Ill. Farmers Ins. Co. v. Mobile Diagnostic Imaging, Inc.
| Decision Date | 19 August 2014 |
| Docket Number | Case No. 13-CV-2820 (PJS/TNL) |
| Court | U.S. District Court — District of Minnesota |
| Parties | ILLINOIS FARMERS INSURANCE COMPANY; 21ST CENTURY INSURANCE COMPANY; and BRISTOL WEST CASUALTY INSURANCE COMPANY, Plaintiffs, v. MOBILE DIAGNOSTIC IMAGING, INC.; MICHAEL A. APPLEMAN; STEVE POSER, D.C.; ELITE HEALTH CHIROPRACTIC, P.C.; AFFINITY HEALTH CHIROPRACTIC, P.A.; ASSIAT BOKE, D.C.; ASSIAT BOKE CHIROPRACTIC, P.A.; RICHARD OTTOMEYER, D.C.; OTTOMEYER CLINICS, PLLC; DANIAL HALL, D.C.; LOIS HALL, D.C.; HALL FAMILY CHIROPRACTIC CLINIC; JOHN VALENTINI, D.C.; MICHAEL B. SHINDER, D.C.; FOUR SEASONS CHIROPRACTIC, LTD.; MATEUS FERRAZ-SOUZA, D.C.; UNIVERSAL CARE CLINICS, INC.; DANIEL G. ANDERSON, D.C.; ANDERSON CHIROPRACTIC CLINIC, P.A.; JEFFREY DANIELSON, D.C.; NORTHERN LIFE CHIROPRACTIC, P.A.; ANDREA RUHLAND, D.C.; LAKEVILLE FAMILY CHIROPRACTIC, LTD.; RICHARD STOFFELS, D.C.; STOFFELS CHIROPRACTIC, LTD.; LOWELL MAGELSSEN, D.C.; FIRST CHIROPRACTIC — SHOREVIEW; ROBIN HARSTAD, D.C.; OVERSTAD CHIROPRACTIC, P.A.; JEFF SCHNEIDER, D.C.; HILLSIDE CHIROPRACTIC CLINIC, INC.; DOROTHY SAUNDERS, D.C., a/k/a Dorothy O'Connor; TEAM CHIROPRACTIC & WELLNESS CENTER, LTD.; STEVEN MOE, D.C.; INTEGRATED HEALTH AND WELLNESS, LTD.; SHAUN GIFFORD, D.C.; PRO ADJUSTER CHIROPRACTIC; SCHEIDEMAN CHIROPRACTIC & BODY SHOP, INC.; BRENT SCHEIDEMAN, D.C.; KATHLEEN A. BLOOM, D.C.; BLOOM CHIROPRACTIC CENTER, P.A.; SCOT PEARSON, D.C.; PEARSON CHIROPRACTIC CLINIC; AARON KIRKING, D.C.; SPINAL HEALTH; MICHAEL LAMPPA, D.C.; ACTIVE LIFE CHIROPRACTIC; LAMPPA CHIROPRACTIC, P.A.; ALLEN TRAN, D.C.; PRESTIGE CHIROPRACTIC, P.A.; DENIS BOERJAN, D.C.; ADVANCE CHIROPRACTIC CLINIC; DENIS BOERJAN, LLC; CARRON PERRY, D.C.; CANDACE SALMI, D.C.; BODYMIND CHIROPRACTIC CENTER; BRENT KVAM, D.C.; HEALTHSTAR CHIROPRACTIC CENTER, P.A.; STEPHAN M. DEHAVEN, D.C.; DEHAVEN CHIROPRACTIC CLINIC; DEHAVEN CHIROPRACTIC CLINIC, INC.; DEREK JOHNSON, D.C.; WELLNESS TEAM OF NISSWA; CYNTHIA STARBUCK, D.C.; HEALING HANDS WELLNESS CENTER, LLC; JOSEPH VIRGA, D.C.; KATHLEEN VIRGA, D.C.; VIRGA CHIROPRACTIC CLINIC, P.A.; MARK REEVE, D.C.; REEVE CHIROPRACTIC CLINIC, P.A.; DOUGLAS EDWARDS, D.C.; ALBERT LEA CHIROPRACTIC, PLC; MICHAEL KILPATRICK, D.C.; NEW PRAGUE FAMILY CHIROPRACTIC; STEPHEN L. ENGEL, D.C.; and ENGEL CHIROPRACTIC, P.A., Defendants. |
Bradley L. Doty, Richard S. Stempel, and Jesse W. Busta, STEMPEL & DOTY, PLC, for plaintiffs.
