Allstate Insurance Company et al v. A & F Medical P.C. et al

Filing 448

MEMORANDUM AND ORDER in case 1:14-cv-06756-JBW-RLM; granting in part and denying in part (433/376) Motion for Sanctions; denying (439/382) Motion to Strike in case 1:15-cv-03639-JBW-RLM. The Clerk of Court is respectfully requested to docket as t heir new operative pleading the proposed amended answer attached to the Pinkusoviches' May 10, 2017 letter (435/378). AOH's operative answer (296) is deemed amended to include the affirmative defense of ratification as pled by the Pinkusov iches in paragraph 32 of their proposed amended answer (435/378). The parties' cross-motions for an award of attorneys' fees are denied. Ordered by Chief Mag. Judge Roanne L. Mann on 5/19/2017. (Attachments: # 1 Appendix Proposed Amended Answer) Associated Cases: 1:14-cv-06756-JBW-RLM, 1:15-cv-03639-JBW-RLM (Proujansky, Josh)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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ALLSTATE INSURANCE COMPANY,
et al.,
Plaintiffs,
-againstA & F MEDICAL P.C. , et al.,

MEMORANDUM AND
ORDER
14-CV-6756 (JBW)

Defendants.
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ALLSTATE INSURANCE COMPANY,
et al.,
Plaintiffs,

15-CV-3639 (JBW)

-againstART OF HEALING MEDICINE, P.C., et al.,
Defendants.
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Currently pending before the Court, in these actions brought pursuant to the Racketeer
Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1961 et seq., are motions
by plaintiffs Allstate Insurance Company, Allstate Indemnity Company, Allstate Property &
Casualty Insurance Company and Allstate Fire & Casualty Insurance Company (collectively,
“plaintiffs” or “Allstate”) to strike the proposed amended answers of defendants Art of Healing
Medicine, P.C. (“AOH”), and Alexander Pinkusovich, MD and Svetlana Pinkusovich, MD
(the “Pinkusoviches”) (collectively, the “AOH defendants”). See Motion for Sanctions (May
5, 2017) (“Motion for Sanctions”), Electronic Case Filing Docket Entry (“DE”) #433;1 Letter
Motion to Strike (May 15, 2017) (“Motion to Strike”), DE #439. For the reasons that follow,

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All citations to docket entries pertain to the docket in 14-cv-6756.

plaintiffs’ Motion to Strike is denied and their Motion for Sanctions is denied in substantial
part.
FACTUAL BACKGROUND
By Report and Recommendation filed on April 24, 2017, this Court recommended that
the motion filed by the AOH defendants to amend their answers to add certain affirmative
defenses be largely denied, except for the addition of the affirmative defense of ratification.2
See Report and Recommendation (Apr. 24, 2017) at 25, DE #422. The Court directed the
AOH defendants to serve on plaintiffs, by May 1, 2017, amended answers that are identical to
their current pleadings but for the addition of the affirmative defense of ratification. See id.
The Court further afforded plaintiffs an opportunity to object prior to the filing of the amended
answer as the operative pleading of the AOH defendants. See id.
On May 3, 2017, after the Honorable Jack B. Weinstein granted the motion of the AOH
defendants’ third consecutive counsel of record to withdraw from the case, see Order (Apr. 18,
2017), DE #417, the Court received an “Amended Answer and Affirmative Defense by
Defendants Art of Healing Medicine, P.C.,” sent by mail on May 1, 2017. It is not clear to
the Court on whose behalf the document was submitted. The proposed pleading states that it
was submitted on behalf of “Defendants ART OF HEALING, P.C. (hereinafter, “Defendant”,

