Government Employees Insurance Co. et al v. Jacobson, D.C. et al

Filing 246

ORDER *** GEICO's motion for an adverse inference is denied. GEICO's motion to preclude defendants' expert Dr. Donald T. Alosio, Jr. is granted in part. GEICO's motion for partial summary judgment is denied, except that its unju st enrichment claims and declaratory judgment claims relating to work performed by NJ Pain and NJ Neuro in New York are granted. Defendants' motion for summary judgment is denied.Ordered by Judge Edward R. Korman on 6/24/2021. (Ballew, Steven)

NOT FOR PUBLICATION

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
GOVERNMENT EMPLOYEES
INSURANCE CO., et al.,

MEMORANDUM & ORDER
15-CV-07236 (ERK) (RML)

Plaintiffs,
– against –
BRUCE JACOBSON, D.C., et al.,
Defendants.
KORMAN, J.:

This case arises out of more than a million dollars’ worth of allegedly
fraudulent no-fault insurance charges that defendant Bruce Jacobson and five of his
chiropractic practices 1 submitted to plaintiff Government Employees Insurance
Company and three of its affiliates (collectively, “GEICO”). GEICO moves for
partial summary judgment against Jacobson and his incorporated practices on causes
of action for declaratory judgment, common law fraud, unjust enrichment, and
violation of the New Jersey Insurance Fraud Prevention Act. GEICO also moves
for an adverse inference to preclude defendants from relying on documents that they

The five practices are (1) Jacobson Chiropractic, P.C. (“Jacobson Chiropractic”),
(2) Dr. Bruce Jacobson DC, P.C. (“Dr. Bruce”), (3) BMJ Chiropractic, P.C.
(“BMJ”), (4) NJ Pain Treatment, P.C. (“NJ Pain”), and (5) NJ Neuro & Pain, P.C.
(“NJ Neuro”).
1

1

never produced during discovery and to exclude the report and testimony of
defendants’ expert.

Jacobson, his incorporated practices, and four licensed

chiropractors who were associated with his practices 2 cross move for summary
judgment on GEICO’s claims for declaratory judgment, fraud, unjust enrichment,
and civil RICO violations and RICO conspiracy.
BACKGROUND
Both New York and New Jersey have adopted comprehensive statutory
schemes that allow individuals injured in automobile accidents to recover the costs
of their medical expenses regardless of fault. See N.Y. Ins. Law § 5101 et. seq.;
N.Y. Comp. Codes R. & Regs. tit. 11, § 65-1.1 et. seq.; N.J. Stat Ann. § 39:6A-1 et
seq. In both states, automobile insurers must provide no-fault insurance benefits
(also known as “personal injury protection” or “PIP” benefits) to their insureds for
necessary medical expenses. N.Y. Ins. Law § 5103; N.J. Stat. Ann. §§ 39:6A-4. An
insured’s PIP benefits may be assigned to his or her healthcare provider, who in turn
may submit requests for payment directly to the insurance company. N.Y. Comp.
Codes R. & Regs. tit. 11, § 65-3.11; N.J. Stat. Ann. § 39:6A-4.
GEICO claims that Jacobson unlawfully submitted bills for millions of
dollars’ worth of PIP benefits to which he is not entitled. Specifically, GEICO

Those four chiropractors are Diana Beynin, Peter Albis, Jongdug Park, and
Gerlando Zambuto.
2

2

argues that Jacobson’s charges (1) were the result of illegal referrals among entities
owned by Jacobson, (2) were the result of two of Jacobson’s New Jersey practices’
unlawful operation in New York, (3) were billed through one of Jacobson’s practices
during a time when his license was suspended, and (4) misrepresented the medical
necessity of the underlying healthcare services, along with the nature and extent of
the services provided. ECF No. 238-27 at 8–9.3
A. Allegedly Unlawful Referrals
New York law provides that a medical practitioner, such as a chiropractor,
“may not make a referral to a health care provider for the furnishing of any health or
health related items or services where such practitioner” has an ownership interest
“without disclosing to the patient such financial relationships.” N.Y. Pub. Health
Law § 238-d. The practitioner must maintain documentation of each instance that
he makes such a financial-interest disclosure to his patients. N.Y. Comp. Codes R.
& Regs. tit. 10, § 34-1.5(d). A practitioner is not eligible for PIP benefits arising
from an illegal referral through an entity in which he has a financial interest. Fair
Price Med. Supply Corp. v. ELRAC Inc., 12 Misc. 3d 119, 121–22 (N.Y. App. Term
2006).
Similarly, under New Jersey’s Codey Law, chiropractors generally may not
refer patients to any healthcare practice in which they have a “significant beneficial
3

Record citations refer to ECF pagination.
3

interest.” N.J. Stat. Ann. § 45:9-22.5. This rule is subject to certain exceptions, such
as self-referrals for procedures performed in a chiropractor’s own office for which a
bill is issued directly in the name of the chiropractor’s office. Id. § 45:9-22.5(c)(1).
Moreover, self-referrals for procedures requiring anesthesia that are provided at
ambulatory surgery centers are permissible, so long as (among other things) the
chiropractor who makes the referral performs the resulting procedure, and advance
written disclosure of the referring chiropractor’s financial interest is made to the
patient. Id. § 45:9-22.5(c)(3). Like in New York, chiropractors who engage in
unlawful self-referrals are ineligible for PIP benefits in New Jersey. See Allstate Ins.
Co. v. Scott Greenberg, D.C., 871 A.2d 171, 179 (N.J. Super. Ct. Law Div. 2004).
GEICO has identified numerous instances in which it claims Jacobson
engaged in allegedly unlawful self-referrals. Indeed, two of Jacobson’s whollyowned practices—Jacobson Chiropractic and Dr. Bruce—referred at least 158
GEICO insureds in New York to another wholly owned Jacobson entity (BMJ) for
electrodiagnostic testing. ECF Nos. 238-2 ¶¶ 22–27, 238-33 ¶¶ 12, 16, 19, 25–29.
GEICO issued $14,363.22 in payments to BMJ for such testing. Id. ¶ 28. Moreover,
Jacobson Chiropractic and Dr. Bruce referred at least 45 GEICO insureds to two
Jacobson-owned entities—NJ Pain and NJ Neuro—for pre-procedure examinations
for a treatment called manipulation under anesthesia (“MUA”). ECF Nos. 233-3 ¶¶
29–34, 233-34 ¶¶ 9, 23, 31–35. GEICO made over $1,300 in payments to NJ Pain
4

and NJ Neuro based on such referrals. ECF Nos. 238-2 ¶¶ 37–38. GEICO also
identified 133 instances in which GEICO insureds, after receiving pre-MUA
examinations at NJ Neuro or NJ Pain, were “referred for MUAs” at an ambulatory
surgery center in New Jersey that were performed by a different chiropractor than
the one who made the referral. ECF Nos. 238-2 ¶¶ 39–42. NJ Neuro and NJ Pain
billed GEICO for the cost of the MUAs, and GEICO paid over $230,000 to NJ Neuro
and NJ Pain for these procedures. ECF Nos. 238-2 ¶¶ 43–44.
The legality of these referrals depends on whether Jacobson provided advance
written disclosures of his financial interest in his various practices. During discovery
in this action, GEICO requested that defendants produce “[a]ll documents reflecting
written disclosures provided to [GEICO’s] Insureds pursuant to” the relevant New
York law. ECF No. 239-2 ¶ 58. Defendants never produced such ownership
disclosures during discovery despite (1) defendants’ responses that they would
produce the requested disclosures, see ECF Nos. 239-3 at 18, 239-6 at 6; (2)
Jacobson’s admission during his deposition that he made, and maintained copies of,
such disclosures, see ECF Nos. 239-4 at 302–03, 239-5 at 55–56; and (3) a court
order compelling production of all documents responsive to GEICO’s document
demands that defendants failed to turn over. See Oct. 20, 2016 Order.
Notwithstanding their failure to produce the ownership disclosure forms
during discovery, defendants now attach 65 ownership disclosure forms to their
5

