Case 1:20-cv-05821-BMC Document 1 Filed 12/01/20 Page 1 of 52 PageID #: 1
`
`Michael A. Sirignano, Esq.
`Barry I. Levy, Esq.
`Jennifer Abreu, Esq.
`RIVKIN RADLER LLP
`926 RXR Plaza
`Uniondale, New York 11556
`(516) 357-3000
`
`Counsel for Plaintiffs Government Employees
`Insurance Company, GEICO Indemnity Company,
`GEICO General Insurance Company and
`GEICO Casualty Company
`
`UNITED STATES DISTRICT COURT
`EASTERN DISTRICT OF NEW YORK
`- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -X
`GOVERNMENT EMPLOYEES INSURANCE
`COMPANY, GEICO INDEMNITY COMPANY,
`GEICO GENERAL INSURANCE COMPANY and
`GEICO CASUALTY COMPANY,
`
`
`Plaintiffs,
`
`
`
`-against-
`
`
`
`
`
`Docket No.: _____( )
`
`
`
`
`
`
`
`
`
`NYRX PHARMACY INC.,
`YURIY AVULOV,
`AND JOHN DOE NOS. “1” THROUGH “5,”
`
`
`Defendants.
`- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -X
`
`
`COMPLAINT
`
`Plaintiffs Government Employees Insurance Company, GEICO Indemnity Company,
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`GEICO General Insurance Company and GEICO Casualty Company (collectively, “GEICO” or
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`“Plaintiffs”), as and for their Complaint against Defendants, NYRX Pharmacy, Inc., Yuriy
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`Avulov, and John Doe Nos. “1” through “5” (collectively, the “Defendants”), hereby allege as
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`follows:
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`

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`Case 1:20-cv-05821-BMC Document 1 Filed 12/01/20 Page 2 of 52 PageID #: 2
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`NATURE OF THE ACTION
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`1.
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`This action seeks to terminate an on-going fraudulent scheme perpetrated against
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`GEICO by the Defendants who have exploited the New York “No-Fault” insurance system by
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`submitting more than $4.6 million in fraudulent billing to GEICO for medically unnecessary
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`pharmaceuticals dispensed to individuals involved in automobile accidents and eligible for
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`insurance coverage under policies of insurance issued by GEICO (the “Insureds”).
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`2.
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`The fraudulent scheme was spearheaded by Yuriy Avulov (“Avulov”) who used,
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`and continues to use, NYRX Pharmacy, Inc. (“NYRX Pharmacy”) to submit thousands of
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`fraudulent No-Fault insurance charges seeking payment for a set of specifically targeted,
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`medically unnecessary “pain relieving” topical pain prescription drug products, primarily in the
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`form of Diclofenac Sodium Gel, Lidocaine 5% Ointment and Lidocaine 5% Patches
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`(collectively, the “Fraudulent Topical Pain Products”), as well as various oral medications,
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`primarily in the form of oral pain relievers and muscle relaxants (together with the Fraudulent
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`Topical Pain Products, the “Fraudulent Pharmaceuticals”).
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`3.
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`To effectuate the scheme, NYRX Pharmacy and its owner Avulov (collectively,
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`the “Pharmacy Defendants”) entered into illegal, collusive agreements with prescribing
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`healthcare providers (collectively, the “Prescribing Providers”) and unlicensed laypersons (the
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`“Clinic Controllers”) who work at or are associated with various multidisciplinary medical
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`clinics that almost exclusively treat No-Fault patients (the “No-Fault Clinics”). Pursuant to these
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`illegal, collusive agreements, the Pharmacy Defendants steered the Prescribing Providers and
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`Clinic Controllers to prescribe and direct large volumes of prescriptions for the targeted
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`Fraudulent Topical Pain Products to NYRX Pharmacy, in place of other effective, but much less
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`costly prescription and non-prescription drug products.
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`2
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`4.
