Gucwa et al v. Lawley et al
ORDER granting 81 Motion to Dismiss; granting 83 Motion to Dismiss; granting 84 Motion to Dismiss; granting 85 Motion to Dismiss; granting 86 Motion to Dismiss; denying 104 Motion for Sanctions; denying 106 Motion for Leave. Signed by District Judge Arthur J. Tarnow. (MLan)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
NANCY GUCWA AND MARK MARUSZA,
Case No. 15-10815
SENIOR U.S. DISTRICT JUDGE
ARTHUR J. TARNOW
DR. JEFFREY LAWLEY, ET AL.,
U.S. MAGISTRATE JUDGE
ANTHONY P. PATTI
OPINION AND ORDER GRANTING DEFENDANTS’ MOTIONS TO DISMISS; DENYING
DEFENDANT DR. BARRY RUBIN’S MOTION FOR SANCTIONS; AND DENYING
PLAINTIFFS’ MOTION FOR LEAVE TO FILE AN AMENDMENT TO THE SECOND
In October 2011, Mark Marusza suffered severe injuries to, among other
things, his brain, shoulders, cervical spine, and ribs, when he was struck by an
SUV while walking through an intersection during the course and scope of his
employment. Accident Fund Insurance Company, the workers’ compensation
administrator, refused to pay for some of Marusza’s treatment, and for attendant
care services provided by Marusza’s girlfriend, Nancy Gucwa, after it reviewed a
series of evaluation reports written by Doctors Ager, Baker, Rubin, and Lawley.
After the Workers’ Compensation Board Magistrate ordered Accident Fund to pay
Marusza, Plaintiffs filed this lawsuit against Accident Fund and the five doctor
defendants, alleging a conspiracy, pursuant to which Accident Fund hired the
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doctors to write fraudulent reports for the purpose of denying claimants workers’
compensation benefits, in violation of the Racketeer Influenced and Corrupt
Organizations (“RICO”) Act. Plaintiffs also bring claims of tortious interference
with contract or expectancy; liability under the Medicare Secondary Payer Act
(“MSPA”); and the tort of false imprisonment.
For the reasons discussed in depth below, the Court will GRANT
Defendants’ Motions to Dismiss. The Court will DENY both Defendant Rubin’s
Motion for Sanctions and Plaintiffs’ Request for Sanctions against Defendant
Rubin, and will DENY Plaintiffs’ Motion for Leave to File an Amendment to the
Second Amended Complaint.
Given the nature of Defendants’ motions, the Court will accept the
complaint’s factual allegations as true and draw all reasonable inferences in the
plaintiffs’ favor. Ohio Police & Fire Pension Fund v. Standard & Poor’s Fin.
Servs. LLC, 700 F.3d 829, 835 (6th Cir. 2012).
Plaintiff Marusza was struck by a car while on the job in October 2011. The
accident caused him to suffer a traumatic brain injury (“TBI”) and injuries to his
spine and shoulder. Plaintiff Gucwa, Marusza’s girlfriend, provided attendant care
services for his brain and spine injuries.
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Defendant Accident Fund Insurance Company (“AF”) administered
workers’ compensation insurance under a contract of insurance through Marusza’s
employer. Plaintiffs allege that AF hired the doctor defendants for the purpose of
obtaining fraudulent reports supporting the denial of benefits, and that the doctor
defendants consistently wrote biased reports favorable to AF. Relying on reports
prepared by Doctors Ager, Baker, Rubin, and Lawley, AF refused to pay for
attendant care services provided by Gucwa and for treatment Marusza received for
his shoulder injuries. Medicare paid for some of the treatment costs that AF
refused to cover.
Plaintiffs submitted claims to the workers’ compensation agency. After a
series of hearings held in October-December of 2015, Magistrate Beatrice B.
Logan, of the Workers’ Compensation Board, made the following relevant factual
findings as to Mr. Marusza:
Plaintiff sustained a mild traumatic brain injury, injury to his neck,
left and right shoulders, lower back, and vision problems as a result of
the October 2011 motor vehicle accident;
Plaintiff returning to useful work is probably not practical;
Plaintiff lost all wage earning capacity due to the injuries he
Plaintiff’s treatment was needed for the problems related to the TBI
and orthopedic injuries Plaintiff sustained as a result of the motor
Defendant Accident Fund is responsible for the reasonable and
necessary medical treatment, including the residual TBI treatment and
the orthopedic injuries;
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Accident Fund shall pay for reasonable and necessary medical
treatment of Plaintiff’s employment-related condition of the TBI, the
convergence insufficiency, hyperphoria, ptosis, end point nystagmus,
and the orthopedic injuries Plaintiff sustained as a result of the
Plaintiff cannot return to his former job with Defendant, any of his
past jobs, or any employment other than a sheltered workshop;
(Dkt. 79, Pg. ID 1220-25).
