Oriska Ins. Co. v. Avalon Gardens Rehab. & Health Care Ctr., LLC
| Decision Date | 04 September 2019 |
| Docket Number | 6:18-CV-1030 |
| Parties | ORISKA INSURANCE COMPANY, Plaintiff, v. AVALON GARDENS REHABILITATION & HEALTH CARE CENTER, LLC, doing business as Brookside Multicare Nursing Center and Optima Care Smithtown, LLC, BAY PARK CENTER NURSING & REHABILITATION, LLC, BROOKHAVEN REHABILITATION & HEALTH CARE CENTER, EASTCHESTER REHABILITATION & HEALTH CARE CENTER, LLC, GARDEN CARE CENTER, INC., GOLDEN GATE REHABILITATION & HEALTH CARE CENTER, LLC, LITTLE NECK CARE CENTER, LLC, LITTLE NECK NURSING HOME LLC, NASSAU OPERATING COMPANY, LLC, doing business as Nassau Extended Care Facility and Nassau Rehabilitation and Nursing Center/Kingsbridge Heights Receiver, LLC, NEW SURFSIDE NURSING HOME, LLC, NORTH SEA ASSOCIATES, LLC, doing business as The Hamptons Center for Rehabilitation and Nursing, PARK AVENUE OPERATING COMPANY, LLC, doing business as Park Avenue Extended Care Facility, PINEGROVE MANOR II, LLC, doing business as Grace Plaza Nursing and Rehabilitation Center, THROGS NECK OPERATING COMPANY, LLC, doing business as Throgs Neck Extended Care Facility, TOWNHOUSE OPERATING COMPANY, LLC, doing business as Townhouse Center for Rehabilitation & Nursing, WILLOUGHBY REHABILITATION & HEALTH CARE CENTER LLC, doing business as Spring Creek Rehabilitation & Nursing Care Center, WOODMERE REHABILITATION & HEALTH CARE CENTER, INC., doing business as Five Towns Premier Rehabilitation and Nursing, NISKAYUNA OPERATING CO LLC, doing business as Pathways Nursing & Rehabilitation Center, PARKVIEW CARE AND REHABILITATION CENTER, INC., BENT PHILIPSON, as the Principal Partner in Control of Sentosacare, LLC, a/k/a Sentosa Group, SENTOSACARE, LLC, SAMUEL SCHLESINGER, Individually and as Principal Partner and as Officer, Director and Owner of Allstate ASO, Inc. and Allstate Administrators, LLC, ALLSTATE ADMINISTRATORS, LLC, also known as Allstate ASO, LLC, ISAAC MULLER, Individually and as an Agent for the Defendants herein named, RASHBI MANAGEMENT, INC., US MANAGEMENT, INC., BAYVIEW MANOR LLC, doing business as South Point Plaza Nursing and Rehabilitation Center, SHOREFRONT OPERATING, LLC, doing business as Seagate Rehabilitation & Healthcare Center, and WHITE PLAINS CENTER FOR NURSING, LLC, Defendants. |
| Court | U.S. District Court — Northern District of New York |
APPEARANCES:
HITZKE & FERRAN, LLP
Attorneys for Plaintiff
DANIEL L. HITZKE, ESQ.
JESSICA SPRAGUE, ESQ.
CHRISTOPHER E. BUCKEY, ESQ.
NICHOLAS J. FASO, ESQ.
IRA S. LIPSIUS, ESQ.
ALEXANDER SPERBER, ESQ.
JON T. POWERS, ESQ
KEVIN J. HARRINGTON, ESQ.
MICHAEL W. FREUDENBERG, ESQ.
TABLE OF CONTENTS
On August 28, 2018, plaintiff Oriska Insurance Company ("Oriska" or "plaintiff") filed this action against defendants Avalon Gardens Rehabilitation and Health Care Center, LLC ("Brookside"), Bay Park Center Nursing and Rehabilitation, LLC ("Bay Park"), Brookhaven Rehabilitation and Health Care Center, LLC ("Brookhaven"), Bayview Manor LLC ("South Point"), Eastchester Rehabilitation and Health Care Center, LLC ("Eastchester"), Garden Care Center, Inc. ("Garden Care"), Golden Gate Rehabilitation and Health Care Center, LLC ("Golden Gate"), Little Neck Care Center, LLC ("Little Neck Care"), Little Neck Nursing Home, LLC ("Little Neck"), Nassau Operating Company, LLC ("Nassau"), New Surfside Nursing Home, LLC ("Surfside"), North Sea Associates, LLC ("North Sea"), Park Avenue Operating Company, LLC ("Park Avenue"), Pinegrove Manor II, LLC ("Pinegrove"), Throgs Neck Operating Company, LLC ("Throgs Neck"), Townhouse Operating Company, LLC ("Townhouse"), Willoughby Rehabilitation and Health Care Center, LLC ("Willoughby"), Woodmere Rehabilitation and Health Care Center, Inc. ("Woodmere"), Niskayuna Operating Co., LLC ("Niskayuna"), Parkview Care and Rehabilitation Center, Inc. ("Parkview"), Sentosacare, LLC ("Sentosa"), Bent Philipson, as the principal partner in control of Sentosa ("Philipson"), Allstate Administrators, LLC, also known as Allstate ASO, LLC ("Allstate"), Samuel Schlesinger, individually and as principal partner and as officer, director, and owner of Allstate ("Schlesinger"), Isaac Muller, individually and as an agent for the named defendants ("Muller"), Rashbi Management, Inc. ("Rashbi Management"), and US Management, Inc. ("US Management").
