July 31, 2009
Autoone Ins. Co. v Manhattan Hgts. Med., P.C. (2009 NY Slip Op 51663(U))
https://www.beynensonlaw.com/case-law/autoone-ins-co-v-manhattan-hgts-med-p-c-2009-ny-slip-op51663u/
- Judge
- Markey, J.
- Decided
- July 31, 2009
- Citation
- 2009 NY Slip Op 51663(U) · 24 Misc 3d 1229(A)
- Posture
- Other motion
- Outcome
- Insurer prevailed
Posture, outcome, issues and treatment by other decisions are Beynenson Law’s classification. Treatment labels are assigned by a language model reading the citing decision; negative and appeal-history labels are checked by a second reader.
Summary
Editorial summary by Beynenson Law, not part of the court’s decision.
Reported in New York Official Reports at Autoone Ins. Co. v Manhattan Hgts. Med., P.C. (2009 NY Slip Op 51663(U))
| Autoone Ins. Co. v Manhattan Hgts. Med., P.C. |
| 2009 NY Slip Op 51663(U) [24 Misc 3d 1229(A)] |
| Decided on July 31, 2009 |
| Supreme Court, Queens County |
| Markey, J. |
| Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. |
| This opinion is uncorrected and will not be published in the printed Official Reports. |
Supreme Court, Queens County
Autoone Insurance
Company, et al.,
against Manhattan Heights Medical, P.C., et al. |
25257/08
For the Plaintiffs: John E. McCormack, P.C., 41 Hilton Ave., Hempstead, NY 11550
For Defendants Bronx Park Medical, P.C., Inwood Hill Medical P.C., Dr. Noel Worrell Howell, Alexander Freed, Innessa Drabkin, Silver Pines Management Corp., Integra CBA Co., Inc., PKH Corp., and Michael Mazur: Lifshutz & Lifshutz, P.C., by Gary Burgoon, 501 Fifth Ave., suite 506, NY, NY 10017
For Defendant Healthbay Medical, P.C.: George T. Lewis, Jr., P.C., 485 Underhill Blvd., suite 101, Syosset, NY 11791
For Defendants Jean D. Miller, D.O., Jean Miller, D.O., P.C., and Acadian Medical P.C.: Kern Augustine Conroy & Schoppman, P.C., by Douglas M. Nadjari, Esq., 1325 Franklin Ave., Garden City, NY 11530
For Defendants Josh Vainer and SVG MGMT., Inc.: Matthew J. Conroy & Associates, P.C., by Matthew J. Conroy and Maria Campese Diglio, Esqs., 350 Old Country Road, suite 106, Garden City, NY 11530
For Defendants Simon Pevzner, ASPG MGNT., Inc., Veritas Management Corp., Group Square I.S. Ltd., Kritek, Inc., Strob, Inc., and Lokh Corp.: Schlam Stone Dolan, LLP, by Thomas A. Kissane and Samuel L. Butt, Esqs., 26 Broadway, NY, NY 10004
Other Defendants are either Pro Se and/or have not appeared.
Charles J. Markey, J.
The plaintiffs have moved for a preliminary injunction, inter alia, prohibiting defendant Pueblo Medical Treatment, PC, defendant Nagle Medical Plaza, PC, defendant Kingsbridge Community Medical, PC, defendant Inwood Hill Medical, PC, defendant Bronx Park Medical, PC, and defendant Healthbay Medical, PC from the further prosecution of pending lawsuits and arbitration proceedings brought by them against the plaintiffs to recover No Fault first-party medical benefits.
The complaint alleges that the plaintiffs are domestic and foreign insurance companies that issue automobile policies in New York State providing benefits payable pursuant to the Comprehensive Automobile Insurance Reparations Act (the No-Fault Law) presently codified in article 51 of the Insurance Law. The plaintiffs are required by law to pay an insured’s No-Fault benefits directly to a health care provider who has been assigned his right to benefits covering medically necessary treatments and tests. Some of the defendants, termed “the Management Defendants,” are the true owners of certain medical facilities also named in the complaint and termed “the provider defendants.” Some of the defendants, termed “the licensed defendants,” hold or did hold medical licenses and fronted as the owners of the provider defendants. The licensed defendants “essentially sold the use of their names and licenses to “the Management Defendants.”
There are three groups of defendants each comprised of some of the licensed defendants,
provider defendants, and management defendants:
(1) The Pevzner management group allegedly using the licenses of Dr. Miller, Dr.
