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Citizens United Reciprocal Exchange v. Meer

United States District Court, D. New Jersey

February 28, 2018

CITIZENS UNITED RECIPROCAL EXCHANGE, Plaintiff,
v.
JOEL J. MEER, M.D., JOEL MEER, P.C., and EVALUATION & TESTING ASSOCIATES, P.C., Defendants.

          OPINION

          KEVIN MCNULTY. U.S.D.J.

         Plaintiff Citizens United Reciprocal Exchange ("CURE"), an insurance reciprocal, alleges that defendants Joel Meer, Joel Meer, P.C., and Evaluation and Testing Associates, P.C. submitted, and caused to be submitted, hundreds of fraudulent claims. CURE seeks to recover $144, 000.00 that it paid to defendants and seeks a declaratory judgment that it does not have to pay defendants' pending claims, which are alleged to be in excess of $16, 100.00. CURE asserts eight counts, including for unjust enrichment, common law fraud, violations of the Racketeer Influenced and Corrupt Organizations Act, and violations of the New Jersey Insurance Fraud Prevention Act.

         I. BACKGROUND[1]

         Plaintiff Citizens United Reciprocal Exchange ("CURE") is an insurance reciprocal authorized to conduct business and issue automobile insurance policies in New Jersey. (Compl. ¶ 9). Defendant Joel Meer ("Meer") resides in New Jersey. (Compl. ¶ 10). Defendant Joel Meer, P.C. ("Meer, P.C") is a medical professional corporation incorporated in New Jersey with its principal place of business in New Jersey. (Compl. ¶ 11). Defendant Evaluation & Testing Associates, P.C. ("ETA") is a medical professional corporation incorporated in New Jersey with its principal place of business in New Jersey. (Compl. ¶ 12). ETA was a New Jersey general business corporation from June 22, 2011 to March 1, 2013. (Compl ¶ 13). Meer owns both Meer, P.C. and ETA. (Compl. ¶¶ 10-12).

         Under New Jersey law, automobile insurance policies provide benefits for personal injuries sustained in an accident involving the covered automobile, regardless of whether the driver was at fault for the accident. (Compl. ¶¶ 23-24). This coverage is called "personal injury protection, " or "PIP." (Compl. ¶¶ 23-24). When insureds receive treatment, they can assign their right to PIP benefits to medical providers, who can then seek reimbursement from the insurance companies. (Compl. ¶¶ 24). Defendants are such medical providers, i.e., assignees of their patients' PIP benefits.

         CURE alleges that defendants Meer, Meer, P.C, and ETA submitted, and caused to be submitted, hundreds of fraudulent no-fault insurance charges for services, including medically unnecessary, illusory, or otherwise non-reimbursable examinations, electrodiagnostic testing, and physical therapy. (Compl. ¶ 1). These services were claimed to have been provided to Insureds involved in automobile accidents who were eligible for coverage under no-fault insurance policies issued by CURE. (Compl. ¶ 2).

         CURE alleges that its payments to defendants were fraudulently obtained for several reasons. First, defendants allegedly billed for medically unnecessary treatments or treatments that did not occur. (Compl. ¶ 3). Extensive services were allegedly provided to Insureds who had only minor accidents. (Compl. ¶¶ 3, 65-70). In those cases, defendants followed pre-determined protocols that invented diagnoses and billed for medically unnecessary treatments to maximize billing. (Compl. ¶¶ 65-132). In many cases the billing codes for services misrepresented and exaggerated the level of service provided. (Compl. ¶3).

         Second, defendants were allegedly not in compliance with the relevant New Jersey laws and regulations and therefore were not eligible to receive no-fault insurance reimbursements at all. (Compl. ¶ 3). ETA engaged in the practice of medicine while it was a non-professional general business corporation; in New Jersey, only professional medical corporations can engage in the practice of medicine. (Compl. ¶¶ 34-36).

