Am. Transit Ins. Co. v. Albis
| Decision Date | 04 May 2020 |
| Docket Number | INDEX NO. 656455/2018 |
| Citation | 2020 NY Slip Op 31563 (U) |
| Parties | AMERICAN TRANSIT INSURANCE COMPANY, a Subsidiary of AMERICAN T, INC., Plaintiff, v. PETER D. ALBIS, D.C., REUVEN ALON aka ROB ALON, DIANA BEYNIN, D.C., NACHMY BRONSTEIN, D.C., RONALD A. HAYEK, D.C., MARK HEYLIGERS, D.C., TODD KOPPEL, M.D., MARGARITA MOSHE, REGINA MOSHE aka REGINA LEVIYEV, M.D., YAN MOSHE aka YAN LEVIYEV, RAMKUMAR PANHANI, M.D., DIPTI R. PATEL, D.C., LEONID SHAPIRO, M.D., ADVANCED SPINAL CARE REHABILITATION, PA, ALBIS CHIROPRACTIC CARE, P.C., AXIS CHIROPRACTIC CARE, P.C., CITIMED SERVICES, P.A., CITIMEDICAL I, P.L.L.C., COLUMBUS IMAGING CENTER, L.L.C., DRUGS R US PHARMACY, INC, DYNAMIC SURGERY CENTER, L.L.C., DYNASTY MEDICAL CARE, P.C., EXCEL SURGERY CENTER, L.L.C., GARDEN STATE PAIN MANAGEMENT, P.A., METRO PAIN SPECIALISTS PROFESSIONAL CORPORATION, PREMIER HEALTH CHOICE CHIROPRACTIC, P.C., UNION WELLNESS CENTER, L.L.C., JOHN DOES 1-3, and ABC CORPS 1-3 Defendants. |
| Court | New York Supreme Court |
MOT SEQ NOS. 001, 002, 003, 005
I. INTRODUCTION
In this action for fraud, violation of General Business Law § 349, unjust enrichment, and for declaratory relief, defendants Metro Pain Specialists Professional Corporation (Metro Pain) and Leonid Shapiro, M.D. (Shapiro) move to dismiss the complaint as asserted against them (MOT SEQ 001) on the grounds that the action is barred by the doctrine of res judicata (CPLR 3211[a][5]) and that it fails to state a cause of action (CPLR 3211[a][7]). Defendants Columbus Imaging Center, L.C.C. (Columbus Imaging) and Reuven Alon aka Rob Alon (Alon) (MOT SEQ 002), Drugs R Us Pharmacy, Inc. (Drugs R Us) and Margarita Moshe (M. Moshe) (MOT SEQ 003) and Dynamic Surgery Center, L.L.C. (Dynamic), Excel Surgery Center, L.L.C. (Excel), Citimed Services, P.C. (Citimed), Citimedical I, P.L.L.C (Citimedical), Yan Moshe aka Yan Leviyev (Y. Moshe) and Regina Moshe aka Regina Leviyev, M.D. (R. Moshe) (MOT SEQ 005) move for the same relief. The plaintiff opposes the motions. The motions are granted in part.
II. BACKGROUND
Plaintiff American Transit Insurance Company, a subsidiary of American T, Inc. (American), a health insurer, alleges thatdefendants are financially-related individuals and entities that engaged in a complex no-fault insurance fraud scheme, whereby they referred patients to one another in order to profit from such referrals rather than reasons related to the medical needs of the patients involved. American asserts that pursuant to this scheme, patients were unnecessarily transported to New Jersey for services in order to bill unnecessary facility fees that could deplete much, or all, of the patients' insurance coverage, and received needless tests, prescriptions, surgeries and treatments in order to inflate billing. American alleges that defendants misrepresented the injuries and medical findings of patients, falsified test results and operative reports, and fraudulently billed American for services that were never rendered, not rendered as billed, were fictitious, medically unnecessary, and/or if performed as billed could have injured patients. American further alleges that as part of the scheme, defendants used property leases to exchange funds and paid or received kickbacks in exchange for patient referrals.
American commenced the instant action against defendants to recover a sum in excess of $5,603,996.83 in payments that defendants allegedly received for fraudulent billing and costs incurred as a result of such billing in the past six years, plus $1 million in punitive damages, as well as declaratory relief. The complaint contains four causes of action - fraud (first cause of action),violation of General Business Law § 349 (), unjust enrichment (third cause of action), and a request for a judgment declaring that American has no obligation to pay pending no-fault claims submitted by defendants, which total in excess of $28 million (fourth cause of action).