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`The Pharmacy Defendants intentionally dispensed the targeted pharmaceutical
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`products without regard to genuine patient care in order to financially enrich themselves through
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`egregiously inflated charges submitted to GEICO. For example, billing from NYRX Pharmacy
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`typically ranged from $1,179.00 to $2,358.00 for a single tube of Diclofenac Gel 3%, with
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`charges at times exceeding $3,500.00 for a single tube; from $380.50 to $1,522.00 for a single
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`tube of Lidocaine 5% Ointment, with charges at times exceeding $1,900.00; and from $308.10 to
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`$925.20 for a prescription of Lidocaine 5% Patch.
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`5.
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`The Pharmacy Defendants’ scheme not only inflated the charges submitted to
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`GEICO and other insurers, but also posed serious risks to the patients’ health as the Fraudulent
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`Pharmaceuticals were prescribed and dispensed in predetermined fashion, without regard to
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`genuine patient care, and without regard to proper documentation or with documentation that
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`was inconsistent with the medications actually prescribed and dispensed.
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`6.
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`By this action, GEICO seeks to recover more than $434,000.00 that the Pharmacy
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`Defendants stole from it, along with a declaration that GEICO is not legally obligated to pay
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`reimbursement to NYRX Pharmacy of over $3,441,000.00 in pending fraudulent No-Fault
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`claims that the Pharmacy Defendants submitted or caused to be submitted through NYRX
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`Pharmacy because:
`
`(i)
`
`(ii)
`
`NYRX Pharmacy billed for pharmaceutical products that were prescribed
`and dispensed pursuant to predetermined fraudulent protocols designed to
`exploit the patients for financial gain, without regard for genuine patient
`care;
`
`the Pharmacy Defendants participated in illegal, collusive relationships in
`which the Pharmacy Defendants steered the Prescribing Providers and
`Clinic Controllers to direct illegal prescriptions for the Fraudulent
`Pharmaceuticals to NYRX Pharmacy in exchange for unlawful kickbacks
`and other financial incentives;
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`3
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`(iii)
`
`
`
`(iv)
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`the Pharmacy Defendants intentionally targeted a specific set of
`pharmaceutical products (i.e., the Fraudulent Topical Pain Products) that
`NYRX Pharmacy dispensed in large volumes to Insureds with exorbitant
`charges, in place of other effective, less costly pharmaceuticals in order to
`inflate the charges to GEICO; and
`
`the Pharmacy Defendants made and continue to make false and fraudulent
`misrepresentations to GEICO by submitting or causing to be submitted
`charges for
`the Fraudulent Pharmaceuticals dispensed by NYRX
`Pharmacy pursuant to illegal, invalid and duplicitous prescriptions.
`
`7.
`
`The Defendants fall into the following categories:
`
`(i)
`
`(ii)
`
`(iii)
`
`NYRX Pharmacy is a New York corporation engaged in a fraudulent
`scheme in which it dispensed the Fraudulent Pharmaceuticals in order to
`submit to GEICO and other New York automobile insurers claims for
`reimbursement of No-Fault Benefits to which it is not entitled;
`
`Avulov is the record owner of NYRX Pharmacy; and
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`John Doe Nos. “1” through “5” are persons and entities, presently not
`identifiable, who along, with the Pharmacy Defendants, participated in the
`operation and control of NYRX Pharmacy, including facilitating the
`illegal, collusive agreements with the Prescribing Providers and Clinic
`Controllers.
`
`8.
`
`The Pharmacy Defendants’ scheme began in 2018. As discussed more fully
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`
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`
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`
`
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`below, the Pharmacy Defendants at all times have known that: (i) the billed-for pharmaceutical
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`products were prescribed and dispensed pursuant to predetermined fraudulent protocols designed
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`to exploit the patients for financial gain, without regard for genuine patient care; (ii) the
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`Pharmacy Defendants participated in illegal, collusive agreements in which they steered the
`
`Prescribing Providers and Clinic Controllers to direct illegal prescriptions for the Fraudulent
`
`Pharmaceuticals to NYRX Pharmacy in exchange for unlawful kickbacks and other financial
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`incentives; (iii) the Pharmacy Defendants intentionally targeted a specific set of pharmaceutical
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`products (i.e., the Fraudulent Topical Pain Products) that NYRX Pharmacy dispensed in large
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`volumes to Insureds with exorbitant charges, in place of other effective, less costly
`
`
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`4
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`

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`pharmaceuticals; and (iv) the Pharmacy Defendants made and continue to make false and
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`fraudulent misrepresentations to GEICO by submitting or causing to be submitted charges for the
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`Fraudulent Pharmaceuticals dispensed by NYRX Pharmacy pursuant to illegal, invalid, and
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`duplicitous prescriptions.
