GOVERNMENT EMPLOYEES INSURANCE CO. et al v. REGIONAL ORTHOPEDIC PROFESSIONAL ASSOCIATION et al

Filing 55

MEMORANDUM ORDER denying without prejudice 22 Motion to Dismiss. Signed by Judge Renee Marie Bumb on 12/1/17. (dd, )

[Dkt. No. 22]
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
CAMDEN VICINAGE

Government Employees Insurance
Co., et al.,
Plaintiff,

Civil No. 17-1615(RMB/JS)

v.
MEMORANDUM ORDER
Regional Orthopedic
Professional Association, et
al.,
Defendant.

Plaintiffs Government Employees Insurance Company, GEICO
Indemnity Company, Geico General Insurance company, and GEICO
Casualty Co. (collectively “Geico”) assert claims under the
Racketeer Influenced and Corrupt Organizations Act (“RICO”), 28
U.S.C. 1961 et seq., New Jersey State Insurance Fraud Prevention
Act (“IFPA”), common law fraud and unjust enrichment claims
(“state claims”) against eight individual orthopedic surgeons,
including moving Defendant Marc Kahn, M.D., as well as the
orthopedic practices Regional Orthopedic Professional
Association (“Regional Orthopedic”), and South Jersey Surgical
Center, LLC (“South Jersey Surgical”).

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Geico seeks to recover

more than $2,000,000 that it paid in allegedly fraudulent PIP
billing and treatment reports received via the mail.
In sum, Defendant Kahn moves to dismiss the Complaint based
on (a) Geico’s failure to exhaust administrative remedies under
requisite state law; (b) the statute of limitations applicable
to RICO claims; and (c) lack of standing.

For the reasons set

forth herein, Defendant’s Motion is denied without prejudice.
First, Defendant Kahn argues that Geico’s claims should be
dismissed because they failed to exhaust their administrative
remedies, to wit, N.J.S.A. 2A:23-1 and N.J.A.C. 11:3-5.1, which
mandate arbitration of disputed PIP claims between an insured
(or his assignee) and a PIP carrier such as Geico.

Plaintiff

counters that its IFPA, RICO, and other fraud-based claims are
not subject to arbitration.

The Court agrees with Plaintiff.

Although state law requires that any dispute regarding the
recovery of medical expense benefits under PIP be arbitrated,
N.J.S.A. § 39:6A-5.1, Geico’s allegations go beyond such
dispute, and may be adjudicated in this Court.

See, e.g.,

Federal Insurance Co. v. Von Windherburg-Cordeiro, 2012 U.S.
Dist. LEXIS *8-9 (D.N.J. 2012)(IFPA claims are not
arbitratable); Nationwide Mutual Fire Insurance Co. v. Flouris,
395 N.J. Super. (App. Div. 2007)(same).
Defendant also contends that Plaintiff’s complaint is timebarred on its face.

Defendant relies on his declaration that,
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in essence, avers that he has not practiced orthopedic medicine
for a period of more than four years from the filing of the
Complaint.

He retired from the practice of medicine because of

a disabling injury.

On December 31, 2012, he resigned from

Defendant South Jersey Surgical and on January 18, 2013, he
resigned from Regional Orthopedic.

[Docket No. 22-d.]

Although

Defendant asks this Court to consider the Kahn declaration for
its truth, the Court believes that this disputed issue is more
appropriate for summary judgment once discovery has been
completed.

Geico points to evidence that Defendant Kahn did not

sever his ties with the orthopedic practices, such as evidence
that South Jersey Surgical listed Defendant Kahn’s home as its
registered office as of the date the Complaint was filed.

This

disputed issue is a fact-sensitive one which must await the
conclusion of discovery.1
Finally, Defendant alleges that Geico lacks standing to
assert RICO claims against him based upon alleged steering and
inflated billings of patients because Geico has not alleged they
suffered a loss.

The Court disagrees.

The Complaint alleges

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The Court hastens to note that Geico’s response is a weak one,
at best. If discovery shows that Defendant Kahn totally severed
his ties to the Regional Orthopedic Professional Association and
South Jersey Surgical Center, LLC, outside of the applicable
statute of limitations, and all that remains is inadvertent
oversight, it expects Geico to adhere to its Rule 11
obligations.
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that Defendants’ predicate acts of mail fraud were the proximate
cause of Geico’s injuries.
409-422.

See, e.g., Docket No. 1, ¶¶ 382-388,

Discovery must be conducted on this point as well.

Accordingly, for the foregoing reasons, the Motion to
Dismiss is DENIED without prejudice.

s/Renee Marie Bumb
RENÉE MARIE BUMB
United States District Judge

Dated: December 1, 2017

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