State Farm Mut. Auto. Ins. Co. v. Metro Pain Specialists P.C.

• Decision Date: 19 May 2022
• Docket Number: 21-CV-5523 (MKB)
• Parties: STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY and STATE FARM FIRE AND CASUALTY COMPANY, Plaintiffs, v. METRO PAIN SPECIALISTS P.C., TRIBOROUGH NY MEDICAL PRACTICE P.C., LEONID SHAPIRO, M.D., MOHAMED SAYED AHMED HASSAN, P.T., NILE REHAB PHYSICAL THERAPY, P.C., MOHAMED ELSAYED KHALLAF, P.T., HANDY PHYSICAL THERAPY P.C., IRINA KATAEVA, P.T., CITYWORKS PHYSICAL THERAPY P.C., MAHMOUD EZZ ELDEEN SHALABY, P.T., PHYSICAL THERAPY OF NEW YORK P.C., AMRO MAHMOUD BARAKAT, P.T., BARAKAT PT, P.C., MOHAMED MAHMOUD ELMANDOUH, P.T., PROTECTION PHYSICAL THERAPY P.C., RAOUF AKL, P.T., PRIMAVERA PHYSICAL THERAPY, P.C., AHMED MAHMOUD ABDELSHAFY ELMANSY, P.T., SKY LIMIT PHYSICAL THERAPY, P.C., GEOFFREY ALLERTON CUSHMAN, P.T., PI PHYSICAL THERAPY, P.C., SHERWIN CATUGDA PALLER, P.T., FLORAL PARK PHYSICAL THERAPY, P.C., ALPESHKUMAR MANUGHAI PATEL, P.T., A. M. PATEL PHYSICAL THERAPY P.C., LEONARD LUNA, D.C., KINGS CHIROPRACTIC WELLNESS, P.C., JONGDUG PARK, D.C., ALL ABOUT CHIROPRACTIC P.C., J PARK CHIROPRACTIC P.C., GIULIO CARUSO, D.C., BROOK CHIROPRACTIC OF NY P.C., INTEGRATED CHIROPRACTIC OF NY P.C., PETER ALBIS, D.C., PDA NY CHIROPRACTIC P.C., PAUL VICTOR SCARBOROUGH, D.C., A.O.T. CHIROPRACTIC P.C., EVOLUTION CHIROPRACTIC P.C., STACY JUYOUNG MOON, L.AC., SJM ACUPUNCTURE P.C., LYUDMILA KRUPNOVA, L.AC., LK ACUPUNCTURIST P.C., HYEONGSOCK CHOI, L.AC., CHOICE ACUPUNCTURE PLLC, CHOI-GO ACUPUNCTURE PLLC, PETER KOPACH, L.AC., FIRST ALTERNATIVE PLM ACUPUNCTURE P.C., EDWIN CASTILLO, L.AC., EDCAS ACUPUNCTURE P.C., LONGYU MA, L.AC., HIDDEN DRAGON ACUPUNCTURE P.C., XIA GUAN, L.AC., REBOUND ACUPUNCTURE P.C., REUVEN ALON a/k/a ROB ALON, COLUMBUS IMAGING CENTER LLC, MEDAID RADIOLOGY LLC, REGINA MOSHE, M.D., YAN MOSHE a/k/a YAN LEVIEV, CITIMEDICAL I, PLLC, HACKENSACK SPECIALTY ASC LLC f/k/a DYNAMIC SURGERY CENTER LLC, INTEGRATED SPECIALTY ASC LLC f/k/a HEALTHPLUS SURGERY CENTER LLC, VLADIMIR NAZAROV, and RIGHT AID MEDICAL SUPPLY CORP., Defendants.
• Court: U.S. District Court — Eastern District of New York

