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Michigan Automobile Insurance Placement Facility v. New Grace Rehabilitation Center, PLLC

United States District Court, E.D. Michigan, Southern Division

February 13, 2018

MICHIGAN AUTOMOBILE INSURANCE PLACEMENT FACILITY, Plaintiff,
v.
NEW GRACE REHABILITATION CENTER, PLLC, PRODIGY SPINAL REHABILITATION CENTER, PLLC, VAN DYKE REHABILITATION CENTER, PLLC, SUMMER ROSE FAKHOURI, D.C, MICHAEL STEVEN MEERON, D.C., and ANTHONY EUGENE PULICE, D.C., Defendants.

          OPINION AND ORDER GRANTING PLAINTIFF'S MOTION FOR LEAVE TO AMEND (DKT. 19) AND DENYING, AS MOOT, DEFENDANT'S MOTION TO DISMISS (DKT. 15)

          TERRENCE G. BERG UNITED STATES DISTRICT JUDGE

         I. Introduction

         Before the Court are Defendants' motion to dismiss the amended complaint (Dkt. 15), Plaintiff's response and motion to amend the complaint for a second time (Dkts. 18 and 19), and Defendants' opposition (Dkt. 23) to Plaintiff's motion to amend. Because Plaintiff sets out sufficient grounds for amending the complaint, the Second Amended Complaint may be filed, rendering moot Defendants' motion to dismiss.

         The Second Amended Complaint alleges that Defendants, chiropractors and chiropractic clinics, orchestrated a scheme to submit false or fraudulent insurance claims for treatment of individuals injured in automobile accidents, which were ultimately reimbursed by Plaintiff, the Michigan Automobile Insurance Placement Facility (MAIPF or Plaintiff). MAIPF is the automobile insurer of last resort in Michigan. In other words, Plaintiff provides automobile insurance to citizens who are unable to obtain insurance on their own. Examples would include pedestrians hurt in accidents or passengers injured in auto crashes who do not have automobile insurance. Defendants include three chiropractic clinics, and three individual chiropractors.

         Having reviewed the motions, and the entire record, the Court finds that these documents adequately present the issues now before the Court, and that oral argument would not aid the decision. Accordingly, the Court will decide the motion without a hearing. See E.D. Mich. LR 7.1(f)(2). For the reasons set forth below, Plaintiff's motion for leave to amend (Dkt. 19) will be GRANTED, and Defendants' motion to dismiss (Dkt. 15) will be DENIED AS MOOT.

         II. Background

         Under Michigan's “no-fault” automobile insurance statute, insurers are required to pay personal protection insurance benefits without regard to fault when an individual suffers bodily injury as a result of an automobile accident. See Mich. Comp. Laws § 500.3105. Plaintiff is a statutorily created organization, responsible for ensuring that automobile insurance coverage is available to any person who is unable to procure insurance on their own. See Mich. Comp. Laws § 500.3301. Plaintiff was also tasked by the Michigan Legislature with adopting and implementing an “Assigned Claims Plan.” See Mich. Comp. Laws §§ 500.3171-3178.

         Under the Assigned Claims Plan, if a person is injured in an automobile accident - but has no automobile insurance of his or her own, as might be the case with a passenger or a pedestrian - that person's claim for insurance benefits is assigned to an insurer (the “Servicing Insurer”) by Plaintiff. Id. § 500.3172. The insurer to whom a claim is assigned is then obligated to make “prompt payment” on the claim, and it will subsequently be reimbursed by Plaintiff for the payments, the insurer's related costs, and interest. Id. § 500.3175(1). This Assigned Claims Plan thus facilitates the payment of claims to uninsured individuals by essentially outsourcing the processing and adjustment of such claims to private insurance companies.

         Plaintiff originally filed this litigation in March 2017, bringing five causes of action against Defendants: fraud, unjust enrichment, payment under mistake of fact, Civil RICO, and declaratory judgment. Plaintiff alleges a scheme by Defendants to fraudulently obtain hundreds of thousands of dollars in insurance benefits from Servicing Insurers that were assigned claims under the Assigned Claims Plan. Plaintiff alleges that, pursuant to statute, it has since reimbursed those Servicing Insurers for the claims they paid to Defendants; Plaintiff is now seeking to recoup those paid benefits from Defendants. The essence of the Complaint is Plaintiff's allegation that Defendants are part of a racketeering enterprise that has the alleged purpose of fraudulently generating bills for unneeded medical services for individuals who were in automobile accidents, and whose claims were adjusted under the Assigned Claims Plan.

         In its original Complaint - and in the subsequently Amended Complaint that removed some mistakenly included insurance claims from this matter - Plaintiff described the overall scope of the Defendants' alleged scheme. In particular, Plaintiff alleges that Defendants scheme “involved obtaining clientele who had been allegedly involved in motor vehicle accidents and then devising a series of treatments based on diagnoses that were medically improbable” (Dkt. 19, Proposed Second Amended Compl. ¶ 22, Pg ID 571). Plaintiff claims that Defendants “would begin by having [a] new patient undergo a series of x-rays, ” which were unnecessary for the chiropractic treatment that Defendants could provide, and then use those unnecessary x-rays as “objective” data to justify a lengthy course of treatment. Id. ¶¶ 23, 24, Pg ID 572. “In nearly every in-stance…Defendants find an injury to every level of a patient's spine.” Id. (emphasis in original).

         Plaintiff alleges that Defendants' “treatment could go on for months without any actual improvement…” and that “Defendants routinely either create the impression of a far greater and more severe injury or find an injury where none existed in order to justify their initial treatment, their continued treatment, or their subsequent referrals.” Id. ¶ 24, Pg IDs 572. Defendants would also “refer [patients] to a network of other treating providers who were likewise engaged in the practice of finding questionable injuries related to motor vehicle accidents and who would support the need for continuing treatment for the purposes of fraudulently obtaining no-fault benefits from various insurers, ” and refer patients for MRIs which were routinely “over-read” to find injuries where none in fact existed. Id. ¶ 26, Pg ID 573. Plaintiff also claims that Defendants “billed for services that must be performed by persons licensed in those fields without having anyone with the requisite licensure to perform the service.” Id. ¶ 27, Pg ID 574. Defendants' overarching “goal in this scheme was to keep their patients in essentially a closed treatment loop with like-minded practitioners all engaged in attributing non-existent or questionable injuries to alleged motor vehicle accidents in order to continue to perform-and, more importantly, bill for-unnecessary and unwarranted treatment.” Id. ¶ 29, Pg ID 574.

         Plaintiff's proposed Second Amended Complaint adds more particularized allegations concerning six individual patients and their claims that Plaintiff cites as illustrative of Defendants' overall scheme. Id. ¶¶ 32-55, Pg IDs 576-584. The six exemplar patients are identified by their initials, the date they were injured in an accident, the Servicing Insurer, and the associated claim number. Furthermore, Plaintiff attached a chart to its proposed Second Amended Complaint, listing over one hundred patients (identified by their initials, claim number, and date of accident), and segregated by Servicing Insurers Allstate, Citizens, Farm Bureau, Farmers, and Titan. See Pg IDs 789-793.

         Common to Defendants' motion to dismiss, and their opposition to Plaintiff's motion to amend, is the contention that Plaintiff's allegations fail to state a claim and, more specifically, that the alleged fraudulent acts are insufficiently plead. Of course, assertions of fact contained in the Complaint are mere allegations at this point. Nevertheless, at this stage, the Court must presume that all of Plaintiff's allegations against Defendants are true, and must view them in a light most favorable to Plaintiff.

         III. ...


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