Kristen G. Marttila, David W. Asp, and Eric C. Tostrud, LOCKRIDGE GRINDAL NAUEN PLLP, for defendants Mobile Diagnostic Imaging, Inc. and Michael A. Appleman.
Thomas D. Jensen, Amy Elizabeth Lanser, and Thomas J. Evenson, LIND, JENSEN, SULLIVAN & PETERSON, P.A., for defendants Steve Poser, D.C.; Elite Health Chiropractic, P.C.; Affinity Health Chiropractic, P.A.; Assiat Boke, D.C.; and Assiat Boke Chiropractic, P.A.
Plaintiffs Illinois Farmers Insurance Company ("Illinois Farmers"), 21st Century Insurance Company ("21st Century"), and Bristol West Casualty Insurance Company ("Bristol West") allege that defendant Michael A. Appleman — acting through his corporation, defendant Mobile Diagnostic Imaging, Inc. ("MDI") — paid kickbacks to several dozen chiropractors and chiropractic clinics. In return, the chiropractors and clinics referred patients to MDI for magnetic resonance imaging ("MRI") scans. After performing the scans, MDI and Appleman submitted insurance claims to plaintiffs for reimbursement under the Minnesota No-Fault Automobile Insurance Act ("No-Fault Act"), Minn. Stat. §§ 65B.41-65B.71, and plaintiffs paid the claims. Plaintiffs allege, however, that they would not have paid those claims if they had known about the kickback scheme.
Plaintiffs also allege that Appleman — who is not a doctor or a chiropractor or otherwise licensed to practice medicine — is barred under Minnesota law from owning MDI because, plaintiffs say, MDI is a corporation that engages in the practice of medicine. Plaintiffs allege that they would have denied the claims submitted by MDI if they had known that MDI was owned by a layperson.
Finally, plaintiffs allege that, because the alleged kickback scheme created an incentive for chiropractors to refer patients to MDI for MRI scans, the "bribed" chiropractors referred patients who did not have a medical need for an MRI scan. According to plaintiffs, this caused them to pay for medically unnecessary scans, and they are entitled to reimbursement for those payments.
Plaintiffs have filed a 56-page, 283-paragraph, 14-count complaint against MDI, Appleman, and dozens of chiropractors and chiropractic clinics, seeking to recover every penny that they paid on every claim submitted by MDI over a five-year period. Plaintiffs assert claims under the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1961-1968; under both federal and state anti-kickback statutes; under the No-Fault Act; and under a host of other laws and doctrines.
"This Court has repeatedly criticized the filing of 'kitchen-sink' or 'shotgun' complaints — complaints in which a plaintiff brings every conceivable claim against every conceivable defendant." Gurman v. Metro Hous. & Redev. Auth., 842 F. Supp. 2d 1151, 1153 (D. Minn. 2011) (collecting cases). One reason why kitchen-sink complaints are so often criticized is that they "unfairly burden defendants and courts" by "shift[ing] onto the defendant and the court the burden of identifying the plaintiff's genuine claims and determining which of those claims might have legal support." Id. Unfortunately, plaintiffs in this case failed to heed the warnings of this Court, and thus it is now necessary for the Court and the defendants to undertake an onerous, claim-by-claim march through the lengthy complaint to try to separate the wheat from the chaff.