motion briefing. ECF No. 243-34. Only two of the 65 disclosure forms that
defendants submit, however, relate to the over 200 patients that GEICO has
identified as being the subject of illegal self-referrals. ECF No. 238-34 at 7; compare
ECF Nos. 233-3 at 393–97, 613–14 with ECF No. 243-34. The other 63 forms relate
to patients who have nothing to do with this litigation.
GEICO seeks to preclude defendants from relying on these disclosure forms,
and it has filed a motion for an adverse inference based on defendants’ failure to
produce the requested documents during discovery. ECF No. 239. Defendants
admit that they never produced the forms during discovery, but they argue that they
were not required to do so because they produced the forms to GEICO before this
litigation commenced. ECF Nos. 238-33 ¶ 37, 239-8 at 9.
B. Unlawful Operations in New York
Under New York law, “medical professionals may incorporate a medical
practice if they are the sole organizers, owners and operators of the corporation.”
Gov’t Emps. Ins. Co. v. Parkway Med. Care, P.C., 2017 WL 1133282, at *2
(E.D.N.Y. Feb. 21, 2017) (citing N.Y. Bus. Corp. Law §§ 1503(a)-(b), 1508), report
& recommendation adopted by 2017 WL 1131901 (E.D.N.Y. Mar. 24, 2017). “New
York law provides that a licensed medical professional undertaking such an
incorporation must certify to the New York State Department of Education that each
proposed shareholder, director and officer of the medical professional corporation is
6

authorized by law to practice in the medical profession.” Id. (citing N.Y. Bus. Corp.
Law § 1503(b)). “A corporate practice that shows willful and material failure to
abide by licensing and incorporation statutes may support a finding that the provider
is not eligible for” PIP benefits. Andrew Carothers, M.D., P.C. v. Progressive Ins.
Co., 33 N.Y.3d 389, 405 (2019) (internal quotations omitted).
As their names suggest, two of Jacobson’s practices—NJ Pain and NJ
Neuro—were incorporated in New Jersey, and neither has been incorporated in New
York, nor have they received a certificate of authority from the New York
Department of Education. ECF No. 238-33 ¶¶ 46–48, 51–53. Yet both practices
leased office space and examined patients in New York. Id. ¶¶ 49–50, 54–55. NJ
Pain and NJ Neuro billed GEICO over $4,000 for such examinations, which GEICO
argues are not recoverable under New York’s no-fault insurance statute due to the
failure to incorporate those practices in the state. Id. ¶¶ 56–57. Jacobson concedes
that, because he failed to file the required paperwork to obtain a certificate of
authority from the New York Department of Education, he was not entitled to
reimbursement for services NJ Pain and NJ Neuro performed in New York. ECF
No. 238-29 at 33 n.3.
C. Practicing with a Suspended License
GEICO also argues that it made $32,701.49 in payments to NJ Neuro for
MUA services that were rendered between December 12, 2014 to October 27, 2015,
7

a period for which it contends Jacobson’s license was suspended. ECF No. 238-33
¶¶ 58–60, 68–69.

New Jersey’s State Board of Chiropractic Examiners (the

“Board”) has issued directives applicable to chiropractors who have had their
licenses suspended. ECF No. 238-26. A chiropractor with a suspended license may
not practice or provide a chiropractic opinion in New Jersey and may not charge,
receive, or share in fees for professional services rendered by himself or others. Id.
Chiropractors who practice or receive a fee for service while their licenses are
suspended are not entitled to PIP benefits under New Jersey law. See Liberty Mut.
Ins. Co. v. Healthcare Integrated Servs., 2008 WL 2595922, at *2 (N.J. Super. Ct.
App. Div. July 2, 2008) (“This court has held that a provider of such services is not
entitled to reimbursement for services covered by PIP unless the provider and the
services are in compliance with relevant laws and regulations.”); Allstate Ins. Co. v.
Greenberg, 871 A.2d 171, 176 (N.J. Super. Ct. Law Div. 2004) (“A medical services
provider’s failure to comply with the standards promulgated by the Board of Medical
Examiners make[s] it ineligible to receive PIP reimbursement.”) (internal quotation
omitted).
The circumstances resulting in Jacobson’s license suspension are as follows.
On May 5, 2010, the Board ordered that Jacobson pay a fine of $5,740.83. ECF No.
238-5 at 2–3. Jacobson testified during his deposition that he was fined for referring
a patient for an electrodiagnostic test without conducting a prerequisite exam as
8

required under New Jersey law. ECF No. 238-3 at 62, 66–67. On December 12,
2014, the Board issued a Provisional Order of Discipline suspending Jacobson’s
license for failure to pay the fine and forwarded a copy of the Provisional Order to
his last known address and also attempted personal service. ECF No. 238-5 at 3.
Those mailings were returned as undeliverable and the service was unsuccessful,
and Jacobson claims he never received them. Id.; ECF No. 238-3 at 68. On July 23,
2015, the Board issued a Final Order of Discipline suspending his license until he
paid the fine. ECF No. 238-5 at 4.
Jacobson claims that he paid the fine immediately after receiving the Final
Order of Discipline and that his license was reinstated by the Board in October 2015.
ECF No. 238-32 ¶ 12. Jacobson also represents that he did not personally treat any
patients, render any opinion regarding chiropractic practice in New Jersey, or receive
any fees or share any office space with chiropractors in New Jersey during the time
his license was suspended. Id. ¶ 13. Moreover, Jacobson testified at his deposition
that, after he became aware of his suspension, he had a phone call with a Deputy
Attorney General who informed him that, while he could not personally treat patients
during his suspension, his corporations could submit bills for treatment provided by
other licensed chiropractors. ECF No. 238-3 at 109–11.
Nevertheless, Jacobson’s staff continued to use his personal tax identification
number and signature on bills that were submitted to GEICO during the time his
9

license was suspended. Id. at 114–20, 133–42. Bank records also show that during
his suspension, Jacobson paid himself at least $9,000 from NJ Neuro’s corporate
bank account, including $6,000 after the Board sent the Final Order of Discipline in
July 2015. ECF No. 238-8. Jacobson claims that any payment he received from NJ
Neuro during his suspension was for patients treated prior to his suspension. ECF.
No. 238-33 ¶¶ 66–67. Jacobson testified at his deposition that he maintained a
handwritten list of patients that NJ Neuro treated during his suspension to ensure
that he was not paid for treatment provided to those patients, but he later stated in an
affidavit that he was no longer in possession of the list. ECF Nos. 238-3 at 146–47;
238-7 ¶¶ 2–3.
D. Billing Misrepresentations
GEICO also alleges that defendants misrepresented the nature and extent of
patient examinations, as well as the medical necessity of certain tests and procedures,
in bills that were sent to GEICO. These alleged misrepresentations fall into three
categories: (1) use of improper current procedural terminology (“CPT”) codes; (2)
billing for unnecessary electrodiagnostic testing; and (3) billing for unnecessary
MUA procedures.
1. CPT Codes
In New York, claims for PIP benefits are governed by a fee schedule adopted
by the Chair of the Workers’ Compensation Board and Superintendent of the
10

