No Good Deed Goes Unpunished

GEICO Sued Fraudulent Health Care Providers Under RICO and Settled with the Defendants Who Failed to Pay Settlement
Post 5118

Default of Settlement Agreement Reduced to Judgment

In Government Employees Insurance Company, Geico Indemnity Company, Geico General Insurance Company, and Geico Casualty Company v. Dominic Emeka Onyema, M.D., DEO Medical Services, P.C., and Healthwise Medical Associates, P.C., No. 24-CV-5287 (PKC) (JAM), United States District Court, E.D. New York (July 9, 2025) 

Plaintiffs Government Employees Insurance Company and other GEICO companies (“GEICO”) sued Defendants Dominic Emeka Onyema, M.D. (“Onyema”), et al (collectively, “Defendants”) alleging breach of a settlement agreement entered into by the parties to resolve a previous, fraud-related lawsuit (the “Settlement Agreement”). GEICO moved the court for default judgment against Defendants and the June 19, 2025 Report and Recommendation (“R. & R.”) of the Honorable Joseph A. Marutollo, United States Magistrate Judge which recommended that the Court grant Plaintiffs' motion for default judgment against Defendants and award Plaintiffs a total of $456,666.65 plus pre- and postjudgment interest. The USDC adopted the recommendations of Judge Marutollo's thorough R. & R. in full.

BACKGROUND

In October 2021, Plaintiffs sued Defendants for an insurance fraud scheme in which [Defendants] used DEO and Healthwise to unlawfully bill Plaintiffs and other New York automobile insurers, seeking payment of no-fault benefits for medically unnecessary, illusory, and otherwise non-reimbursable healthcare services. Plaintiffs asserted claims against the Defendants for violation of the Racketeer Influenced and Corrupt Organizations Act (‘RICO'), common law fraud, and unjust enrichment, and sought money damages against them in excess of $590,000.00. On April 27, 2023, the parties entered into the Settlement Agreement, whereby Defendants agreed to “jointly and severally pay [Plaintiffs] the sum of $325,000.00 divided into a series of payments” as detailed in the Settlement Agreement.

Defendants made the initial payment followed by two installment payments, as stipulated in the Settlement Agreement. However, Defendants failed to make any subsequent installment payments, allegedly in breach of the Settlement Agreement. Plaintiffs notified Defendants of their breach pursuant to the terms of the Settlement Agreement and demanded that the default be cured per the agreement. Defendants purportedly failed to cure the breach. These liquidated damages entail $500,000.00, less any amounts paid through the date of the Payment Default. Later provisions in the Settlement Agreement make clear that the “amounts paid” that are to be subtracted from the liquidated damages total are only the installment payments.

Defendants have failed to file any objections to the R. & R. within the 14 days prescribed by statute.

CONCLUSION

Plaintiffs are awarded:

$456,666.65 in liquidated damages, for which Defendants are jointly and severally liable;
Pre-judgment interest in the amount of $112.60 per day between March 7, 2024, and the day judgment is entered; and
Post-judgment interest in an amount to be calculated by the Clerk of Court pursuant to 28 U.S.C. § 1961.

The Court adopted the R. & R. in its entirety. The Court granted Plaintiffs default judgment and found Defendants jointly and severally liable for $456,666.65 in damages, plus pre-judgment and post-judgment interest.

ZALMA OPINION

People who commit fraud are not good and honorable people. GEICO, with clear evidence of fraud, sued the health care provider defendants under the RICO law. GEICO, acting honorably entered into a settlement agreement with the fraudsters who made about two of the agreed payments only to force GEICO to effectively sue again to get a judgment to enforce the settlement agreement plus interest which the defendants ignored believing they could avoid collection teaching GEICO and all insurers to never enter into a settlement with fraudsters where they would pay the settlement amount in timely installments.

(c) 2025 Barry Zalma & ClaimSchool, Inc.

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