Three groups of defendants have moved to dismiss the complaint: (1) MDI and Appleman; (2) Steve Poser and two of his chiropractic clinics (Elite Health Chiropractic, P.C. ("Elite Health") and Affinity Health Chiropractic, P.A. ("Affinity Health")); and (3) Assiat Boke and her chiropractic clinic (Assiat Boke Chiropractic, P.A.). This matter is before the Court on those motions to dismiss. See ECF Nos. 108 & 112. For the reasons that follow, the motions are granted, and the complaint is dismissed as to the moving defendants.
MRI scans are often needed to diagnose neck and back injuries. Compl. ¶ 47 [ECF No. 1]. MRI machines are expensive, however, and thus many chiropractors do not own them. When a patient of such a chiropractor requires an MRI scan, the chiropractor will refer the patient to another person or company to perform the scan. MDI is one such company.
Unlike many companies that perform MRI scans, MDI does not keep its MRI machine at a fixed location. Instead, MDI transports its MRI machine on a large trailer, and thus MDI can perform scans at locations that are convenient for a referring chiropractor's patients — such as in the parking lot outside of the chiropractor's office. See id. ¶ 22. After conducting MRI scans, MDI "engages the services" of radiologists "to interpret the scans performed on the patients. . . ." Id. ¶ 122. An interpretative report signed by a radiologist is then forwarded to the referring chiropractor, and the chiropractor, in turn, discusses the report with the patient. Id. ¶¶ 25-26.
MDI is just one of many companies that provide MRI-scanning services in a competitive industry. Because its business model relies on referrals from chiropractors, MDI (through its owner, Appleman2) cultivates relationships with chiropractors in an effort to encourage them to refer patients to MDI. For example, Appleman allows students at local chiropractic colleges to vacation at his property in the Cayman Islands. Id. ¶ 49. He also sends gift baskets, flowers, and other tokens of appreciation to practicing chiropractors. Id. ¶ 50. These types of enticements are, of course, common in the business world.
According to plaintiffs, however, MDI used a more pernicious way to give chiropractors an incentive to refer patients to MDI. Under "Confidential Rental Agreement[s]" reached between MDI and referring chiropractors, MDI paid a "use fee" of several hundred dollars to the chiropractors or their clinics, ostensibly for the "use of the [chiropractors'] premises, equipment, personnel, services, and supplies for a scanning day." Compl. Ex. 3 [ECF No. 1-1 at 3] (example of Confidential Rental Agreement). Plaintiffs characterize this "use fee" as a thinly disguised kickback to chiropractors in return for their referral of patients to MDI. Both the payment andthe receipt of such kickbacks are illegal under Minnesota and federal law. See Minn. Stat. § 62J.23; 42 U.S.C. § 1320a-7b(b)(1).
When a chiropractor refers a patient who has been injured in a car accident for a scan, MDI asks the patient to sign a medical lien requiring the patient to pay MDI's bill out of any settlement of the patient's insurance claim. See Compl. ¶ 30. MDI then submits a health-insurance-claim form — known as a CMS 1500 form3 — to the patient's automobile insurer for reimbursement of the cost of the MRI scan. See id. ¶ 41; Minn. Stat. § 62J.52, subd. 2(a) (2008) (). Those forms require that the person seeking reimbursement include certain information, such as the patient's name, address, and insurance status; the medical services provided to the patient; and the charges associated with those services. See Compl. ¶ 39; Compl. Ex. 11 [ECF No. 1-1 at 81] ().
Plaintiffs issue automobile insurance in Minnesota. See Compl. ¶¶ 9, 236. The State of Minnesota, through the No-Fault Act, provides a statutory framework "to encourage appropriate medical and rehabilitation treatment of the automobile accident victim by assuring prompt payment for such treatment . . . ." Minn. Stat. § 65B.42(3). For example, the No-Fault Act requires automobile insurers...
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