Department of Financial Services. Gov’t Emps. Ins. Co. v. Avanguard Med. Grp.,
PLLC, 27 N.Y.3d 22, 27 (2016) (citing N.Y. Ins. Law § 5108). The fee schedule is
based on the American Medical Association’s (“AMA”) guidelines explaining what
codes (called “CPT” codes) healthcare providers should use when billing treatment
to an insurer. In re. Glob. Liberty Ins. Co. v. McMahon, 172 A.D.3d 500, 501 (1st
Dept. 2019). A PIP award rendered without consideration of the AMA’s CPT billing
guidelines is incorrect as a matter of law. Id.
GEICO argues that Jacobson overbilled by using CPT codes indicating that
patients received treatment that was more comprehensive and expensive than what
they actually received. When conducting initial patient examinations, Jacobson’s
practices always billed the examinations to GEICO under one of the following four
CPT codes: 99203, 99204, 99243, or 99244. ECF No. 238-33 ¶ 71.
Under AMA guidelines, a chiropractor who uses the CPT codes 99203 or
99243 to bill for an initial patient examination represents that (1) the examining
chiropractor conducted a “detailed” physical examination, which requires the
chiropractor to conduct and document an extended examination of the affected body
areas and other symptomatic or related organ systems and (2) the examination
requires the examining chiropractor to engage in legitimate “low complexity”
medical decision-making. Id. ¶ 73. A chiropractor who uses CPT codes 99204 or
99244 to bill for an initial patient examination represents that (1) the chiropractor
11

who performed the patient examination took a “comprehensive” patient history,
which requires the chiropractor to have documented a review of the systems directly
related to the history of the patient’s present illness, as well as at least 10 other organ
systems; (2) the physical examination was “comprehensive,” which requires
documentation of either a general examination of multiple organ systems or a
complete examination of a single organ system; and (3) the examination required the
examining chiropractor to engage in legitimate “moderate complexity” decisionmaking. Id. ¶ 72.
GEICO’s expert, Dr. Edward Cremata, reviewed the billing records that
Jacobson sent to GEICO and concluded that the CPT codes that Jacobson used were
improper. First, it did not appear to Cremata that patients provided significant
amounts of medical records prior to or during examinations, nor that the treating
chiropractor requested or reviewed such records. ECF No. 238-9 at 20. Second, in
Cremata’s opinion, the problems patients reported and the treatments provided—
typically ordinary chiropractic manipulation, physical therapy or MUA—did not
carry an unusually high risk of significant complications, morbidity, or mortality.
Id. at 20–21. Finally, Cremata opined that Jacobson did not consider a substantial
number of diagnoses or treatment options for patients during examinations and, in
fact, virtually every GEICO insured treated by Jacobson received largely identical
soft-tissue injury diagnoses and were recommended substantially similar treatment
12

plans. Id. at 21. Against this backdrop, Cremata concluded that the CPT codes that
Jacobson used to bill GEICO misrepresented the level of medical decision-making
involved in initial patient examinations. Id. GEICO claims that it issued nearly
$33,000 in payments to Jacobson-controlled entities based on his use of these
challenged billing codes. ECF No. 238-33 ¶¶ 78–81.
In an affidavit submitted in opposition to GEICO’s summary judgment
motion, Jacobson claimed that he used the CPT billing codes appropriately. ECF
No. 238-32 ¶ 7. He said the following about the initial examinations conducted at
his practices:
The examinations documented a complete examination of the
musculoskeletal system, as well as an examination of other
systems as required to recommend appropriate treatment. The
examining chiropractor considered a number of treatment
options, such as manipulative therapy, imaging studies, referrals
to appropriate specialists, based on the patient[’]s progress, nerve
testing, orthopedics, pain management, neurologist, and if there
is a suboptimal response to conservative treatment[,] MUA
evaluation may be considered. MUA treatments, performed
under anesthesia inherently risk significant complications,
morbidity, or mortality, more or less so depending on the
patient’s underlying health and condition.
Id. In addition to his affidavit, Jacobson submitted arbitration decisions which
upheld his use of the challenged billing codes. See, e.g., ECF No. 243-17. Jacobson
argues that the arbitration decisions demonstrate that reasonable minds may differ
about the propriety of using the billing codes the way that he did, and that he believed
that his use of those billing codes was justified. ECF No. 238-29 at 23.
13

Jacobson also submitted a rebuttal expert report of Dr. Donald T. Alosio, Jr.
ECF No. 240-3. Alosio opined that the CPT codes that Jacobson utilized after
conducting patient examinations comported with the New York fee schedule. Id. at
3.

Yet Alosio admitted during his deposition that he did not review any of

Jacobson’s treatment reports or the bills that Jacobson sent to GEICO. ECF No.
240-4 at 21, 41–43. Indeed, Alosio conceded that it was “a fair statement” that he
could not say whether Jacobson’s reports met the requirements for the CPT codes
he billed to GEICO because Alosio had not reviewed the reports. Id. at 42–43.
2. Electrodiagnostic Testing
GEICO also argues that Jacobson submitted close to $850,000 in charges for
medically unnecessary or illusory electrodiagnostic testing. ECF No. 238-33 ¶¶ 92–
94. To support its claim, GEICO submitted an expert report prepared by Dr. John
Robinton. ECF. No. 238-10. Robinton explained that electrodiagnostic testing is
used to evaluate patients with possible neuromuscular disorders. Id. at 8. GEICO
claims that Jacobson inappropriately used three types of electrodiagnostic tests on
patients: (1) electromyography (“EMG”), (2) nerve conduction velocity (“NCV”),
and (3) somatosensory evoked potential (“SSEP”) tests. ECF No. 238-33 ¶¶ 91–92.
EMG and NCV tests can be used to diagnose radiculopathy. Id. ¶ 82.
Radiculopathy is a condition in which the nerve roots exiting the spinal cord have
been damaged either by compression or because of disease. ECF No. 238-10 at 9.
14

Robinton explained in his report that radiculopathy is the most common diagnosis
of motor vehicle accident victims and most often results from a herniated disc. Id.
In an EMG examination, a needle is inserted through the skin and into the muscle to
test and record limb and paraspinal muscle activity both at rest and while active. Id.
at 13. NCV tests are conducted by taping an electrode over the muscle, stimulating
a nerve to that muscle, and recording the muscle’s response to the nerve stimulation.
Id. at 11.
According to Robinton, treatment for radiculopathy does not require EMG or
NCV testing unless a patient fails to respond to an initial treatment plan that might
include medications or physical therapy. Id. at 23. If the patient fails to respond to
initial treatment, the next step is for the patient to receive an MRI to determine how
treatment should proceed. Id. EMG and NCV testing are infrequently used and are
usually undertaken when the patient fails to respond to directed treatment or when a
patient has symptoms that appear excessive compared to what an MRI shows. Id.
Thus, Robinton opined that only a small percentage of patients require EMG testing
to make a diagnosis of radiculopathy. Id. at 24. Indeed, Robinton explained that he
rarely uses electrodiagnostic testing when diagnosing patients involved in motor
vehicle accidents. Id. at 16. Even one of defendants’ own experts, Robert Odell,
testified that EMG and NCV tests are rarely prescribed. ECF No. 243-49 at 52–53.
Yet Robinton observed that diagnosing radiculopathy was the primary reason why
15

Jacobson utilized EMG and NCV testing when evaluating GEICO insureds. ECF
No. 238-10 at 23–24.
After reviewing the medical records of Jacobson’s patients, Robinton opined
that Jacobson used EMG and NCV testing inappropriately. First, Robinton found
that Jacobson’s use of electrodiagnostic testing did not comply with guidelines
established by the American Association of Neuromuscular and Electrodiagnostic
Medicine (“AANEM”). Id. at 24–25. Jacobson concedes that AANEM guidelines
state that the maximum number of EMG and NCV tests necessary to diagnose
radiculopathy in 90% of patients are: (1) NCV tests of three motor nerves, (2) NCV
tests of two sensory nerves; and (3) a two-limb EMG. ECF No. 238-33 ¶ 83. Despite
these guidelines, Robinton noted that, in a majority of cases, Jacobson and his
associates performed (1) NCV tests of 10 motor nerves, (2) NCV tests of 12 sensory
nerves, and (3) EMGs of all four limbs. ECF No. 238-10 at 25. Thus, the extent of
the tests that Jacobson conducted exceeded what the AANEM guidelines deemed
medically necessary in 90% of cases. Robinton opined that, while a physician might
have reason to deviate from the AANEM guidelines occasionally, one would not
expect a physician to deviate from the guidelines as a matter of course. Id. As a
result of this excessive testing, Robinton believed that Jacobson was able to increase
billing to GEICO “by an order of magnitude.” Id.