The Magistrate ordered Accident Fund to pay Plaintiff Marusza worker’s
compensation benefits at the rate of $592.88 per week from October 19, 2011 until
otherwise ordered and to pay for reasonable and necessary medical treatment for
Plaintiff’s employment related injury. Accident Fund paid Plaintiff Marusza
$74,382.00 on August 12, 2016. (Dkt. 102-1, Pg. ID 1846).
The Court will recite only the pertinent parts of the procedural history of this
case. After Plaintiffs filed their Amended Complaint [Dkt. 2] in March 2015, the
Defendants filed their Motions to Dismiss [Dkt. 27, 32-34, 36] in April and May
2015. Further briefing on these motions followed, and in lieu of a hearing, the
Court met with counsel for a status conference in November 2015. The Court
adjourned the hearing until after the Workers’ Compensation Board issued a
written decision in Marusza’s case.
Plaintiffs filed their Second Amended Complaint [Dkt. 75] in April 2016.
The Workers’ Compensation Board Magistrate issued an Opinion and Order [Dkt.
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79] on May 23, 2016. Thereafter, Defendants filed their Motions to Dismiss the
Second Amended Complaint [Dkt. 81, 83-86] in late July 2016. Both parties timely
briefed their Responses [Dkt. 93-97] and Replies [Dkt. 98-102] by October 2016.
Defendant Dr. Barry Rubin filed a Motion for Sanctions (Dkt. 104) on
November 8, 2016. Plaintiffs then filed a Motion for Leave to File an Amendment
to the Second Amended Complaint [Dkt. 106] on November 21, 2016. After a
hearing on December 2, 2016, the Court took all motions under advisement.
Defendants’ Motions to Dismiss
STANDARD OF REVIEW
All Defendants move to dismiss Plaintiffs’ complaint pursuant to Federal
Rules of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can
be granted. To survive such a motion, Plaintiffs must plead factual content that
allows the court to draw a reasonable inference that the defendant is liable for the
misconduct alleged. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “A plaintiff's
complaint must provide ‘more than labels and conclusions, and a formulaic
recitation of the elements of a cause of action will not do.’” Iqbal, 556 U.S. at 678
(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). Courts are not
required to accept as true legal conclusions framed as factual allegations. See
Twombly, 550 U.S. at 555. “Factual allegations must be enough to raise a right to
relief above the speculative level on the assumption that all the allegations in the
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complaint are true (even if doubtful in fact).” Id. (internal citations omitted).
“[W]here the well-pleaded facts do not permit the court to infer more than the mere
possibility of misconduct, the complaint has alleged—but it has not ‘show[n]’—
'that the pleader is entitled to relief.’” Iqbal, 556 U.S. at 679 (quoting Fed. R. Civ.
Plaintiffs bring claims under RICO against Defendants AF and Doctors
Baker, Lawley, and Ager. They also assert tortious interference claims against all
of the doctors. Finally, Plaintiffs allege that AF has violated the Medicare
Secondary Payer Act (“MSPA”) and that AF and Dr. Baker are liable for the tort of
A. Racketeer Influenced and Corrupt Organizations (“RICO”) Act
Plaintiffs suing under RICO must establish that illegal racketeering activities
have caused them injury “in [their] business or property.” 18 U.S.C. § 1964(c). To
state a civil RICO claim, a plaintiff must allege “(1) conduct (2) of an enterprise
(3) through a pattern (4) of racketeering activity.” Sedima, S.P.R.L. v. Imrex Co.,
Inc., 473 U.S. 479, 496 (1985) (footnote omitted). The pattern element requires
continuity, “referring either to a closed period of repeated conduct, or to past
conduct that by its nature projects into the future with a threat of repetition.”
Brown v. Cassens Transport Co., 546 F.3d 347, 354 (6th Cir. 2008) (internal
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quotations omitted). A plaintiff must also allege (5) an “injury to business or
property” that is (6) proximately caused by the defendants’ racketeering activity.
