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State Farm Mutual Automobile Insurance Co. v. Vital Community Care, P.C.

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

May 14, 2018

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Plaintiff,
v.
VITAL COMMUNITY CARE, P.C., et al. Defendants.

          OPINION AND ORDER DENYING DEFENDANTS' JOINT MOTION TO DISMISS.

          LINDA V. PARKER U.S. DISTRICT JUDGE.

         Plaintiff State Farm Mutual Automobile Insurance Company (“State Farm”) brings this action against multiple defendants that it alleges engaged in a scheme to submit fraudulent bills and false documentation for treatment and services that were never performed or were not medically necessary. State Farm alleges the following claims in its Complaint: (1) common law fraud; (2) unjust enrichment; (3) violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1962(c); (4) RICO conspiracy in violation of 18 U.S.C. § 1962(d); and (5) declaratory judgment under 28 U.S.C. § 2201 with respect to State Farm's obligation to pay unpaid claims and charges submitted by Defendant Vital Community Care, P.C., Advanced Pain Specialists PLLC, Affiliated Diagnostic of Oakland, LLC, Insight Diagnostics LLC, and Get Well Medical Transport Company. (ECF No. 1.)

         The matter presently is before the Court on Defendants' joint motion to dismiss, filed pursuant to Federal Rule of Civil Procedure 12(b)(6). (ECF No. 21.) The parties have fully briefed the motion. (ECF Nos. 24, 27.) Finding the facts and legal arguments sufficiently presented in the parties' briefs, the Court is dispensing with oral argument with respect to Defendants' motion pursuant to Eastern District of Michigan Local Rule 7.1(f).

         I. Standard of Review

         A Rule 12(b)(6) motion to dismiss tests the legal sufficiency of the complaint. RMI Titanium Co. v. Westinghouse Elec. Corp., 78 F.3d 1125, 1134 (6th Cir. 1996). Under Federal Rule of Civil Procedure 8(a)(2), a pleading must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” Where a pleading alleges fraud, the Federal Rules of Civil Procedure impose a heightened pleading requirement. See Fed. R. Civ. P. 9(b) (providing that “[i]n alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake.”). To meet Rule 9(b)'s particularity requirement, a complaint must “(1) specify the statements that the plaintiff contends were fraudulent, (2) identify the speaker, (3) state where and when the statements were made, and (4) explain why the statements were fraudulent.” Frank v. Dana Corp., 547 F.3d 564, 570 (6th Cir. 2008) (internal quotations and citations omitted).

         To survive a motion to dismiss, a complaint need not contain “detailed factual allegations, ” but it must contain more than “labels and conclusions” or “a formulaic recitation of the elements of a cause of action . . ..” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). A complaint does not “suffice if it tenders ‘naked assertions' devoid of ‘further factual enhancement.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 557). The “complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Id. (quoting Twombly, 550 U.S. at 570). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556). The plausibility standard “does not impose a probability requirement at the pleading stage; it simply calls for enough facts to raise a reasonable expectation that discovery will reveal evidence of illegal [conduct].” Twombly, 550 U.S. at 556.

         In deciding whether the plaintiff has set forth a “plausible” claim, the court must accept the factual allegations in the complaint as true. Erickson v. Pardus, 551 U.S. 89, 94 (2007). This presumption, however, is not applicable to legal conclusions. Iqbal, 556 U.S. at 668. Therefore, “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. (citing Twombly, 550 U.S. at 555).

         “When a court is presented with a Rule 12(b)(6) motion, it may consider the [c]omplaint and any exhibits attached thereto, public records, items appearing in the record of the case and exhibits attached to [the] defendant's motion to dismiss, so long as they are referred to in the [c]omplaint and are central to the claims contained therein.” Bassett v. Nat'l Collegiate Athletic Ass'n, 528 F.3d 426, 430 (6th Cir. 2008).

         II. Background[1]

         State Farm is an insurance corporation that does business in Michigan. In this action, State farm is suing fifteen defendants it claims played a role in the alleged insurance fraud scheme: (1) Vital Community Care, P.C. (“Vital”); (2) Amanda Makki, a/k/a Amanda Bazzi, a/k/a Amale Bazzi (“Bazzi”); (3) Namir D. Zukkoor, M.D.; (4) Martin Bloda, M.D.; (5) Mark J. Brennan, M.D.; (6) Affiliated Diagnostic of Oakland, LLC (“Affiliated”); (7) Insight Diagnostics, LLC (“Insight”); (8) Warren J. Ringold, M.D.; (9) Nesreen Bazzi; (10) Ahmad Makki, a/k/a Mike Makki; (11) Advanced Pain Specialists, PLLC (“Advanced Pain”); (12) Ricardo D. Borrego, M.D.; (13) Jason A. Bitkowski, D.O.; (14) Hala Moussa, a/k/a Hala Makki (“Moussa”); and (15) Get Well Medical Transport Company (“Get Well”).