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY and STATE FARM FIRE AND CASUALTY COMPANY, Plaintiffs, v. METRO PAIN SPECIALISTS P.C., TRIBOROUGH NY MEDICAL PRACTICE P.C., LEONID SHAPIRO, M.D., MOHAMED SAYED AHMED HASSAN, P.T., NILE REHAB PHYSICAL THERAPY, P.C., MOHAMED ELSAYED KHALLAF, P.T., HANDY PHYSICAL THERAPY P.C., IRINA KATAEVA, P.T., CITYWORKS PHYSICAL THERAPY P.C., MAHMOUD EZZ ELDEEN SHALABY, P.T., PHYSICAL THERAPY OF NEW YORK P.C., AMRO MAHMOUD BARAKAT, P.T., BARAKAT PT, P.C., MOHAMED MAHMOUD ELMANDOUH, P.T., PROTECTION PHYSICAL THERAPY P.C., RAOUF AKL, P.T., PRIMAVERA PHYSICAL THERAPY, P.C., AHMED MAHMOUD ABDELSHAFY ELMANSY, P.T., SKY LIMIT PHYSICAL THERAPY, P.C., GEOFFREY ALLERTON CUSHMAN, P.T., PI PHYSICAL THERAPY, P.C., SHERWIN CATUGDA PALLER, P.T., FLORAL PARK PHYSICAL THERAPY, P.C., ALPESHKUMAR MANUGHAI PATEL, P.T., A. M. PATEL PHYSICAL THERAPY P.C., LEONARD LUNA, D.C., KINGS CHIROPRACTIC WELLNESS, P.C., JONGDUG PARK, D.C., ALL ABOUT CHIROPRACTIC P.C., J PARK CHIROPRACTIC P.C., GIULIO CARUSO, D.C., BROOK CHIROPRACTIC OF NY P.C., INTEGRATED CHIROPRACTIC OF NY P.C., PETER ALBIS, D.C., PDA NY CHIROPRACTIC P.C., PAUL VICTOR SCARBOROUGH, D.C., A.O.T. CHIROPRACTIC P.C., EVOLUTION CHIROPRACTIC P.C., STACY JUYOUNG MOON, L.AC., SJM ACUPUNCTURE P.C., LYUDMILA KRUPNOVA, L.AC., LK ACUPUNCTURIST P.C., HYEONGSOCK CHOI, L.AC., CHOICE ACUPUNCTURE PLLC, CHOI-GO ACUPUNCTURE PLLC, PETER KOPACH, L.AC., FIRST ALTERNATIVE PLM ACUPUNCTURE P.C., EDWIN CASTILLO, L.AC., EDCAS ACUPUNCTURE P.C., LONGYU MA, L.AC., HIDDEN DRAGON ACUPUNCTURE P.C., XIA GUAN, L.AC., REBOUND ACUPUNCTURE P.C., REUVEN ALON a/k/a ROB ALON, COLUMBUS IMAGING CENTER LLC, MEDAID RADIOLOGY LLC, REGINA MOSHE, M.D., YAN MOSHE a/k/a YAN LEVIEV, CITIMEDICAL I, PLLC, HACKENSACK SPECIALTY ASC LLC f/k/a DYNAMIC SURGERY CENTER LLC, INTEGRATED SPECIALTY ASC LLC f/k/a HEALTHPLUS SURGERY CENTER LLC, VLADIMIR NAZAROV, and RIGHT AID MEDICAL SUPPLY CORP., Defendants.

No. 21-CV-5523 (MKB)

United States District Court, E.D. New York

May 19, 2022

MEMORANDUM & ORDER

MARGO K. BRODIE, UNITED STATES DISTRICT JUDGE:

Plaintiffs State Farm Mutual Automobile Insurance Company (“State Farm Automobile”) and State Farm Fire and Casualty Company (“State Farm Fire”) commenced the above-captioned action on October 5, 2021, (Compl., Docket Entry No. 1), and filed an Amended Complaint against sixty-three Defendants^[1] on December 14, 2021, (Am. Compl., Docket Entry No. 63).

Plaintiffs allege, inter alia, that Defendants wrongfully obtained no-fault insurance reimbursements for medically unnecessary healthcare services in violation of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C §§ 1962(c)-(d) (“RICO”) and are liable for common law fraud, aiding and abetting fraud, and unjust enrichment, (id. ¶¶ 1, 338-480), and seek damages and a declaratory judgment, (id. ¶¶ 338-484).

On December 23, 2021, Plaintiffs moved to (1) stay, until resolution of litigation, all arbitrations pending before the American Arbitration Association (“AAA”) and all lawsuits pending in New York state courts between Defendants and Plaintiffs seeking “no-fault insurance benefits for services or supplies provided by Defendants to Metro Pain or Tri-Borough patients” and (2) enjoin Defendants, until resolution of litigation, from commencing any new arbitrations or New York state court proceedings against Plaintiffs seeking the same.^[2] Twenty-nine of the sixty-three Defendants opposed the motion.^[3] For the reasons set forth below, the Court grants in part and denies in part Plaintiffs' motion. The Court grants the motion to stay (1) all pending arbitrations, (2) all future arbitrations and (3) all future state court proceedings. The Court denies the motion to stay all pending state court proceedings.

I. Background

a. New York's no-fault insurance scheme

Under New York's no-fault law, automobile insurers provide mandatory coverage for certain no-fault benefits, including necessary expenses for medical treatment up to $50, 000.^[4]N.Y. Ins. Law §§ 5102(a)(1), 5102(b), 5103. “[I]ndividuals injured in car accidents assign their statutory benefits to licensed medical professionals, who submit claims for medically ‘necessary' treatments directly to the injured party's insurance carriers.” United States v. Zemlyansky, 908 F.3d 1, 7 (2d Cir. 2018) (first quoting N.Y. Ins. Law § 5102; and then citing 11 N.Y. Comp. Codes R. & Regs. § 65-3.11). A regulation implementing section 5106(b) of the New York Insurance Law states that “[i]n the event any person making a claim for first-party benefits and the [insurance] [c]ompany do not agree regarding any matter relating to the claim, such person shall have the option of submitting such disagreement to arbitration.” 11 N.Y. Comp. Codes R. & Regs. § 65-1.1(d); see also Allstate Ins. Co. v. Mun, 751 F.3d 94, 97-98 (2d Cir. 2014) (quoting 11 N.Y. Comp. Codes R. & Regs. § 65-1.1(a), (d)).