Jackson v. Sedgwick Claims Management Services, 731 F.3d 556, 563–64 (6th Cir.
2013) (en banc). Furthermore, plaintiffs must demonstrate that “a RICO predicate
offense not only was a ‘but-for’ cause of [the] injury, but was the proximate cause
as well.” Hemi Group, LLC v. City of New York, 559 U.S. 1, 9 (2010).
Plaintiffs argue that Defendants AF, Ager, Baker, and Lawley conducted an
enterprise through a pattern of mail and wire fraud—specifically, the preparation
(and mailing) of false medical reports intended to serve as a pretext for denying
Plaintiffs and others workers’ compensation benefits.
1. Plaintiff Marusza’s RICO Claim
Although Plaintiff Marusza concedes that his RICO claim is fatal “as the law
now stands in the Sixth Circuit” (Dkt. 97, Pg. ID 1703), he nevertheless argues that
Jackson should not bar an injured worker from bringing a claim against an
independent examiner. 731 F.3d at 563–64. He also purports to sue Defendant AF
under RICO in an attempt to preserve his allegations in the event that Jackson is
reversed “and holds that an injured person has a claim for damage to property
under RICO.” (Compl. ¶7B). Plaintiff may not now “reserve” his RICO claim on
the basis of such speculation. If Jackson is overturned at some future date, Plaintiff
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could then “seek leave to amend his complaint to add a RICO claim.” Prieur v.
Acuity, 143 F. Supp. 3d 670, 671 n.2 (E.D. Mich. 2015) (Parker, J.).
The Court will dismiss Plaintiff’s RICO claim because he has failed to
allege injury to business or property. Jackson, and a subsequent case, Brown v.
Ajax Paving Industries, Inc., are on point: in both cases, plaintiffs who were denied
workers’ compensation benefits for work-related injuries brought RICO claims
against their employers, their employers’ workers’ compensation claim
administrators, and alleged “cut-off” doctors. See Brown, 752 F.3d 656, 657 (6th
Cir. 2014); Jackson, 731 F.3d at 558. Sitting en banc, the Jackson Court held that
the claims were properly dismissed because “racketeering activity leading to a loss
or diminution of benefits the plaintiff expects to receive under a workers’
compensation scheme does not constitute an injury to ‘business or property’ under
RICO.” Jackson, 731 F.3d at 566. Likewise, in Brown, the Sixth Circuit rejected
the argument that Jackson’s holding applied only to RICO claims brought by an
employee against his employer. Jackson’s reasoning, it explained, “applies with
equal force whether an employee sues his employer or somebody else.” Brown,
752 F.3d at 658; see also id. (stating that the RICO Act’s applicability turns on the
nature of the plaintiff’s injury, not the nature of the defendant).
Plaintiff argues that his claims can proceed because he is only bringing them
against “independent medical examiners,” and “Jackson never specifically
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considered whether a RICO claim brought by an injured worker against an
‘independent’ examiner is sufficiently removed from the ‘personal injury’ giving
rise to the workers’ compensation claim that it may be considered an injury to
‘business or property’ within RICO.” (Compl. ¶6). Because this argument ignores
the reasoning of both Jackson and Brown, it is meritless, and Plaintiff’s RICO
claim is dismissed.
2. Plaintiff Gucwa’s RICO Claim
Unlike Marusza or the Jackson and Brown plaintiffs, Gucwa is not an
employee claiming workers’ compensation for her own personal injury1; rather,
she provided medical care to the injured employee and claims workers’
compensation as reimbursement. The Court finds this distinction irrelevant and
holds that Gucwa’s claim fails because she cannot prove that the alleged
racketeering activities caused injury to her business or property.
Brown articulates two reasons as to why similar claims have previously
One was that workers’ compensation compensates for personal injury.
The [RICO] Act, which puts its spotlight on “business or property,”
does not cover losses that flow from personal injuries. The other was
that a contrary rule would allow the Act to police fraud in the
workers’ compensation system, planting the national banner on land
“A personal injury – that is, an injury ‘to a person, such as a broken bone, a cut, or a bruise” or
a ‘bodily injury’ is different in kind from an injury to ‘business or property,’ in the sense that
these terms are commonly understood.” Jackson, 731 F.3d at 564 (quoting Black’s Law
Dictionary 857 (9th ed. 2009)).
