$1.5 Million No-Fault Billing Scheme Exposed — Why Outsourcing Your DME Claims Matters

Do you know that recently, a lawsuit underscored a pressing risk in the DME (durable medical equipment) billing world? Here it is seen that the insurance carrier American Transit Insurance Company has accused a DME supplier of orchestrating a $1.5 million no-fault billing scheme.

Also, a few months back in July 2025, American Transit filed a complaint in the Eastern District of New York. Where the allegation was that Advanced Recovery colluded with no-fault medical clinics in and around NYC to supply CPM machines, cold-therapy units, and orthopedic braces based not on patient need but on pre-arranged referral and reimbursement plans. While the prescriptions were intentionally generic, there were many patients who reportedly signed delivery receipts before receiving equipment. Also, for some, they never got the equipment at all.

This isn’t an isolated case. Earlier legal actions by insurers like Allstate Insurance Company a few years back in 2022 and Liberty Insurance last year in 2024 also named the same supplier and people, pointing to a pattern.

Frauds in 2025, in fact, are only seen rising and for the next year in 2026 it might further rise if not properly taken care of. And for providers, this means deeper financial loss and reputational damage. So now the most common question that many DME providers ask is what they need to do to manage it effectively and how to avoid any DME billing fraud in 2026. And most importantly, why is it rising?

Why DME Billing Frauds are Escalating?

• Frauds in DME billing are rising for several reasons:
• Complex coding gives more opportunities.
• Generic prescriptions or vague documentation let it slip through.
• Insurers and regulators struggle to keep pace with scheme innovation.
• DME providers (and payers) face pressure to cover rapidly rising equipment costs, which can tempt corners to be cut.

While simple errors can cause fraud in the practices, it is seen that the DME providers end up struggling the most. As when fraud occurs, the provider pays in two ways: either revenue losses (claims denied or reclaimed) or reputational risk (association with bad actors, regulatory scrutiny, audits), and for some, even both.

Understanding the impact on DME providers due to billing fraud:

For providers, the stakes are always high. This is because the claims you thought were safe could claw back. Also, the DME supplier/provider may even face investigations, audits or even litigation. While all these can put your brand and reputation at risk, it will leave you with no patience if this continues in the long run. So, given these risks, providers must act now to build stronger defenses and can take expert help, like outsourcing

Why Outsourcing Works here?

Outsourcing your DME billing and revenue-cycle management (RCM) to a trusted partner undoubtedly shifts the burden. As the right outsourcing partner will implement rigorous claim validation workflows. At the same time, ensuring all the medical necessities, correct coding and proper documentation.

Monitor relationships and referral patterns for any kind of red flags in the DME billing process (e.g., generic prescriptions, high volumes of same-device claims). The right DME billing company will properly review every DME claim and ensure no mistakes are made. While staying on top of regulatory changes will be the professional expert’s priority, working with an outsourcing partner will reduce the workload of internal resources. You also gain a guardrail against fraud that might slip through in an under-resourced, internal billing operation.

Read More:

Why Proper Documentation Can Save You From Fraudulent DME Billing Services

Why SunKnowledge Is the Best Choice for managing DME billing:

SunKnowledge brings together deep specialty-billing expertise, advanced compliance controls and transparency in the overall DME billing operation. Here’s how we stand out from the rest:

We have experience across durable medical equipment billing and no-fault environments, which means no risk partnering with us.

Our RCM workflows emphasize documentation quality, coding accuracy of 99%, device verification, and supply-chain traceability, along with after-sales support in case of CPAP and other devices as well. Being HIPAA-compliant, our expert has access only to the internal network, which is restricted to authorized employees via client-to-site VPN connections.

Maintaining up-to-date regulatory tracking, so you aren’t exposed because you missed a change in the fee schedule or billing rule, we further ensure all the supporting documents with persistent doctor office follow-up. Ensuring no hidden costs or any transactional fees, our experts provide scalable solutions. Whether you’re a small DME shop or a large multi-site DME provider, SunKnowledge is here to assist.

When you partner with us, you no longer need to worry about catastrophic fraud exposure or endless audit liability. So act now and call us right away and protect your DME practice’s bottom line in 2026.