16

Moreover, in nearly half of the records Robinton reviewed, Jacobson’s files
contained electrodiagnostic tests that had deficient or medically impossible results.
Id. at 27. Jacobson stated in his affidavit that his practices have performed thousands
of electrodiagnostic tests over the years, which occasionally would yield the type of
medically “impossible” results that Robinton observed. ECF No. 238-32 ¶ 6.
Jacobson explained that the incorrect testing results could be caused by electrical
interference, the patient’s temperature, the use of skin cream, or an error in recording
numbers.

Id.

Such defects, which Jacobson represented occurred “in a tiny

percentage of the total electrodiagnostic testing my practices performed,” did not
alter his belief in the utility of the testing methods he employed. Id
Robinton also opined that Jacobson engaged in an inappropriate “cookie
cutter” approach to NCV testing. ECF No. 238-10 at 24. The testing patterns of
Jacobson and his associates revealed that they had established a predetermined
course of testing. Id. Indeed, Stephen Giorgio, a chiropractor who worked for
Jacobson, testified in his deposition that Jacobson had developed a protocol for
conducting NCV tests on the same set of nerves on every patient who received
testing, regardless of the patient’s injuries. ECF No. 238-11 at 143–46, 150–51.
Giorgio testified that conducting tests based on Jacobson’s protocol was not
common in his experience working for other doctors and that he thought Jacobson’s
approach would be a “red flag to the insurance company.” Id. at 150–51. Giorgio
17

also testified that, while he performed the NCV tests in accordance with Jacobson’s
protocol, he believed the tests to be medically unnecessary. Id. at 151–55. Based
on his review of medical records, Robinton also found that testing did not alter the
care or treatment of patients in any way, which is further indication that the testing
was medically useless. ECF No. 238-10 at 42.
Robinton likewise concluded that Jacobson’s use of SSEP testing was
medically unnecessary. SSEP testing measures the body’s response to peripheral
stimulation through the limb, up the spinal cord, and into the brain. Id. at 20. The
test is conducted by performing low levels of electric shock in the limb. Id.
According to Robinton, in the 1970s and 1980s, SSEP was considered clinically
useful for diagnosing certain central nervous system disorders, such as multiple
sclerosis, but has largely become obsolete due to improvements in MRI and CT scan
technology. Id. at 20. Robinton explained that SSEP testing should only be utilized
in cases when other types of testing have been inconclusive or when the patient is
unconscious. Id. at 21. In Robinton’s opinion, use of SSEP as an initial diagnostic
test, as Jacobson used it, is not appropriate or consistent with good medical practice.
Id. at 21, 35.
Jacobson did not submit an expert report to rebut Robinton. He did, however,
submit decisions in arbitrations between GEICO and Jacobson in which arbitrators
approved his use of electrodiagnostic testing. ECF Nos. 243-7, 243-8. He also
18

submitted affidavits in which he represented that he always tailored testing and
treatments to the complaints of his patients and believed that all testing he conducted
was medically necessary. ECF Nos. 238-32 ¶ 4, 243-33 ¶ 4.
3. Manipulation Under Anesthesia
GEICO also claims that Jacobson billed over $935,000 for medically
unnecessary MUAs through NJ Pain and NJ Neuro. ECF No. 238–33 ¶¶ 111–12.
MUA involves a series of chiropractic mobilization, stretching, and traction
procedures on a patient’s musculoskeletal system while the patient is under
anesthesia. Id. ¶ 97. Under appropriate circumstances, MUA can be an effective
treatment when applied to the spine, hip, or shoulder, as well as other areas of the
body. Id. ¶ 98. According to GEICO’s expert, Dr. Cremata, however, due to the
risks from anesthesia, MUA would almost never be an appropriate first-line
treatment. ECF No. 238-9 at 7. Rather, he opined that MUA should be reserved
only for patients who have already received more conservative treatment, such as
ordinary chiropractic manipulation without anesthesia, but who nonetheless fail to
respond to such treatment. Id. In Cremata’s opinion, except in rare cases, a
minimum of six weeks of conservative treatment should be provided to a patient
before MUA is even considered. Id. Nor would Cremata expect to see more than 3
to 10% of car accident victims examined by an MUA provider be referred for an
MUA procedure. Id. at 7–8.
19

A patient may require only a single MUA procedure. Id. at 8. Nevertheless,
multiple MUA treatments may be appropriate when a patient’s condition could be
characterized as chronic or incalcitrant. Id. If a patient regains 80% of his or her
biomechanical function, a second MUA procedure would typically be considered
unnecessary. Id. at 9. But if a patient recovers only 50 to 70% of biomechanical
function, follow-up MUA procedures may be appropriate. Id. Cremata would not
expect a large percentage of patients to recover similar amounts of biomechanical
function following a first or second MUA procedure given differences in age,
physical condition, and injuries. Id.
Several aspects of Jacobson’s MUA practices suggested to Cremata that he
made MUA referrals automatically without regard for an individual patient’s
circumstances. Id. at 21. Contrary to Cremata’s clinical experience—in which only
3 to 10% of patients examined by an MUA provider would be referred for MUA
treatment—NJ Pain and NJ Neuro recommended more than 90% of their patients
for the procedure. Id. Indeed, more than 90% of patients who received one MUA
treatment were referred for serial MUA. Id. The majority of Jacobson’s patients
were recorded as experiencing between a 50 to 70% improvement in biomechanical
function after a single MUA—just within the range of improvement necessary to
justify serial MUA. Id. at 21–22. According to Cremata, that consistency among
patients is so statistically improbable that he believes the data was fabricated so that
20

Jacobson could bill GEICO for more MUA procedures than were medically
necessary. Id. at 22. Moreover, in most of the cases Cremata reviewed, MUA was
prescribed through self-referrals among Jacobson-controlled entities. Id. at 28. In
Cremata’s opinion, an unusually high percentage of Jacobson’s MUA patients—at
least 35%—received MUA within six to eight weeks of receiving more conservative
treatment, often from one of Jacobson’s other practices. Id. at 27–28. That led
Cremata to conclude that Jacobson referred patients for MUA for financial reasons
and not based on medical necessity. Id. at 28.
Cremata also opined that Jacobson misrepresented the nature of MUA
services billed to GEICO. Jacobson virtually always used the CPT code 27194 when
billing for MUA services that his practices performed on GEICO-insured patients.
Id. That CPT code is used to bill for the treatment of “pelvic ring fracture,
dislocation, diastasis, or subluxation.” ECF No. No. 238-33 ¶ 109. The medical
reports that Cremata reviewed, however, indicated that these patients suffered injury
to their sacroiliac joint, which is located at the bottom of the spine by the tailbone.
ECF Nos. 238-4 at 70, 238-9 at 28. Jacobson concedes that he used the 27194 CPT
code to bill for MUA related to injuries to the sacrum but argues that he considers
the sacrum to be part of the pelvic ring and that his use of the CPT code was therefore
appropriate. ECF Nos. 238-4 at 72; 238-32 ¶ 8. Although Jacobson claims that the
sacrum is part of the pelvic ring, Peter Albis, one of the chiropractors who worked
21

for Jacobson, testified at his deposition that the sacroiliac and pelvic joints are
separate. ECF No. 243-54 at 52.
Cremata further reviewed numerous cases in which patients were treated by
doctors other than Jacobson for weeks or months with no indication of injury to the
pelvic ring or sacroiliac joint but then, when the patients were treated by Jacobson
for the first time, they suddenly were identified as having pelvic or sacroiliac injury
symptoms. ECF No. 238-9 at 30–31. In Cremata’s opinion, it is “improbable to the
point of impossibility” that such a sizeable group of patients, most of whom were
involved in minor accidents, would fail to exhibit symptoms of pelvic or sacroiliac
injury for weeks or months before being treated by Jacobson. Id. at 31.
Jacobson points to evidence that, he argues, disputes GEICO’s position that
the MUA treatments he performed were medically unnecessary. First, Jacobson
relies on the report of his expert, Dr. Alosio, to argue that his MUA treatments were
proper. ECF No. 238-29 at 30. But, as described above, Alosio admitted that he did
not review any of the medical records in this case. Jacobson also submits arbitration
decisions in which his use of MUA was upheld over GEICO’s objections. ECF No.
243-16. Moreover, in an affidavit, Jacobson represents that NJ Neuro and NJ Pain
specialize in MUA treatment, which explains why patients referred to these practices
receive substantially more MUA treatment than the general patient population. ECF