Oriska's eighty-five page, eleven-count civil pleading asserted, inter alia, claims under three federal statutes: the Racketeer Influenced and Corrupt Organizations Act ("RICO"), the Employee Retirement Income Security Act of 1974 ("ERISA"), and Section 43(a) of the Lanham Act. Broadly stated, plaintiff's complaint alleged the various named defendants were engaged in a scheme to divert millions of dollars in insurance premiums from certain trust funds set up to receive those payments. The matter was originally assigned to Chief U.S. District Judge Glenn T. Suddaby.
Shortly thereafter, Oriska amended its complaint to add Shorefront Operating, LLC ("Seagate") and White Plains Center for Nursing, LLC ("White Plains") as two more defendants allegedly involved in the scheme. See Dkt. No. 8. As plaintiff explained in the Civil RICO Statement it later submitted in accordance with this District's General Order #14, the twenty-nine defendants named in its amended pleading fall into four different categories: (1) a group of skilled nursing facilities collectively known as the "Sentosa SNFs"; (2) Sentosa and Allstate, limited liability companies that operate and administer the Sentosa SNFs; (3) the individual defendants Philipson, Schlesinger, and Muller are involved in the management and operation of the Sentosa SNFs; and (4) Rashbi Management and US Management are two entities with "an interest in the disposition of" the allegedly stolen funds. See generally Dkt. No. 20 ("Pl.'s Civil RICO Statement"); see also Am. Compl. ¶¶ 39-40.
On September 19, 2018, Oriska notified the Court of its intention to seek a preliminary injunction and requested an expedited briefing schedule for its motion. Dkt. No. 9. Citing a litany of procedural deficiencies with the filing, Chief Judge Suddaby denied plaintiff's request. Dkt. No. 11.
Thereafter, Oriska filed a "notice of related cases" in which it requested this case be transferred to the undersigned. Dkt. No. 12. According to plaintiff's filing, the current dispute between plaintiff and these defendants "arises out of the same basic facts and circumstances" as Oriska Insurance Company v. The Power P.E.O., Inc. et al., 5:03-CV-1481, a prior matter closed in 2008. Id. Chief Judge Suddaby granted plaintiff's request on October 10, 2018. Dkt. Nos. 28-29.
On October 12, 2018, Oriska moved under Federal Rule of Civil Procedure ("Rule") 65 for a preliminary injunction that would require the named defendants to disgorge the "missing" $33,277,303.61 and place it in trust during the pendency of these civil proceedings. Dkt. No. 35 (requesting expedited hearing); see also Dkt. No. 50 (). Plaintiff's renewed filing attempted to cure the various procedural deficiencies previously identified by the Chief Judge. Id.; see also Dkt. No. 11. The motion has been fully briefed and remains pending. See, e.g., Dkt. Nos. 82, 83, 84, 85.
On October 15, 2018, the parties appeared at a telephone conference before U.S. Magistrate Judge David E. Peebles. See Text Minute Entry for 10/16/2018. There, Judge Peebles extended certain initial deadlines and granted permission to brief two, particularly time-sensitive matters raised by the parties: (1) Oriska's request for expedited discovery; specifically, "leave to serve fifty-nine subpoenas seeking a wide range of documents from various banking institutions relating to a sixteen-year period"; and (2) defendants' request that two of plaintiff's attorneys be disqualified from representing plaintiff in this action. Id.
The parties briefed both issues at length. Dkt. Nos. 37, 39, 40, 41, 43, 47, 48, 49, 54, 55. Defendants partially withdrew their motion to disqualify Oriska's attorneys after AttorneyAntonio Faga unexpectedly passed away,1 Dkt. Nos. 52, 53, and Judge Peebles heard oral argument on what remained of both motions on November 9, 2018. Dkt. No. 60; Text Minute Entry for 11/9/2018.
On November 21, 2018, Judge Peebles issued a Decision and Order (the "November 21 Order") denying Oriska's motion...
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