Surgeons Can’t Slip Out of GEICO’s Latest RICO Fraud Lawsuit in NC, Judge Says

By | June 6, 2024

GEICO Insurance companies have continued their campaign against alleged auto insurance fraud actors, including some well-known physicians and medical clinics. And a federal judge ruled this week that two of those practitioners cannot escape a $2.8 million lawsuit in North Carolina.

U.S. District Judge Frank Whitney, in Charlotte, on Monday denied a request by two orthopedic surgeons to dismiss GEICO’s 2023 lawsuit that alleges the doctors inflated or fabricated medical conditions and repeatedly overbilled the insurance company.

It was part of a racketeering scheme orchestrated with a Charlotte-based plaintiffs lawyer to refer victims of minor car accidents to the clinics, upcode medical treatments and milk millions from the insurer, GEICO attorneys said in the lawsuit.

The surgeons, Dr. Erik Bendiks, who practices in Georgia and North Carolina, and Dr. Sonia Pasi, in Raleigh, had argued that the GEICO lawsuit failed on a number of technical grounds, including the use of outdated medical billing codes. The judge disagreed.

“Here, the nature and scope of the claims alleged by Plaintiffs (GEICO companies) in their 90-page complaint are much broader and more detailed than simply providing medical billings codes,” Whitney wrote in his order. “Importantly, Plaintiffs allege specific, discrete, fraudulent acts which include details such as the who, what, when, where, and why for multiple patient-specific examples.”

The federal Racketeer Influenced and Corrupt Organizations Act, a law that has been used to bring down organized crime figures, allows injured parties to bring a civil suit and ask for triple damages.

The judge went into some detail about the nature of the allegations, explaining that GEICO believes the doctors and their clinics, beginning in 2020, “masterminded and implemented a fraudulent and unlawful scheme with Shane Smith and Shane Smith Law.”

Smith is not named as a defendant in this case, but he acted as a patient broker, sending car wreck plaintiffs more than 120 miles away to seek treatment at the doctors’ Apex Spine & Orthopaedics clinics and at Advanced Pain Consultants, GEICO charges. The Smith slogan on the firm’s website is: “In Pain? Call Shane!”

The lawsuit cites dozens of instances in which Smith’s clients had only minor soft-tissue injuries. Knowing that those sprains and bruises would not result in a significant bodily injury insurance or uninsured motorist payout, the defendants often ordered medically unnecessary treatments “to create the illusion” that patients suffered from severe, long-term, debilitating injuries that required extensive care, the complaint argues.

“Absent the Defendants’ fraudulent bills and reports, the (GEICO) claims would include no medical treatment at all, or else basic chiropractic and/or physical therapy treatment for alleged soft tissue injuries, with total medical expenses that would be significantly less than the applicable policy limits,” the suit claims.

In answer to the complaint, the doctors denied the allegations and asked the court to dismiss the suit. In denying the motion to dismiss, the judge allowed the litigation to continue, in federal court in Charlotte.

Officials with the insurance giant, part of the Berkshire Hathaway family of companies, declined to comment on pending litigation. But the complaint notes that North Carolina insurance law requires auto insurers to deal with claims fairly and in good faith and bars carriers from low-balling insureds and forcing them to go to court to recover. But the law also bars fraud by health care providers and outlines what constitutes fraud.

The suit is one of several that GEICO has pursued against medical providers in recent years. In December, GEICO filed suit against five New York clinics and a pharmacy, alleging they participated in a scheme to provide expensive but dubious topical drugs.

In New Jersey, a federal appeals court ruled in April found that GEICO’s $10 million fraud lawsuit against three chiropractors must be decided in arbitration, per state law and arbitration agreements.

Other national insurers have pursued alleged fraudsters through civil actions. Allstate Insurance companies in January filed suit against a Florida pain clinic, alleging that the clinic had billed for unnecessary treatments.

State Farm Insurance in 2022 also filed suit against a chiropractor and his Florida clinics, charging that the clinics gamed Florida’s personal injury protection auto insurance law by falsely claiming that victims needed emergency care and magnetic resonance imaging, raising the reimbursement due and defrauding the insurer of $3 million.

That suit was settled last year for an undisclosed amount.

Topics Lawsuits Florida Fraud Legislation North Carolina

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