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