United States District Court, D. New Jersey
GOVERNMENT EMPLOYEES INSURANCE CO., GEICO INDEMNITY CO., GEICO GENERAL INSURANCE COMPANY and GEICO CASUALTY CO., Plaintiffs,
NINGNING HE, M.D., ADVANCED PAIN CARE, L.L.C., SASCHA QIAN, M.D., RAJIVAN MANIAM, M.D., YOUNG M. AHN, L.AC., APEX ANESTHESIA ASSOCIATES, L.C.C., JOHN LI, M.D., ANTHONY SURACE, M.D., ANI KALFAYAN, M.D., SAMUEL CARUTHERS, M.D., TIMOTHY FINLEY, M.D., SANJAY TEWARI, M.D., and LOUIS QUARTARARO, M.D., Defendants.
Employees Insurance Co., GEICO Indemnity Co., GEICO General
Insurance Company and GEICO Casualty Co. (collectively,
"GEICO"), are automotive insurers that allege that
defendants submitted or caused to be submitted hundreds of
fraudulent claims for reimbursement of medical expenses.
GEICO seeks to recover $5, 298, 000.00 that it paid to
defendants. GEICO asserts eleven counts, including unjust
enrichment, common law fraud, violations of the Racketeer
Influenced and Corrupt Organizations Act, and violations of
the New Jersey Insurance Fraud Prevention Act. Defendants
John Li, M.D., Anthony Surace, M.D., and Timothy Finley,
M.D., now move to dismiss the complaint under Rule 12(b)(6).
(DE 20, 47). Dr. Surace separately moves to dismiss for lack
of proper service under Rule 12(b)(4) and 12(b)(5). (DE 20)
(Herein, "defendants" refers to the movants, unless
are automotive insurers who have sued a number of defendants
to recover funds reimbursed to defendants for allegedly
fraudulent medical services. The movants, defendants John Li,
M.D., Anthony Surace, M.D., and Timothy Finley, M.D., are all
anesthesiologists licensed to practice medicine in New
Jersey. (Compl. ¶¶ 17, 18, 25). They are alleged to
have performed the relevant medical services while working at
co-defendant Apex Anesthesia Associates, L.C.C.
("Apex"). Apex is a New Jersey medical professional
limited liability company through which defendants allegedly
provided medical services and then requested and received
reimbursement from GEICO. (Id. ¶ 4(v)).
Defendant Advanced Pain Care is another New Jersey medical
professional limited liability company through which many of
the fraudulent services were provided and billed to insurance
companies, including GEICO. (Id. ¶ 4(ii))
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. (Id.
¶¶ 36-37). This coverage is called "personal
injury protection," or "PIP." (Id.).
When Insureds receive treatment, they can assign their right
to PIP benefits to their medical providers, who can then seek
direct reimbursement from the insurance companies.
(Id. ¶ 37). Defendants are such medical
providers, i.e., assignees of their patients'
alleges that defendant Doctors Li, Surace, and Finley
submitted, and caused to be submitted, hundreds of fraudulent
no-fault insurance charges for services that were
unjustified, medically unnecessary, and designed only to
enrich defendants. (Id. ¶ 5). 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 GEICO. (Id.
alleges that its payments to defendants were fraudulently
obtained for several reasons. Defendants allegedly billed for
medically unnecessary treatments, or for treatments that did
not occur at all. (Id. ¶ 3). Treatments were
allegedly provided to Insureds who had only minor accidents.
(Id. ¶¶ 3, 85-94). In those cases,
defendants followed predetermined protocols that invented
diagnoses and billed for medically unnecessary treatments.
(Id.; see also ¶¶ 308-18). In many cases
the billing codes for services misrepresented and exaggerated
the level of service provided. (Id. ¶¶
seeks to recover more than $5, 298, 000.00 that it paid in
reliance on defendants' allegedly fraudulent billing.
(Id. ¶ 7). GEICO's complaint asserts eleven
causes of action. Of these, seven are relevant to these
defendants and these motions to dismiss:
• Count 2 alleges violations of the New Jersey Insurance
Fraud Prevention Act ("NJIFPA"), N.J. Stat. §
17:33A-1, et seq. (Id. ¶¶ 415-18);
• Counts 4 and 9 allege violations of the federal
Racketeer Influenced and Corrupt Organizations Act
("RICO"), 18 U.S.C. § 1962(c) [Id.
¶¶ 426-34, 463-71);
• Count 5 alleges aiding and abetting common law fraud
(Id. ¶¶ 442-49);
• Count 10 alleges common law fraud (Id.
¶¶ 472-78); and
• Counts 7 and 11 allege unjust enrichment (Id.
¶¶ 450-55, 479-84).
response to GEICO's allegations, defendants have moved to
dismiss the complaint pursuant to Rule 12(b)(6). (DE 20, 47).
Surace also moves for dismissal under Rule 12(b)(4) and (5),
alleging improper service. Plaintiffs oppose the motions to
dismiss. (DE 35, 52).
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).
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.
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
misconduct with which it is charged." Frederico v.
Home Depot, 507 F.3d 188, 200 (3d Cir. 2007) (internal
quotation and citation omitted).
general, "[t]o satisfy this heightened standard, the
plaintiff must plead or allege the date, time, and place of
the alleged fraud or otherwise inject precision or some
measure of substantiation into a fraud allegation."
Id. "Plaintiff must also allege who made the
misrepresentation to whom and the general content of the
misrepresentation." hum v. Bank of Am., 361
F.3d 217, 224 (3d Cir. 2004) (internal citation omitted);
see also In re Suprema Specialties, Inc. Sec.
Litig., 438 F.3d 256, 276-77 (3d Cir. 2006) ("Rule
9(b) requires, at a minimum, that plaintiffs support their
allegations of fraud with all of the essential factual
background that would accompany the first paragraph of any
newspaper story-that is, the who, what, when, where and how
of the events at issue." (internal quotation and
[Plaintiffs] need not, however, plead the "date, place
or time" of the fraud, so long as they use an
"alternative means of injecting precision and some
measure of substantiation into their allegations of
fraud." The purpose of Rule 9(b) is to provide notice of
the "precise misconduct" with which defendants are
charged and to prevent false or unsubstantiated charges.
Courts should, however, apply the rule with some flexibility
and should not require plaintiffs to plead issues that may
have been concealed by the defendants.
Rolo v. City Investing Co. Liquidating Trust, 155
F.3d 644, 658 (3d Cir. 1998) (quoting Seville Indus.
Mach. v. Southmost Mach.,742 F.2d 786, 791 (3d Cir.
1984) and citing Christidis v. First Pa. Mortg.