The U.S. Court of Appeals for the Second Circuit ruled in *GEICO v. Patel*, a significant case involving allegations of insurance fraud under the Racketeer Influenced and Corrupt Organizations Act. The decision, issued Feb. 3, 2026, addresses whether GEICO can obtain preliminary relief against a New York medical provider accused of exploiting the state's no-fault automobile insurance system.
The Government Employees Insurance Company and three of its subsidiaries filed suit against Dr. Bhargav Patel and Patel Medical Care, P.C., in the U.S. District Court for the Eastern District of New York. GEICO alleged that the defendants participated in a scheme to defraud the insurance company by exploiting New York's no-fault automobile insurance laws.
Under New York's no-fault insurance system, automobile insurance companies must provide coverage for medical expenses and other benefits regardless of who caused an accident. GEICO claimed that Dr. Patel and his medical practice manipulated this system to submit fraudulent claims for reimbursement.
The case took a complex turn when defendants filed more than 600 independent collection actions against GEICO in various New York state courts and arbitration tribunals. These collection suits sought judgments totaling over $2 million based on benefits claims that GEICO had disputed or denied. The sheer volume of these cases created significant litigation burden for GEICO.
In response to the flood of collection actions, GEICO sought emergency relief from the federal district court. The insurance company requested a preliminary injunction that would stay all pending state collection suits and prevent defendants from filing new collection actions until the court ruled on GEICO's underlying RICO claims.
District Judge Kiyo Matsumoto granted GEICO's request for preliminary injunctive relief. The district court found that GEICO had sufficiently demonstrated the necessary elements for a preliminary injunction: irreparable harm, serious questions going to the merits, and a balance of hardships favoring the plaintiff.
The preliminary injunction effectively halted defendants' ability to pursue their collection efforts through the state court system while the federal RICO case proceeded. This type of relief is significant because it allows a federal court to control related state court proceedings that could interfere with the resolution of federal claims.
GEICO's RICO complaint seeks two primary forms of relief. First, the company wants a judgment requiring defendants to pay back money GEICO paid on allegedly fraudulent claims. Second, GEICO seeks a declaration that it has no obligation to pay any of defendants' pending but unpaid reimbursement claims.
The use of RICO in insurance fraud cases has become increasingly common as insurance companies seek powerful federal remedies against alleged schemes. RICO provides for treble damages and attorney's fees, making it an attractive option for plaintiffs who can establish a pattern of racketeering activity.
No-fault insurance fraud represents a persistent challenge in New York and other states with similar systems. The laws are designed to ensure prompt payment of legitimate medical expenses following automobile accidents, but critics argue they create opportunities for abuse by unscrupulous medical providers.
The case highlights the tension between state no-fault insurance systems and federal anti-fraud enforcement. While state laws mandate certain payments to medical providers, federal RICO statutes allow insurance companies to challenge systematic fraud through federal courts.
Defendants appealed the district court's preliminary injunction order to the Second Circuit. The appeals court's decision will determine whether the injunction properly balances the competing interests of preventing fraud while allowing legitimate collection efforts to proceed.
The outcome could have broader implications for how insurance companies combat alleged fraud schemes involving multiple state court proceedings. If upheld, the injunction approach could become a template for other insurers facing similar situations.
The Second Circuit's ruling also may influence how medical providers structure their collection efforts against insurance companies. The decision could affect whether providers can use multiple state court actions as leverage in disputes over claim payments.
Legal observers will watch closely to see how the appeals court balances federal anti-fraud policy against state court jurisdiction over collection actions. The decision may establish important precedent for future cases involving alleged insurance fraud schemes.
The case was argued before Circuit Judges Carney, Park, and Nardini on Jan. 31, 2025. The defendants sought to reverse the district court's preliminary injunction, arguing that it improperly interfered with their rights to pursue legitimate collection efforts through state courts.
The resolution of this appeal will determine the immediate future of both the underlying RICO case and the hundreds of related collection actions that remain stayed pending the federal court's decision on the merits of GEICO's fraud allegations.