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

• Decision Date: 24 February 2023
• Docket Number: SA-22-CV-806-JKP-HJB
• Parties: STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY and STATE FARM COUNTY MUTUAL INSURANCE COMPANY OF TEXAS, Plaintiffs, v. SANJAY MISRA, M.D.; and SANJAY MISRA, M.D., P.A., Defendants.
• Court: U.S. District Court — Western District of Texas

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY and STATE FARM COUNTY MUTUAL INSURANCE COMPANY OF TEXAS, Plaintiffs, v. SANJAY MISRA, M.D.; and SANJAY MISRA, M.D., P.A., Defendants.

No. SA-22-CV-806-JKP-HJB

United States District Court, W.D. Texas, San Antonio Division

February 24, 2023

MEMORANDUM OPINION AND ORDER

JASON PULLIAM, UNITED STATES DISTRICT JUDGE

Before the Court is Defendants' Motion to Dismiss (ECF No. 13). Pursuant to Fed.R.Civ.P. 12(b)(1) and (6) Defendants Sanjay Misra, M.D., and Sanjay Misra, M.D., P.A. (“Defendants”) seek dismissal of all claims in this case. Plaintiffs State Farm Mutual Automobile Insurance Company and State Farm County Mutual Insurance Company of Texas' (“Plaintiffs”) have filed a response (ECF No. 16) and Defendants have filed a reply (ECF No. 18). After considering the motion, related briefing, and applicable law, the Court DENIES the motion.

I. BACKGROUND

Plaintiffs are insurance companies. See Compl. (ECF No. 1) at 6. Defendant Sanjay Misra (“Misra”) is a Texas licensed physician who provides medical services in San Antonio. Id. He is the president of Sanjay Misra M.D., P.A., a Texas professional association. Id. at 7. Plaintiffs assert two claims. See id. at 28-31. They first assert a federal claim under the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1962(c). See id. ¶¶ 68-74. Then they assert a Texas claim for money had and received. See id. ¶¶ 75-80. They contend that Defendants treat patients who have been injured in automobile accidents by drivers they insure. Id. ¶¶ 2-10. They specifically allege Misra submitted fraudulent medical bills and medical records because:

a. Dr. Misra does not perform legitimate examinations of his patients;

b. patterns in the findings and diagnoses within the examination reports (“Evaluations”) prepared by Dr. Misra prior to recommending injections are not credible and serve as pretext to support their predetermined recommendations for medically unnecessary ESIs [(epidural steroid injections)] for nearly all patients reporting neck and/or back pain;

c. the injections Dr. Misra recommends and purportedly performs are not recommended and performed because they are medically necessary, but rather to substantially inflate the severity and potential value of the patients' claims;

d. the boilerplate operative reports (“Operative Reports”) prepared by Dr. Misra for the ESIs he purportedly performs are not credible based upon patterns in the patients' diagnoses and responses to the ESIs; and e. the surgical recommendations made by Dr. Misra are not recommended because they are medically necessary, but rather to substantially inflate the severity and potential value of the patients' claims.

Id. ¶ 3 (omitting citations to exhibits).

Plaintiffs provide additional facts relating to Defendants' alleged scheme. See id. ¶ 8. In particular, they allege that to facilitate the scheme, Defendants:

(a) prepare fraudulent Evaluations to create the appearance patients suffered serious injuries that warrant ESIs, often to more than one spinal region;

(b) purportedly perform medically unnecessary injections;

(c) prepare bills from Misra P.A. with typical charges of $499 for the initial examinations and typical charges of at least $3,300 for each ESI;

(d) often recommend patients undergo surgeries, which are estimated to cost in excess of $50,000 (not including fees for anesthesia and related items Dr. Misra estimates cost an additional $50,000); and

(e) provide their fraudulent documentation and bills to the PI Attorneys representing the patients in BI Claims and UM Claims who, in turn, submit the documentation and bills to State Farm Mutual and State Farm County to support written demands to settle the claims within policy limits, often within 15 days or less.

Id.

Plaintiffs' essential allegation is that Misra recommends and administers medically unnecessary epidural steroid injections and recommends and performs medically unnecessary surgeries to inflate medical bills to increase the value of his patients' bodily injury or uninsured/underinsured claims. According to Plaintiffs, Misra submits the medical bills and records to his patients' personal injury attorneys to submit demands to Plaintiffs to settle the patients' claims. Id. at ¶¶ 9-10.

