Allstate Ins. Co. v. Rozenberg

• Decision Date: 18 March 2011
• Docket Number: No. 08–CV–565 ADS ETB.,08–CV–565 ADS ETB.
• Citation: 771 F.Supp.2d 254
• Parties: ALLSTATE INSURANCE COMPANY, Allstate Indemnity Company, Allstate Property & Casualty Insurance Company, Allstate New Jersey Insurance Company, Continental Insurance Company, Deerbrook Insurance Company, Encompass Indemnity Company, The Glens Falls Insurance Company, and National–Ben Franklin Insurance Company of Illinois, Plaintiffs,v.Alexander ROZENBERG, M.D., A.R. Medical Rehabilitation, P.C., A.R. Medical Art, P.C., Yonkers Medical Art, P.C., Inna Polack, Alexander Polack, Yuliy Goldman, Natalya Shvartsman, Emmanuel Kucherovsky, Shaun Robinson (aka “Prince”), Yevgeniy Chertok, Yelena Dukach, Karina Dukach, Vladimir Kutsyk, Ilya Grinberg, Dimitriy Sheynkman, Mighty Management Group, Inc., Mighty Management, LLC, Blue Wave Management, Inc., Kevy's Management, Inc., First Neptune Management, Inc., Artek Management, Inc., M and Prestige Management Group, Inc., Defendants.
• Court: U.S. District Court — Eastern District of New York

771 F.Supp.2d 254

ALLSTATE INSURANCE COMPANY, Allstate Indemnity Company, Allstate Property & Casualty Insurance Company, Allstate New Jersey Insurance Company, Continental Insurance Company, Deerbrook Insurance Company, Encompass Indemnity Company, The Glens Falls Insurance Company, and National–Ben Franklin Insurance Company of Illinois, Plaintiffs,

v.Alexander ROZENBERG, M.D., A.R. Medical Rehabilitation, P.C., A.R. Medical Art, P.C., Yonkers Medical Art, P.C., Inna Polack, Alexander Polack, Yuliy Goldman, Natalya Shvartsman, Emmanuel Kucherovsky, Shaun Robinson (aka “Prince”), Yevgeniy Chertok, Yelena Dukach, Karina Dukach, Vladimir Kutsyk, Ilya Grinberg, Dimitriy Sheynkman, Mighty Management Group, Inc., Mighty Management, LLC, Blue Wave Management, Inc., Kevy's Management, Inc., First Neptune Management, Inc., Artek Management, Inc., M and Prestige Management Group, Inc., Defendants.

No. 08–CV–565 ADS ETB.

United States District Court, E.D. New York.

March 18, 2011.

Smith & Brink, P.C., by Richard Steigman, Esq., Michael W. Whitcher, Esq., Nathan A. Tilden, Esq., Richard D. King, Esq., of Counsel, Garden City, NY, for Plaintiffs.Hoffman Einiger & Polland PLLC by Mark L. Furman, Esq., of Counsel, New York, NY, for Defendants Alexander Rozenberg, A.R. Medical Art, P.C., A.R. Medical Rehabilitation, P.C., and Yonkers Medical Art, P.C.Belesi Donovan & Conroy by Maria Campese Diglio, Esq., of Counsel, Garden City, NY, for Defendants Inna Polack, Alexander Pollack, Mighty Management Group, Mighty Management, LLC, Natalya Shvartsman.The Zuppa Firm PLLC by Raymond Joseph Zuppa, Esq., of Counsel, Brooklyn, NY, for Yevgeniy Chertok, Yelena Dukach, Karina Dukach, Ilya Grinberg.Andrew Citron, Esq., New York, NY, for Artek Management, Inc., Dimitriy Sheynkman.Revas Chachanashvili & Associates by Revaz Chachanashvili, Esq., of Counsel, Forest Hills, NY, for Artek Management, Inc.SPATT, District Judge.

On February 12, 2008, the Plaintiffs, a group of nine insurers, commenced this action alleging that the numerous defendants conspired to abuse New York's No–Fault Insurance regime, N.Y. Ins. Law § 5101 et seq., in order to obtain payment for medical services and diagnostic tests that were not medically necessary, or in some cases, never performed at all. The Plaintiffs asserted common law claims for fraud and unjust enrichment, and sought damages for violations of N.Y. Gen. Bus. L. § 349, and violations of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961 et seq. (“RICO”).

In a decision dated December 29, 2008, this Court largely upheld the sufficiency of this complaint under Federal Rules of Civil Procedure 8(a) and 9(b), and in a series of subsequent decisions the Court granted the Plaintiffs' requests for prejudgment attachment of the defendants' assets. Subsequently, on April 21, 2010, the Plaintiffs filed a First Amended Complaint adding ten additional defendants that they allege were involved in the fraudulent scheme.

On July 21, 2010, two of the newly added defendants, Dimitriy Sheynkman (“Sheynkman”) and Artek Management, Inc. (“Artek” and together with Sheynkman “the Defendants”) moved to dismiss the complaint against them pursuant to Federal Rule of Civil Procedure 12(b)(6) (“Rule 12(b)(6)”) for failure to plead their involvement in the fraudulent scheme with the particularity required by Federal Rule of Civil Procedure 9(b) (“Rule 9(b)”), and to dismiss the complaint as against Sheynkman pursuant to Federal Rules of Civil Procedure 12(b)(2) (“Rule 12(b)(2)”), 12(b)(4) ( “Rule 12(b)(4)”), and 12(b)(5) (“Rule 12(b)(5)”) for lack of personal jurisdiction, insufficient process, and insufficient service of process.