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At the oral argument on the AOH defendants’ motion to amend, held on March 31, 2017, this
Court struck the proposed amended answers (DE #393, #394) submitted by the AOH
defendants’ then-counsel, as a sanction for making material changes to the operative answer
that were not the subject of the AOH defendants’ motion to amend, including incorporating by
reference the complaint filed in Art of Healing Medicine, P.C. v. Allstate Ins. Co., 16-cv-4208
(JBW) (the “AOH Action”). See Transcript of Civil Cause for Discovery Conference held on
March 31, 2017 (May 17, 2017) at 15-17, DE #441.
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“AOH”) by Alexander Pinkusovich, M.D. and Svetlana Pinkusovich, M.D. individual
defendants in the above captioned matter acting pro se . . . .” In any event, since it appeared
that the proposed amended answer had not been served on plaintiffs prior to its submission to
the Court, this Court extended plaintiffs’ time to object and noted that the proposed amended
answer would not be docketed.3 See Order (May 5, 2017), DE #431.
By letter-motion filed on May 5, 2017, plaintiffs seek an order: that Art of Healing
Medicine, P.C. be precluded from filing a proposed amended answer because it failed to
follow the Court’s directions; that a notation of default be entered against it because an entity is
not permitted to proceed in federal court without counsel; that the individual defendants be
precluded from asserting any defenses that are not contained in their operative answer (DE
#297) because of their failure to timely serve a proposed amended answer in accordance with
this Court’s orders; and that the Court award plaintiffs their attorneys’ fees. See Motion for
Sanctions (May 5, 2017), DE #433.
Shortly thereafter, on May 11, 2017, the Court received a proposed amended answer on
behalf of the two individual defendants, Alexander Pinkusovich, MD and Svetlana
Pinkusovich, M.D. See Letter attaching proposed amended answer (May 11, 2017), DE #435.
By electronic order dated May 11, 2017, this Court recognized that, once again, this latest
proposed amended answer had not been sent to plaintiffs in advance of its submission to the
Court. See Electronic Order (May 11, 2017). Accordingly, the Court ordered plaintiffs to
review that pleading and, by May 15, 2017, to set forth their view on whether the