Plaintiffs attached thirty-four exhibits to their complaint. The first exhibit is a spreadsheet titled “Pre-Injection Appendix.” ECF No. 1-3. The eight-page exhibit has twenty columns (A through T) which provide detailed information for patients treated by Misra. Id. The exhibit includes the State Farm claim number (Column B), patient initials (Column C), date of the underlying accident (Column D), date of first visit to Misra (Column F), Misra's recommendation for injection (Column S), and the type of injection Misra recommended (Column T). Id. Columns G through R reflect the tests or exams Misra conducted to determine whether to administer an injection and the type of injection to administer. Id. Citing Exhibits 1 and 2, Plaintiffs allege that “Dr. Misra's Evaluations reveal the same cursory examination findings and result in recommendations that virtually all patients with neck and/or back pain receive a recommendation for an interlaminar ESI.”^[1] Compl. ¶ 28. Misra recommended and/or administered spinal injections for 300 of 335 patients identified on Exhibit 1. Id. ¶ 29. Misra recommended that each of these 300 patients receive the same type of ESI injection-the interlaminar ESI. Id.; see also ECF No. 1-3.

Plaintiffs contend Misra's medical evaluations and findings “are boilerplate, include nonspecific information about patients' conditions, and reveal noncredible patterns.” Compl. ¶ 40. Plaintiffs note Misra almost always lists a patient's chief complaint as “radiating pain” and “numbness.” Id.; see ECF No. 1-3 (Columns G-H). In most instances, Misra's physical exam reflects patients exhibiting tenderness or pain with soft tissue palpitations, motor strength deficits, and decreased or diminished sensation in the affected area. Compl. ¶ 40. Plaintiffs identify a number of other tests and findings which are similar for most of the patients listed in Exhibit 1. Id. ¶¶ 4049.

Plaintiffs attached an Injection Appendix (Exhibit 2) which lists the ESI injections administered by Misra. See ECF No. 1-4. Exhibit 2 identifies 276 patients who received a total of 792 interlaminar injections. Id. Plaintiffs contend Misra does not document his pre-injection diagnosis in the patient evaluation forms, but only includes the diagnosis in the operative reports of patients who actually receive an ESI. Compl. ¶ 54. Plaintiffs essentially allege Misra does not actually perform a preoperative diagnosis but provides a diagnosis when the injection is administered. Id. Plaintiffs further allege that virtually all patients who receive ESIs from Misra have the same diagnosis. Id. Plaintiffs also attached a deposition transcript of one patient and her experience with Misra regarding an attempt to administer an ESI injection. See id.; Tr. of A.M. 42:21-43:17 (ECF No. 1-25). Misra allegedly told the patient who was concerned about receiving the injection, “[well], no shot, no money.” Tr. of A.M. 43:15-17.

Plaintiffs allege a similar pattern regarding Misra's surgical recommendations. They attached a Surgical Recommendation Appendix (ECF No. 1-5 (Ex. 3)) to their complaint, which reflects that Misra recommended surgery for approximately half of the patients for whom he also recommended ESI injections. Compl. ¶ 58; Surgical Recom. App'x. Plaintiffs allege Misra recommended surgery for patient K.L. during his first visit before considering nonsurgical options. Compl. ¶ 60; Tr. of K.L. 119:21 (ECF No. 1-26 (Ex. 24)). Plaintiffs contend Misra administered ESI to K.L. even though he had already determined that surgery was necessary. Compl. ¶ 60.

Plaintiffs also contend Misra's evaluation of and surgical recommendation for patient J.C. indicates a pattern of recommending surgeries that are unnecessary. Id. ¶ 61. Plaintiffs allege Misra recommended spinal surgery for J.C. despite MRI findings which state there was “no significant central canal or neural foraminal narrowing,” which means J.C.'s herniation was not causing radiating pain. Id. Plaintiffs contend Misra recommended J.C. undergo spinal surgery at ¶ 5-C6 even though there is not a clear record J.C. experienced radiating pain at this level. Id. The Court has independently evaluated the exhibits regarding Plaintiffs' contention regarding Misra's surgical recommendation for J.C. (Exs. 31, 32, and 33), and finds the medical records do not explicitly state J.C. was not experiencing radiating pain. Despite this lack of clarity, the medical records offer enough support for Plaintiffs' contention at this stage of litigation. Challenge to this type of allegation is better suited for summary judgment.

Plaintiffs state Defendants charge $3,300 for each cervical interlaminar ESI and an additional $535 for unbundled drugs and supplies for a total of $3,835. For lumbar interlaminar ESIs, Defendants charge $3,802 for each injection and an additional $535 for unbundled drugs and supplies for a total of $4,337. Id. ¶ 63; see also Ex. 34 for sample billing practices. Plaintiffs allege more than $1.1 million in damages based on Defendants' fraudulent medical records and bills which were created to inflate the value of the patients' bodily injury and uninsured/underinsured motorist claims, which in turn caused Plaintiffs to pay more to settle the claims. Id. ¶¶ 64-67.

II. MOTION TO DISMISS

Pursuant to Fed.R.Civ.P. 12(b)(1), Defendants seek to dismiss Plaintiffs' RICO claim for lack of standing. And pursuant to Fed.R.Civ.P. 12(b)(6), Defendants seek to dismiss both Plaintiffs...