III. DISCUSSION
CPLR 3211(a)(5) permits a party to move, pre-answer, to dismiss a cause of action based on the doctrine of res judicata. "In New York, res judicata, or claim preclusion, bars successive litigation based upon the same transaction or series of connected transactions if: (i) there is a judgment on the merits rendered by a court of competent jurisdiction, and (ii) the party against whom the doctrine is invoked was a party to the previous action, or in privity with a party who was." Matter of People v Applied Card Sys., Inc., 11 NY3d 105, 122 (2008). The party seeking to assert the doctrine "must show the existence of a prior judgment on the merits." Ricatto v Mapliedi, 133 AD3d 737, 738 (2nd Dept 2015); see Miller Mfg. Co. v Zeiler, 45 NY2d 956, (1978).
Here, the moving defendants assert that the doctrine of res judicata bars this action based on prior litigation and/or arbitration awards. Although "prior arbitration awards may be givenpreclusive effect in a subsequent judicial action by operation of the doctrines of res judicata and collateral estoppel," (Diorio v Ossining Union Free School Dist., 96 AD3d 710, 711 [2nd Dept. 2012]; see Kern v Excelsior 57th Corp., LLC, 77 AD3d 500 [1st Dept. 2010]), the moving defendants fail to demonstrate the existence of, or even identify, a prior arbitration award. Nor do they demonstrate that "a judgment on the merits exists between the same parties involving the same subject matter." Ricatto v Mapliedi, supra. As such, they are not entitled to dismissal of the complaint on res judicata grounds.
On a motion to dismiss pursuant to CPLR 3211(a)(7) for failure to state a cause of action, AG Capital Funding Partners, L.P. v State St. Bank & Trust Co., 5 NY3d 582, 591 (2005) (internal quotation marks and citations omitted). "In this procedural posture, the allegations of a complaint, supplemented by a plaintiff's additional submissions, if any, must be given their most favorable intendment." Arrington v New York Times Co., 55 NY2d 433, 442 (1982). A motion to dismiss madepursuant to CPLR 3211(a)(7) will fail if, taking all facts alleged as true and according them every possible inference favorable to the plaintiff, the complaint states a legally cognizable cause of action. Shaya B. Pac., LLC v Wilson, Elser, Moskowitz, Edelman & Dicker, LLP, 38 AD3d 34, 38 (2nd Dept. 2006). Whether the complaint will later survive a motion for summary judgment, or whether the plaintiff will ultimately be able to prove its claims, of course, plays no part in the determination of a pre-discovery CPLR 3211 motion to dismiss. Id.
Eurycleia Partners, LP v Seward & Kissel, LLP, 12 NY3d 553, 559 (2009) (internal citations omitted). Section 3016(b) provides, in relevant part, that "[w]here a cause of action or defense is based upon...fraud...the circumstances constituting the wrong shall be stated in detail" CPLR 3016(b). "This requirement is to inform a defendant of the acts that the plaintiff is complaining about." Epiphany Community Nursery Sch. v Levey, 171 AD3d 1, 9 (1st Dept. 2019). "Although there is certainly no requirement of unassailable proof at the pleading stage, thecomplaint must allege the basic facts to establish the elements of the cause of action." Eurycleia Partners, LP v Seward & Kissel, LLP, supra. The Court of Appeals has "held that CPLR 3016(b) is satisfied when the facts suffice to permit a reasonable inference of the alleged misconduct." Id.; see Epiphany Community Nursery Sch. v Levey, supra.
"[S]ection 3016 (b) should not be so strictly interpreted 'as to prevent an otherwise valid cause of action in situations where it may be "impossible to state in detail the circumstances constituting a fraud." Lanzi v Brooks, 43 NY2d 778, 780 [1977], quoting Jered Contr. Corp. v New York City Tr. Auth., 22 NY2d 187, 194 (1968). Thus, where concrete facts 'are peculiarly within the knowledge of the party' charged with the fraud (Jered Contr. Corp., supra), it would work a potentially unnecessary injustice to dismiss a case at an early stage where any pleading deficiency might be cured later in the proceedings. See CPC Intl. v McKesson Corp., 70 NY2d 268, 285-286 (1987); Houbigant, Inc. v Deloitte & Touche LLP, 303 AD2d 92, (1st Dept. 2003).
Here, the moving defendants contend that American has failed to plead fraud with the heightened particularity required by CPLR 3016(b). They assert that the complaint does not allege facts sufficient to support a claim that American justifiably relied uponany misrepresentation by the moving defendants or that American suffered a monetary injury as a result. They also argue that although the complaint alleges that American reasonably and justifiably relied upon material misrepresentations that led it to making payments to defendants and incurring expenses as a result, it does not identify a single payment that American made voluntarily, or that was paid upon a misrepresentation by any defendant. Furthermore, the moving defendants contend that American's ability to verify claims under the no-fault statute and regulations preclude it from satisfying the justifiable reliance element.
The moving defendants also argue that the complaint fails to plead the existence of a financial...
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