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Allstate Insurance Company v. Tox Testing, Inc.

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

October 22, 2019

ALLSTATE INSURANCE COMPANY, ALLSTATE FIRE AND CASUALTY INSURANCE COMPANY, ALLSTATE PROPERTY AND CASUALTY INSURANCE COMPANY, ESURANCE INSURANCE COMPANY, and ESURANCE PROPERTY AND CASUALTY INSURANCE COMPANY, Plaintiffs,
v.
TOX TESTING, INC., PARAGON LABS, LLC, MICHIGAN TECHNOLOGY PARTNERS, LLC, CURE IMAGING, LLC, U.S. HEALTH PHARMACEUTICALS, LLC d/b/a MEDS DIRECT, BLOCK BILLING SOLUTIONS, LLC, MICHAEL ANGELO, and CHITRA SINHA, M.D., Defendants.

          David R. Grand United States Magistrate Judge

         OPINION AND ORDER (1) GRANTING PLAINTIFFS' MOTION FOR ENTRY OF JUDGMENT AGAINST MERCYLAND HEALTH SERVICES, PLLC AND MOHAMMED ALI ABRAHAM, M.D., a/k/a MOHAMMED ALI IBRAHIM (ECF NO. 96) AS UNOPPOSED, (2) ENTERING THE AGREED JUDGMENT, (3) PERMITTING PLAINTIFFS TO SUBMIT A BILL OF COSTS DETAILING THEIR ATTORNEY'S FEES AND COSTS INCURRED AS A RESULT OF THE BREACH OF THE SETTLEMENT AGREEMENT, AND (4) CANCELING THE HEARING SCHEDULED FOR OCTOBER 23, 2019 AT 10:00 A.M.

          PAUL D. BORMAN UNITED STATES DISTRICT JUDGE.

         In this action, the Allstate plaintiffs allege that the defendants, comprised of “a medical clinic, urine drug testing companies, magnetic resonance imaging (“MRI”) facilities, pharmacies, physical therapy clinics, and the physicians, owners, managers, agents and representatives of the same, ” engaged in a fraudulent scheme to seek reimbursement under Michigan's No-Fault Act for treatment and services that were not actually rendered, were medically unnecessary, were fraudulently billed, and were not lawfully rendered. Allstate entered into a confidential settlement agreement with two of the defendants, but now claims that those defendants materially breached the settlement agreement and accordingly seeks entry of the “Agreed Judgment” as provided by the parties as a term of the settlement.

         Presently before the Court is Plaintiffs' Motion for Entry of Judgment Against Mercyland Health Services, PLLC (“Mercyland”) and Mohammed Ali Abraham, M.D., a/k/a Mohammed Ali Ibrahim (“Abraham”). (ECF No. 96.) Defendants Mercyland and Abraham have not responded to Allstate's motion. The Court has determined, pursuant to E.D. Mich. L.R. 7.1(f), that a hearing is not necessary and decides the matter on the written submission.

         I. BACKGROUND

         A. Allstate's Complaint

         On October 25, 2018, Plaintiffs Allstate Insurance Company, Allstate Fire and Casualty Insurance Company, Allstate Property and Casualty Insurance Company, Esurance Insurance Company, and Esurance Property and Casualty Insurance Company (collective “Allstate” and/or “Plaintiffs”) filed their Complaint against 18 defendants, including Mercyland Health Services, PLLC (“Mercyland”) and Mohammed Ali Abraham, M.D., a/k/a Mohammed Ali Ibrahim (“Abraham”). (ECF No. 1, Complaint.) Allstate alleges the existence of a well-organized and complex fraudulent scheme whereby the defendant medical providers submitted false and fraudulent medical records, bills, and invoices to Allstate seeking reimbursement under the Michigan No-Fault Act, Mich. Comp. Laws § 500.3101, et seq., for medical treatment and services that were not actually provided, were medically unnecessary, were not lawfully rendered, and were charged at unreasonable rates. (Id.) Allstate asserts claims for violation of the Racketeer Influenced and Corrupt Organizations (“RICO”) Act, 18 U.S.C. § 1962(c) and (d), common law fraud, civil conspiracy, payment under mistake of fact, unjust enrichment, and declaratory relief. (Id.)

         B. April 1, 2019 Settlement Agreement Between Allstate, Mercyland and Abraham

         On April 1, 2019, Plaintiffs Allstate and Defendants Mercyland and Abraham entered into a Confidential Settlement Agreement to resolve Allstate's allegations in the Complaint against Mercyland and Abraham only. (ECF No. 96-4, Confidential Settlement Agreement.) The Settlement Agreement required Mercyland and Abraham, jointly and severally, to pay the amount set forth in the Agreement to Allstate within 75 days of the Settlement Agreement's execution date, April 1, 2019. (Id. ¶ 2.) Thus, payment was due to Allstate on or before June 15, 2019. To “assure that Mercyland and Abraham will comply with their obligations under this [Settlement] Agreement, ” Mercyland and Abraham were required to (and purportedly did) sign an agreed-upon form of judgment (the “Agreed Judgment”) as a term of the Settlement Agreement, in the amount of $250, 000.00, less any payments made by Mercyland and Abraham pursuant to paragraph 2 of the Agreement. (Id. ¶ 3 and Exhibit A; ECF No. 96-3, Agreed Judgment.) The Settlement Agreement provides that, “in the event that Allstate does not receive timely payment pursuant to paragraph two, ” Allstate is entitled to enter the Agreed Judgment after providing Mercyland and Abraham with ten (10) days written notice of the breach. (ECF No. 96-4, Settlement Agreement ¶ 3.)

         In the May 22, 2019 Stipulation and Order dismissing Allstate's claims against Mercyland and Abraham, without prejudice, the Court expressly “retain[ed] jurisdiction over this matter only to enforce the terms of settlement reached between the parties.” (ECF No. 67, May 22, 2019 Stipulation & Order of Dismissal 5, PgID 2626.)

         C. Mercyland and Abraham Breached the Parties' Settlement Agreement

         Pursuant to the terms of the parties' Settlement Agreement, Mercyland and Abraham were required to make payment of the settlement amount to Allstate, in full, by June 15, 2019. (See Settlement Agreement ¶ 2.) However, Allstate did not receive payment, and, on June 18, 2019, Allstate provided written notice to Mercyland and Abraham of their “material breach of the Settlement Agreement” because of their failure to make payment “within the time specified by the Settlement Agreement, ” or thereafter. (ECF No. 96-5, June 18, 2019 Written Notice from Allstate, PgID 3350.) Allstate advised in that notice that if the material breach was not cured within ten days (by June 28, 2019), it would “enter the Agreed Judgment and seek all damages available to it.” (Id.) Mercyland and Abraham failed to cure the breach and have not made any payment to Allstate due pursuant to the parties' Settlement Agreement. (ECF No. 96-6, Catia Monforton-Farris Aff., ¶ 6, PgID 3352.)

         D. Allstate's Motion for Entry of Judgment Against ...


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