Spine Imaging Mri, L.L.C. v. Liberty Mut. Ins. Co., Civil No. 09–1963 (JRT/AJB).

• Decision Date: 22 August 2011
• Docket Number: Civil No. 09–1963 (JRT/AJB).
• Parties: SPINE IMAGING MRI, L.L.C., a Minnesota limited liability company, Plaintiff, v. LIBERTY MUTUAL INSURANCE COMPANY; Allstate Insurance Company; and American Family Mutual Insurance Company, Defendants.Liberty Mutual Insurance Company, and Allstate Insurance Company, Counterclaim Plaintiffs, v. Spine Imaging MRI, L.L.C., Counterclaim Defendant.Liberty Mutual Insurance Company, Third Party Plaintiff, v. Eduardo Bullon, Rafael Mendez, Central Medical Clinic, L.L.C., Dr. Alfonso Morales–Utrilla, Northstar Radiology Corporation, P.A., Dr. William Ford, and Dr. Hans Michael Castro, Third Party Defendants.
• Court: U.S. District Court — District of Minnesota

818 F.Supp.2d 1133

SPINE IMAGING MRI, L.L.C., a Minnesota limited liability company, Plaintiff,

v.LIBERTY MUTUAL INSURANCE COMPANY; Allstate Insurance Company; and American Family Mutual Insurance Company, Defendants.Liberty Mutual Insurance Company, and Allstate Insurance Company, Counterclaim Plaintiffs,

v.Spine Imaging MRI, L.L.C., Counterclaim Defendant.Liberty Mutual Insurance Company, Third Party Plaintiff,

v.Eduardo Bullon, Rafael Mendez, Central Medical Clinic, L.L.C., Dr. Alfonso Morales–Utrilla, Northstar Radiology Corporation, P.A., Dr. William Ford, and Dr. Hans Michael Castro, Third Party Defendants.

Civil No. 09–1963 (JRT/AJB).

United States District Court, D. Minnesota.

Aug. 22, 2011.

Eric C. Tostrud, David W. Asp, and Matthew R. Salzwedel, Lockridge Grindal Nauen PLLP, Minneapolis, MN, for plaintiff/counterclaim defendant Spine Imaging, MRI, L.L.C., and third-party defendants Eduardo Bullon, Rafael Mendez, Central Medical Clinic, LLC, Dr. Alfonso Morales–Utrilla, and Dr. Hans Michael Castro.

Sharie L. Lowden and Michael W. Lowden, Lowden Law Firm, Minnetonka, MN, for defendant/counterclaim plaintiff Liberty Mutual Insurance Company.

Bradley L. Doty, Richard S. Stempel, Robert J. Anthonsen, and Steven P. Pope, Stempel & Doty PLC, Hopkins, MN, for defendant/counterclaim plaintiff Allstate Insurance Company.Paula Duggan Vraa, Mark A. Solheim, and Hilary J. Loynes, Larson King, LLP, St. Paul, MN, for defendant American Family Mutual Insurance Company.Alyson M. Palmer and Donald Chance Mark, Jr., Fafinski Mark & Johnson, PA, Eden Prairie, MN, for third-party defendants Northstar Radiology Corporation, P.A. and Dr. William Ford.

MEMORANDUM OPINION AND ORDER

JOHN R. TUNHEIM, District Judge.

Plaintiff Spine Imaging MRI, L.L.C. (“Spine Imaging”) provides medical imaging services to individuals with neck and spine injuries. Spine Imaging brought the instant action against defendant-insurers Liberty Mutual Fire Insurance Company (“Liberty”), Allstate Insurance Company (“Allstate”) and American Family Mutual Insurance Company (“American Family”) (collectively, “defendants”), alleging claims for breach of contract, declaratory judgment, and unjust enrichment arising out of defendants' refusal to pay for medical imaging services provided by Spine Imaging to defendants' policyholders. Liberty and Allstate filed counterclaims seeking a declaration that Spine Imaging is knowingly operating in violation of the corporate practice of medicine doctrine (“CPMD”) and seeking recovery of benefits paid to Spine Imaging. American Family did not file any counterclaims. Liberty filed a third-party complaint against several other individuals and businesses (“third-party defendants”) associated with Spine Imaging, asserting the same claims as the counterclaims against Spine Imaging. Before the Court is Spine Imaging's motion to dismiss Allstate's counterclaims, third-party defendants' and Spine Imaging's motions to dismiss Liberty's claims and counterclaims, and American Family's motions for summary judgment and sanctions. Because the Court finds the declaratory judgment sought by all defendants is the obverse to that sought by Spine Imaging, those counterclaims are dismissed. The Court also determines that Liberty's counterclaims and third-party claims as they plead fraud, recovery of benefits, and unjust enrichment are sufficient to survive a motion to dismiss, however the claim of champerty/maintenance fails to state a claim. Finally, because the Court finds no controversy exists between American Family and Spine Imaging, the Court dismisses the claims without prejudice for lack of subject matter jurisdiction but denies sanctions because Spine Imaging had a good faith reason to believe one existed.