         Third, although New Jersey prohibits the practice, defendants allegedly gave patient referrals to chiropractors and chiropractic professional corporations (the "Chiropractic Referral Sources") in exchange for "return referrals." (Compl. ¶¶ 80-104).

         CURE seeks to recover more than $144, 000.00 that it paid in reliance on defendants' allegedly fraudulent billing. (Compl. ¶ 8). CURE also seeks a declaratory judgment that it does not have to pay defendants' pending claims, which are alleged to be in excess of $16, 100.00. (Compl. ¶ 3).

         CURE asserts eight causes of action against defendants:

■ Count 1 seeks a declaratory judgment that Meer, P.C. and ETA have no right to receive payment for any pending bills submitted to CURE. (Compl. ¶¶ 322-29)
■ Count 2 alleges, against all defendants, violations of the New Jersey Insurance Fraud Prevention Act ("NJIFPA"), N.J. Stat. § 17:33A-1, et seq. (Compl. ¶¶ 330-32)
■ Count 3 alleges, against Meer, a violation of the federal Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962(c) (Compl. ¶¶ 333-40)
■ Count 4 alleges, against Meer and Meer, P.C., common law fraud (Compl. ¶¶ 341-47)
■ Count 5 alleges, against Meer and Meer, P.C., unjust enrichment (Compl. ¶¶ 348-53)
■ Count 6 alleges, against Meer and ETA, a violation of RICO, 18 U.S.C. ¶ 1962(c) (Compl. ¶¶ 354-61)
■ Count 7 alleges, against Meer and ETA, common law fraud (Compl. ¶¶ 362-68)
■ Count 8 alleges, against Meer and ETA, unjust enrichment (Compl. ¶¶ 369-74)

         In response to CURE'S allegations, defendants have moved to dismiss the complaint pursuant to Rule 12(b)(1) and Rule 12(b)(6), as well as for lack of particularity pursuant to Rule 9(b). (ECF No. 10). Plaintiffs oppose this motion to dismiss. (ECF No. 13).

         II. LEGAL STANDARDS

         A. Rule 12(b)(1)

         Motions to dismiss for lack of subject matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1) may be raised at any time. Iwanowa v. Ford Motor Co., 67 F.Supp.2d 424, 437-38 (D.N.J. 1999). "(B]ecause subject matter jurisdiction is non-waivable, courts have an independent obligation to satisfy themselves of jurisdiction if it is in doubt. See ML Healthy City Sch. Dist. Bd. of Educ. v. Doyle, 429 U.S. 274, 278, 97 S.Ct. 568, 50 L.Ed.2d 471 (1977). A necessary corollary is that the court can raise sua sponte subject-matter jurisdiction concerns." Nesbit v. Gears Unlimited, Inc., 347 F.3d 72, 76-77 (3d Cir. 2003).

         Rule 12(b)(1) challenges may be either facial or factual attacks. See 2 Moore's Federal Practice § 12.30(4] (3d ed. 2007); Mortensen v. First Fed. Sav. & LoanAss'n, 549 F.2d 884, 891 (3d Cir. 1977). A facial challenge asserts that the complaint does not allege sufficient grounds to establish subject matter jurisdiction. Iwanowa, 67 F.Supp.2d at 438. A court considering such a facial challenge assumes that the allegations in the complaint are true. Cardio-Med. Assoc, Ltd. v. Crozer-Chester Med. Ctr., 721 F.2d 68, 75 (3d Cir. 1983); Iwanowa, 67 F.Supp.2d at 438. A factual attack, on the other hand, permits the Court to consider evidence extrinsic to the pleadings. Gould Elecs. Inc. v. United States, 220 F.3d 169, 178 (3d Cir. 2000), holding modified on other grounds by Simon v. United States, 341 F.3d 193 (3d Cir. 2003). Thus "Rule 12(b)(1) does not provide plaintiffs the procedural safeguards of Rule 12(b)(6), such as assuming the truth of the plaintiffs allegations." CNA v. United States, 535 F.3d 132, 144 (3d Cir. 2008).

