Metropolitan Property and Casualty Insurance Company v. A.B. Physical Therapy, LLC et al

Filing 118

Judge Richard G. Stearns: ORDER entered granting 61 Motion to Dismiss for Failure to State a Claim; granting in part and denying in part 68 Motion to Dismiss for Failure to State a Claim; granting in part and denying in part 70 Motion to Dismiss for Failure to State a Claim. Berger' motion to dismiss is GRANTED. The motions to dismiss of ABPT, ARDIPT, and the Katsnelsons are GRANTED as to Counts III and V, and DENIED as to Counts I-II, IV, and VI. Metropolitan will have until February 22, 2013, to show cause why the non-moving defendant-employees should not be dismissed. (RGS, law1)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
CIVIL ACTION NO. 12-11059-RGS
METROPOLITAN PROPERTY AND CASUALTY INSURANCE CO.
v.
A.B. PHYSICAL THERAPY, LLC,
ORDER ON MOTIONS TO DISMISS FIRST AMENDED COMPLAINT BY
GREGORY BERGER, ARKADI KATSNELSON, BORIS KATSNELSON, A.B.
PHYSICAL THERAPY, LLC, and ARDI PHYSICAL THERAPY, INC.
February 1, 2013
STEARNS, D.J.
In the Amended Complaint, plaintiff Metropolitan Property and Casualty
Insurance Co. alleges that corporate defendants A.B. Physical Therapy, LLC (ABPT),
and ARDI Physical Therapy, Inc. (ARDIPT), and the named individual defendants
jointly engaged in a fraudulent over-utilization scheme to inflate motor vehicle personal
injury claims submitted to and reimbursed by Metropolitan. As evidence of the
scheme, Metropolitan points to the statistically improbable fact that virtually every
patient evaluation claim it received from ABPT and/or ARDIPT was billed as
“moderately complex,” the fourth most expensive of five possible evaluation

categories.1 Although 90 percent of all soft tissue injuries resolve in less than six
weeks, every patient2 treated by ABPT and/or ARDIPT at Metropolitan’s expense
underwent more than six weeks of therapy or twenty treatment visits. Metropolitan
also alleges that as a result of the inflated medical bills, it had to pay litigation costs and
damages for pain and suffering that would otherwise have been barred by the no-fault
system threshold.3
Individual defendants Boris Katsnelson and Arkadi Katsnelson are the principals
of ABPT and ARDIPT, respectively. Defendant Swaran Goswami is a medical doctor
employed by ABPT and/or ARDIPT, who is alleged to have “always refer[red] patients
for physical therapy” to ABPT and/or ARDIPT. Am. Compl. ¶¶ 105-106. Defendants
Domenic Visocchi, David Bacani, Jerome Mackesy, Gregory Berger, and Farrokh
Najafi are physical therapists employed by the corporate defendants. Defendants Silvia
T. Peloso, Edward Rossi, and Thomas Murray are physical therapy assistants.

1

In one instance, an established patient evaluation was billed as a lengthier (and
more expensive) new patient evaluation.
2

In the Amended Complaint, Metropolitan includes a table of fifty patients who
were treated by ABPT and/or ARDIPT, the time period of the treatments, and the
length and frequency of the treatments.
3

Under Mass. Gen. Laws ch. 231, § 6D, a person allegedly injured in a motor
vehicle accident may only seek monetary damages for pain and suffering in a tort action
if the reasonable and necessary medical treatment expenses exceeded $2,000.
2

