Insurer Says Medical Network Billed Millions for Unnecessary Treatment: What It Means for Patients
Updated On: October 7, 2026
An insurer is suing a NY medical network over alleged no-fault fraud and seeks $9.8M.
When an insurer accuses a medical clinic of fraud, the lawsuit is aimed at the clinic. But the patients' care, benefits, and injury claims sit in the same paperwork. A new federal suit in New York shows how that can happen.
On October 5, American Transit Insurance Company filed a 166-page complaint in federal court in Brooklyn against Atlantic Medical & Diagnostic, P.C. It alleges racketeering, fraud, and unjust enrichment tied to a "standardized treatment and billing scheme" across more than 50 no-fault clinics in the New York area. It seeks roughly $9.79 million, plus a ruling that Atlantic can't collect further no-fault benefits.
The complaint points to patterns in about 2,515 claims. Roughly 72% allegedly billed for at least one trigger-point or nerve-block injection, and about 84% of those billed injections on the first visit. About 90% of injection claims allegedly billed four or six units of ultrasound guidance, matching the number of injections. Exam reports allegedly used the same language across unrelated patients, with treatment set at four to six weeks regardless of need.
The suit also alleges that the majority owner, who lives in Florida, didn't actually run the practice. Under New York law, the insurer argues, that would make Atlantic ineligible for no-fault payments, no matter whether the treatment was necessary.
Not the First Suit
Four insurers have now sued over this network. The earlier suits came from GEICO, Allstate, USAA, and State Farm, and courts granted injunctions pausing the network's collection actions in at least three. None of the allegations has been tested, and no court has ruled on the merits. Patients are not accused of anything.
How This Can Reach Patients
New York no-fault pays up to $50,000 in medical expenses regardless of fault, and patients typically assign their benefits to the provider, so the dispute is mostly between insurer and clinic. Patients can still feel it:
- Delays and cut-offs. Insurers must pay or deny within 30 days of a complete claim, with 2% monthly interest on overdue benefits. But verification requests, independent medical exams (IMEs), and examinations under oath (EUOs) can stretch that window. Benefits can also be cut off if an IME doctor says treatment is no longer necessary, if you miss an IME or EUO, or if the insurer suspects fraud
- A disrupted provider. If a clinic is found ineligible, payment can be refused, whether or not the care helped, which could leave a patient mid-treatment looking for a new doctor
- A weaker injury claim. To sue for pain and suffering in New York, you generally must show a "serious injury," which leans heavily on medical records. If your records come from a clinic accused of templated exams, the other side may question them all
What Patients Can Do
Ask your doctor why each treatment is recommended, and get a second opinion if the care feels one-size-fits-all. Keep your own records: a symptom journal, copies of bills, and every insurer letter. Never accept money or gifts in exchange for treatment, and be wary of anyone steering you to a specific clinic.
Don't ignore IME or EUO notices, and meet the deadlines: the NF-2 application within 30 days of the accident, medical bills within 45 days of treatment, and lost-earnings claims within 90 days.
What a Lawyer Can Do
An attorney can vet a provider before treatment begins, help line up independent evidence such as imaging or a specialist outside any suspect network, prepare you for an IME or EUO, and contest a denial. A good lawyer also keeps your injury claim separate from the clinic's billing dispute, so allegations about the clinic don't taint your case. They can't repair a record of unnecessary treatment after the fact, which is why early involvement matters.
Other no-fault and PIP states have different rules and deadlines, but the lesson is the same: where you get treated can shape your claim.
If your treatment has been questioned or your benefits have been cut off, the independent attorneys we connect you with can help you protect your claim.
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