The burden of establishing federal jurisdiction rests with the party asserting its existence, [citing DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 342 n. 3 (2006).] "Challenges to subject matter jurisdiction under Rule 12(b)(1) may be facial or factual." [citing Common Cause of Pa. v. Pennsylvania, 558 F.3d 249, 257 (3d Cir. 2009) (quoting Taliaferro v. Darby Twp. Zoning Bd., 458 F.3d 181, 188 (3d Cir. 2006)).] A facial attack "concerns 'an alleged pleading deficiency' whereas a factual attack concerns 'the actual failure of [a plaintiffs] claims to comport [factually] with the jurisdictional prerequisites.™ [citing CNA v. United States, 535 F.3d 132, 139 (3d Cir. 2008) (alterations in original) (quoting United States ex rel Atkinson v. Pa. Shipbuilding Co., 473 F.3d 506, 514 (3d Cir.2007)).]
"In reviewing a facial attack, the court must only consider the allegations of the complaint and documents referenced therein and attached thereto, in the light most favorable to the plaintiff." [citing Gould Elecs. Inc. v. United States, 220 F.3d 169, 176 (3d Cir. 2000).] By contrast, in reviewing a factual attack, "the court must permit the plaintiff to respond with rebuttal evidence in support of jurisdiction, and the court then decides the jurisdictional issue by weighing the evidence. If there is a dispute of a material fact, the court must conduct a plenary hearing on the contested issues prior to determining jurisdiction." [citing McCann v. Newman Irrevocable Trust, 458 F.3d 281, 290 (3d Cir. 2006) (citations omitted).]

Lincoln Ben. Life Co. v. AEILife, LLC, 800 F.3d 99, 105 (3d Cir. 2015) (footnotes omitted; case citations originally in footnotes are inserted in text).

         B. Rule 12(b)(6)

         Federal Rule of Civil Procedure 12(b)(6) provides for the dismissal of a complaint, in whole or in part, if it fails to state a claim upon which relief can be granted. The defendant, as the moving party, bears the burden of showing that no claim has been stated. Animal Sci. Prods., Inc. v. China Minmetals Corp., 654 F.3d 462, 469 n.9 (3d Cir. 2011). For the purposes of a motion to dismiss, the facts alleged in the complaint are accepted as true and all reasonable inferences are drawn in favor of the plaintiff. New Jersey Carpenters & the Trs. Thereof v. Tishman Constr. Corp. of New Jersey, 760 F.3d 297, 302 (3d Cir. 2014).

         Federal Rule of Procedure 8(a) does not require that a complaint contain detailed factual allegations. Nevertheless, "a plaintiffs obligation to provide the 'grounds' of his 'entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." BellAtl Corp. v. Twombly, 550 U.S. 544, 555 (2007). Thus, the complaint's factual allegations must be sufficient to raise a plaintiffs right to relief above a speculative level, so that a claim is "plausible on its face." Id. at 570; see also West Run Student Hous. Assocs., LLC v. Huntington Nat'l Bank, 712 F.3d 165, 169 (3d Cir. 2013). That facial-plausibility standard is met "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556). While "(t]he plausibility standard is not akin to a 'probability requirement'... it asks for more than a sheer possibility." Iqbal, 556 U.S. at 678.

         C. Rule 9(b)

         For claims of fraud, Federal Rule of Civil Procedure 9(b) imposes a heightened pleading requirement, over and above that of Rule 8(a). Specifically, it requires that "[i]n alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake." Fed.R.Civ.P. 9(b). "Malice, intent, knowledge, and other conditions of a person's mind, " however, "may be alleged generally." Id., That heightened pleading standard requires the plaintiff to "state the circumstances of the alleged fraud with sufficient particularity to place the defendant on notice of the precise ...


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