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traditionally patrolled by the States. The Act does not speak with
enough clarity . . . to authorize such an intrusion.
Brown, 752 F.3d at 657 (internal citations omitted). The Jackson holding applies to
any suit brought by the injured employee, regardless of the defendant, because
“[c]hanging the defendant neither weakens the link between the benefits and
personal injury nor dims the respect owed to the States’ authority over workers’
compensation.” Id. at 658.
Plaintiffs’ position is that changing the plaintiff to a caregiver does
“weaken the link between the benefits and personal injury.”
highlight four decisions from this District in which courts held that a medical
provider’s loss of reimbursement from some form of insurance benefits is
sufficiently removed from the underlying personal injury to suffice as a RICO
injury. See State Farm Mut. Auto. Ins. Co. v. Warren Chiropractic & Rehab Clinic,
P.C., No. 14-11521, 2015 WL 4724829 (E.D. Mich. Aug. 10, 2015) (Goldsmith,
J.) (explaining that the “business dispute between an insurance company and the
medical providers . . . relates to harm to business or property, not personal
injury.”); State Farm Mut. Auto. Ins. Co. v. Universal Health Group, Inc., No. 1410266, 2014 WL 5427170, at *8 (E.D. Mich. Oct. 24, 2014) (Levy, J.) (the court
did not interpret Jackson to bar claims by “doctors, hospitals, and any number of
nonprofits directly injured in their business dealings involving personal injuries”);
Allstate Insurance Company v. Medical Evaluations, P.C., No. 13-14682, 2014
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WL 2559230 (E.D. Mich. June 6, 2014) (Leitman, J.); State Farm Mut. Auto. Ins.
Co. v. Physiomatrix, Inc., No. 12-11500, 2014 WL 555199 (E.D. Mich. Feb. 12,
2014) (O’Meara, J.) (Jackson did not bar medical clinics’ RICO claims based on
blanket denials of personal injury protection benefits because their loss of
reimbursement for services provided was an injury to business or property).
Plaintiffs’ arguments are misplaced. Gucwa is not a professional caregiver
and only provided medical care to Marusza in her capacity as his girlfriend. The
above-cited cases are also distinguishable because they involved claims brought
under Michigan’s No-Fault Insurance Act and defendants who were commercial
entities – rehabilitative clinics, medical billing firms, and other corporations. See
also Reiter v. Sonotone Corp., 442 U.S. 330, 339 (1979) (“When a commercial
enterprise suffers a loss of money[,] it suffers an injury in both its ‘business’ and its
‘property.’”) (emphasis added). Also notable is the fact that, in November 2015,
Gucwa withdrew her workers’ compensation claim for attendant care services
because she is not considered a ‘provider’ as defined in the Michigan
Administrative Health Care Services Workers Compensation Rules,2 and thus, she
no longer asserts entitlement to benefits for services rendered. (Dkt. 85-4, Pg. ID
The Michigan Administrative Health Care Service Workers Compensation Rule 418.10109(p)
defines ‘provider’ as “a facility, health care organization, or a practitioner.” Another provision of
this Rule states that a practitioner is “an individual who is licensed, registered, or certified.” Rule
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Plaintiff Gucwa’s role as a non-professional, unlicensed, attendant care
provider is not comparable to that of a commercial enterprise, such as a licensed
doctor or rehabilitative clinic, such that Gucwa can sufficiently establish that she
suffered injury to her business or property. Her claimed damages are too intimately
connected with Marusza’s personal injury underlying his workers’ compensation
claim to constitute an injury to business or property that is recoverable under
RICO. See Lewis v. Drouillard, 788 F. Supp. 2d 567, 570 (E.D. Mich. 2011)
(Roberts, J.); Jackson, 731 F.3d at 566 (emphasizing that “an award of benefits
under a workers’ compensation system and any dispute over those benefits are
inextricably intertwined with a personal injury giving rise to the benefits.”)
It is undisputed that AF paid Marusza $74,382.00 in August 2016 as ordered
by the Workers’ Compensation Magistrate. (Dkt. 102-1, Pg. ID 1846). Plaintiffs
suggest that Accident Fund wrote a check to Marusza, rather than Gucwa, only
“because [it] knew this decision was pending.” (Tr. 26:24-25, 27:1-7). This
argument is baseless.3 The bottom line is, AF paid, as directed. Once AF wrote
Marusza a check, it was under no obligation to pay anyone else. Id. at 27:14-17.
