State Farm has hauled a sprawling New York City medical operation into federal court, accusing Atlantic Medical & Diagnostic, P.C. and its physician owners of running a massive no-fault fraud scheme out of more than 90 clinics across the five boroughs. The insurer is asking for roughly $30 million and wants a judge to block Atlantic from collecting on disputed no-fault bills while the fight plays out.
In a complaint filed in the U.S. District Court for the Eastern District of New York, State Farm says Atlantic examined more than 5,500 State Farm-insured crash victims since June 2022 and billed for a wide range of services, from office examinations and trigger-point injections to nerve blocks, electrodiagnostic testing, and durable medical equipment and orthotics. According to the filing, Atlantic routinely billed multiple units of ultrasonic guidance per visit, charged hundreds of dollars for medications that cost about a dollar to acquire, and submitted claims at full physician rates for services actually performed by nurse practitioners and physician assistants. State Farm says those charges were fueled by sham exams and kickbacks dressed up as rent and administrative fees, according to Insurance Business.
Insurers Point to a Network of ‘Clinic Mills’
State Farm casts Atlantic as one node in a larger pattern that other carriers have already dragged into court. Allstate filed a federal racketeering suit in 2024 against Dr. Jonathan Landow, Dr. Viviane Etienne and related entities, and those cases describe similar allegations about pay-for-referral setups and relentless high-volume billing strategies. Those filings are public and sit on the federal court docket.
In its own case, State Farm accuses Atlantic and its owners of running a pay-to-play network that steered patients into preset treatment tracks and disguised referral payments as rent and administrative fees. The insurer brings claims under federal racketeering statutes, common-law fraud and unjust enrichment, and asks the court for money damages along with a declaration that Atlantic is not entitled to collect no-fault benefits on the disputed examinations, injections and related services. The plaintiffs have also demanded a jury trial, according to Insurance Business.
Mixed Rulings in Related Cases
Atlantic and clinics tied to the operation have already been drawn into a tangle of lawsuits and court decisions over the past two years. In December 2024, a Suffolk County judge ruled in favor of Atlantic Medical in a dispute over billing for multiple units of ultrasound guidance, while other state cases show default judgments and motion practice breaking for insurers against some related entities. The Suffolk County decision is summarized by a local law firm, and additional state-court orders are on file.
How New York’s No-Fault System Factors In
New York’s no-fault framework requires insurers to pay up to $50,000 per person for necessary medical expenses after a crash. State Farm says Atlantic leaned on that structure by moving patients through low-scrutiny exams to generate long lists of billable treatments. Filing deadlines, documentation rules and fights over what counts as “necessary” treatment are regular flashpoints in no-fault litigation, and those rules are laid out by the state Department of Financial Services along with New York insurance statutes.
Why the RICO Claim Matters
If the court ultimately finds that State Farm has proven a pattern of racketeering that injured its business, civil RICO liability can come with serious bite. Plaintiffs can seek treble damages, attorneys’ fees and equitable relief, which together can dramatically raise the financial stakes of any judgment. RICO claims are complex and require proof of specific predicate acts and a continuing pattern of conduct, but successful civil cases can reshape how insurers and medical providers negotiate and litigate no-fault disputes, according to legal guides on racketeering and civil remedies.
The new lawsuit is still in its early days and the court has not weighed in on the merits. Expect the coming phases to feature heavy discovery battles over billing codes, supervision of non-physician staff and the details of lease and service agreements as both sides press their claims and defenses in federal court.
