Sky Med. Supply Inc. v. SCS Support Claims Servs., Inc., No. 12–CV–6383 JFBAKT.

CourtUnited States District Courts. 2nd Circuit. United States District Court (Eastern District of New York)
Writing for the CourtJOSEPH F. BIANCO, District Judge
Citation17 F.Supp.3d 207
PartiesSKY MEDICAL SUPPLY INC., Plaintiff, v. SCS SUPPORT CLAIMS SERVICES, INC., et al., Defendants.
Decision Date07 May 2014
Docket NumberNo. 12–CV–6383 JFBAKT.

17 F.Supp.3d 207


No. 12–CV–6383 JFBAKT.

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

Signed May 7, 2014.

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Gary Tsirelman, Stefan Belinfanti, Daniel Joseph Grace, Nicholas Paul Bowers, and Sarah A. Adam, Gary Tsirelman, P.C., Brooklyn, NY, for Plaintiff.

Andrew Leslie Zwerling and Justin M. Vogel, Garfunkel Wild P.C., Great Neck, NY, for Defendants SCS, Brittis, Cole, Dagan, Ehrlich, Ferrante, Kritzberg, Mann, Sohn, Sukhov, Weber, Weisman, and Westerband.

Glenn Michael Jones, Offit Kurman, Bethesda, MD, for Defendants Patient Focus, Sharahy, and Vakhidova.

David S. Douglas, Gallet Dreyer & Berkey LLP, New York, NY, for Defendants Nationwide, B. Osiashvili, M. Osiashvili, S. Osiashvili, and Vayner.

E. Christopher Murray, Ruskin Moscou Faltischek, P.C., Uniondale, NY, for Defendants D. Martins and Kerness.

Peter S. Gordon, Gordon & Gordon, PC, Forest Hills, NY, for Defendant S. Ross.

Cohen, pro se.


JOSEPH F. BIANCO, District Judge:

Plaintiff Sky Medical Supply, Inc. (“Sky Medical” or “plaintiff”) commenced this action on December 27, 2012, against close to ninety individual and corporate defendants, alleging violations of the Racketeering Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961 et seq. (“RICO”) and numerous state law claims. On July

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31, 2013, plaintiff filed an amended complaint, which reduced the number of defendants to forty-four. The gravamen of the amended complaint is that defendants—vendors who handle independent medical examinations (“IMEs”) and peer reviews for no-fault insurance companies, their owners, and the doctors who claim to have performed these IMEs and peer reviews—have colluded to generate fraudulent IME and peer review reports that result in the denial of no-fault insurance claims. As a medical equipment provider who has submitted claims to no-fault insurers for the reimbursement of benefits furnished to injured parties, many of which have been denied, plaintiff asserts financial loss as a result of defendants' alleged scheme.

Numerous defendants have moved to dismiss the amended complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons set forth below, the motions to dismiss are granted in part, and plaintiff's request for leave to file a second amended complaint is granted. First, the Court cannot determine at this juncture whether plaintiff's RICO claims are time-barred, particularly in light of plaintiff's allegations of fraudulent concealment. Second, the Court concludes that plaintiff has adequately alleged RICO violations (both its substantive and conspiracy provisions) as to all moving defendants who are actually named defendants in the RICO causes of action. Third, the Court concludes that plaintiff has failed to satisfy RICO's ripeness requirement, i.e., to allege clear and definite damages that were caused by the alleged RICO violations. According to plaintiff's own representations to the Court, plaintiff is currently challenging the denials of an unknown number of its no-fault claims in arbitration proceedings and state court actions. At issue in those proceedings are the same no-fault claims whose denials have prompted this action. Thus, the full extent of plaintiff's RICO damages is contingent upon the results in pending proceedings, and is not clear and definite at this time. Under these circumstances, clear Second Circuit law requires dismissal of plaintiff's RICO claims, as to all defendants, without prejudice to plaintiff bringing its RICO claims once its damages have become clear and definite. Fourth, the Court concludes that plaintiff has adequately alleged the causation element of a RICO claim. In sum, the Court concludes that plaintiff's RICO claims must be dismissed without prejudice. Because the RICO claims are plaintiff's only federal claims, the Court declines to exercise supplemental jurisdiction over plaintiff's remaining state law claims.

The Court also considers plaintiff's request for leave to file a second amended complaint. Specifically, plaintiff's counsel indicated at oral argument that plaintiff could remedy its inadequate allegations of RICO damages by including in a second amended complaint a list of all denied no-fault claims underlying this lawsuit, along with information about whether each claim is pending or not in state court or arbitration proceedings. Given plaintiff's counsel's representation at oral argument, and the fact that plaintiff's RICO claims are otherwise well-pleaded, the Court grants plaintiff leave to amend its RICO claims within thirty days of this Memorandum and Order. If plaintiff does not file a second amended complaint within thirty days, then the Court will order the Clerk of the Court to close the case and enter judgment of dismissal, without prejudice to plaintiff bringing a new action when its RICO injury has become clear and definite.

