Multiple Suits or Arbitration on Fraudulent Claims Irreparably Harm GEICO
Post number 5279

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GEICO Successfully Fights No Fault Auto Insurance Claims Fraud by Fraudsters Seeking Independent Trials or Arbitrations for Each Suspected Fraudulent Claim

In Government Employees Insurance Company, GEICO Indemnity Company, GEICO General Insurance Company, GEICO Casualty Company v. Bhargav Patel, MD, Patel Medical Care, P.C., John Doe Defendants 1 through 10, No. 24-191, United States Court of Appeals, Second Circuit (February 3, 2026) Government Employees Insurance Company (GEICO) and its subsidiaries, brought a civil action under the Racketeering Influenced and Corrupt Organization Act (“RICO”) against Dr. Bhargav Patel, Patel Medical Care, P.C., and other associated defendants.

GEICO alleged that the defendants orchestrated a scheme to exploit New York’s no-fault automobile insurance laws, submitting millions of dollars in reimbursement claims for treatments that were allegedly medically unnecessary, experimental, excessive, or even fictitious.

FACTS

After GEICO denied or disputed these claims, the defendants initiated over 600 independent collection actions in New York state courts and arbitration tribunals, seeking more than $2 million in judgments against GEICO.

LEGAL ISSUES

The case centers on the application of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §§ 1961–1968, and the Anti-Injunction Act, 28 U.S.C. § 2283.

DISCUSSION AND ANALYSIS

GEICO sought a preliminary injunction to halt all of the defendants’ ongoing and future collection actions in state court and arbitration, arguing that these multiple proceedings threatened irreparable harm and could obscure the full scope of the alleged fraudulent scheme. The district court granted the injunction, finding GEICO had demonstrated irreparable harm due to the risk of inconsistent judgments and the piecemeal litigation of its fraud defenses.

On appeal, the Second Circuit reviewed the injunction for abuse of discretion and found none.

Reviewing the district court’s grant of a preliminary injunction for abuse of discretion, the Second Circuit identified none. The court did not clearly err in concluding that the parallel proceedings posed a risk of irreparable harm to GEICO: the potential of inconsistent judgments posed that risk, as did the possibility that the alleged overarching fraudulent scheme would be obscured by a requirement that GEICO’s fraud defense be asserted piecemeal in the numerous individual state collection proceedings.

Finally, in accordance with the recent decision in State Farm v. Tri-Borough NY Medical Practice, P.C., 120 F.4th 59 (2d Cir. 2024), the Second Circuit concluded that the preliminary injunction did not violate the Anti-Injunction Act.

To demonstrate that the district court’s failure to provide the requested relief will cause it irreparable harm, the movant must show an “injury that is neither remote nor speculative, but actual and imminent and that cannot be remedied by an award of monetary damages.” The injury must also be a “continuing” one.

BALANCE OF HARDSHIPS

The Second Circuit explained, when a preliminary injunction is sought based on a serious question going to the merits of a case the movant must further demonstrate that the balance of hardships tips decidedly in its favor. This factor requires the district court to balance the competing claims of injury and consider the effect on each party of the granting or withholding of the requested relief.

The district court determined that, if the expedited state court collections actions were to be stayed, Defendants would at the worst suffer from delayed recovery of payment. But if the federal court action is meritorious and the state court actions not stayed, the court reasoned, GEICO would suffer the irreparable harm described above weighing the hardships in favor of GEICO.

GEICO sufficiently alleged that the massive fraudulent scheme here becomes apparent only when the claims are analyzed altogether. The risks created by disaggregating the scheme into individual actions-both financial and of concealment-amount to allowing irreparable harm to GEICO if the actions are permitted to proceed.

The Second Circuit affirmed the district court’s order, upholding the preliminary injunction in favor of GEICO.

ZALMA OPINION

Insurance fraud is estimated to take $308 billion every year from the US insurance industry. GEICO alleged the defendants presented hundreds of fraudulent claims and whenever GEICO refused to pay they sued it piecemeal forcing GEICO into hundreds of trials where different results, to the detriment of GEICO would become a certainty causing it irreparable harm. The RICO suits give GEICO a chance to fairness and the injunction was necessary and proper to protect its assets from fraud.

(c) 2026 Barry Zalma & ClaimSchool, Inc.

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