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Allstate Insurance Co. v. Utica Physical Therapy Inc.

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

June 19, 2018

Allstate Insurance Company, et al., Plaintiffs,
v.
Utica Physical Therapy, Inc. et al., Defendants.

          R. Steven Whalen Mag. Judge

          OPINION AND ORDER DENYING DEFENDANTS' MOTIONS TO DISMISS [31, 34]

          JUDITH E. LEVY UNITED STATES DISTRICT JUDGE

         This is a RICO case, brought by plaintiffs Allstate Insurance Company, Allstate Property and Casualty Insurance Company, and Allstate Fire and Casualty Insurance Company (“Allstate”), against multiple defendants. Allstate alleges that defendants - physical therapy clinics, medical clinics, a diagnostic imaging company, a transportation company, a clinical urine drug testing company, and their respective owners, agents and representatives - engaged in an insurance fraud scheme to seek reimbursement for “treatment and services that were not actually rendered, were medically unnecessary, were fraudulently billed, and were not lawfully rendered.” (Dkt. 1 at 2.) Plaintiffs filed their complaint against 14 defendants: (1) Utica Physical Therapy Inc.; (2) Rose Physical Therapy, Inc.; (3) Rose Pain Management Inc.; (4) Crystal Clear Health Management Inc.; (5) Bluebird Transportation Inc.; (6) Computerised Joint Surgery LLC; (7) Mini Invasive Orthopedics LLC; (8) Advanced Central Laboratory, LLC; (9) Stefan Glowacki, M.D., P.C.; (10) Mukhlis Tooma; (11) Lolo Tooma; (12) Arak Ishaq; (13) Sam Hakki, M.D.; and (14) Stefan Glowacki, M.D.

         Default has been entered for eight of the defendants.[1] Defendants Stefan Glowacki, M.D. and Stefan Glowacki, M.D., P.C., filed a motion to dismiss (Dkt. 43) that will be adjudicated in a separate opinion and order. Pending are defendants Sam Hakki, M.D., Computerised Joint Surgery, LLC, and Mini Invasive Orthopedics, LLC's (“Hakki defendants”) motion to dismiss (Dkt. 31), and defendant Advanced Central Laboratory, LLC's (“Advanced”) motion to dismiss. (Dkt. 34.) The parties have fully briefed each motion. (Dkts. 40, 41, 53, 55.) Pursuant to E.D. Mich. Local R. 7.1(f)(2), the Court will determine the motions without oral argument.

         I. Background

         Plaintiffs allege that defendants devised and implemented a scheme to fraudulently bill Allstate for medical procedures for patients involved in motor vehicle accidents who were eligible for Personal Insurance Protection (“PIP”) benefits under Michigan's No-Fault Act. The alleged scheme involved a fraudulent network of entities, each providing a different type of treatment or services, utilizing various quid pro quo arrangements and referral relationships to unlawfully bill plaintiffs for more than $355, 759.

         According to the complaint, defendant Computerised Joint Surgery LLC (“Computerised Joint”) is a Florida limited liability company with a principal place of business in Clinton Township, Michigan. (Dkt. 1 at 10.) Defendant Sam Hakki is the sole member of Computerised Joint. (Id.) Computerised Joint does not maintain a brick-and-mortar location, but instead operates out of the offices of defendant Mini Invasive Orthopedics, LLC and defendant Rose Pain Management, Inc. (Id. at 11.) Defendant Mini Invasive Orthopedics, LLC (“Mini Invasive) is a Florida limited liability company with a principal place of business in Madison Heights, Michigan. (Id.) Defendant Hakki is the sole member of Mini Invasive. (Id.) Defendant Advanced Central Laboratory, LLC (“Advanced Central”) is a Florida limited liability company with a principal place of business in Allen Park, Michigan. (Id. at 11-12.) Sam Hakette, alleged to be an alias for defendant Hakki, is identified in the Articles of Organization as a manager for Advanced Central. (Id. at 12.) Defendant Sam Hakki is a licensed physician in the state of Michigan, and is the sole listed manager of defendants Computerised Joint and Mini Invasive. (Id. at 14)

         The 264-page complaint details a complex web of interaction between the defendants - including shared mailing addresses and office spaces, overlap in management, and extensive referral and quid pro quo relationships - as well as a variety of unlawful treatment and billing practices. (Id. at 25-27.) A non-exhaustive sampling of plaintiffs' allegations include:

(1) defendants Hakki and Rose Pain Management Inc., submitting bills for P-stim treatment that was never rendered (Dkt. 1 at 42-47);
(2) defendants Utica PT, Rose PT, Rose Pain, Computerised Joint, Mini Invasive, and Hakki submitting bills “for the same or similar services on the same date of service . . . being provided at different locations” (Id. at 59-72);
(3) defendants Computerised Joint and Mini Invasive dispensing durable medical equipment (DME) to patients, and subsequently billing plaintiffs, without the proper license from the Michigan Board of Pharmacy (Id. at 74-77);
(4) defendants Hakki and Stefan Glowacki, M.D. using a predetermined treatment protocol for patients, including documenting exaggerated symptoms, prescribing unnecessary and excessive physical therapy, and performing unnecessary injection-related treatments (Id. at 89-99);
(5) defendants Hakki, Rose Pain, Mini Invasive, and Computerised Joint making assorted false representations regarding the approval of, application of, and medical necessity for P-Stim treatments (Id. at 100-11);
(6) defendants Rose Pain, Computerised Joint, Mini Invasive, Stefan Glowacki M.D., P.C., Stefan Glowacki M.D., and Hakki making fraudulent and unnecessary MRI referrals to defendant Crystal Clear Health Management, Inc. (Id. at 111-14);
(7) defendant Advanced Central billing for unnecessary and excessive urine drug testing based on standing order requisitions from defendant Hakki (Id. at 114-19);
(8) defendants Rose Pain, Computerised Joint, Mini Invasive, Stefan Glowacki, M.D., P.C., Stefan Glowacki, M.D., and Hakki billing plaintiffs “for high-level office visits and consultations that did not occur as billed” (Id. at 158-69)

Plaintiffs' complaint includes 26 “exemplar claims” - individual patient narratives that detail various ways in which defendants engaged in the aforementioned conduct. The complaint is supplemented with over 500 pages of supporting documentation including itemized lists of billed services for disputed patient claims (Dkts. 1-2, 1-3, 1-4, 1-5, 1-6, 1-7, 1-8, 1-9, 1-10), copies of health insurance claim forms for allegedly duplicative services (e.g., Dkts. 1-22, 1-23, 1-24, 1-25, 1-26, 1-27, 1-28, 1-29), and itemized lists of alleged damages (Dkts. 1-45, 1-46, 1-47, 1-48, 1-49, 1-50, 1-51, 1-52, 1-53).

         Plaintiffs request a declaratory judgment that (1) Allstate has no obligation to pay pending and previously denied No-Fault insurance claims submitted by defendants, and (2) defendants cannot seek payment from Allstate or any person insured under an Allstate policy for benefits related to the fraudulent conduct detailed within the complaint. Plaintiff also brings causes of action for violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1962(c) and (d), common law fraud, civil conspiracy, payment under mistake of fact, and unjust enrichment.

         II. Legal Standard

         When deciding a motion to dismiss under Fed.R.Civ.P. 12(b)(6), the Court must “construe the complaint in the light most favorable to the plaintiff and accept all allegations as true. Keys v. Humana, Inc., 684 F.3d 605, 608 (6th Cir. 2012). “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A plausible claim need not contain “detailed factual allegations, ” but it must contain more than ...


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