New York court strips GEICO's authority to deny no-fault claims

Jennifer Williams ; 2025-11-25 17:55:49

Find out how a $390k kickback scheme between an acupuncturist and unlicensed people changed no-fault rules

Legal Insights

By Matthew Sellers

Nov 26, 2025Share

A New York Court of Appeals decision limits insurer authority to deny no-fault claims over alleged healthcare provider misconduct, reshaping fraud-fighting strategies across the industry.

That's the practical upshot of a ruling handed down November 24, 2025, in Government Employees Insurance Company v. Mayzenberg. The decision significantly constrains how insurance companies can fight fraud in the state's no-fault auto insurance system and marks a departure from what some in the industry had hoped would be a stronger tool for combating misconduct.

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GEICO sued Igor Mayzenberg, a licensed acupuncturist in New York, over what it considered a blatant scheme to extract millions in fraudulent reimbursements. From 2015 to 2017, Mayzenberg allegedly paid roughly $390,000 to unlicensed individuals in exchange for patient referrals. Those individuals would call him each month, demand a payment amount with no documentation, and Mayzenberg would comply. They essentially controlled which patients received treatment. In return, GEICO received bills totaling nearly $4.9 million for acupuncture services. A federal district court found the evidence straightforward. There was no genuine dispute about the kickback scheme.

GEICO wanted to deny reimbursement for all pending claims based on a state regulation requiring providers to meet licensing requirements to get paid. The insurance company argued that Mayzenberg's misconduct violated professional conduct standards, making him ineligible.

The Court of Appeals saw things differently. In a 6-1 decision, the majority said insurers cannot unilaterally decide that a provider has committed misconduct serious enough to withhold payment. That authority belongs to state regulators, specifically New York's Board of Regents, which oversees professional licensing and discipline. Justice Rivera explained the concern: if insurers could deny claims whenever they suspected professional misconduct, they could delay payments based on mere allegations. New York's no-fault system, enacted in 1973, was designed to get money to accident victims quickly, without litigation delays. Giving insurers power to make unilateral misconduct determinations would defeat that purpose.

The court also noted that New York law lists roughly 50 different types of professional misconduct, ranging from serious violations to trivial ones. If insurers could deny claims over any of these, they would have enormous leverage to delay payment, undermining the entire system.

The decision does leave one pathway open for insurers. If a provider has effectively surrendered control of their medical practice to unlicensed individuals, insurers can challenge those claims. This distinction matters because it preserves insurers' ability to address the most egregious arrangements while preventing them from weaponizing minor professional violations.

Beyond that carve-out, insurers retain other tools. They can deny claims if services were medically unnecessary. They can report suspected fraud to state regulators, who have authority to temporarily prohibit providers from billing for up to 90 days and permanently deauthorize them if the Board of Regents determines misconduct occurred. Insurers can also sue for unjust enrichment or damages.

Chief Judge Wilson dissented sharply, arguing that Mayzenberg's scheme was functionally identical to fraud the court had previously condemned. When non-licensed parties have financial stakes in referrals, they have incentives to refer unnecessary cases, inflating costs and raising insurance premiums for all New York drivers.

For insurers operating in New York, the decision establishes a clear boundary: you cannot deny claims based on professional misconduct allegations alone, unless that misconduct involves actual surrender of control to unlicensed parties. You must work through the state's regulatory apparatus, which means filing reports and waiting for investigations. It slows down response to suspected fraud but reinforces that New York's no-fault system prioritizes speed of payment over insurer discretion. Whether that arrangement effectively prevents fraud is ultimately a question for policymakers.