I. Background

A. New York No–Fault Insurance Law

Under New York's no-fault automobile insurance scheme, an insurer can deny an insured's claim for medical treatment if the treatment is not medically necessary. See

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N.Y. Comp.Codes R. & Regs. tit. 11, § 65–1.1 ; see also McGee v. State Farm Mut. Auto. Ins. Co., No. 08–CV–392 (FB)(CLP), 2009 WL 2132439, at *1 (E.D.N.Y. July 10, 2009) [hereinafter McGee I ]; Healing Hands Chiropractic, PC v. Nationwide Assurance Co., 5 Misc.3d 975, 787 N.Y.S.2d 645, 647 (N.Y.Civ.Ct.2004). To verify a treatment's medical necessity, an insurer may require the claimant to “submit to medical examination by physicians selected by, or acceptable to, the [insurer], when, and as often as, the [insurer] may reasonably require.” N.Y. Comp.Codes R. & Regs. tit. 11, § 65–1.1. “These examinations are referred to as ‘independent medical examinations' (‘IMEs').” McGee I, 2009 WL 2132439, at *1. An insurer may also submit the injured party's medical and other records to a third party physician, who reviews the records and renders an opinion on the medical necessity of the treatment at issue in a so-called “peer review report.” See, e.g., Consol. Imaging P.C. v. Travelers Indem. Co., 30 Misc.3d 1222(A), 924 N.Y.S.2d 308 (N.Y.Civ.Ct.2011). The insurer may deny a claim for lack of medical necessity on the basis of an IME or peer review report. See, e.g., Healing Hands, 787 N.Y.S.2d at 647.

After an insurer denies a claim, the claimant “is entitled to ‘seek immediate redress, and to recover both the amount of any overdue claim and reasonable attorney's fees in securing payment.’ ” Hosp. for Joint Diseases v. Allstate Ins. Co., 5 A.D.3d 441, 773 N.Y.S.2d 427, 428 (2004) (quoting Roggio v. Nationwide Mut. Ins. Co., 66 N.Y.2d 260, 262, 496 N.Y.S.2d 404, 487 N.E.2d 261 (1985) ). Specifically, the claimant has two options: (1) “file suit seeking payment of the claim,” or (2) “pursuant to Insurance Law § 5106(b), submit the dispute to arbitration, pursuant to simplified procedures promulgated by the Insurance Department.” Id. at 428–29.

B. Allegations in the Amended Complaint and Amended RICO Statement

The following facts are taken from the amended complaint, amended RICO statement, and the exhibits attached thereto, and are not findings of fact by the Court. Instead, the Court will assume these facts to be true and, for purposes of the pending motions to dismiss, will construe them in a light most favorable to plaintiff, the nonmoving party.1

1. The Parties

Plaintiff is a medical equipment provider that furnishes medical equipment to injured

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parties who are covered by no-fault insurance. (Am. Compl. ¶¶ 72–75.) In exchange for plaintiff's medical equipment, an individual assigns plaintiff his insurance claim. (Id. ¶ 73.) Plaintiff then submits a claim for reimbursement to the individual's no-fault insurer. (Id. ¶¶ 72–75.)

Defendant SCS is a medical consulting vendor that contracts with no-fault insurance carriers to perform IMEs and peer reviews. (Id. ¶¶ 12, 79.) SCS is owned by defendant Linda Ackerman (“Ackerman”), but defendant Eitan Dagan (“Dagan”) manages and controls all of SCS's operations. (Id. ¶ 13, 79.)

Defendant Patient Focus provides back office and clerical services to no-fault IME and peer review vendors like SCS. (Id. ¶¶ 13, 80.) Although Patient Focus is a professional corporation, plaintiff alleges that unlicensed individuals are the actual owners of Patient Focus, in violation of New York law. (Id. ¶ 102.) Specifically, Patient Focus is formally owned by defendant Tatiana Sharahy (“Sharahy”). (Id. ¶ 13, 31, 80.) However, plaintiff asserts that Patient Focus is actually owned and operated by defendants Svetlana Osiashvili (“S. Osiashvili”), Benjamin Osiashvili (“B. Osiashvili”), Mikael Osiashvili (“M. Osiashvili”), Aleksey Vayner (“Vayner”), and five unidentified individuals. (Id. ¶¶ 13, 80.) S. Osiashvili, B. Osiashvili, and M. Osiashvili operate Patient Focus through their management company, defendant Nationwide Management Inc. (“Nationwide”); Vayner operates Patient Focus through his management company, defendant BAB Management Inc....

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