Defendants Jeanette Lopez, Giselle Bello, Jacqueline Lugo, and Grisse Pena are office
administrators. Defendants Trigilda Velez, Raymond Rafael Pabon, and Felix Minyette
are liverymen.
The Amended Complaint asserts eight claims. Count I alleges common-law
fraud and deceit against all defendants. Count II alleges a civil conspiracy to commit
fraud on the part of ABPT, ARDIPT, and the Katsnelsons. Counts III-V allege breach
of contract and violations of Mass. Gen. Laws ch. 90, §§ 34A and 34M, intentional
interference with contractual relations, and intentional interference with advantageous
relationships.4 Count VI alleges unfair and deceptive trade practices in violation of
Mass. Gen. Laws ch. 93A against ABPT and ARDIPT. Counts VII and VIII seek
injunctive and equitable relief.
Before the court are motions filed by Berger (dkt # 61), the Katsnelsons (dkt #
68), and ABPT and ARDIPT (dkt # 70), to dismiss the Amended Complaint for failure
to state claims upon which relief can be granted. To survive a Rule 12(b)(6) motion
to dismiss, the factual allegations of a complaint must “possess enough heft” to set
forth “a plausible entitlement to relief.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557,
559 (2007); Thomas v. Rhode Island, 542 F.3d 944, 948 (1st Cir. 2008). As the
Supreme Court has emphasized, this standard “demands more than an unadorned,
4

These three counts are alleged generally against “defendants.”
3

the-defendant-unlawfully-harmed-me accusation. A pleading that offers labels and
conclusions or a formulaic recitation of the elements of a cause of action will not do.
Nor does a complaint suffice if it tenders naked assertion[s] devoid of further factual
enhancement.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal citations and
quotation marks omitted).
Claims against ABPT, ARDIPT, and the Katsnelsons
Counts I & II – fraud-based claims
ABPT, ARDIPT, and the Katsnelsons contend that the fraud and conspiracy
claims were not pled with the particularity required by Fed. R. Civ. P. 9(b). “In
alleging fraud . . . a party must state with particularity the circumstances constituting
fraud . . . .” Fed. R. Civ. P. 9(b). The heightened pleading standard is satisfied by an
averment of “the who, what, where, and when of the allegedly false or fraudulent
representation.” Alternative Sys. Concepts, Inc. v. Synopsys, Inc., 374 F.3d 23, 29 (1st
Cir. 2004). “The requirement that supporting facts be pleaded applies even when the
fraud relates to matters peculiarly within the knowledge of the opposing party.” Wayne
Inv., Inc. v. Gulf Oil Corp., 739 F.2d 11, 14 (1st Cir. 1984). Defendants’ Rule 9(b)
argument boils down to the fact that Metropolitan has not in the Amended Complaint
identified the specific patient invoices that are alleged to be fraudulent.
The court, however, is of the view that Metropolitan has satisfied its burden
4

under Alternative Systems Concepts as to ABPT, ARDIPT, and the Katsnelsons.
Metropolitan has identified fifty patients by name whose treatment regimens are
deemed suspect (the “who”) and the times and durations of their treatments (the “when
and where”). The Amended Complaint further alleges that all of these patients were
overtreated for their injuries and/or their treatments were systematically overbilled (the
“what”).
The defendants argue in the alternative that Counts I and II (as well as the other
tort claims) are barred (in party) by the three-year statute of limitations for tort claims,
given that Metropolitan has alleged fraudulent conduct dating back to 2007. As a
matter of fairness, the statute of limitations is tolled when a plaintiff has been injured
by an “inherently unknowable” wrong. Flynn v. Associated Press, 401 Mass. 776, 781
(1988). The “inherently unknowable” standard is no different from and is used
interchangeably with the “knew or should have known” standard. Szymanski v. Boston
Mut. Life Ins. Co., 56 Mass. App. Ct. 367, 371 (2002). Under Massachusetts law
“[f]actual disputes concerning the date on which the plaintiff knew or should have
known of his cause(s) of action are resolved by a jury.” Wolinetz v. Berkshire Life Ins.
Co., 361 F.3d 44, 48 (1st Cir. 2004). Metropolitan credibly counters that it could not
have discovered the fraudulent nature of the alleged scheme until the pattern of alleged
overbilling and overtreatment emerged and could be exposed by recognition and
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investigation. Whether Metropolitan should have discovered this pattern sooner and
connected the dots is a matter of disputed fact.
Counts III and V – the contract-based claims
As to the breach of contract claim (Count III), defendants argue that
Metropolitan has not identified a contract that has been allegedly breached.
Metropolitan contends that Mass. Gen. Laws ch. 90, § 34M, imposes reciprocal
contractual obligations on all parties, including the covenant of good faith and fair
dealing, which defendants breached when they submitted false claims. Section 34M
provides that
[i]n any case where [insurance] benefits [for medical treatment as a result
of a vehicular accident] due and payable remain unpaid for more than
thirty days, any unpaid party shall be deemed a party to a contract with
the insurer responsible for payment and shall therefore have a right to
commence an action in contract for payment of amounts therein
determined to be due in accordance with the provisions of this chapter.
The problem with Metropolitan’s argument is that section 34M clearly states that a
contractual relationship is imposed only when insurance benefits that are “due and
payable remain unpaid . . . for more than thirty days.” Because Metropolitan has not
alleged that it has failed to pay any of the relevant insurance claims to defendants, no
statutory contract, express or implied, has been created.
“[T]o make out a claim for interference with advantageous business relations,
6

