State Firm Mut. Auto. v. Philly Family Practice
| Decision Date | 27 November 2007 |
| Docket Number | Civil Action No. 05-2081. |
| Citation | 525 F.Supp.2d 718 |
| Parties | STATE FARM MUTUAL AUTOMOBILE INSURANCE CO. et al., Plaintiffs, v. PHILLY FAMILY PRACTICE, INC. et al., Defendants. |
| Court | U.S. District Court — Eastern District of Pennsylvania |
Cy Goldberg, Goldberg, Miller & Rubin, PC, Philadelphia, PA, for Plaintiffs.
Joel W. Todd, Dolchin, Slotkin & Todd PC, Alan B. Epstein, Jennifer L. Myers, Spector, Gadon & Rosen, PC, Douglas N. Stern, Douglas N. Stern, Esquire, Philadelphia, PA, for Defendants.
Bernard Snyder, Jenkintown, PA, pro se.
An insurance company sued several health-care providers for fraud and racketeering based on their alleged participation in a scheme to submit false bills for treatment of injuries purportedly sustained in certain staged accidents. The parties settled the case and executed a release. The insurance company and a related entity subsequently brought the instant suit against several health-care providers, some of whom are affiliated with the defendants in the prior action, for fraud and racketeering, also based on alleged participation in a scheme to submit false bills.
Certain defendants now move for summary judgment on the basis that the release executed in the prior case bars all of the plaintiffs' claims against them in this case. Plaintiffs argue that the scope of the release is limited to only certain acts of insurance fraud and, does not cover the fraud alleged in this case, that the release applies to only one of the plaintiffs, and that the release applies to only certain defendants.
For the reasons that follow, the motions for summary judgment will be denied.
On October 19, 2001, State Farm Mutual Automobile Insurance Co. `("State Farm Mutual") brought suit against certain health-care providers and related persons in this Court. See State Farm Mut. Auto. Ins. Co. v. Makris, No. Civ. A. 01-5351 (E.D.Pa.2001). One of the defendants in the Makris case, Rennard Health. Care, Inc. ("Rennard Inc."), is also a defendant in the instant case. On March 10, 2003, the parties settled the Makris case, and State Farm Mutual voluntarily dismissed its claims and executed a settlement agreement and release in favor of Rennard Inc.
On May 3, 2005, State Farm Mutual and State Farm Fire and Casualty Co. ("State Farm Fire") sued certain health-care providers. This is the case sub judice. Defendants in this case are Rennard Inc.; Rennard Health Care, P.C. ("Rennard P.C."); Philly Family Practice, Inc.; Advanced Family Medicine, P.C.; Management Services of PA, Inc.; Hav Moeung; Alexander Tarnopolsky; Bernard Snyder; Joseph Mandale; and Lana Mandale.
Before the Court are the motions for summary judgment filed by Alexander Tarnopolsky and Rennard P.C. (doc. no. 156), and Joseph Mandale, Lana Mandale, and Management Services of PA, Inc. (doe. no. 158).1
The second amended complaint filed in the Makris case was the operative complaint at the time the release was executed. It was filed on June 11, 2003, and it alleged in relevant part:
Defendants were active participants in a scheme to defraud State Farm and other insurers by staging automobile accidents, alleging phony injuries as a result of the staged accidents, preparing, and assisting in the preparation of, false and fraudulent medical reports and bills alleging injuries never sustained and treatment never provided, and filing of false and fraudulent insurance claims with State Farm and other insurers under various policies for first party benefits, uninsured and underinsured motorist benefits, property damage payments and payments for bodily injury claims.
Defendants were active participants in a scheme to defraud State Farm by making, and assisting in making, false and fraudulent insurance claims under State Farm automobile insurance policies and initiating third-party claims against State Farm insureds seeking payment for pain and suffering allegedly suffered in the staged accidents.
It was further part of the scheme to defraud State Farm that defendants created and submitted documents including bills, medical reports, treatment records and other documents that:
a. reported false examination findings and provided unnecessary physical therapy and chiropractic treatment to "support" billing for certain examinations and to justify the need for ongoing treatment;
b. documented examinations, modalities and treatments not rendered;
c. reported and billed for treatment that was excessive and/or unnecessary and/or redundant;
d. prescribed durable medical equipment that was medically unnecessary.
