American Transit Insurance Company Files Over $450 Million Insurance Fraud Case Against Over 180 Defendants

FREEPORT, N.Y., Dec. 17, 2024 /PRNewswire/ -- American Transit Insurance Company (ATIC), a leading commercial automobile liability insurance provider with specialization in the taxi and for-hire vehicle sector, filed a lawsuit today seeking more than $150 million in compensatory damages (over $450 million in trebled damages), as well as punitive damages, from over 180 defendants in the New York and New Jersey area.

The case, filed under the federal Racketeer Influenced and Corrupt Organizations Act (RICO), which allows recovery of three times incurred compensatory damages, and New York State common law, alleges that the defendants, including certain ambulatory surgery centers and related health care entities and individuals, engaged both individually and as part of a conspiracy to submit thousands of fraudulent insurance claims to ATIC. The case is one of the largest insurance fraud RICO actions ever filed in New York State. The case is denominated American Transit Insurance Company v. All City Family Healthcare Center Inc., et. al., Case No. 24-cv-08606.

The federal court complaint, filed in the Eastern District of New York, alleges that the defendants sought to take advantage of New York's no-fault auto insurance laws, which require insurance companies to reimburse their policyholders for the cost of necessary and documented medical care up to $50,000 for personal or private passenger vehicles ($200,000 for taxis and for-hire vehicles in New York City) for injuries arising out of an accident regardless of fault. These substantial possible no-fault recoveries can incentivize providers with ill intent to over-diagnose, over-treat, and over-bill to recover the most money for themselves.

The complaint seeks to recover funds ATIC paid to providers who are alleged to have unlawfully sought payments for services, including ambulatory surgical centers that the complaint alleges were improperly licensed. The complaint further alleges that the services were rendered as a result of improper kickbacks or patient referrals, services that were not provided as billed or were provided in a manner misrepresenting the services provided, were medically unnecessary, and were provided to maximize reimbursement pursuant to a pre-determined protocol irrespective of the actual medical condition and needs of patients.

Hundreds of thousands of fraudulent claims are submitted to commercial automobile insurance providers every year. In March 2024, New York's Department of Financial Services (DFS), which oversees insurance companies operating in New York State, reported that no-fault fraud reports accounted for 94% of all healthcare fraud reports received in 2023. As estimated by ATIC, whose 75,000 policyholders include operators of taxis, Uber and Lyft dispatched cars, and other TLC-licensed vehicles, of the more than 250,000 claims it processes every year, 60-70% are fraudulent.

For over 50 years, ATIC has proudly provided affordable commercial automobile insurance to policyholders in New York City and beyond. But rampant insurance fraud unnecessarily inflates the price of commercial automobile insurance and adversely impacts the financial condition of no-fault insurers by falsely increasing the number and cost of payouts. Such insurance fraud also hurts the general public by overwhelming insurance companies in their claims process and diminishing the amount of coverage available to real injured patients for legitimate medical services. 

This lawsuit represents an important step in implementing ATIC's statutory responsibility under New York Insurance Law § 409 to combat fraud through the initiation of civil actions. ATIC hopes that this lawsuit, and ATIC's other continuing efforts to fight fraud on behalf of its policyholders, will not only result in appropriate compensation to ATIC for the alleged fraudulent conduct but also serve as a deterrent to others engaged in or contemplating fraud. ATIC also hopes that it will highlight the scope of the no-fault insurance fraud that occurs in New York so that lawmakers and regulators will consider new measures, including several proposed by ATIC, to combat this enormous problem.

ATIC maintains that there are many market influences beyond insurance rates contributing to the increasing costs associated with providing for-hire transportation services. As these services are essential to a healthy and vibrant NYC economy, it is incumbent upon city leaders to balance higher operating costs with more opportunities for the industry's service providers to improve earnings.

ATIC is represented by Robert A. Stern of Manning & Kass, Ellrod, Ramirez, Trester LLP and William J. Natbony of Cadwalader, Wickersham & Taft LLP.

About American Transit Insurance Company

American Transit Insurance Company (ATIC) is a leading commercial automobile liability insurance provider with specialization in the public and trade automobile sector. ATIC is a New York State-licensed property and casualty insurance carrier with more than 50 years of industry experience. ATIC principally writes commercial automobile liability insurance on risks such as taxicabs (yellow and green), black cars, company fleets, and other commercial livery vehicles.

Media Contact:
William J Natbony
Cadwalader, Wickersham & Taft, LLP.
[email protected]
(212) 504-6351

SOURCE American Transit Insurance Company