22

No. 238-32 ¶ 10. Jacobson also claims that he believed the MUA treatments
provided to his patients were medically necessary. Id.
LEGAL STANDARD
Summary judgment may be granted only if “the movant shows that there is
no genuine dispute as to any material fact and the movant is entitled to judgment as
a matter of law.” Fed. R. Civ. P. 56(a). A genuine dispute of material facts exists “if
the evidence is such that a reasonable jury could return a verdict for the nonmoving
party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The movant
bears the initial burden of demonstrating the absence of a genuine issue of material
fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Where the non-movant
bears the burden of proof at trial, the movant’s initial burden at summary judgment
can be met by pointing to a lack of evidence supporting the non-movant’s claim. Id.
at 325. By contrast, “[w]here the movant has the burden” of proof at trial, “its own
submissions in support of the motion must entitle it to judgment as a matter of law.”
Albee Tomato, Inc. v. A.B. Shalom Produce Corp., 155 F.3d 612, 618 (2d Cir. 1998).
DISCUSSION
I.

GEICO’s Motions
GEICO moves for summary judgment on its causes of action for declaratory

judgment (Count 1), common law fraud (Counts 4, 9, 24, and 29), unjust enrichment
(Counts 6, 11, 26, and 31), and violation of the New Jersey Insurance Fraud
23

Prevention Act (Count 34). In addition, GEICO makes two evidentiary motions: (1)
a motion for an adverse inference with respect to certain documents Jacobson did
not produce to GEICO during discovery, and (2) a motion to exclude defendants’
expert, Dr. Alosio. “Because the purpose of summary judgment is to weed out cases
in which there is no genuine issue as to any material fact and . . . the moving party
is entitled to a judgment as a matter of law, . . . it is appropriate for district courts to
decide questions regarding the admissibility of evidence on summary judgment.”
Raskin v. Wyatt Co., 125 F.3d 55, 66 (2d Cir. 1997) (internal quotation omitted).
Exclusion of defendants’ evidence may affect whether a genuine dispute of material
fact exists, and thus I address GEICO’s evidentiary motions before turning to its
summary judgment motion.
A. GEICO’s Motion for an Adverse Inference
First, GEICO moves under Fed. R. Civ. P. 37 for an adverse inference and to
preclude Jacobson from introducing evidence that he disclosed his ownership
interests in his various practices to GEICO insureds to whom he made self-referrals.
ECF No. 239. Specifically, GEICO seeks to preclude Jacobson from relying on 65
ownership disclosure forms that he attached to his motion papers but that he
concedes he never produced to GEICO in discovery. Jacobson argues that he was
not required to produce these disclosure forms in discovery because they were made
available to GEICO prior to the commencement of this litigation.
24

As mentioned above, the disclosure forms that Jacobson attached to his
motion papers are largely irrelevant to disposing of the pending summary judgment
motions. Only two of the forms relate to the more than 200 examples of allegedly
illegal self-referrals that GEICO has identified. Compare ECF Nos. 238-3 at 393–
97, 613–14 with ECF No. 243-34. The other 63 forms were signed by patients who
have nothing to do with GEICO’s claims. Indeed, it is unclear from the disclosure
forms whether most of the patients are even GEICO insureds. Thus, even assuming
that Jacobson had an obligation to produce the disclosure forms during discovery, an
adverse inference as a sanction for Jacobson’s failure to satisfy his discovery
obligations is unnecessary. Rule 37 sanctions are not warranted where, as here, a
failure to disclose is harmless, meaning that the omission does not prejudice the
offended party. Aboeid v. Saudi Arabian Airlines Corp., 2011 WL 5117733, at *2
(E.D.N.Y. Sept. 6, 2011).
B. GEICO’s Motion to Exclude Jacobson’s Expert
GEICO also moves to preclude defendants from offering any opinions or
testimony from their expert, Dr. Alosio, “relating to (i) the Defendants’ purported
performance of MUAs and patient examinations; and (ii) the Defendants’ billing
submissions to GEICO for MUAs and patient examinations.” ECF No. 240-5 at 5.
GEICO argues that Alosio’s expert report should not be considered when resolving
the parties’ summary judgment motions because it violates Fed. R. Evid. 702.
25

Specifically, GEICO contends that the opinions in Alosio’s report are conclusory
speculations, given his admission that he did not review any of Jacobson’s treatment
reports or billing submissions. GEICO’s motion is granted in part.
Fed. R. Evid. 702 provides that a witness who is “qualified as an expert by
knowledge, skill, experience, training, or education may testify in the form of an
opinion or otherwise if: (a) the expert’s scientific, technical, or other specialized
knowledge will help the trier of fact to understand the evidence or to determine a
fact in issue; (b) the testimony is based on sufficient facts or data; (c) the testimony
is the product of reliable principles and methods; and (d) the expert has reliably
applied the principles and methods to the facts of the case.” In determining expert
admissibility, district courts act as gatekeepers against unreliable expert opinion.
Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 597 (1993).

“The court

performs the same [gatekeeper] role at the summary judgment phase as at trial; an
expert’s report is not a talisman against summary judgment.” Raskin, 125 F.3d at
66.
Alosio’s failure to review any treatment reports or the bills submitted to
GEICO renders his opinions about Jacobson’s billing and treatment practices
unreliable. For example, he opined that the number of patients on whom Jacobson
performed MUA was not unusually high because they “had been referred to the
MUA specialist only after undergoing a trial of conservative therapy,” including
26

“chiropractic, physical therapy, acupuncture, and pain management, with
accompanying MRI studies.” ECF No. 238-31 at 3. But it is unclear how Alosio
could render such an opinion without having reviewed any medical records. Indeed,
when asked at his deposition how he could determine whether patients underwent
sufficient conservative therapy before undergoing MUA treatment if he did not
review the underlying medical records, Alosio responded, “[h]onestly, I don’t
remember, but I would not give something informationally that I didn’t feel was
accurate, so there must have been either information given from Dr. Cremata’s
report, which I reviewed and it was present. I’m assuming that’s where I got it from.”
ECF No. 240-4 at 46. Moreover, Alosio admitted that he could not opine on whether
Jacobson satisfied the guidelines for when MUA procedures are appropriate because
he did not review the underlying medical records. Id. at 51.
Similarly, in his expert report, Alosio opined that the CPT codes that Jacobson
used “comport with the New York fee schedule description.” ECF No. 240-3 at 3.
Yet, as described above, Alosio admitted at his deposition that it was a “fair
statement” that he could not actually say whether any of Jacobson’s treatment reports
satisfied the CPT requirements because he never reviewed the reports. ECF No.
240-4 at 42–43.
“[T]here appear to be very few cases in the Second Circuit in which the court
has been presented with an expert medical opinion where the expert . . . did not
27