the plaintiff must prove that (1) he had a business relationship or contemplated contract
of economic benefit with a third party, (2) the defendants knew of the relationship, (3)
the defendants interfered with the relationship through improper motive or means, and
(4) the plaintiff’s loss of advantage resulted directly from the defendants’ conduct.”
Kurker v. Hill, 44 Mass. App. Ct. 184, 191 (1998). As pled, Count V characterizes
agreements to settle the legal liabilities of its insureds owed to third parties as
“advantageous business relationship.” The Amended Complaint does not allege a basis
in fact for concluding that defendants were aware of any potential or actual settlement
with any identified party, an essential element of the tort.5
Counts VI – deceptive and unfair business practices
ABPT and ARDIPT contend that because Chapter 93A is subject to a four-year
statute of limitations, Count VI should be dismissed, presumably in part. For the
reasons discussed earlier, this argument is defeated by the “discovery” rule.6
Claims Against the Employee-Defendants
5

Although by providing treatment and submitting claims for insurance
reimbursement it is fair to infer that defendants knew of the underlying insurance
contracts and can therefore be found liable for tortious interference with the insurance
contract (Count IV), the Amended Complaint provides no basis of support for the
further inference that defendants knew that specific patients had brought tort claims,
and whether these claims, if brought, were or were not settled (Count V).
6

Counts VII and VIII are not legal claims, but prayers for relief, and need not
be addressed in the context of a motion to dismiss.
7

The Amended Complaint does not state actionable claims against the employeedefendants. Other than identifying these defendants by name and listing their seemingly
mundane job titles, the Amended Complaint makes no specific factual allegations that
would suggest that any one of them was a knowing actor in the fraudulent scheme that
is alleged.7 A district court may, on its own initiative, note the inadequacy of a
complaint and enter a dismissal. It should do so, however, only after giving the plaintiff
notice and an opportunity to address the issue. Wyatt v. City of Boston, 35 F.3d 13, 1415 (1st Cir. 1994); see also Chute v. Walker, 281 F.3d 314, 319 (1st Cir. 2002).
Consistent with these teachings, the court will give Metropolitan twenty-one days from
the date of these decision to show cause why all claims should not be dismissed against
the employee-defendants.
ORDER
Berger’s motion to dismiss is GRANTED. The motions to dismiss of ABPT,
ARDIPT, and the Katsnelsons are GRANTED as to Counts III and V, and DENIED
as to Counts I-II, IV, and VI. Metropolitan will have until February 22, 2013, to show
cause why the non-moving defendant-employees should not be dismissed.

7

The only specific factual allegation against an employee-defendant is the
allegation that Dr. Goswami “always refer[red] patients for physical therapy” to ABPT
and/or ARDIPT. However, there is no allegation that the referrals themselves were
fraudulent.
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SO ORDERED.
/s/ Richard G. Stearns
_______________________________
UNITED STATES DISTRICT JUDGE

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