That Gucwa did not receive any portion of that money is no fault of Accident
Plaintiffs’ counsel acknowledged during the hearing that he did not have proof to support this
claim and that he “can only infer [Accident Fund] paid it directly to Marusza.” (Tr. 27:2-7).
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The Court now finds that Gucwa lacks standing to sue Defendants under
RICO. The record is devoid of evidence showing how Gucwa has “any contractual
or other rights against the defendants,” nor has Gucwa shown “what duty was
owed [her] . . . nor how any defendant deprived [her] of a benefit due [her].”
Palmer v. Nationwide Mutual Insurance Company, 945 F.2d 1371, 1376 (6th Cir.
1991). It is abundantly clear that Gucwa has no legal basis upon which to maintain
a claim in her own capacity for the workers’ compensation reimbursement owed to
B. Tortious Interference with Contract or Business Expectancy
The Court will dismiss Plaintiffs’ state claims for tortious interference with
contract or business expectancy against Defendants Ager, Baker, and Rubin. “The
elements of tortious interference with a contract are (1) the existence of a contract,
(2) a breach of the contract, and (3) an unjustified instigation of the breach by the
defendant.” Knight Enterprises v. RPF Oil Co., 829 N.W.2d 345, 348 (Mich. Ct.
App. 2013). Plaintiffs allege that by supplying their false reports, Ager, Baker, and
Rubin induced AF to breach its workers’ comp insurance contract with Marusza’s
employer. Furthermore, according to Plaintiffs, the Michigan Supreme Court
recognized the validity of such a claim in Dubuc v. El-Magrabi, 795 N.W.2d 593,
594 (Mich. 2011) (Mem. Op.).
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The allegations in Dubuc differ from those in this matter in a critical respect:
here, AF allegedly had a pre-existing intent to deny workers’ compensation
benefits and hired the doctor defendants to effectuate that intent by providing a
pretext for the denial. In other words, Plaintiffs have alleged that the doctor
defendants did not induce the breach; rather, AF intended to breach the contract all
Plaintiffs also purport to allege tortious interference with a business
expectancy. Under Michigan law, this is a separate cause of action from tortious
interference with contract. Health Call, 706 N.W.2d at 848. Its elements are
(1) the existence of a valid business relationship or expectancy that is
not necessarily predicated on an enforceable contract, (2) knowledge
of the relationship or expectancy on the part of the defendant
interferer, (3) an intentional interference by the defendant inducing or
causing a breach or termination of the relationship or expectancy, and
(4) resulting damage to the party whose relationship or expectancy
Id. at 849. Plaintiffs have not shown that these elements are satisfied, and their
claims are therefore dismissed.
C. Medicare Secondary Payer Act
Marusza maintains that Jackson’s holding conflicts with the intent of the
Medicare Secondary Payer Act (“MSPA”), 42 U.S.C. § 1395(y), in that it
improperly requires Medicare to pay for medical bills that should have been paid
by the workers’ compensation insurer. The MSPA “designates certain private
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entities – such as a group health plan, a worker’s compensation plan, or an
automobile or liability insurance plan – as ‘primary payers’ that have the
responsibility to pay for a person’s medical treatment.” Stalley v. Methodist Health
Care, 517 F.3d 911, 915 (6th Cir. 2008). The MSPA does not require Medicare to
pay “if payment for covered medical services has been or is reasonably expected to
be made by a private payer.” Nawas v. State Farm Mut. Auto. Ins., No. 13-11158,
2014 WL 4605601, at *3 (E.D. Mich. Sept. 15, 2014) (Berg, J.) (citing 42 U.S.C. §
1395y(b)(2)(A)). However, “[i]f the primary payer has not paid and will not
promptly do so,” Medicare may “conditionally pay the cost of the treatment.”
Stalley, 517 F.3d at 915; see also 42 U.S.C. § 1395y(b)(2)(B)(i). The MSPA
further creates a private right of action for double damages against a primary
insurer that fails to pay medical expenses and thereby lets Medicare foot the bill
instead. See Bio-Medical Applications of Tenn., Inc. v. Central States S.E. & S.W
Areas Health & Welfare Fund, 656 F.3d 277, 284 (6th Cir. 2011) (citing 42 U.S.C.