Mukendi, and Dr. Kadianakis (Group 1),
(2) the Kargman management group allegedly using the licenses of Dr. Garcia, Dr. Iroku,
Dr. Richie, and Dr. Chiarmonte (Group 2), and
(3) the Drabkin/Freed management group allegedly using the licenses of Dr. Howell and
Dr. Iroku (Group 3).
The following chart sets forth the three groups of defendants: [*2]
Group 1
| Provider Defendants |
|---|
| Manhattan Heights Medical, P.C. |
| West River Medical, P.C. |
| Arcadian Medical, PC |
| Jean Miller, D.O. |
| Lane Medical, PC |
| Licensed Defendants |
|---|
| Melchias Mukendi, MD |
| Jean Deborah Miller, DO |
| Jean Deborah Miller, DO |
| Kiki Kadianakis, DO |
| Management Defendants |
|---|
| Simon Pevzner/Seymon Prevner/Seymon Pezner/Simon Pevznea |
| Stanislav Sorkin/Stanley Sorkin |
| Strob Inc. |
| SVG MGMT, INC. |
| Josh Vainer |
| ASPG MGMT Inc. |
| Veritas Management Inc. |
| Almas Management, Inc. |
| Lokh Corp. |
| Group Square |
| Kritek |
| Oleg Rubin |
| Bazmana Rubin & Sazha Management Corp. |
Group 2
| Provider Defendants |
|---|
| Dykman Med. Diag. & Tmt PC |
| Pueblo Medical Treatment PC |
| Nagle Medical Plaza, PC |
| Kingsbridge Community Med PC |
| Total Health Care Medical PC |
| Licensed Defendants |
|---|
| Rafael Garcia, MD |
| Rafael Garcia, MD |
| Humphrey Iroku, MD |
| Carl Richie, MD & Lawrence Chiarmonte, MD |
| Carl Richie, MD |
| Management Defendants |
|---|
| Dmitry Kargman |
| SRK Management Group Inc. & Care Plus of NY Inc. |
| Claire Slobodsky aka Claire Slobodski |
| CNL Management Corp. |
| Icon Management Inc. |
| Espy Management Inc. & Zev Corporation |
Group 3
[*3]| Provider Defendants |
|---|
| Inwood Hill Medical PC |
| Bronx Park Medical PC |
| Healthbay Medical PC |
| Licensed Defendants |
|---|
| Neal Worrell Howell MD |
| Neal Worrell Howell MD |
| Humphrey Iroku MD |
| Management Defendants |
|---|
| Inessa Drabkin/Inessa Freed/Inna Freed/Inna Drabkin/Iness Drabkin |
| Silver Pines Management Corp. |
| Integra CBA Co. Inc. |
| Alexander Freed |
| PKH Corp. |
| Michael Mazur Yevgeniy Ryvkin & Lucy Rodriguez |
The defendants have allegedly defrauded the plaintiff insurers by submitting bills pursuant to New York State’s No-Fault Law for medical services rendered by corporations not truly owned by holders of medical licenses. On or about October 15, 2008, the plaintiffs (over 20 insurance companies) began this lawsuit asserting six causes of action, the first for common-law fraud, the second for unjust enrichment, the third for a declaratory judgment concerning fraudulent incorporation, the fourth for declaratory judgment concerning illegal fee splitting, the fifth for reimbursement based on Public Health Law § 238-a, and the sixth for a declaratory judgment concerning medical services allegedly rendered by independent contractors.
In order to obtain a preliminary injunction, the plaintiffs had to show (1) a likelihood of ultimate success on the merits, (2) irreparable injury if provisional relief is withheld, and (3) a weight of the equities in their favor (see, Aetna Insurance Co. v. Capasso, 75 NY2d 860 [1990]; McNeil v. [*3]Mohammed, 32 AD3d 829 [2nd Dept. 2006]). The plaintiffs successfully carried this burden (see, St. Paul Travelers Ins. Co. v Nandi, 2007 WL 1662050, 2007 NY Slip Op 51154[U] [Sup Ct Queens County, Dollard, J.] [in action involving alleged fraudulently incorporated medical providers, preliminary injunction granted prohibiting defendants from prosecuting pending lawsuits and commencing future lawsuits against No Fault insurer]).