In addition, on April 22, 2010, the Plaintiffs filed their fourth motion for a prejudgment attachment seeking to attach the assets of the newly added defendants. With the exception of Sheynkman, Artek, and Prestige Management Group, Inc. (“Prestige”), all of the newly added defendants entered into stipulations with the Plaintiffs with respect to the prejudgment attachment of their assets.

In the interest of judicial economy, the Court will address both of these motions together. For the reasons set forth below, the Court denies Artek and Sheynkman's motion to dismiss, and denies in part and grants in part the Plaintiffs' fourth motion for prejudgment attachment on the assets of Prestige, Artek, and Sheynkman.

I. BACKGROUND

The Court set forth the details of the Plaintiffs' allegations in this matter in its previous decision in this case, Allstate Insurance Co. v. Rozenberg, 590 F.Supp.2d 384 (E.D.N.Y.2008). Although familiarity with the factual background and procedural history of this case is assumed, a brief review is in order.

On February 12, 2008, the Plaintiffs, a group of nine insurers, commenced this action against Inna Polack, Alexander Polack, Natalya Shvartsman (“the Initial Management Defendants”), Mighty Management Group, Inc., Mighty Management LLC, and Blue Wave Management, Inc. (“the Initial Management Companies”), Dr. Alexander Rozenberg (“Rozenberg”), and A.R. Medical Rehabilitation, P.C. (“AR”), A.R. Medical Art, P.C. (“ARMA”), and Yonkers Medical Art, P.C. (“YMA” and together with AR and ARMA “the PC Defendants” and collectively with the Initial Management Defendants, the Initial Management Companies, and Rozenberg “the Initial Defendants”), alleging that they conspired to abuse New York's No–Fault Insurance regime, N.Y. Ins. Law § 5101 et seq., in order to obtain payment for medical services and diagnostic tests that were not medically necessary, or in some cases, never performed at all (the “Initial Complaint”). With the exception of ARMA and YMA, all of the Initial Defendants were also subject to a criminal indictment with respect to their participation in the allegedly fraudulent scheme.

As stated in previous decisions, the basics of the alleged scheme are as follows. The PC Defendants are medical professional corporations that billed the Plaintiffs for consultations and medical procedures performed upon patients insured by the Plaintiffs. According to the Plaintiffs, Rozenberg, a licensed neurologist, was listed as the owner of the PC Defendants, but played no role in the actual operation or management of the PC Defendants. Rather, in the Initial Complaint, the Plaintiffs asserted that the PC Defendants were owned and operated by the Initial Management Companies; namely, New York corporations that are owned and controlled by Yuliy Goldman, Inna Polack and Alexander Polack. The Plaintiffs alleged that the sole purpose of the relationship between the PC Defendants and the Initial Management Companies was to facilitate a scheme to defraud the Plaintiffs by creating and submitting fraudulent medical reports and invoices for medical services in support of hundreds of No–Fault insurance claims. The Plaintiffs also alleged that Inna Polack, Alexander Polack, and Rozenberg created the PC Defendants with different names, addresses, and taxpayer identification numbers to reduce the likelihood that insurers would uncover their scheme.

In particular, the Plaintiffs asserted that the Initial Defendants submitted bills for services not rendered; charged excessive fees for unnecessary medical treatment; and induced Allstate and the other insurers to pay No–Fault insurance claims to professional medical corporations that were owned by non-licensed individuals. The Plaintiffs further alleged that checks were drawn from the accounts of the Initial Management Companies and made payable to corporations owned or controlled by Emmanuel Kucherovsky (the “money laundering entities”) who, for a transaction fee, transferred these monies to Inna Polack.

In the Initial Complaint, the Plaintiffs alleged that the Initial Defendants (i) violated RICO, 18 U.S.C. § 1962(c); (ii) engaged in a RICO conspiracy in violation of 18 U.S.C. § 1962(d); (iii) committed common law fraud and unjust enrichment; and (iv) were liable under N.Y. Gen. Bus. L. § 349 for deceptive business practices. The Initial Defendants filed motions to dismiss the Initial Complaint in April and June of 2008. By order dated December 29, 2008, this Court denied the motions as to all counts with the exception of the cause of action alleging a RICO conspiracy under the Innocent Enterprise Theory. See generally Allstate Insurance Co. v. Rozenberg, 590 F.Supp.2d 384 (E.D.N.Y.2008). In addition, by order dated January 26, 2009, Allstate Ins. Co v. Rozenberg, No. 08–CV–565, Docket No. 119 (E.D.N.Y. Jan. 26, 2009) (the “January 26, 2009 Order”) and subsequent amendments, the Court granted the Plaintiffs' requests for prejudgment attachments on the assets of the Initial Defendants based upon a showing of a likelihood of success on the merits and the existence of one or more of the enumerated statutory grounds for attachment under N.Y. C.P.L.R. § 6201 (“CPLR § 6201”).

Based on information they purportedly uncovered during the discovery process, on April 21, 2010, the Plaintiffs filed an amended complaint to add ten additional management defendants that the Plaintiffs allege were involved in the ownership and control of the PC Defendants (the “Amended Complaint”). Specifically, the Plaintiffs amended the complaint to add the following defendants and allegations:

• Kevy's Management (“Kevy's”), and Yevgeniy Chertok, Yelena Dukach, Karina Dukach, and Vladimir Kutsyk who allegedly owned and controlled Kevy's. The Plaintiffs allege that, since January 2001, Kevy's was used by its owners as a tool to illegally own and control AR and to siphon-off revenues generated by AR through billings submitted to the Plaintiffs for healthcare services. (Am. Compl., ¶¶ 73–75.)

• Prestige Management Group, Inc., allegedly owned and controlled by Inna Polack. The Plaintiffs allege that since 2000, Prestige was used as a tool to illegally own and control AR and to siphon-off revenues generated by AR through billings submitted...