§ 1395y(b)(3)(A)). Two conditions precedent must be met before a plaintiff may
invoke the MSPA: “[f]irst, Medicare must have actually made payments on the
claimant’s behalf . . . second, the primary insurer must be ‘responsible’ for paying
the benefits at issue.” Geer v. Amex Assur. Co., No. 09-11917, 2010 WL2681160,
at *4 (E.D. Mich. July 6, 2010) (Zatkoff, J.).
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AF raises two arguments. First, it claims that there is no evidence in the
workers’ compensation record that Medicare actually paid for any of Plaintiff
Marusza’s medical bills at issue.4 Specifically, AF challenges the complaint’s
failure to identify specific payments that Medicare made. Plaintiff contends that
there is nothing requiring a workers’ compensation claimant to prove that
Medicare paid medical bills. AF maintains that as of December 2, 2016 (the date of
the hearing), it has not received a final determination letter from Medicare, and
therefore, no payment to Medicare from AF is due.5
AF also asserts that a cause of action does not accrue under the MSPA until
there is some sort of adjudication or settlement demonstrating the defendant’s
responsibility for the expenses. However, the Sixth Circuit expressly rejected this
line of reasoning in Bio-Medical. The MSPA’s “demonstrated responsibility”
provision applies only to lawsuits brought by Medicare against tortfeasors; it does
not apply to suits brought by private parties or to suits against private insurers.
Bio-Medical, 656 F.3d at 279. Since Marusza is a private party suing a private
insurer, AF’s “demonstrated responsibility” argument is no good.
In her Opinion, Magistrate Judge Logan noted that “[t]here was no evidence presented at the
hearings of unpaid medical bills. It appears Auto-Owners paid the medical bills that defendant
did not pay and they are seeking reimbursement.” Dkt. 79, Pg. ID 1594.
INSURER NGHP RECOVERY, https://www.cms.gov/medicare/coordination-of-benefits-andrecovery/insurerservices/insurer-NGHP-recovery.html (modified on Dec. 21, 2015, 12:56 P.M.)
(explaining that the Commercial Repayment Center “issues a recovery demand letter advising
the applicable plan of the amount of money owed to Medicare.”).
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The Court finds a more serious problem with Plaintiff’s claim. The BioMedical Court acknowledged that the MSPA’s private cause of action is not a qui
tam provision, which would transfer the government’s standing to a private party.
656 F.3d at 296 n.17. To have standing, MSPA plaintiffs “must suffer their own
harm,” as opposed to the harm suffered by Medicare (i.e., Medicare’s loss of
money when it pays expenses that a private payer should have paid). Id. The BioMedical plaintiff had standing because he alleged that Medicare paid him less than
the primary insurer would have paid. Id.
Marusza has not alleged that he was paid less by Medicare or that he was in
any other way harmed by the fact that Medicare, rather than AF, paid for treatment.
Accordingly, the Court will dismiss Marusza’s MSPA claim for lack of standing.
D. False Imprisonment
Plaintiff Marusza concedes that his false imprisonment claim fails in light of
Sheehan v. Star Insurance Company, in which the Sixth Circuit – affirming this
Court – held that the plaintiff’s actions, like those here, “were sufficiently
voluntary that there was no imprisonment . . . and there is no indication that the
Michigan Supreme Court would likely say otherwise.” No. 16-1692, 2016 WL
6872049, at *1 (6th Cir. Nov. 22, 2016). The Court will therefore dismiss
Plaintiff’s false imprisonment claim.
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Defendant Doctor Barry Rubin’s Motion for Sanctions and
Plaintiffs’ Requests for Sanctions
Per Federal Rule of Civil Procedure 11(b), when a motion or document is
filed with the court, a party or counsel represents to the court that:
(1) it is not being presented for any improper purpose, such as to
harass, cause unnecessary delay, or needlessly increase the cost of
(2) the claims, defenses, and other legal contentions are warranted by
existing law or by a nonfrivolous argument for extending, modifying,
or reversing existing law or for establishing new law;
(3) the factual contentions have evidentiary support or, if specifically
so identified, will likely have evidentiary support after a reasonable
opportunity for further investigation or discovery.
Oakstone Cmty. Sch. v. Williams, No. 14-3742, 615 F. Appx. 284, 288 (6th Cir.
