New York, NY — On August 26, 2025, Allstate Insurance Company filed a federal lawsuit in the U.S. District Court for the Eastern District of New York, accusing First Supply Inc., its principal Jacob Binyaminov, and several unnamed individuals and entities of orchestrating a fraudulent scheme that exploited New York’s no-fault auto insurance system, costing the insurer over $125,000. The suit, brought under the Racketeer Influenced and Corrupt Organizations Act (RICO), alleges that the defendants submitted hundreds of false claims for pain management devices, seeking treble damages, compensatory damages, and a court declaration that Allstate is not obligated to pay outstanding claims tied to the alleged fraud.
Details of the Allegations
According to the complaint, between June 2021 and August 2025, First Supply Inc. allegedly submitted fraudulent insurance claims for rental pain management devices, specifically Sustained Acoustic Medicine (SAM) units and related patches. Allstate claims these devices were prescribed through pre-set treatment plans, often without regard for patients’ medical needs, as part of a scheme involving kickbacks and financial incentives with no-fault medical clinics in the New York area. The insurer alleges that the equipment was either unnecessary or never delivered, exploiting New York’s no-fault insurance law, which requires insurers to cover reasonable medical expenses for car accident injuries, with patients able to assign benefits directly to providers for reimbursement.
The lawsuit describes a coordinated effort where fraudulent prescriptions and inflated claims were used to generate payments, undermining the integrity of the no-fault system. Allstate’s filing highlights a broader pattern of alleged fraud, referencing similar RICO suits it has pursued, including a July 2024 case against Marc Kassman and SMK Pharmacy in Queens for a $4 million fraud scheme and a 2025 suit against five New York clinics for $842,000 in sham medical bills.
Legal and Industry Context
The RICO Act, enacted in 1970 to combat organized crime, has become a powerful tool for insurers like Allstate to address healthcare fraud, allowing them to seek treble damages—three times the actual financial loss—along with legal fees. To succeed, Allstate must prove that First Supply and its associates operated as a criminal enterprise engaged in a pattern of racketeering activity, such as fraudulent billing and kickbacks. The case builds on a growing trend of insurers using civil RICO claims to target no-fault fraud, with notable successes including multimillion-dollar verdicts by State Farm and Allstate against medical providers.
New York’s no-fault system, which mandates coverage for medical expenses up to $50,000 for personal vehicles and $200,000 for taxis and for-hire vehicles, has been a frequent target for fraud due to its structure. Critics argue that the system incentivizes over-diagnosis and over-billing, with providers exploiting direct billing to insurers. Allstate, alongside insurers like GEICO and State Farm, has been aggressive in pursuing legal action to curb these practices, filing numerous RICO suits in recent years to recover damages and deter fraud.
Community and Broader Implications
In Kansas City, Kansas, where recent attention has focused on the tragic death of Police Officer Hunter Simoncic on August 26, 2025, the Allstate lawsuit has not been a major local story. However, the case resonates within the insurance and legal communities, highlighting the ongoing battle against no-fault fraud. Posts on X reflect public frustration with insurance fraud, with one user stating, “No-fault fraud drives up premiums for everyone. Good on Allstate for cracking down.” The broader impact of such schemes, as noted in a 2024 Pharmacy Times report, is higher insurance premiums for consumers, as fraudulent claims inflate costs across the industry.
The lawsuit’s outcome could set a precedent for how insurers address fraud in New York’s no-fault system, potentially prompting stricter oversight of medical suppliers and clinics. Allstate’s aggressive use of RICO underscores its commitment to protecting policyholders, but critics, as seen in a 2019 Detroit Free Press report on similar Michigan cases, argue that such lawsuits sometimes target legitimate providers to reduce payouts, raising questions about fairness in litigation strategies.
Next Steps and Outlook
The case is pending in federal court, with Allstate seeking to recover losses and halt First Supply’s alleged fraudulent practices. The investigation, supported by Allstate’s Special Investigative Unit, is part of a broader effort to reform New York’s no-fault system, which the insurer and state leaders have called a “broken” framework ripe for exploitation. As the legal battle unfolds, it will likely fuel ongoing debates about balancing consumer protections with efforts to combat fraud in the insurance industry.
This article has been reviewed for grammar and clarity to ensure accuracy and readability for a U.S. audience.