Four Pharmacies, one Pain Cream Playbook, $1.49M in Alleged no-fault Fraud
www.Insurancebusinessmag.com, Tez Romero, September 29, 2026
What happened: Allstate alleges four New York pharmacies billed more than $1.49 million in medically unnecessary pain creams through no-fault auto claims
Who's involved: Allstate and affiliates versus Avi Pharmacy Corp., Castle Hill Drugs Inc., Frederick Community Pharmacy Inc., and H Plaza Pharmacy Inc.
What's at stake: More than $589,000 in paid claims Allstate wants back, plus roughly $903,000 in unpaid claims it says it should not have to pay - with a federal racketeering law that could triple the damages
Why it matters: A major carrier filing four near-identical fraud suits on the same day signals a coordinated crackdown on topical pain cream billing in the no-fault space
Where it stands: All four complaints filed September 28, 2026, in the Eastern District of New York; no responses on record
One of the pharmacies, according to the complaint, was created for the purpose of running the alleged scheme. It is one of four that Allstate is now suing.
The insurer and its affiliates filed four federal lawsuits on the same day - September 28, 2026 - in the US District Court for the Eastern District of New York. Each complaint tells the same story: a pharmacy exploited New York's no-fault auto insurance system to bill for expensive, medically unnecessary topical pain creams while cheaper alternatives went unprescribed.
Every filing includes a claim under the federal Racketeer Influenced and Corrupt Organizations Act - a law originally designed to combat organized crime that, when invoked successfully, can triple the payout. That detail alone signals how seriously Allstate is treating the alleged conduct.
The combined exposure across the four complaints: more than $1.49 million. That is made up of $589,000 in claims Allstate says it already paid out and should not have, plus approximately $903,000 in outstanding bills the insurer says it should never have to pay. Continue article