In regard to the first requirement, the plaintiffs established a likelihood of ultimate success on the merits by making a prima facie showing that they can prove their causes of action based on fraudulent incorporation (see, McNeil v Mohammed, 32 AD3d 829, supra ; Trimboli v Irwin, 18 AD3d 866 [2nd Dept. 2005]; Four Times Square Associates, L.L.C. v Cigna Investments, Inc., 306 AD2d 4 [1st Dept. 2003]). The verified complaint, the affidavit of James Beadle (an investigator for plaintiff Autoone Insurance Company), and the deposition and examination transcripts from other cases show prima facie that certain of the licensed defendants did not truly own and operate the provider defendants against whom injunctive relief is sought. “State law mandates that professional service corporations be owned and controlled only by licensed professionals (see, Business Corporation Law §§ 1503[a]; 1507, 1508), and that licensed professionals render the services provided by such corporations (see, Business Corporation Law § 1504[a])” (One Beacon Ins. Group, LLC v Midland Medical Care, P.C., 54 AD3d 738, 740 [2nd Dept. 2008]).
In State Farm Mut. Auto. Ins. Co. v Mallela, (4 NY3d 313 [2005]), an action for, inter alia, a declaratory judgment brought by an insurer against defendants allegedly operating the same type of scheme allegedly involved in the case at bar, the Court of Appeals held that, on the basis of 11 NYCRR 65-3.16(a)(12), insurers may deny no-fault payments to fraudulently incorporated health care providers to which patients have assigned their claims. In regard to the requirement of irreparable injury, the plaintiffs adequately demonstrated that equitable relief is a more efficient remedy than monetary damages (see, People by Abrams v Anderson, 137 AD2d 259 [4th Dept. 1988]; Poling Transp. Corp. v A & P Tanker Corp., 84 AD2d 796 [2nd Dept. 1981]).
The plaintiffs have shown that the issuance of a preliminary injunction is necessary to prevent the repetitive litigation and arbitration of numerous No Fault claims for reimbursement by medical providers where the insurers raise the same defense of fraudulent incorporation. In regard to the weight of the equities (see, Reuschenberg v Town of Huntington, 16 AD3d 568 [2nd Dept. 2005]; Credit Index, L.L.C. v Riskwise Intern. L.L.C., 282 AD2d 246 [1st Dept. 2001]; McLaughlin, Piven, Vogel, Inc. v W.J. Nolan & Co., Inc., 114 AD2d 165 [2nd Dept.], appeal denied, 67 NY2d 606 [1986]; Metropolitan Package Store Ass’n, Inc. v Koch, 80 AD2d 940 [3rd Dept. 1981]; Nassau Roofing & Sheet Metal Co., Inc. v Facilities Development Corp., 70 AD2d 1021 [3rd Dept], appeal dismissed, 48 NY2d 654 [1979]; 67A NY Jur2d, “Injunctions,” § 31), the issuance of a preliminary injunction will not unduly cause hardship to any of the defendants, but, to the contrary, all parties will benefit from having the issue of fraudulent incorporation determined in one action.
Accordingly, the plaintiffs’ motion for a preliminary injunction is granted. The parties may submit affidavits concerning the proper amount of the undertaking at the time of the settlement of the order to be entered hereon (see, NSA, Inc. V. L.I.C. Food Court, Inc., 2009 WL 1904683, 2009 NY Slip Op 51411 [U] [Sup Ct Queens County 2009] [decision by the undersigned]; Chiu Cheuk Chan v. 28-42, LLC, 2009 WL 129893, 2009 NY Slip Op 50080 [U] [Sup Ct Queens County 2009] [decision by the undersigned]; Nand Land LAL v. Shiri Guru Ravidas Sabha of New York Inc., 2008 NY Slip Op 51720[U] [Sup Ct Queens County 2008]; Daily Bread Café Inc. v. City Lights at Queens [*4]Landing Inc., 2007 WL 3375899, 2007 NY Slip Op 52158 [Sup Ct Queens County 2007]; Molyneux-Petraglia v. Northbridge Capital Mgmt. Inc., 2007 WL 1203597, 2007 NY Slip Op 50845[U] [Sup Ct NY County 2007]; Citadel Mgt. Inc. v. Hertzog, 182 Misc 2d 902, 906 [Sup Ct Queens County 1999]; Connor v. Cuomo, 161 Misc 2d 889, 897 [Sup Ct Kings County 1994]; Jewelry Realty Corp. v. 55 West 47 Co., 90 Misc 2d 407, 408 [Sup Ct NY County 1977].)