consult the patient's medical records. And in these very few cases, courts have
invariably found such opinions to be unreliable.” El Ansari v. Graham, 2019 WL
3526714, at *5 n.5 (S.D.N.Y. Aug. 2, 2019) (collecting cases). Jacobson’s argument
for why this case should turn out differently is unconvincing. He contends that the
purpose of Alosio’s report and testimony is solely to rebut GEICO’s expert and his
opinions are not “predicated on a review of a [sic] Defendants’ medical or billing
records.” ECF No. 240-6 at 11. While “there is no requirement that a rebuttal expert
himself offer a competing analysis,” and “his opinions may properly concern
criticizing that presented by another party,” Luitpold Pharms., Inc. v. Ed. Geistlich
Sohne A.G. Fur Chemische Industrie, 2015 WL 5459662, at *12 (S.D.N.Y. Sept. 16,
2015), rebuttal experts must still “meet Daubert’s threshold standards regarding the
qualifications of the expert, sufficiency of the data, reliability of the methodology,
and relevance of the testimony.” Scott v. Chipotle Mexican Grill, Inc., 315 F.R.D.
33, 44 (S.D.N.Y. 2016).
To the extent that Alosio opines about Jacobson’s treatment or billing
practices, his opinion is inadmissible. For example, Alosio claims that “[n]one of
the patients treated deviates from any of the guidelines or articles that [GEICO’s
expert] cites and, in fact, all of these patients are within the accepted current
guidelines and literature.” ECF No. 240-3 at 4. Alosio cannot have reliably formed
that rebuttal opinion without reviewing any of the patients’ medical records or
28

Jacobson’s treatment reports. His opinion with respect to whether Jacobson properly
used CPT codes or performed MUAs thus will not be considered in resolving the
summary judgment motions and will be inadmissible at trial.
Nevertheless, Alosio’s opinions are likely admissible to the extent that he
challenges Cremata’s opinion about the general standards chiropractors should use
when treating patients and billing insurers. For example, Alosio disagrees with
Cremata’s opinion that a minimum of six weeks of conservative treatment is
necessary before a chiropractor could reasonably provide MUA treatment to a
patient. ECF No. 239-31 at 2. Moreover, Alosio opines that subluxation of the pelvis
is an ailment that a chiropractor can properly bill under CPT code 27194. Id. at 4–
5. Such opinions about the general standards that chiropractors should satisfy before
treating patients or billing insurers does not require review of Jacobson’s medical
records and are likely admissible, assuming that a proper foundation is laid at trial.
C. GEICO’s Summary Judgment Motion
1. The Fraud Claims (Counts 4, 9, 24, and 29)
GECIO argues that it is entitled to summary judgment against Jacobson and
his incorporated practices on its common law fraud claims under New York law. To
prevail on a claim of fraud, a plaintiff must prove “(1) a material misrepresentation
or omission of a fact, (2) knowledge of that fact’s falsity, (3) an intent to induce
reliance, (4) justifiable reliance by the plaintiff, and (5) damages.” Loreley Fin.
29

(Jersey) No. 3 Ltd. v. Wells Fargo Secs. Litig., 797 F.3d 160, 170 (2d Cir. 2015)
(applying New York law).
Defendants’ argument against granting summary judgment rests principally
on their assertion that GEICO has failed to demonstrate knowledge of falsity and
intent to defraud. ECF No. 238-29 at 34. Under New York law, “[i]ntent to deceive
must be shown by evidence of guilty knowledge or willful ignorance.” Century
Pac., Inc. v. Hilton Hotels Corp., 528 F. Supp. 2d 206, 222 (S.D.N.Y. 2007) (internal
quotation omitted). “[F]raudulent intent is rarely susceptible to direct proof and
must ordinarily be established by circumstantial evidence and the legitimate
inference arising therefrom.” Barkley v. United Homes, LLC, 2012 WL 2357295, at
*8 (E.D.N.Y. June 20, 2012) (internal quotation omitted). An inference of fraudulent
intent can be established “by a showing of a motive for committing fraud or by
‘identifying . . . conscious behavior by the [accused party].’” Enzo Biochem, Inc. v.
Johnson & Johnson, 1992 WL 309613, at *11 (S.D.N.Y. Oct. 15, 1992) (internal
quotation omitted) (alteration in original).
GEICO argues that there is sufficient evidence demonstrating defendants’
motive to commit fraud and conscious behavior that serves as circumstantial
evidence of fraudulent intent. First, it argues that Jacobson had a financial motive
to

commit

fraud

because

GEICO’s

discovery

of

the

various

billing

misrepresentations described above would have resulted in GEICO’s non-payment
30

of millions of dollars in no-fault billing. ECF No. 238-27 at 32. Moreover, GEICO
argues that Jacobson’s submission of bills through six different entities and his
failure to submit income tax returns for his incorporated practices is further evidence
of his fraudulent intent. Id. at 32–33.
Based on the evidence GEICO has presented, a reasonable jury might
conclude that Jacobson acted with fraudulent intent. Courts have regularly held that
a medical professional’s financial motive to obtain no-fault insurance benefits by
making intentional misrepresentations to an insurance company is sufficient to
demonstrate scienter. See, e.g., Gov’t Emps. Ins. Co. v. Badia, 2015 WL 1258218,
at *15 (E.D.N.Y. Mar. 18, 2015); Allstate Ins. Co. v. Etienne, 2010 WL 4338333, at
*10 (E.D.N.Y. Oct. 26, 2010).
Jacobson argues that the opinion of his expert, Dr. Alosio, and decisions in his
favor in arbitrations against GEICO raise triable issues for the jury. For the reasons
stated above, Dr. Alosio’s opinions about Jacobson’s treatment and billing practices
are inadmissible and are not considered here. With respect to the arbitration
decisions, the arbitrators only considered individual cases of Jacobson’s billing
practices in isolation.

But GEICO argues that Jacobson “systematically and

concertedly administered treatments in a rote fashion, independent of the clinical
needs of the patient, in such a combination as to maximize reimbursements while
minimizing the possibility of detection through the use of various controlled
31

entities.” State Farm Mut. Auto. Ins. Co. v. Parisien, 352 F. Supp. 3d 215, 229
(E.D.N.Y. 2018). “[T]hese alleged violations may not be apparent if the claims and
their supporting documentation are examined in isolation on a case-by-case basis.
Facially legitimate treatments may be provided with little variance across multiple
patients, but it is only by analyzing the claims as a whole that the irresistible
inference arises that the treatments are not being provided on the basis of medical
necessity.” Id. Thus, the arbitration decisions are of little probative value in
determining whether Jacobson engaged in widespread fraud by submitting hundreds
of bills to GEICO for PIP reimbursement for cookie-cutter treatments without regard
for medical necessity.
Nevertheless, as GEICO concedes, “in many instances, summary judgment
may be inappropriate on fraud-based claims because knowledge and fraudulent
intent typically present fact questions.” ECF No. 238-27 at 32 n.6. Such triable
disputes are present here. While a jury may find that Jacobson intentionally made
fraudulent representations in his no-fault submissions to GEICO, a jury may also
find—based on Jacobson’s testimony—that Jacobson had a good-faith belief that he
properly billed GEICO for medically necessary testing and treatment. While GEICO
points to circumstantial evidence from which a jury could find scienter, this case will
likely turn on a jury’s assessment of Jacobson’s credibility and whether he possessed
the requisite intent to defraud. “Ordinarily, the issue of fraudulent intent cannot be
32

