State Farm Mut. Auto. Ins. Co. v. Weiss

• Decision Date: 12 January 2006
• Docket Number: No. 6:03-CV-1645-ORL-31KRS.,6:03-CV-1645-ORL-31KRS.
• Citation: 410 F.Supp.2d 1146
• Parties: STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, State Farm Mutual Automobile Insurance Company Plaintiffs, v. Gary M. WEISS, Robert J. Brown, & Spectrum Dx Services, Inc., Defendants.
• Court: U.S. District Court — Middle District of Florida

410 F.Supp.2d 1146

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, State Farm Mutual Automobile Insurance Company Plaintiffs, v. Gary M. WEISS, Robert J. Brown, & Spectrum Dx Services, Inc., Defendants.

No. 6:03-CV-1645-ORL-31KRS.

United States District Court, M.D. Florida.

January 12, 2006.

Alexander S. Vesselinovitch, Charles Chejfec, Jason Shaffer, Kathy P. Josephson, Ross O. Silverman, Katten Muchin Rosenman LLP, Chicago, IL, Ralph C. Spooner, Spooner, Much & Ammann, P.C., Salem, OR, Rhonda Burns Boggess, Stephen E. Day, Taylor, Day & Currie, Jacksonville, FL, for Plaintiffs.

Charles I. Artz, Charles I. Artz & Associates, Harrisburg, PA, Gabriel Louis Imperato, Broad & Cassel, Ft. Lauderdale, FL, Jake Schmidt, Epstein, Becker & Green, P.C., Chicago, IL, Lee Calligaro, Patricia M. Wagner, Scott L. Cagan, Epstein, Becker & Green, P.C., Washington, DC, David J. Fischer, Margaret Therese Rodenburg, Hochman, Dolgin, Delott, Galarnyk & Prohov, P.C., Chicago, IL, James H. Monroe, Jr., James H. Monroe, P.A., Orlando, FL, Michael H. Kahn, Michael H. Kahn, P.A., Melbourne, FL, Christopher J. Hoare, Vincent Buttaci, Taylor, Colicchio

& Silverman, LLP, Princeton, NJ, Robert E. Stine, Stine, Greer & Duggan, Springfield, IL, Geoffrey J. Repo, Joseph P. Pozen, Matthew M. Murphy, Bates & Carey, LLP, Chicago, IL, Jeffrey L. Myers, Myers & Buttaci, LLC, Clearwater, FL, Ben J. Weaver, Harrell & Harrell, P.A., Chad S. Roberts, Robert F. Spohrer, Spohrer, Wilner, Maxwell & Matthews, P.A., Jacksonville, FL, Patricia Campbell Bobb, Patricia C. Bobb & Associates, Chicago, IL, for Defendants.

Jay M. Cohen, Jay M. Cohen, P.A., Winter Park, FL, pro se.

ORDER

PRESNELL, District Judge.

The Plaintiffs, State Farm Mutual Automobile Insurance Company ("State Farm Mutual") and State Farm Fire & Casualty Company ("State Farm Fire") (collectively referred to, where appropriate, as "State Farm"), have sued a number of defendants alleging that they engaged in a scheme to fraudulently bill State Farm for certain medical tests, thereby committing, inter alia, racketeering violations and fraud. Pursuant to settlement agreements, certain defendants were dismissed.¹ Another defendant, Robert Brown ("Brown") filed for bankruptcy, (see Docs. 264, 268), and yet another defendant, Spectrum DX Services, Inc. ("Spectrum"), has not participated in this action, thus essentially leaving Gary Weiss ("Weiss") as the sole remaining defendant.² Weiss has moved for summary judgment (Doc. 311), and the Plaintiffs have responded thereto (Doc. 343). The Court heard argument on the motion on January 6, 2006.

I. Background

A. Parties and Players

1) Parties

State Farm Mutual and State Farm Fire are Illinois corporations with their principal places of business in Bloomington, Illinois. Both are licensed and engaged in the business of insurance throughout the United States.

Weiss is a citizen of, and has been licensed to practice medicine in, the State of Florida. He is a board certified neurologist, and operates a private practice in Melbourne, Florida.

2) Relevant Players

David Goroway ("Goroway") operated Practice Mechanix, Inc. ("PMI"), through which he marketed a variety of products and services, including certain diagnostic tests, to chiropractors.³

Brad Goldstein ("Goldstein") owned and operated Premier Medical Group, Inc. ("Premier"), which provided chiropractors with the equipment and technicians necessary to conduct the diagnostic tests.⁴

Brown owned and operated Spectrum, a company that provided interpretations of the results of those diagnostic tests.

B. Facts

1) General

The facts of this case involve a practice wherein companies would market electrodiagnostic tests and equipment to chiropractors by demonstrating how the tests could be used to benefit their practices through improved care and increased profitability.⁵ (See Doc. 345, Att. 1, Ex. 1 at 173-76, 209; Att. 3, Ex. 3 at 231-32, 269-70). Technicians working for mobile diagnostic companies would conduct the tests at the chiropractors' offices, and another company would compile diagnostic reports for the test results. The chiropractors would then be able to send bills, generally to insurance companies, for the testing (the "technical component"),⁶ and the company that prepared the diagnostic reports (or a related entity) would send bills, also generally to insurance companies, for preparation of the reports (the "professional component"). This was all done with the goal of allowing the chiropractors to increase their profitability, and to allow the various diagnostic testing and interpreting companies to also reap profits.⁷ (See generally Doc. 345, Att. 1, Ex. 1 at 89; Att. 3, Ex. 3 at 231-32, 269-70).