         According to State Farm, Bazzi and Borrego are at the center of the alleged scheme and created and/or rely on the remaining defendants to carry out the scheme. The scheme is executed pursuant to-what State Farm has coined-a “Predetermined Protocol.” In accordance with this Predetermined Protocol, patients eligible for No-Fault Insurance Benefits are examined, diagnosed, and referred for treatment, testing, devices, and services to recoup the maximum possible payments from insurance companies, rather than their necessity to address the unique medical needs of the patient.

         State Farm alleges that Bazzi created Vital in January 2014, to examine, re-examine, diagnose, and refer persons eligible for No-Fault Benefits for services from other providers owned and controlled by Bazzi or from whom she receives unlawful kickbacks or has fee-splitting arrangements. Zukkoor is identified on paper as Vital's owner; however, State Farm contends that this is to conceal Bazzi's actual ownership and control of the entity. Zukkoor, Bloda, and other doctors work at Vital, examining, diagnosing, and referring patients under the alleged fraudulent insurance scheme.

         These physicians refer Vital's patients for physical therapy, to Affiliated and Insight for magnetic resonance imaging services (“MRIs”), and to Brennan for electro-diagnostic tests (“EDX Tests”). Ringold and Nesreen Bazzi (Amanda Bazzi's daughter) own Affiliated and Insight; however, State Farm alleges that Bazzi secretly owns and/or controls both entities. Mike Makki, Amanda Bazzi's brother, manages the day-to-day operations of Affiliated and Insight.

         Vital's doctors also refer patients to Advanced Pain for pain management consultations, where Borrego and Bitkowski were employed. State Farm alleges that “[t]hese pain management consultations served as a pretext for providing electro-acupuncture devices (“P-STIM Devices”) to patients, which were billed to State Farm each time at a rate of approximately $5, 000. State Farm provides that, pursuant to a kickback agreement, Bazzi and Vital received twenty percent (20%) of the amounts Advanced Pain collected for these pain management consultations and P-STIM Devices. State Farm alleges that it was billed for similar unnecessary medical consultations and devices from numerous other medical practices not named in this lawsuit, but related to Bazzi.

         Physicians working for Vital also routinely found patients to be disabled from various activities of daily living, including driving, which enabled Get Well to bill for transportation services provided to the patients. In public filings, Hala Makki is identified as Get Well's sole owner, officer, and manager; however, in bankruptcy proceedings, Makki represented that she has only a one-third interest in the company. Makki previously was married to Amanda Bazzi's first cousin.

         State Farm claims that it has paid Defendants more than $750, 000 in No-Fault Benefits for services, testing, devices, and treatments that were medically unnecessary or not performed at all. Attached to the Complaint are various charts State Farm prepared to identify the medically unnecessary services performed (or purportedly performed) by Defendants, which were billed to State Farm. State Farm also has been billed by Vital, Advanced Pain, Affiliated, Insight, and Get Well for additional charges, which State Farm has not paid.

         In its Complaint, State Farm refers to other lawsuits it or other insurance companies have filed against entities-some of which were connected to Amanda Bazzi-allegedly engaged in similar fraudulent No-Fault Benefits billing schemes. (See, e.g., Compl. ¶ 6, n.2.) In their briefs, the parties refer to additional similar lawsuits. (See, e.g., Defs.' Br. in Supp. of Mot. at 1, ECF No. 21 at Pg ID 333; Pl.'s Resp. Br. at 4, ECF No. 24 at Pg ID 585.) Defendants contend that “in an attempt to circumvent the Michigan No-Fault system … State Farm filed numerous proforma lawsuits against Michigan medical practitioners who treat injured automobile victims alleging [the same claims asserted in the pending case].” (Defs.' Br. in Supp. of Mot. at 1, ECF No. 21 at Pg ID 333.) Defendants never identify any of those other lawsuits by name or case number, with the exception of a case pending before the Honorable Paul Borman: State Farm Mutual Automobile Insurance Co. v. Pointe Physical Therapy, LLC, et al., No. 14-11700 (E.D. Mich. filed April 29, 2014) (“Pointe Case”).

         III. Analysis of Defendants' Arguments for Dismissal

         A. Abstention

         Defendants argue that the Court should abstain from deciding State Farm's declaratory judgment claim under various abstention doctrines. The Court begins its analysis of those arguments by noting the Supreme Court's and Sixth Circuit's warning that “abstention is an ‘extraordinary and narrow exception to the duty of a District Court to adjudicate a controversy properly before it, '” and that “‘only the clearest of justifications' will warrant abstention.” Rouse v. DaimlerChrysler Corp., 300 F.3d 711, 715 (6th Cir. 2002) (quoting Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 813-819 (1976)). The Court further notes that because they are contesting jurisdiction, Defendants bear the burden of proving that abstention is proper. Answers in Genesis of Ky., Inc. v. Creation Ministries Int'l, Ltd., 556 F.3d 459, 467 (6th Cir. 2009).

         1. The Bu ...


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