resolved on a motion for summary judgment, being a factual question involving the
parties’ states of mind.” Golden Budha Corp. v. Canadian Land Co. of Am., N.V.,
931 F.2d 196, 201–02 (2d Cir. 1991); see also Wright & Miller, 10B Fed. Prac. &
Proc. Civ. § 2730 (4th ed. 2016) (“[I]t frequently has been observed that when state
of mind, or ‘consciousness and conscience’ is involved, credibility often will be
central to the case and summary judgment inappropriate.”). Indeed, GEICO cites no
case in which a court has granted summary judgment in favor of a plaintiff on an
insurance fraud claim like the one it alleges here. Thus, GEICO’s motion for
summary judgment on its common law fraud claims is denied.
2. The Unjust Enrichment Claims (Counts 6, 11, 26, and 31)
To establish Jacobson’s liability on an unjust enrichment theory, GEICO must
establish “1) that the defendant benefitted; 2) at the plaintiff's expense; and 3) that
‘equity and good conscience’ require restitution.” Kaye v. Grossman, 202 F.3d 611,
616 (2d Cir. 2000). Jacobson argues that GEICO’s unjust enrichment claim is
duplicative of its fraud claim. ECF No. 238-29 at 36–37. Indeed, GEICO requests
the same damages under an unjust enrichment theory as it does for common law
fraud. ECF No. 238-27 at 34, 36. Because GECIO’s “unjust enrichment claims arise
from the same factual predicates as [its] other claims, it is unnecessary to explore
the unjust enrichment claim at length. If one of a number of integrally related causes
of action must be tried, it makes little sense to grant a motion for summary judgment
33

as to one or more of them, as it may prove necessary to hold yet another trial in the
event that it is determined on appeal that the motion for summary judgment was
improperly granted.” Eviner v. Eng, 2015 WL 4600541, at *13 (E.D.N.Y Jul. 29,
2015). As observed by Judge Clark in an analogous context: “[T]here seems no
question that in the long run fragmentary disposal of what is essentially one matter
is unfortunate not merely for the waste of time and expense caused the parties and
courts, but because of the mischance of differing dispositions of what is essentially
a single controlling issue.” Audi Vision, Inc. v. RCA Mfg. Co., 136 F.2d 621, 625 (2d
Cir. 1943).
The one exception concerns payment that NJ Neuro and NJ Pain received
from GEICO for services provided in New York. Jacobson concedes that he
“submitted those bills believing them to be properly reimbursable, [but] he now
understands that they were not because he failed to file the paperwork to obtain a
certificate of authority that would allow NJ Pain or NJ Neuro to bill for the New
York services.” ECF No. 238-29 at 33 n.3. Given Jacobson’s concession that he
was never entitled to those payments, holding a trial on this issue is unnecessary, and
GEICO is granted summary judgment on its unjust enrichment claim for the
$4,018.33 in payments that it made to NJ Pain and NJ Neuro’s unlawful operations
in New York. ECF No. 238-33 ¶¶ 56–57. The remainder of GEICO’s summary
judgment motion on its unjust enrichment claim is denied.
34

3. The New Jersey Insurance Fraud Prevention Act Claim (Count
34)
GEICO argues that all the MUA charges that Jacobson submitted through NJ
Pain and NJ Neuro violate New Jersey’s Insurance Fraud Prevention Act
(“NJIFPA”). Specifically, GEICO argues that all of the charges NJ Pain and NJ
Neuro purported to provide to GEICO insureds in New Jersey falsely represented
(1) the medical necessity of the MUAs, (2) the nature and extent of services billed
under code 27914 related to pelvic ring treatment, and (3) in 133 cases, that the
MUAs were provided in compliance with New Jersey law when in fact those cases
were the result of illegal self-referrals.
The NJIFPA is violated when a practitioner “[p]resents or causes to be
presented any written or oral statement as part of, or in support of . . . a claim for
payment or other benefit pursuant to an insurance policy . . . knowing that the
statement contains any false or misleading information concerning any fact or thing
material to the claim.” N.J. Stat. Ann. § 17:33A–4(a)(1). To prove a violation of the
NJIFPA, a plaintiff must demonstrate (1) knowledge, (2) falsity, and (3) materiality.
Gov’t Emps. Ins. Co. v. Zuberi, 2017 WL 4790383, at *4 (D.N.J. Oct. 23, 2017).
“Unlike common law fraud, proof of fraud under the [NJIFPA] does not require
proof of reliance on the false statement or resultant damages . . . nor proof of intent
to deceive.” Id. (alterations in original).
Jacobson argues that GEICO is not entitled to summary judgment on its
35

NJIFPA claim because no rational juror could find that Jacobson knowingly
submitted a false statement to GEICO. Jacobson overstates his case. Based on the
circumstantial evidence described above, a reasonable jury could conclude that
Jacobson knowingly performed medically unnecessary MUAs on his patients and
billed them incorrectly to inflate the PIP benefits he would receive from GEICO. A
reasonable jury could also conclude that Jacobson knowingly made unlawful selfreferrals to NJ Pain and NJ Neuro. Yet, as the New Jersey Supreme Court held in
applying the NJIFPA in analogous circumstances, “[i]nferring mental state from
circumstantial evidence is among the chief tasks of factfinders.” Allstate Ins. Co. v.
Northfield Med. Ctr., P.C., 159 A.3d 412, 427 (N.J. 2017) (internal quotation
omitted). As is the case with the New York state common law fraud claims, whether
Jacobson possessed the requisite knowledge will turn on a jury’s assessment of his
credibility. GEICO’s summary judgment motion with respect to its NJIFA claim is
thus denied.
4. The Declaratory Judgment Claim (Count 1)
GEICO argues that it is entitled to a declaratory judgment that it is not
obligated to pay $1.4 million in pending PIP benefits to Jacobson in connection with
charges (1) that were the result of illegal self-referrals; (2) for services provided by
NJ Pain and NJ Neuro’s operations in New York without a certificate of authority
from the New York Department of Education, (3) for services provided by NJ Neuro
36

for services provided in New Jersey while Jacobson’s chiropractic license was
suspended; (4) for initial patient examinations utilizing improper CPT codes; (5) for
EMG, NCV, and SSEP tests; and (6) for MUAs. ECF Nos. 1 ¶ 428; 238-27 at 30–
31. Because a jury will decide whether Jacobson was entitled to the PIP benefits
that GEICO already paid to him, it also should resolve whether GEICO is obligated
to pay the pending claims. For that reason, except for any outstanding payments to
NJ Neuro and NJ Pain for services it performed in New York, to which Jacobson
concedes he is not entitled, GEICO’s summary judgment motion on its declaratory
judgment claim is denied. GEICO’s motion for declaratory judgment related to
outstanding payments for services rendered by NJ Pain and NJ Neuro in New York
is granted.
II.

Defendants’ Summary Judgment Motion
A. The Declaratory Judgment, Common Law Fraud, Unjust
Enrichment, and NJIFPA Claims (Counts 1, 4–5, 11, 14–16, 19–21,
24–26, 29–31, & 34–35)
As described above, genuine issues of material fact exist with respect to

GEICO’s declaratory judgment, common law fraud, unjust enrichment, and NJIFPA
claims. Defendants’ motion for summary judgment is thus denied with respect to
those causes of action.
B. Civil RICO and RICO Conspiracy Claims (Counts 2–3, 12–13, 17–
18, 22–23, 27–28, & 32–33)
Defendants also move for summary judgment on GEICO’s substantive RICO
37

claims against Jacobson, and RICO conspiracy claims against Jacobson and four
chiropractors who worked for him—Diana Beynin, Peter Albis, Jongdug Park, and
Gerlando Zambuto. A plaintiff is entitled to damages under 18 U.S.C. § 1964(c) if
it can demonstrate “(1) a substantive RICO violation under § 1962; (2) injury to the
plaintiff's business or property, and (3) that such injury was by reason of the
substantive RICO violation.” UFCW Local 1776 v. Eli Lilly & Co., 620 F.3d 121,
131 (2d Cir. 2010) (internal quotation omitted). To prove a substantive RICO claim
under 18 U.S.C. § 1962(c), a plaintiff must demonstrate “(1) that the defendant (2)
through the commission of two or more acts (3) constituting a ‘pattern’ (4) of
‘racketeering activity’ (5) directly or indirectly invests in, or maintains an[] interest
in, or participates in (6) an ‘enterprise’ (7) the activities of which affect interstate or
foreign commerce.” Williams v. Affinion Grp., LLC, 889 F.3d 116, 123–24 (2d Cir.
2018) (internal quotation omitted). To prove a RICO conspiracy, GEICO must show
“the existence of an agreement to violate RICO’s substantive provisions.” Id. at 124
(internal quotation omitted). For the reasons described below, defendants’ summary
judgment motion is denied with respect to the civil RICO and RICO conspiracy
claims.
1. GEICO Has Standing to Pursue its Civil RICO Claims
First, defendants argue that GEICO lacks standing to pursue its civil RICO
claims. ECF No. 243-2 at 17–20. Defendants argue that “a subset of the no-fault
38