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`9.
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`Based on the foregoing, NYRX Pharmacy does not now have – and has never had
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`– any right to be compensated for the Fraudulent Pharmaceuticals allegedly dispensed to GEICO
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`Insureds. The chart attached hereto as Exhibit “1” sets forth the fraudulent claims that have been
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`identified to date which the Pharmacy Defendants submitted, or caused to be submitted, to
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`GEICO using the United States mails. As a result of the Pharmacy Defendants’ scheme, GEICO
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`has incurred damages of approximately $434,000.00.
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`
`
`I.
`
`Plaintiffs
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`THE PARTIES
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`10.
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`Plaintiffs Government Employees Insurance Company, GEICO Indemnity
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`Company, GEICO General Insurance Company and GEICO Casualty Company are Maryland
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`corporations with their principal places of business in Chevy Chase, Maryland. GEICO is
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`authorized to conduct business and to issue automobile insurance policies in New York.
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`II. Defendants
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`11.
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`Defendant NYRX Pharmacy is a New York corporation, incorporated on or about
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`June 19, 2018, with its principal place of business at 179-07 Union Turnpike, Fresh Meadows,
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`New York.
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`
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`12.
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`NYRX Pharmacy was registered as a pharmacy with the New York State
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`Department of Education on August 17, 2018, but is no longer registered as an active pharmacy.
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`
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`5
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`13.
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`NYRX Pharmacy and its owner Avulov, knowingly submitted, and continue to
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`submit through the present day, fraudulent claims to GEICO for pharmaceuticals purportedly
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`dispensed to GEICO Insureds and continue to seek reimbursement on unpaid fraudulent claims.
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`14.
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`Defendant Avulov resides in and is a citizen of New York and is the record owner
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`of NYRX Pharmacy.
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`15.
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`John Doe Nos. 1-5 reside in and are citizens of New York. John Doe Nos. 1-5 are
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`individuals and entities, presently not identifiable, who, along with the Pharmacy Defendants,
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`participate in the operation and control of NYRX Pharmacy, including facilitating illegal,
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`collusive agreements with the Prescribing Providers and Clinic Controllers, whereby they
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`prescribe, or purport to prescribe, the Fraudulent Pharmaceuticals in exchange for kickbacks and
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`other financial incentives from the Pharmacy Defendants.
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`JURISDICTION AND VENUE
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`This Court has jurisdiction over the subject matter of this action under 28 U.S.C.
`
`16.
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`§ 1332(a)(1) because the controversy exceeds the sum or value of $75,000.00, exclusive of
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`interests and costs, and is between citizens of different states. Pursuant to 28 U.S.C. § 1331, this
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`Court also has jurisdiction over the claims brought under 18 U.S.C. §§ 1961 et seq., the
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`Racketeer Influenced and Corrupt Organizations (“RICO”) Act, because they arise under the
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`laws of the United States. In addition, this Court has supplemental jurisdiction over the subject
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`matter of the claims asserted in this action pursuant to 28 U.S.C. § 1367.
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`17.
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`Venue in this District is appropriate pursuant to 28 U.S.C. § 1391, as the Eastern
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`District of New York is the District where one or more of the Defendants reside and because this
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`is the District where a substantial amount of the activities framing the basis of the Complaint
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`occurred.
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`6
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`ALLEGATIONS COMMON TO ALL CLAIMS
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`I. An Overview of New York’s No-Fault Laws
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`18.
`
`19.
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` GEICO underwrites automobile insurance in the State of New York.