Settle order.
___Hon. Charles J. MarkeyJustice, Supreme Court, Queens County
Appearances:
Legal questions (3)
Questions of no-fault law this decision rules on, from our Legal Questions pages. Bars count the decisions on the question by year and court, coloured by category; circles are this decision and the decisions on the question it cites or that cite it. Point at a bar or circle for details. The categories and summaries are Beynenson Law’s classification, made by a language model and checked by a second reading.
Does an insurer’s no-coverage declaratory judgment, or pending declaratory action, bar or stay a no-fault claimant’s action?
This decision: The claimant's action is stayed, enjoined or adjourned while the DJ action is pending
Granted the insurers a preliminary injunction barring the providers from prosecuting pending no-fault suits and arbitrations while the declaratory action proceeded, finding likely success on fraudulent incorporation, irreparable harm from repetitive litigation and favorable equities.
Of the 164 decisions on this question in the Second Department courts and the Court of Appeals, 7 (this one included) are in the same category.
On the merits, when may a no-fault insurer withhold payment because unlicensed persons own or control the provider (Mallela)?
This decision: Evidence of unlicensed ownership/control enough to proceed, but not resolved (rules on the question, but another ground decided the case)
Granted insurers a preliminary injunction against the providers' pending suits and arbitrations, finding investigator affidavits and deposition transcripts showed prima facie that the licensed physicians did not truly own and operate the providers.
Of the 61 decisions on this question in the Second Department courts and the Court of Appeals, 19 (this one included) are in the same category.
May the insurer raise and investigate a Mallela (fraudulent incorporation) defense, or is it precluded, waived or denied discovery?
This decision: Insurer may raise or investigate the Mallela defense here (rules on the question, but another ground decided the case)
Granted insurers a preliminary injunction staying the providers' pending suits and arbitrations so the fraudulent-incorporation declaratory claims could be decided in one action, finding a prima facie showing and favorable equities.
Of the 136 decisions on this question in the Second Department courts and the Court of Appeals, 112 (this one included) are in the same category.
Cited in this decision
A label shows how this decision treated the case it cites.
- St. Paul Travelers Ins. Co. v Nandi (2007 NY Slip Op 51154(U)) FollowedAn insurer obtained preliminary injunctions against acupuncture collection suits based on evidence of provider licensing defects.
- One Beacon Ins. Group, LLC v Midland Med. Care, P.C. (2008 NY Slip Op 06813) FollowedThe insurers raised a triable issue of fraudulent incorporation despite evidence of physician ownership and oversight of the provider.
- State Farm Mut. Auto. Ins. Co. v Mallela (2005 NY Slip Op 02416) FollowedFraudulently incorporated medical providers are ineligible for no-fault reimbursement under 11 NYCRR 65-3.16 (a) (12).
Cited by
- New York Cent. Mut. Ins. v McGee (2009 NY Slip Op 52385(U))The insurer's common-ownership allegations did not justify joining all provider defendants, and its requested injunction lacked evidentiary support.
Similar decisions
- Country-Wide Ins. Co. v Gotham Med., P.C. (2015 NY Slip Op25387)A provider's refusal to answer relevant EUO questions is a material breach of the policy's cooperation condition and precludes recovery.
- Montgomery Med., P.C. v State Farm Ins. Co. (2006 NY Slip Op 51116(U))The insurer's evidence raised a factual issue of fraudulent incorporation despite denials issued 53 days after the provider's EUO. Under 11 NYCRR 65-3.8 (a) (1), verification was received when the EUO occurred; the late denials precluded medical necessity and concurrent-care defenses.
- State Farm Mut. Auto. Ins. Co. v Farescal (2009 NY Slip Op 50937(U))A medical provider cannot recover assigned no-fault benefits for services rendered by independent contractors rather than by it or its employees.
- Carnegie Hill Orthopedic Servs. P.C. v GEICO Ins. Co. (2008 NY Slip Op 50639(U))An insurer's provider-fraud defense is precluded by an untimely denial, but fraud and unjust-enrichment counterclaims may proceed.
- New York Cent. Mut. Fire Ins. Co. v 563 Grand Med., P.C. (2004 NY Slip Op 50979(U))An insurer cannot recoup payments solely for an alleged violation of Business Corporation Law § 1503 (a) without a private right of action.