BACKGROUND

Spine Imaging provides magnetic-resonance imaging (“MRI”) to assist physicians and chiropractors in the diagnosis and treatment of various medical conditions, with a specific focus on the neck and spine. (Second Am. Compl. ¶ 18, Docket No. 103.) MRI technology provides images of the human body that can be used to assist in diagnosing various medical conditions and to assess the most effective course of treatment. ( Id. ¶ 21.)

Spine Imaging alleges that there are two steps to providing medical imaging services. The first step, the “technical component,” “involves physically taking the MRI scan itself. This first step is a mechanical process that can be performed by trained MRI technicians[,]” which Spine Imagine employs. ( Id. ¶ 25.) The second step, the “professional component,” “involves interpreting the image that results from the MRI scan [which] must be performed by a licensed physician or chiropractor.” ( Id. ¶ 26.) Spine Imaging claims it only provides the technical component of the MRI services, but maintains “independent-contractor relationships with board certified radiologists, neuroradiologists, and skeletal radiologists, who provide patients with interpretational MRI services and prepare summary reports.” ( Id. ¶ 28.)

Spine Imaging concedes that it is not owned or operated by a licensed physician or chiropractor, and also avers that it does not employ licensed physicians or chiropractors as part of its medical imaging services. ( Id. ¶¶ 19–20.) Spine Imaging is solely owned and operated by Eduardo Bullon. ( Id. ¶ 19.) Spine Imaging actively markets its services to the chiropractic community to provide services to individuals who have suffered neck and spine injuries in automobile accidents. ( Id. ¶ 31.) Spine Imaging's services have been in demand. ( Id. ¶¶ 32–41.)

In Minnesota, “no-fault” automobile insurance covers the cost of treatment for most accident victims. ( Id. ¶ 42.) Defendants all provide “no-fault” automobile insurance in Minnesota, and some of Spine Imaging's clients have insurance policies with defendants and have received reimbursement from defendants for MRI services provided by Spine Imaging. ( Id. ¶ 43.) In spring 2009, Spine Imaging alleges defendants ceased reimbursing it for MRIs provided to defendants' policyholders. ( Id. ¶ 49.) Spine Imaging brought this action, alleging breach of contract and unjust enrichment, and seeking a declaratory judgment that it was not violating CPMD.

In September 2010, this Court granted in part and denied in part defendants' motions to dismiss without prejudice on Spine Imaging's contract and unjust enrichment claims. It granted the motions, in part, on the basis that Spine Imaging failed to allege that it had received written assignments from policyholders such that Spine Imaging had standing to sue the insurers. Spine Imaging MRI, L.L.C. v. Liberty Mut. Ins. Co., 743 F.Supp.2d 1034, 1045 (D.Minn.2010). Spine Imaging filed a second amended complaint which addressed this deficiency. ( See Second Am. Compl. ¶¶ 44–46, Docket No. 103.)

Liberty answered the Second Amended Complaint and renewed its counterclaims for a declaratory judgment that Spine Imaging was in violation of the CPMD as a result of violations of the Minnesota Professional Firms Act, recovery of benefits, or, in the alternative, unjust enrichment. Spine Imaging moved to dismiss the counterclaims for lack of particularity, and the Court granted Liberty leave to amend. (Docket No. 98.) In so amending, Liberty added claims of violation of state and federal anti-kickback laws, and champerty/maintenance. (Docket No. 107.) Spine Imaging now moves to dismiss, claiming the new counterclaims impermissibly expand the scope of litigation beyond the leave granted by the Court and that the counterclaims fail to state a claim.

Liberty also brought a third-party complaint against individuals and organizations that worked with Spine Imaging: Eduardo Bullon, Rafael Mendez, Central Medical Clinic, LLC, Dr. Alfonso Morales, Northstar Radiology, Dr. William Ford, and Dr. Hans Michael Castro. (Third–Party Compl., Docket No. 126.) The third-party complaint alleges the same claims as the counterclaims against Spine Imaging. The third-party defendants move to dismiss those claims on the same bases.

In response to Spine Imaging's Second Amended Complaint, Allstate brought counterclaims seeking a declaratory judgment that Spine Imagine is violating the CPMD and requesting attorney's fees and costs. (Allstate Countercl. ¶¶ 24–25, Docket No. 106.) Spine Imaging moves to dismiss the counterclaims.

Finally, American Family seeks summary judgment on Spine Imaging's claims, asserting that it has never denied a claim on the basis of a violation of the CPMD, therefore any litigation over denial of benefits belongs in arbitration as required by the state No–Fault Act. Further, it seeks Rule 11 sanctions, alleging that Spine Imaging had no factual basis to bring the claims against it.

ANALYSIS

I. STANDARD OF REVIEW FOR MOTIONS TO DISMISS

Reviewing a complaint under a Rule 12(b)(6) motion to dismiss, the Court considers all facts alleged in the complaint as true, and construes the pleadings in a light most favorable to the non-moving party. See, e.g., Turner v. Holbrook, 278 F.3d 754, 757 (8th Cir.2002). To survive a motion to dismiss, however, a complaint must provide more than “ ‘labels and conclusions' or ‘a formulaic recitation of the elements of a cause of action....’ ” Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). That is, to avoid dismissal, a complaint must include “sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Id. (internal quotation marks omitted). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. “Where a complaint pleads facts that are merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility,” and therefore must be...