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`New York’s “No-Fault” laws are designed to ensure that injured victims of motor
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`vehicle accidents have an efficient mechanism to pay for and receive the healthcare services that
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`they need. Under New York’s Comprehensive Motor Vehicle Insurance Reparations Act (N.Y.
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`Ins. Law §§ 5101 et seq.) and the regulations promulgated pursuant thereto (11 N.Y.C.R.R. §§
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`65 et seq.)(collectively, referred to herein as the “No-Fault Laws”), automobile insurers are
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`required to provide Personal Injury Protection Benefits (“No-Fault Benefits”) to Insureds.
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`20.
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`No-Fault Benefits include up to $50,000.00 per Insured for necessary expenses
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`that are incurred for health care goods and services.
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`21.
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`The No-Fault Laws limit reimbursement for benefits to prescription drugs only.
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`Over-the-counter drugs and products which may be purchased without prescription are not
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`covered expenses under the No-Fault Laws.
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`22.
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`An Insured can assign his or her right to No-Fault Benefits to the providers of
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`healthcare services in exchange for those services. Pursuant to a duly executed assignment, a
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`healthcare provider may submit claims directly to an insurance company and receive payment
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`for necessary goods and medical services provided, using the claim form required by the New
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`York State Department of Insurance (known as the “Verification of Treatment by Attending
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`Physician or Other Provider of Health Service,” or, more commonly, as an “NF-3”). In the
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`alternative, healthcare providers sometimes submit claims using the Health Care Financing
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`Administration insurance claim form (known as the “HCFA-1500 Form”).
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`7
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`23.
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`Pursuant to New York’s No-Fault Laws (11 N.Y.C.R.R. § 65-3.16(a)(12)), a
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`healthcare provider is not eligible to receive No-Fault Benefits if it fails to meet any applicable
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`New York state or local licensing requirement necessary to perform such services in New York.
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`24.
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`The implementing regulation adopted by the Superintendent of Insurance, 11
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`NYCRR § 65-3.16(a)(12), provides, in pertinent part, as follows:
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`A provider of health care services is not eligible for reimbursement under section
`5102(a)(1) of the Insurance Law if the provider fails to meet any applicable New
`York State or local dispensing requirement necessary to perform such service in
`New York … (emphasis supplied).
`
`In State Farm Mut. Auto. Ins. Co. v. Mallela, 4 N.Y.3d 313 (2005), the New York
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`25.
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`Court of Appeals, confirmed that healthcare service providers that fail to comply with licensing
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`requirements are ineligible to collect No-Fault Benefits, and that insurers may look beyond a
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`facially-valid license to determine whether there was a failure to abide by state and local law.
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`26.
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`Pursuant to New York Insurance Law § 403, the NF-3s and HCFA-1500 Forms
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`submitted by a healthcare provider to GEICO, and to all other automobile insurers, must be
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`verified by the healthcare provider subject to the following warning:
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`Any person who knowingly and with intent to defraud any insurance
`company or other person files an application for insurance or statement of
`claim containing any materially false information, or conceals for the
`purpose of misleading, information concerning any fact material thereto,
`commits a fraudulent insurance act, which is a crime.
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`II. An Overview of Applicable Licensing Requirements
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`27.
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`Pursuant to New York Education Law § 6808, no person, firm, corporation or
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`
`
`
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`association shall possess drugs, prescriptions or poisons for the purpose of compounding,
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`dispensing, retailing, wholesaling or manufacturing, or shall offer drugs, prescriptions or poisons
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`for sale at retail or wholesale unless registered by the New York State Department of Education
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`as a pharmacy, wholesaler, manufacturer or outsourcing facility.
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`8
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`28.
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`Pursuant to 8 N.Y.C.R.R. § 29.1, pharmacies in New York are prohibited from
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`“exercising undue influence on the patient or client, including the promotion of the sale of
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`services, goods, appliances or drugs in such manner as to exploit the patient or client for the
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`financial gain of the practitioner or of a third party.”
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`29.
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`Pursuant to 8 N.Y.C.R.R. § 63.1(7), pharmacists shall conduct a prospective drug
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`review before each prescription is dispensed, which review shall include screening for potential
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`drug therapy problems due to therapeutic duplication, drug-drug interactions, including serious
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`interactions with over-the-counter drugs, incorrect drug dosage or duration of drug treatment,
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`drug-allergy interactions, and clinical abuse or misuse.