2015) (unpublished). Fed. R. Civ. P. 11(c) authorizes the Court to impose sanctions
if it finds that Rule 11(b) has been violated. In making this determination, the
Court should focus on whether “the attorney believes on the basis of reasonable
inquiry that there is a reasonable basis in law and fact for the position taken and
that the paper is not filed for an improper purpose.” Id. (quoting Jackson v. Law
Firm of O'Hara, Ruberg, Osborne and Taylor, 875 F.2d 1224, 1229 (6th
Cir.1989)). When deciding whether to impose sanctions, the Court implements a
standard of objective reasonableness. Montell v. Diversified Clinical Servs., Inc.,
757 F.3d 497, 510 (6th Cir. 2014).
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A party’s egregious conduct may warrant monetary sanctions, which can
include “part or all of the reasonable attorney's fees and other expenses directly
resulting from the violation,” but “must be limited to what suffices to deter
repetition of the conduct or comparable conduct by others similarly situated.” Fed.
R. Civ. P. 11(c)(4). The party seeking sanctions must serve the motion within the
safe harbor period so that the opposing party has “sufficient opportunity . . . to
choose whether to withdraw or cure the offense voluntarily before the court
disposes of the challenged contention.” Ridder v. City of Springfield, 109 F.3d 288,
297 (6th Cir. 1997).
According to Defendant Dr. Rubin, Plaintiffs’ claims are frivolous because
Rubin submitted his independent medical examination report in May 2014, two
years after Defendant AF first denied Plaintiff Marusza his benefits. Therefore, he
says, he could not have committed tortious interference.6 Rubin also maintains that
Plaintiffs’ attorney should be sanctioned7 because he presented to the Court a
frivolous, unwarranted legal theory – specifically, that a party can be liable for
tortious interference for causing a continuation of the initial breach.
Plaintiffs argue that these claims are not sanctionable because disability
workers’ compensation claimants “may make a stream of claims as services are
AF denied Plaintiffs’ claims for workers’ compensation benefits in June 2012.
Pursuant to Federal Rule of Civil Procedure 11(c)(5)(A), the court may not impose a monetary
sanction against a represented party for violating Rule 11(b)(2).
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provided.” (Dkt. 105, Pg. ID 1893). Because a person could file claims over the
span of many years for an old injury, Plaintiffs contend, the insurer will continually
evaluate new claims and either grant or deny benefits. They further state that if
they prevail, Defendant should pay sanctions to them pursuant to Federal Rule of
Civil Procedure 11(c)(2).
The Court will deny Defendant Rubin’s Motion for Sanctions and Plaintiffs’
Request for Sanctions because the basis for Plaintiffs’ claims against Rubin was
not unreasonable. Furthermore, there is no indication that any of the claims were
filed for an improper purpose or that any of the parties or their counsel engaged in
egregious conduct. See Montell, 757 F.3d at 510.
Plaintiffs’ Motion for Leave to File an Amendment to the Second
Plaintiffs move for leave to amend the Second Amended Complaint. Leave
to amend “shall be freely given when justice so requires.” Fed. R. Civ. P. 15(a)(2).
“When considering whether to grant leave to amend a complaint, the court
considers ‘[u]ndue delay in filing, lack of notice to the opposing party, bad faith by
the moving party . . . and futility.’” Coe v. Bell, 161 F.3d 320, 341 (6th Cir. 1998)
(quoting Brooks v. Celeste, 39 F.3d 125, 130 (6th Cir. 1994)). Though Rule 15(a)
indicates that leave to amend shall be freely granted, “[a]mending would be futile
if a proposed amendment would not survive a motion to dismiss.” SFS Check, LLC
v. First Bank of Delaware, 774 F.3d 351, 355 (6th Cir. 2014).
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Plaintiffs’ Motion for Leave to Amend the Second Amended Complaint is
denied, as any proposed amendments would be insufficient to defeat Defendants’
Motions to Dismiss.
IT IS ORDERED that Defendants’ Motions to Dismiss the Second
Amended Complaint [Dkt. 81, 83-86] is GRANTED.
IT IS FURTHER ORDERED that Defendant Rubin’s Motion for
Sanctions  is DENIED.
IT IS FURTHER ORDERED that Plaintiffs’ Motion for Leave to Amend
 is DENIED.
Dated: January 23, 2017
s/Arthur J. Tarnow
Arthur J. Tarnow
Senior United States District Judge
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