Insurance Company Targets 180 Health Care Providers in $450M Fraud Lawsuit

American Transit Insurance Co. has filed a landmark lawsuit against more than 180 healthcare providers in the Eastern District of New York, seeking $450 million in damages. The lawsuit, brought under the Racketeer Influenced and Corrupt Organizations Act (RICO), alleges a complex scheme of fraudulent insurance claims involving improper licensing, unnecessary medical procedures, kickbacks, and inflated billing practices in violation of New York’s no-fault insurance law.

While the insurer argues the suit fulfills its duty to combat fraud, critics like Steven Harfenist, representing multiple defendants in similar cases, claim such actions primarily aim to force settlements from providers unable to afford prolonged litigation. Harfenist described the suit as part of a broader pattern by insurers using RICO claims as a strategic tool to avoid paying receivables and eliminate smaller medical practices from pursuing claims.

The lawsuit emerges amidst financial struggles for American Transit, which reported over $700 million in losses earlier this year. Legal experts and providers have raised concerns about the balance of power in no-fault fraud cases, with calls for legislative reforms to address potential abuses by insurance companies and ensure fair treatment for smaller practices.