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`30.
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`Pursuant to 8 N.Y.C.R.R. § 29.1, pharmacies are prohibited from “directly or
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`indirectly offering, giving, soliciting, or receiving or agreeing to receive, any fee or other
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`consideration to or from a third party for the referral of a patient or client or in connection with
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`the performance of professional services.”
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`31.
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`New York Education Law § 6810 prohibits pharmacies from dispensing
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`pharmaceuticals when a prescription form for a drug includes any other drug. Separate
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`prescriptions are required for each drug prescribed and dispensed.
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`32.
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` New York Education Law § 6810 prohibits persons and corporations, not
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`licensed to issue a prescription, to willfully cause prescription forms, blanks, or facsimiles
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`thereof to be disseminated to any person other than a person who is licensed to issue a
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`prescription.
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`33.
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`Pursuant to Education Law § 6512, §6530(11), (18), and (19), aiding and abetting
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`an unlicensed person to practice a profession, offering any fee or consideration to a third party
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`9
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`for the referral of a patient, and permitting any person not authorized to practice medicine to
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`share in the fees for professional services is considered a crime and/or professional misconduct.
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`34.
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`New York Education Law § 6530(17) prohibits a physician from “exercising
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`undue influence” on the patient by promoting the sale of drugs so as to exploit the patient for the
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`financial gain of the licensee or of a third party.
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`35.
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`New York Education Law § 6530(18) prohibits a physician from “directly or
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`indirectly” offering, giving, soliciting, receiving or agreeing to receive any fee or other
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`consideration to or from a third party in connection with the performance of professional
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`services.
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`36.
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`New York Education Law § 6509-a prohibits a professional licensee from
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`“directly or indirectly” requesting, receiving, or participating in the division, transference,
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`assignment, rebate, splitting or refunding of a fee in connection with professional care or services
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`related to drugs and/or medications.
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`37.
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`Pursuant to New York Education Law § 6808, pharmacy owners and supervising
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`pharmacists shall be responsible for the proper conduct of a pharmacy.
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`III. The Pharmacy Defendants’ Scheme Involving the Fraudulent Pharmaceuticals
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`A. Overview of the Scheme
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`Beginning in 2018, and continuing uninterrupted through the present day, the
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`38.
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`Pharmacy Defendants masterminded and implemented a fraudulent scheme in which they used
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`NYRX Pharmacy to exploit patients for financial gain by billing the New York automobile
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`insurance industry millions of dollars in exorbitant charges seeking reimbursement relating to the
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`Fraudulent Pharmaceuticals purportedly dispensed to the Insureds.
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`10
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`39.
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`NYRX Pharmacy purported to be a storefront neighborhood pharmacy operating
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`in Fresh Meadows, Queens, when in fact, it operated as a large-scale fraudulent scheme that
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`exploited GEICO’s Insureds, as well as insureds of other New York automobile insurers, through
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`the prescribing and dispensing of the Fraudulent Pharmaceuticals, while intentionally
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`disregarding a vast array of other pharmaceutical products, including over-the-counter (“OTC”)
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`medications readily available at a fraction of the cost.
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`40.
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`Unlike legitimate pharmacies dispensing a variety of pharmaceutical products,
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`NYRX Pharmacy intentionally focused on and targeted a specific set of pharmaceutical products
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`(i.e., the Fraudulent Topical Pain Products), which make up about 92% of the billing that the
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`Pharmacy Defendants submitted to GEICO for reimbursement.
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`41. While about 92% of the billing that the Pharmacy Defendants submitted through
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`NYRX Pharmacy was for the Fraudulent Topical Pain Products, the remaining billing submitted
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`was primarily for oral pain-relieving medication, including nonsteroidal anti-inflammatory drugs
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`(“NSAIDs”) and muscle relaxers submitted as part of the scheme to defraud GEICO.
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`42.
