GEICO Suit Alleges $1.8M in Fraudulent Billings by New Jersey Healthcare Providers

Insurer GEICO is suing to recover more than $1.8 million in allegedly fraudulent and unlawful no-fault insurance charges it says it has paid to several New Jersey health centers since 2018.

The charges were for a range of medical services GEICO says were unnecessary including patients exams, chiropractic treatment, drug screens, pain management, electro-diagnostic tests, and acupuncture. The services were provided to insureds who claimed to have been involved in automobile accidents and were eligible for insurance coverage under GEICO no-fault insurance policies.

The insurer’s 169-page complaint filed in federal district court for New Jersey alleges Prestige Health Center, Comprehensive Pain Medicine and Anesthesia Group Professional Association, Comprehensive Physical Medicine and Rehabilitation of New Jersey, Clifford Acupuncture & Herb, and the owners of these firms, engaged in a scheme under which they received unlawful compensation in exchange for patient referrals. The referral scheme allegedly included phony “diagnoses” to explain a purported need for extended medical services as well as payments for referrals that were disguised as office lease payments.

GEICO claims that the scheme was aimed at submitting as much PIP (personal injury protection) billing as possible, without regard for whether the underlying services were medically necessary. Many of the insureds had minor soft tissue injuries such as sprains or strains, which are typically resolved after a short course of conservative treatment, or no treatment at all. The state has approved Care Paths that set forth the standard course of medically necessary treatment for certain types of neck and back soft tissue injuries that commonly are sustained in automobile accidents. These regulations require healthcare providers to demonstrate why treatment is necessary beyond the four–week, eight–week, and 13–week marks.

GEICO further claims that the defendants knew that their ability to submit PIP billings to insurers would be limited by the Care Paths because they would not be able to demonstrate that the insureds required any extensive healthcare services, and they also allegedly knew that it would be much easier for them to obtain payment for medically unnecessary services if other licensed healthcare providers were to “generate phony and falsified treatment reports and diagnoses that purported to reflect injuries more serious than ordinary strains and sprains.”

According to the complaint, the referral scheme was typically carried out with Prestige Health initially providing several months of putative chiropractic services to each insured until the time when the state’s Care Paths regulations would ordinarily require the conclusion of this treatment. Prestige Health would refer the insured to others for “expensive and medically unnecessary” examinations and electro-diagnostic testing. The other providers would falsely diagnose each Insured with continuing symptoms and nerve injuries, and would refer the insureds back to Prestige Health for even more medically unnecessary chiropractic and physical therapy. Then, Prestige Health would allegedly use the phony diagnoses to provide additional, long term, medically unnecessary chiropractic and physical therapy services to the insureds and then refer the insureds for acupuncture treatments.

Among the defendants is David Zelefsky, M.D., identified as the owner of Comprehensive Physical, who the GEICO complaint says “has a history as a defendant in criminal and civil insurance fraud cases” that “has made it extremely difficult for Zelefsky to obtain legitimate employment as a physician, and made him amenable to participation” in the defendants’ alleged fraudulent scheme.