Geico is hauling a southeastern Brooklyn drugstore into federal court, claiming the pharmacy tried to squeeze more than $3 million out of New York's no-fault auto insurance system for a narrow set of topical pain products. The insurer says it already paid about $432,000 on those bills and wants a judge to declare it owes nothing on roughly $2.53 million in remaining claims. At the center of the dispute are LidoReal patches and a diclofenac solution that Geico says were pushed through referral arrangements and template-style exam notes instead of individualized care.
Complaint Filed In Federal Court
According to Insurance Business, Geico filed the case on June 10, 2026, in the U.S. District Court for the Eastern District of New York. The lawsuit names Hatzlacha Rx Inc., which does business as Nostrand Avenue Chemists, along with the pharmacy's owner, one prescribing doctor and several John Doe defendants. Geico's filing alleges that almost 100% of the pharmacy's billing to the insurer was for LidoReal 4%‑1% patches and diclofenac sodium 2% solution, with per-prescription charges listed at about $2,751.84 for the patches and between $2,686.88 and $4,299.01 for the diclofenac claims.
Products And The OTC Question
Federal drug records indicate that Lidoreal (also referenced as Lidoreal/LidoReal) patches are classified as an over-the-counter monograph product, a designation that insurers say undercuts any argument that the items should have been billed as prescription drugs. The NDC Directory lists Lidoreal Patch (NDC 81877‑725) as an OTC monograph drug labeled by Forreal Pharmaceuticals LLC, according to NDC Directory. Geico's complaint also alleges the patches were sourced from Forreal and that the supplier was not registered with the New York State Education Department.
Pharmacy Identity And Local Footprint
Hatzlacha Rx is registered to operate as Nostrand Avenue Chemists in southeastern Brooklyn, with federal provider records placing the business at 3806 Nostrand Avenue. The NPI registry lists Hatzlacha Rx Inc. under NPI 1316747215 and names Jason Kornfeld as the authorized official, according to NPI Profile. That Nostrand Avenue address sits in a part of the borough where no-fault clinics and affiliated suppliers have previously surfaced in insurer litigation.
Legal Claims And What's At Stake
Geico's complaint lays out seven causes of action, including a declaratory-judgment claim, alleged RICO violations, fraud, unjust enrichment, a claim under New York Public Health Law §238‑a, and aiding and abetting fraud. Insurance Business reports that Geico says it paid about $432,000 on the challenged bills and is asking for a declaration that it owes nothing on roughly $2,530,000 in pending claims. A successful civil RICO claim can let a private plaintiff recover treble damages and attorneys' fees, although the statute's requirements are strict and those remedies depend on proving a pattern of racketeering activity in court under 18 U.S.C. §1964 (Legal Information Institute).
Why This Matters
The lawsuit lands amid a broader wave of insurer cases targeting high-dollar no-fault billing in New York, where Geico has repeatedly gone after suppliers and pharmacies it says helped drive up costs. Hoodline previously covered a similar Geico complaint against an ortho supplier that sought to claw back hundreds of thousands of dollars in pending claims. For now, Geico's allegations in the pharmacy case remain just that: allegations. The court has not ruled, and the claims will have to move through motions practice and discovery before any finding on liability or damages.
Next up is a largely procedural grind. The complaint will be assigned to an Eastern District judge, and the parties will work through briefing and discovery, where Geico will try to substantiate the referral and billing patterns it describes. Until that plays out, the accusations are untested and Nostrand Avenue Chemists remains a defendant in an unfolding civil dispute, not a proven fraudster.