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`The Pharmacy Defendants chose to target the Fraudulent Topical Pain Products
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`because they knew that (i) similar over-the-counter drugs that could be recommended to Insureds
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`are not covered expenses under the No-Fault Laws and (ii) they could acquire the Fraudulent
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`Topical Pain Products at low cost and submit claims for reimbursement under the No-Fault Laws
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`at exorbitant prices.
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`43.
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`In furtherance of the fraudulent scheme, the Pharmacy Defendants steered the
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`Prescribing Providers and the Clinic Controllers to prescribe and direct large volumes of
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`prescriptions to NYRX Pharmacy for the targeted set of Fraudulent Topical Pain Products, which
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`were purportedly prescribed and dispensed to treat patients at the No-Fault Clinics.
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`11
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`44. Many of the No-Fault Clinics where the prescriptions steered to NYRX Pharmacy
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`were generated included clinics that housed a “revolving door” of numerous other purported
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`healthcare providers geared towards exploiting New York’s No-Fault insurance system.
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`45.
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`NYRX Pharmacy received large volumes of medically unnecessary prescriptions
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`from the Prescribing Providers and the Clinic Controllers at the No-Fault Clinics almost
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`immediately after NYRX Pharmacy became registered to operate, despite the fact that NYRX
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`Pharmacy was a new pharmacy, its owner was not a pharmacist, and it had no reputation or track
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`record in the pharmacy industry.
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`46.
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`The Pharmacy Defendants obtained large volumes of medically unnecessary
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`prescriptions from the Prescribing Providers and the Clinic Controllers at the No-Fault Clinics
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`pursuant to predetermined protocols, in exchange for the payment of kickbacks or other financial
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`incentives, solely to maximize profits and without regard to genuine patient care.
`
`47.
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`In some instances, the Prescribing Providers were supplied what is essentially a
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`product list – disguised as a “prescription order form” (the “Fraudulent Prescription Forms”) – of
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`the various Fraudulent Pharmaceuticals that NYRX Pharmacy dispensed.
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`48.
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`The Fraudulent Prescription Forms are invalid and illegal in that they are not
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`electronic prescriptions nor are they official serialized New York State prescriptions bearing the
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`legible, conspicuous imprinted or stamped name of the authorized prescribing healthcare
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`provider.
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`49.
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`Some of the Fraudulent Prescription Forms created by the Pharmacy Defendants
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`listed NYRX Pharmacy’s name, address, and contact information, along with the names of the
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`Fraudulent Pharmaceuticals, including the Fraudulent Topical Pain Products and the quantity in
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`which they were to be prescribed and dispensed to Insureds.
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`12
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`50.
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`In other instances, the Fraudulent Prescription Forms submitted by the Pharmacy
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`Defendants to GEICO listed another pharmacy’s name, address, and contact information, not
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`NYRX Pharmacy.
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`51.
`
`The other pharmacy whose name appeared on the Fraudulent Prescription Forms
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`in some instances was Wellmart Rx, Inc. (“Wellmart Rx”).
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`52. Wellmart Rx was a named defendant in a federal affirmative action commenced
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`by GEICO captioned, GEICO v. Wellmart Rx, Inc., et al, 1:19-CV-04414 (KAM)(RLM)
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`(E.D.N.Y. 2019) (the “Wellmart Rx matter”). In the Wellmart Rx matter, similar to the
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`fraudulent scheme described herein, GEICO alleged that Wellmart Rx, among other defendants,
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`stole from GEICO by submitting, or causing to be submitted thousands of fraudulent No-Fault
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`insurance claims seeking reimbursement for pharmaceutical products.
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`53. While NYRX Pharmacy purports to operate as a separate and distinct pharmacy
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`from Wellmart Rx, in some instances, NYRX Pharmacy submitted billing to GEICO that listed
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`Wellmart Rx’s address, instead of its own address. Further, on at least one occasion, an
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`insurance check made payable to NYRX Pharmacy was deposited into Wellmart Rx’s bank
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`account. Moreover, both NYRX Pharmacy and Wellmart Rx made payments to Statewide
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`Employment Professionals, Inc. (“Statewide Employment’), a New York corporation that
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`appears to have no legitimate purpose but which received payments from entities that were
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`indicted by the Brooklyn District Attorney’s Office for allegedly participating in a healthcare
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`fraud scheme wherein patients were paid in cash in exchange for going to clinics for medically
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`unnecessary treatment.