2) Marketing the program and leases with participating chiropractors

Goroway and PMI marketed, among other things, mobile electrodiagnostic testing to chiropractors. Goroway gave presentations and seminars to which he would attract attendees by promising them that they could increase their income significantly. (Doc. 345, Att. 5, Ex. 25 at 3-4). At these seminars, Goroway would teach chiropractors about these tests and the billing codes to be used, and stressed the financial benefits available from ordering the tests. (Id.). When chiropractors expressed interest, sales consultants would visit them. These consultants were directed to tell the chiropractors that they should order these tests for every patient they had. (Id.).

Chiropractors who indicated that they wished to have these tests performed on their patients then entered into leases with Premier, whereby they agreed to pay a small amount, generally between $200 and $500 per month, to lease the technicians and the equipment necessary to perform these tests.⁸ (Id. at 4). Premier then arranged for the test results to be interpreted, and billed thousands of dollars for the interpretations for each patient. (Id.; see also Doc. 345, Att. 1, Ex. 1 at 89). The chiropractors billed separately for the performance of the tests, and were able to do so because Premier provided them with sample billing forms, including the proper codes and charges to be used. (Doc. 345, Att. 5, Ex. 25 at 4; see also Doc. 345, Att. 1, Ex. at 89). In this way, the chiropractors were able to collect approximately one thousand dollars per patient tested.⁹ (Doc. 345, Att. 5, Ex. 25 at 4). Goroway monitored the number of tests each chiropractor ordered, and instructed the sales consultants to encourage the chiropractors to order as many tests as possible. (Id. at 5).

3) Premier, Spectrum and Weiss

Premier¹⁰ acted as a "mobile diagnostic company." (Doc. 320, Att. 4, Ex. C at 2). Premier entered into Lease Agreements with chiropractors whereby the chiropractors leased from Premier neurological technicians trained to perform certain diagnostic tests and the diagnostic testing equipment used in those tests. Premier would arrange for these technicians to bring the mobile equipment to the chiropractors' offices to perform various tests.¹¹ (Doc. 320, Att. 4, Ex. C at 2, Doc. 345, Att. 34, Ex. 24). The Lease Agreement noted that it was not cost-effective for the healthcare provider to purchase such equipment or to employ such technicians on a full-time basis, and instead allowed the healthcare provider to lease such equipment and personnel from Premier at a low cost of, for example, a total of $2,400 per year. (Id. at pages 1-2).

During 1996, Brown started Spectrum, the purpose of which was to prepare reports containing interpretations of diagnostic tests ordered by treating physicians. In return for a fee, Spectrum provided mobile diagnostic companies, such as Premier,¹² with interpretive reports that purported to reflect a "reading physician's" interpretation of various data, forms and films generated by the diagnostic tests.¹³ (Doc. 320, Att. 4, Ex. C at 2). The mobile diagnostic companies would then submit those interpretive reports to insurance companies along with a bill for the interpretation services.¹⁴ (Id. at 2-3). Thus, after an interpreting physician provided a report, the mobile diagnostic company would bill the insurance company, and then pay Spectrum for the interpretation and Spectrum, in turn, would pay the interpreting (or reading) physician. (Doc. 320, Att. 10, Ex. I at 30-31).

Premier was one of Brown's primary mobile diagnostic clients. (Doc. 320, Att. 4, Ex. C at 2). Spectrum received approximately 150 to 200 packages of diagnostic tests per day, at least three quarters of which came from Premier. (Id. at 4).

Brown asked Weiss to act as an "interpreting physician" for Spectrum, and Weiss agreed.¹⁵ (Id.). Brown and Weiss agreed that Weiss would receive $25 for each interpretive diagnostic test he reviewed.¹⁶ (Doc. 345, Att. 9, Ex. 7 at 245-46).¹⁷ Weiss does not know how much Spectrum charged its clients for the reviews that Weiss performed. (Doc. 320, Att. 13, Ex. L at 312). Weiss' involvement with Spectrum was limited to reviewing these interpretations; he neither owned nor controlled any part of Spectrum, did not participate in either Spectrum's management or operations, and only received compensation from Spectrum based on the review services he performed.¹⁸ (See Doc. 236 at 6-7).

On June 13, 2000, Weiss entered into an agreement with B & G whereby Weiss was to be employed as an interpreting physician and paid $2,500 per month to receive phone calls from those doctors whose tests Weiss had interpreted.¹⁹ (Doc. 345, Att. 9, Ex. 7 at 330-33; Att. 44, Ex. 33). B & G was also authorized to use Weiss' name on certain forms to identify him as the reading physician, and to sign Weiss' name on those forms. (Id.; see also Doc. 320, Att. 7, Ex. F at 50, 55).²⁰ That agreement also stated that Weiss was neither a director nor an officer of B & G, was not a medical director, was not responsible for overseeing the medical diagnostic testing that B & G performed, had no responsibility for sales or marketing, and had no knowledge of B & G's inner...