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The proposed amended answer is attached hereto as an appendix.
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Pinkusoviches’ proposed amended answer complied with the Court’s substantive directions
contained in the Report and Recommendation. See id. On May 15, 2017, plaintiffs moved to
strike “non-compliant portions” of the Pinkusoviches’ proposed amended answer. See Motion
to Strike. Plaintiffs contend that the Pinkusoviches’ proposed amended answer improperly
references allegations in the AOH Action, which, according to plaintiffs, this Court has
prohibited, and adds new and irrelevant factual allegations regarding billing matters that
occurred subsequent to the events at issue in this case. See id. at 2. Plaintiffs request that the
Court strike the non-compliant portions of the Pinkusoviches’ proposed amended answer,
preclude any further proposed amendments as a sanction for defendants’ violation of this
Court’s orders, and award plaintiffs attorneys’ fees. See id.
By letter dated May 15, 2017, the Pinkusoviches responded to plaintiffs’ Motion for
Sanctions. See Response in Opposition (May 18, 2017), DE #443. The Pinkusoviches
generally re-hash their allegations, recited in several motions already pending before the Court,
that this action is being orchestrated by plaintiffs’ counsel, rather than Allstate, in order to
extort money from the AOH defendants. See id. at 2. The Pinkusoviches also suggest that
their most recently submitted proposed amended answer is a corrected and edited version of the
proposed amended answer that they had submitted on behalf of AOH.
By separate letter dated May 16, 2017, the Pinkusoviches responded to plaintiffs’
Motion to Strike. See Response in Opposition (May 18, 2017), DE #444. The Pinkusoviches’
response primarily argues that their ratification defense is colorable and that they would be
prejudiced if the Court granted plaintiffs’ Motion to Strike. See id. at 2-3. Not to be outdone,
the Pinkusoviches cross-move for sanctions against plaintiffs. See id. at 3.
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DISCUSSION
Pinkusoviches’ Proposed Amended Answer
First, plaintiffs’ argument that the Pinkusoviches improperly included in their proposed
amended answer allegations contained in the complaint filed in the AOH Action misses the
mark. This Court prohibited only the incorporation by reference of the complaint filed in that
action, which incorporation was contained in the original proposed amended answers submitted
in the instant case by then-counsel for the AOH defendants (see DE #393, #394). The
proposed amended answer submitted by the Pinkusoviches contains no reference whatsoever to
the AOH Action. To the extent that some of their allegations in support of the affirmative
defense of ratification are similar to allegations in their pleading in that action, they have not
thereby violated this Court’s directives.
Second, the allegations described by the plaintiffs as “new, irrelevant and inapposite,”
contained in paragraph 32 of the Pinkusoviches’ proposed amended answer in support of the
affirmative defense of ratification (see DE #435), are largely the same allegations that were
contained in paragraph 35 of the Pinkusoviches’ original proposed amended answer interposing
the affirmative defense of ratification. Compare DE #435 ¶ 32 with DE #394 ¶ 35. Since the
challenged allegations were contained in the pleadings that were the subject of the AOH
defendants’ motion to amend, and this Court rejected plaintiffs’ (limited) objection to the
ratification defense, the inclusion of those allegations does not violate the Court’s directions.
Moreover, to the extent that plaintiffs seek to re-argue the merits of the ratification defense,
plaintiffs conceded at oral argument that there are factual disputes that bear upon the viability
of that defense. See Minute Entry (Mar. 31, 2017) at 2, DE #402.
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Accordingly, this Court grants the Pinkusoviches leave to file the proposed amended
answer. The Clerk of Court is respectfully requested to docket as their new operative pleading
the proposed amended answer attached to the Pinkusoviches’ May 10, 2017 letter (see DE
#435).
AOH’s Proposed Amended Answer
As to defendant AOH, although a corporation may not proceed in this action without
counsel, this Court, following defense counsel’s withdrawal, issued a Report and
Recommendation that required of AOH only the ministerial task of adding the ratification
defense to the then-operative answer. Unfortunately, the proposed amended answer submitted
by the Pinkusoviches, on behalf of AOH, did not comply with this Court’s substantive
directions.4 Therefore, the Court grants plaintiffs’ motion to strike the proposed amended
answer submitted on behalf of AOH. However, AOH’s operative answer (DE #296) is deemed
amended to include the affirmative defense of ratification as pled by the Pinkusoviches in
paragraph 32 of their proposed amended answer (see DE #435). In light of the fact that
plaintiffs’ Motion to Strike AOH’s Answer for failure to retain counsel is pending before Judge
Weinstein, see Motion to Strike (Apr. 25, 2017), DE #423, this Court declines to recommend
entry of default against AOH at this time.
Finally, this Court is constrained to note the serial motions for sanctions recently filed
by plaintiffs in this action. See, e.g., DE #423, #433, #439, #442. Counsel is urged to show
more restraint in moving for an award of fees. The Pinkusoviches are similarly advised that

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For example, it incorporates by reference the entire complaint filed in the AOH Action.
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responding to plaintiffs in kind is not a productive way to proceed. The parties’ cross-motions
for fees in connection with the instant dispute (DE #433, #439, #444) are denied.
CONCLUSION
For the foregoing reasons, plaintiffs’ motion to strike the Pinkusoviches’ proposed
amended answer is denied and plaintiffs’ motion to strike AOH’s proposed amended answer is
granted. However, AOH’s operative answer (DE #296) is deemed amended to include the
affirmative defense of ratification as pled by the Pinkusoviches in paragraph 32 of their
proposed amended answer (see DE #435). The parties’ cross-motions for an award of
attorneys’ fees are denied.
SO ORDERED.
Dated:

Brooklyn, New York
May 19, 2017
/s/

Roanne L. Mann

ROANNE L. MANN
CHIEF UNITED STATES MAGISTRATE JUDGE

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