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`54.
`
`Although Wellmart Rx purportedly ceased its operation in May of 2019, NYRX
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`Pharmacy filled and dispensed pharmaceutical drug products pursuant to Wellmart Rx’s
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`13
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`Fraudulent Prescription Forms. Furthermore, Wellmart Rx’s former pharmacist, Cyril Gulian
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`became NYRX Pharmacy’s supervising pharmacist.
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`55.
`
`The Fraudulent Prescription Forms,
`
`including Wellmart Rx’s Fraudulent
`
`Prescription Forms that were filled by NYRX Pharmacy, steered the Prescribing Providers to
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`prescribe predetermined Fraudulent Topical Pain Products such as Diclofenac Gel 3%, Lidocaine
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`5% Ointment, and/or Lidocaine 5% Patch (or its equivalent, Lidoderm 5% Patch), which NYRX
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`Pharmacy thereafter billed at exorbitant charges.
`
`56.
`
`Additionally, the Fraudulent Prescription Forms also steered the Prescribing
`
`Providers to prescribe other Fraudulent Pharmaceuticals, including predetermined oral
`
`medications, such as Naproxen and Celebrex to further increase NYRX Pharmacy’s profits. The
`
`Prescribing Providers chose which predetermined pharmaceutical product should be given to the
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`Insured by marking off or circling one of the designed boxes on the prescription form.
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`57.
`
`A sample of the prescriptions issued by the Prescribing Providers using the
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`Fraudulent Prescription Forms, which the Pharmacy Defendants submitted to GEICO in support
`
`of NYRX Pharmacy’s fraudulent billing, is annexed hereto as Exhibit “2”.
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`58.
`
`The Prescribing Providers also were provided in some instances with preset labels
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`or rubber stamps that contained the names of some of the Fraudulent Pharmaceuticals. The
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`Prescribing Providers then used the preset labels or stamps on their official New York State
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`prescription pads to prescribe the Fraudulent Pharmaceuticals to the Insureds that were dispensed
`
`by NYRX Pharmacy
`
`59.
`
`The preset label or rubber stamps steered the Prescribing Providers to prescribe
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`predetermined Fraudulent Topical Pain Products, particularly Diclofenac Gel 3% and Lidocaine
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`5% Ointment, which was then dispensed by NYRX Pharmacy.
`
`
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`14
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`Case 1:20-cv-05821-BMC Document 1 Filed 12/01/20 Page 15 of 52 PageID #: 15
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`60.
`
`A sample of prescriptions issued by the Prescribing Providers using preset labels
`
`or rubber stamps, which NYRX Pharmacy submitted to GEICO in support of its fraudulent
`
`billing, is annexed hereto as Exhibit “3”.
`
`61.
`
`In keeping with the fact that the Pharmacy Defendants illegally steered the
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`Prescribing Providers and the Clinic Controllers to provide NYRX Pharmacy with prescriptions
`
`for the Fraudulent Pharmaceuticals pursuant to predetermined fraudulent protocols and solely to
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`maximize profits, the Insureds were not given the prescriptions to fill (even though many of the
`
`prescriptions were paper prescriptions) and they were not given the option to use a pharmacy of
`
`their choosing.
`
`62.
`
`The Pharmacy Defendants ensured that the Prescribing Providers and Clinic
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`Controllers directed the prescriptions for the Fraudulent Pharmaceuticals to NYRX Pharmacy,
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`regardless of (i) the distance of the pharmacy to the Insureds’ residences or the No-Fault Clinics
`
`where the Insureds were receiving treatment and (ii) the fact that there were countless other
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`pharmacies located much closer to the Insured’s residences and the No-Fault Clinics.
`
`63.