The relief sought by State Farm against defendants includes claims for compensatory damage to recover payments made by State Farm to defendants in third-party and uninsured and underinsured motorist claims, property damage claims and payments made on behalf of defendants by State Farm under medical payment coverage for treatment allegedly provided to defendants for the injuries they falsely claimed to have suffered as a result of the staged accidents.
. . . . . .
The scheme to defraud is based upon a series of alleged motor vehicle accidents, including but not limited to those described below....
. . . . . .
It was part of the conspiracy and scheme to defraud State Farm that passengers in the vehicles that were involved in staged accidents were referred to medical facilities, in most cases Rennard and Philmont, for phony medical treatment In the furtherance of the scheme to defraud, fraudulent medical reports, bills and other records were prepared by defendant doctors Faynberg and Berdichevsky on behalf of Rennard and Philmont and sent to State Farm to obtain payment on behalf of defendant doctors and facilities. These reports, bills or other records were false and fraudulent in that they concerned physical examinations and physical therapy treatments at defendants facilities which were never provided or were unnecessary.
Second Am. Compl., Makris, ¶¶ 2-5, 38, 45 .
State Farm Mutual then listed five allegedly staged accidents-those occurring on December 19, 1996; November 18, 1997; April 20, 1998; April 30, 1998; and June 24, 1999 — and alleged that the motorists purportedly injured in the accidents went to Rennard Inc., and other medical facilities, to receive treatment even though they were not in fact injured. Id. ¶¶ 48-81. The "relevant times to this action" were alleged to be from 1996 to the "present," i.e., the filing date of the second amended complaint, June 11, 2003. Id. ¶ 7.
The first amended complaint is the relevant complaint in this case. It was filed on May 16, 2006, and it alleges:
[The defendants] were active participants in a scheme to defraud State Farm by doing acts including, but not limited to, producing and submitting fraudulent medical reports, bills and other documents, and representations which were intended to generate payment from State Farm for medical treatment allegedly provided to individuals insured by State Farm.
. . . . . .
[P]hysical examination's, physical therapy, diagnostic testing, radiographic testing, chiropractic treatments and other services and/or goods were billed for [sic] which were never performed, provided in violation of applicable law, not prescribed and/or not provided for the medical necessity of the patient, but rather for other reasons, such as unjustly enriching the Defendants and/or other individuals.
. . . . . .
During the relevant times, in reasonable reliance on and in belief of the truth of the medical' reports and bills from Defendants, State Farm made payments to Philly Family, Advanced, Rennard P.C. and/or Rennard Inc. Further, State Farm made payments to individuals insured by State Farm involved in alleged accidents with uninsured and/or underinsured motorists in reasonable reliance on the misleading, incorrect and/or fraudulent medical reports and bills from Defendants.
First Am. Compl., Philly Family, ¶¶ 16, 29, 41 (doc. no. 106).
The complaint alleges that the relevant times are 2000 through the "present," i.e., the filing date of the first amended complaint, May 16, 2006. Id. ¶ 38.
The Makris release was executed on March 10, 2003, between State Farm Mutual and Rennard Inc. It provides:
State Farm Mutual Automobile Insurance Company ("Releasor"), for the sole consideration of $65,000 does hereby on behalf of itself, its heirs, executors, administrators, successors, and assigns, and its past and present officers, directors, employees, agents, attorneys and representatives, remise, release and forever fully and completely discharge Rennard Health Care, Inc., its heirs, executors, administrators, successors and assigns and their past and present officers, directors, employees, agents and representatives, ("Releasees") from any and all causes of action, claims, suits, and demands of whatsoever kind on account of any and all liability arising out of their participation in the activities which are the subject of a lawsuit styled State Farm Mutual Automobile Insurance Company v. Athanasios Makris, et al. instituted by the undersigned in the United States District Court for the Eastern District of Pennsylvania, No. 01-5351.
It is expressly understood and agreed that this Release is intended to cover and does cover only all losses or damages, known or unknown, which arise from or are directly related to the Releasees' participation in the occurrences set forth in the legal action, noted above. It is further understood and agreed that this is the complete Release and Settlement Agreement and that there are no written or oral understandings, or agreements, directly or indirectly connected to this Release and Settlement Agreement that are not incorporated herein.
Release and Settlement Agreement .
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