Allstate Files Federal Suit Over $305K Alleged No-Fault Medical Equipment Fraud
Allstate Insurance has initiated a federal lawsuit alleging it suffered losses exceeding $305,000 due to fraudulent medical equipment billing. The complaint, filed on August 25, 2025, in the Eastern District of New York, targets A to Z Supply Services Inc., its principal Michael Pogrebinsky, and associated entities. The suit alleges a coordinated scheme to defraud automobile insurers through New York's No-fault system by submitting inflated claims for durable medical equipment (DME) starting January 2021.
According to the filings, A to Z Supply Services allegedly collaborated with medical clinics in the New York metropolitan area to issue prescriptions for generic orthotic and medical equipment such as cervical pillows, traction units, and back braces, irrespective of medical necessity. These prescriptions purportedly followed a predetermined protocol rather than individualized patient care.
The insurer claims that A to Z submitted thousands of reimbursement claims using these generic prescriptions, billing at rates exceeding New York No-fault Law and Medicaid or Workers' Compensation fee schedules. The complaint indicates A to Z purchased low-cost equipment in bulk, misrepresented product quality and cost, and failed to provide adequate supporting documentation, including delivery receipts and invoices.
Further allegations include kickbacks paid by A to Z to clinics in exchange for prescriptions and patients signing delivery receipts without actually receiving the equipment, which were then used to substantiate fraudulent claims. Allstate seeks recovery of the alleged $305,000 in payments and a declaration that it is not liable for outstanding claims from A to Z due to the fraudulent conduct.
This case underscores the complexities insurers face in verifying claims amidst intricate provider relationships and regulatory frameworks. It spotlights the regulatory stipulations for DME reimbursement in New York, emphasizing reimbursement caps dictated by state Medicaid schedules or acquisition cost standards. The progression of this litigation may influence how the insurance industry enhances fraud detection and claims management strategies, particularly within the auto insurance and medical equipment domains.
Currently, the defendants have not responded, and the case remains pending. Insurers might consider this a pertinent example of enforcing rigorous documentation and compliance measures to mitigate insurance fraud risks in the No-fault system and related medical billing practices.