`
`Notably, approximately 55% of
`
`the
`
`Insureds
`
`that allegedly
`
`received
`
`pharmaceuticals dispensed by NYRX Pharmacy lived outside of Queens, New York, where the
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`pharmacy is located, with a majority of the Insureds’ residences scattered throughout Brooklyn,
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`Bronx, Manhattan, Staten Island and Long Island, including Nassau and Suffolk County.
`
`64.
`
`In some instances, the Insureds’ residences are located in cities and counties
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`outside of New York City, including Albany, Westchester County, Rockland County, Sullivan
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`County, Orange County, Clinton County, Dutchess County, Onondaga County, Rensselaer
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`County, Saratoga Springs, and Oneida County, with some residences located more than 150
`
`miles away from NYRX Pharmacy.
`
`
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`15
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`

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`Case 1:20-cv-05821-BMC Document 1 Filed 12/01/20 Page 16 of 52 PageID #: 16
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`65.
`
`But for the Pharmacy Defendants’ illegal, collusive agreements with the
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`Prescribing Providers and Clinic Controllers, these Insureds would not have received
`
`pharmaceutical products from a pharmacy that is located in a county or city outside of their place
`
`of residence.
`
`66.
`
`Instead, the Prescribing Providers and the Clinic Controllers directed prescriptions
`
`for the Fraudulent Pharmaceuticals to NYRX Pharmacy, irrespective of its inconvenient location
`
`to the Insureds’ residences because the prescriptions were being issued pursuant to illegal,
`
`collusive agreements between the Pharmacy Defendants and the Prescribing Providers and Clinic
`
`Controllers.
`
`67.
`
`The Pharmacy Defendants used the prescriptions obtained from the No-Fault
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`Clinics to bill GEICO and other insurers millions of dollars for the Fraudulent Pharmaceuticals.
`
`68.
`
`The Pharmacy Defendants billed GEICO more than $4.6 million, with more than
`
`$4 million of that billing being submitted in only one year of active operations by NYRX
`
`Pharmacy.
`
`69.
`
`Upon information and belief, considering that GEICO is only one of many
`
`automobile insurers in New York, NYRX Pharmacy likely billed the New York automobile
`
`industry in excess of $10 million for the Fraudulent Pharmaceuticals, with substantially all of
`
`that billing taking place in a single year.
`
`70.
`
` NYRX Pharmacy, after a flurry of billing to GEICO and other New York
`
`automobile insurers, shut down active operations and terminated NYRX Pharmacy’s registration
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`with New York State Department of Education.
`
`71.
`
`Nevertheless, as a further part of the scheme, the Pharmacy Defendants continue
`
`their scheme by hiring law firms to pursue collection on the fraudulent charges submitted to
`
`
`
`16
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`

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`Case 1:20-cv-05821-BMC Document 1 Filed 12/01/20 Page 17 of 52 PageID #: 17
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`GEICO by NYRX Pharmacy, through numerous, separate no-fault arbitration or civil court
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`collection proceedings seeking recovery on the individual bills, which proceedings may continue
`
`for years.
`
`72.
`
`The Pharmacy Defendants’ continued collection efforts through numerous,
`
`separate no-fault arbitration or civil court collection proceedings is an essential part of their
`
`fraudulent scheme since they know it is impractical for an arbitrator or civil court judge in a
`
`single no-fault arbitration or civil court proceeding, typically involving a single bill, to uncover
`
`or address the Pharmacy Defendants’ large scale, complex fraud scheme involving the
`
`prescription and dispensing of fraudulent pharmaceuticals to hundreds of patients across
`
`numerous different No-Fault Clinics located throughout the New York metropolitan area.
`
`73.
`
`The Pharmacy Defendants masterminded and implemented their pharmaceutical
`
`fraud scheme and recruited the Prescribing Providers and Clinic Controllers as willing
`
`participants, knowing that: (i) the Fraudulent Pharmaceuticals were prescribed and dispensed
`
`pursuant to predetermined protocols designed to exploit the patients for financial gain, without
`
`regard to genuine patient care; (ii) the Fraudulent Pharmaceuticals were the product of illegal,
`
`collusive agreements intended to inflate the billing from NYRX