Plaintiffs seek damages from Defendants for submitting allegedly “fraudulent bills and supporting documentation” for services that were “ineligible for reimbursement and/or medically unnecessary.” (Am. Compl. ¶ 1.) The alleged services include examinations, treatment, medical imaging, testing, orthotic devices and durable medical equipment, pain management, and orthopedic procedures and related services provided to individuals involved in motor vehicle accidents and eligible for no-fault benefits under Plaintiffs' policies. (Id.)

b. The parties

i. Plaintiffs

State Farm Automobile “is a corporation organized under the laws of Illinois with its principal place of business in Illinois, and it issues automobile insurance policies in New York.” (Id. ¶ 25.) State Farm Fire “is a corporation organized under the laws of Illinois with its principal place of business in Illinois, and it issues automobile insurance policies in New York.” (Id. ¶ 26.)

ii. Defendants

Shapiro is a licensed anesthesiologist in New York and New Jersey. (Id. ¶ 27.) He “purportedly owns Metro Pain” and “is also the owner of numerous other medical and anesthesia professional corporations closely associated with Metro Pain, ” including Neurological Diagnostics P.C. (“Neurological Diagnostics”), PMR Medical P.C. (“PMR Medical”), Premier Anesthesia Associates P.A. (“Premier Anesthesia”), and Hudson Premier Healthcare Partners LLC. (Id. at ¶¶ 2, 27.) Shapiro also incorporated and/or has an ownership interest in at least two businesses providing services to attorneys and medical clinics, LegalMDConsult.com LLC (“LegalMDConsult”) and Scan to Data LLC (“Scan to Data”). (Id.) Shapiro served as medical director of Excel Surgery Center LLC (“Excel Surgery”), Dynamic Surgery, and HealthPlus Surgery, and Director of Anesthesiology at NJMHMC LLC, doing business as Hudson Regional Hospital (“Hudson Regional”). (Id. ¶¶ 2, 28.)

Metro Pain is a corporation organized under the laws of New Jersey with its principal place of business in New Jersey. (Id. ¶ 29.) Metro Pain's medical practices operate at as many as thirty multidisciplinary clinics in the New York area that cater to individuals who have been in automobile accidents. (Id. ¶ 2.) Shapiro is the sole original shareholder, director, officer, and incorporator of Metro Pain. (Id. ¶ 29.)

Tri-Borough is a corporation organized under the laws of New York with its principal place of business in New Jersey. (Id. ¶ 31.) Shapiro is the sole original shareholder, director, officer, and incorporator of Tri-Borough. In May of 2021, Shapiro began operating Tri-Borough as a successor entity to Metro Pain. (Id.)

The Physical Therapy Defendants are eleven citizens of New York and New Jersey who serve as licensed physical therapists in New York and eleven corporations, owned by the physical therapists, organized under the laws of New York with their principal places of business in New York and New Jersey that have submitted bills to Plaintiffs for physical therapy services. (Id. ¶¶ 32-53.)

The Chiropractor Defendants are five citizens of New York who serve as licensed chiropractors in New York and eight New York corporations, owned by the chiropractors, that have submitted bills to Plaintiffs for chiropractic services. (Id. ¶¶ 54-66.)

The Acupuncture Defendants are seven citizens of New York and New Jersey who serve as licensed acupuncturists in New York and eight New York corporations, owned by the acupuncturists, that have submitted bills to Plaintiffs for acupuncture services. (Id. ¶¶ 67-81.)

The MRI Defendants include Alon, Dr. Moshe, Moshe, and three New York and New Jersey corporations owned by these individuals that have submitted bills to Plaintiffs for MRI services “purportedly performed for patients [of] Metro Pain.” (Id. ¶¶ 82-87.) Alon is a citizen of New Jersey and is a cousin and business associate of Moshe. (Id. ¶ 82.) He is neither a physician nor a radiologist. (Id.) He owns Columbus Imaging and Medaid Radiology, as well as nonparty Beshert Corp. (“Beshert”), “a purported advertising and marketing company to which Metro Pain has made substantial payments.” (Id.) Dr. Moshe is a citizen of New York and is a physician licensed in New Jersey and New York. (Id. ¶ 85.) She “purportedly owns” MRI providers Citimedical I, Citimedical Services P.C. (“Citimedical Services”), and Citimed Complete Medical Care P.C. (“Citimed Complete”) (collectively, “Citimedical”), and an anesthesia provider Citimed Services P.A. (“Citimed Services”). (Id. ¶¶ 2, 85.) Moshe is a citizen of New York and is Dr. Moshe's brother. (Id. ¶ 86.) He is not a health care professional. (Id.) Moshe owned, controlled, and was in a position to derive economic benefit from Citimedical and Citimed Services. (Id.) Moshe also “owns and controls a purported medical receivables financing company, Med Capital LLC (‘Med Capital'), a billing company Star...