claims GEICO relies upon are currently pending in arbitration and litigation,” and
thus it cannot demonstrate that its injuries are concrete or definite. Id. at 20. GEICO
responds that its RICO damages are based only on payments that it has already made
on Defendants’ no-fault claims. ECF No. 243-43 at 12. Because its RICO claims
are limited to the no-fault payments that it has already made to defendants, GEICO
has standing to pursue these claims. See Allstate Ins. Co. v. Lyons, 843 F. Supp. 2d
358, 374 (E.D.N.Y. 2012).
2. There is Sufficient Evidence of a “Pattern” of Racketeering
Activity
Second, defendants argue that GEICO cannot prove the continuity necessary
to demonstrate a pattern of racketeering activity. To prove a pattern, GEICO must
show “at least two acts of racketeering activity, . . . the last of which occurred within
ten years . . . after the commission of a prior act of racketeering activity.” 18 U.S.C.
§ 1961(5). “The acts of racketeering activity that constitute the pattern must be
among the various criminal offenses listed in § 1961(1) [in this case, mail fraud],
and they must be related, and [either] amount to or pose a threat of continuing
criminal activity.” Spool v. World Child Int’l Adoption Agency, 520 F.3d 178, 183
(2d Cir. 2008) (internal quotation omitted) (second alteration in original). A plaintiff
can demonstrate a pattern by either showing “closed-ended” continuity or an “openended” continuity. Id.
“To satisfy closed-ended continuity, the plaintiff must prove ‘a series of
39

related predicates extending over a substantial period of time.’” Cofacrèdit, S.A. v.
Windsor Plumbing Supply Co., Inc., 187 F.3d 229, 242 (2d Cir. 1999) (quoting H.J.,
Inc. v. Nw. Bell Tel. Co., 492 U.S. 229, 242 (1989)). “Predicate acts separated by
only a few months will not do; this Circuit generally requires that the crimes extend
over at least two years” to support a finding of closed-ended continuity. Reich v.
Lopez, 858 F.3d 55, 60 (2d Cir. 2017) (internal citation omitted). “[W]hile two years
may be the minimum duration necessary to find closed-ended continuity, the mere
fact that predicate acts span two years is insufficient, without more, to support a
finding of a closed-ended pattern.” First Cap. Asset Mgmt., Inc. v. Satinwood, Inc.,
385 F.3d 159, 181 (2d Cir. 2004). Other factors relevant to determining closed-ended
continuity include “the number and variety of predicate acts, the number of both
participants and victims, and the presence of separate schemes.” Id.
“To satisfy open-ended continuity, the plaintiff . . . must show that there was
a threat of continuing criminal activity beyond the period during which the predicate
acts were performed.” Cofacrèdit, S.A., 187 F.3d at 242. A continuing threat is
“presumed when the enterprise’s business is primarily or inherently unlawful.”
Spool, 520 F.3d at 185. When “the enterprise primarily conducts a legitimate
business, however, no presumption of continued threat arises” and open-ended
continuity can only be inferred when there is evidence “that the predicate acts were
the regular way of operating that business, or the nature of the predicate acts
40

themselves implies a threat of continued criminal activity.” Id. (quoting Cofacrèdit,
187 F.3d at 243).
GEICO concedes that it cannot prove closed-ended continuity with respect to
the RICO claims involving Jacobson’s incorporated practices. ECF No. 243-43 at
13 n.2. It does argue, however, that closed-ended continuity can be established with
respect to Jacobson’s unincorporated practice. Id. at 13–14. Defendants do not
dispute that Jacobson’s unincorporated practice sent no-fault bills to GEICO for a
period exceeding two years. Rather, they argue that GEICO cannot establish closedended continuity because Jacobson’s “standard billing for his unincorporated
practice’s treatments was non-complex, involved few participants, and just one
purported victim.” ECF No. 243–64 at 11. Defendants’ argument is unpersuasive.
Courts have routinely held in similar situations that a closed-ended continuity pattern
is cognizable when a healthcare provider commits numerous acts of mail fraud by
submitting hundreds of fraudulent no-fault insurance claims to an insurer over a
period of more than two years. See, e.g., Gov’t. Emps. Ins. Co. v. Simalovsky, 2015
WL 5821407, at *8 (E.D.N.Y. Oct. 5, 2015); Gov’t. Emps. Ins. Co. v. Hollis Med.
Care, P.C., 2011 WL 5507426, at *9 (E.D.N.Y. Nov. 9, 2011). A jury could thus find
a closed-ended continuity pattern at trial with respect to Jacobson’s unincorporated
practice.
GEICO has also submitted sufficient evidence to demonstrate open-ended
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continuity with respect to Jacobson’s unincorporated practice and his five
incorporated practices. A jury could infer that engaging in a pattern of illegal selfreferrals and sending inflated and fraudulent invoices to insurers was its regular way
of conducting business. A jury could thus find an open-ended pattern of racketeering
activity based on the evidence that Jacobson has submitted.

See Lyons, 843

F. Supp. 2d at 369–70; Allstate Ins. Co. v. Nazarov, 2015 WL 5774459, at *14
(E.D.N.Y. Sept. 30, 2015).
3.

There is Sufficient Evidence of an “Enterprise”

Defendants argue that GEICO failed to produce evidence of an “associationin-fact” enterprise consisting of Jacobson’s five incorporated practices and his
unincorporated practice. ECF No. 243-2 at 26–29. As an initial matter, Defendants’
argument only relates to Counts 32 and 33. ECF No. 1 ¶¶ 660, 671. For the
remaining RICO counts, GEICO alleges that each individual practice is its own
enterprise. Id. ¶¶ 438, 445, 475, 482, 512, 519, 549, 556, 586, 593, 623, 630.
Defendants do not argue that each of the individual practices themselves fail to
constitute an enterprise under the RICO statute.
Nor would such an argument have merit. An “enterprise” is defined as “any
individual, partnership, corporation, association, or other legal entity, and any union
or group of individuals associated in fact although not a legal entity.” 18 U.S.C.
§ 1961(4). “A RICO enterprise ‘is proved by evidence of an ongoing organization,
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formal or informal, and by evidence that the various associates function as a
continuing unit.’” United States v. Applins, 637 F.3d 59, 73 (2d Cir. 2011) (quoting
United States v. Turkette, 452 U.S. 576, 583 (1981)). The enterprise requirement “is
most easily satisfied when the enterprise is a formal legal entity.” Satinwood, Inc.,
385 F.3d at 173. In an almost identical context, a medical practice that sought over
two million dollars in allegedly fraudulent no-fault benefits was found to satisfy the
enterprise requirement as a formal legal entity. Hollis Med. Care, P.C, 2011 WL
5507426, at *5. Thus, for the RICO claims outside of Counts 32 and 33, the evidence
that GEICO has produced relating to the existence of separate medical practices is
sufficient to demonstrate that each practice is its own enterprise.
For Counts 32 and 33, GEICO has produced sufficient evidence of an
association-in-fact enterprise comprised of all of Jacobson’s practices. “[A]n
association-in-fact enterprise must have at least three structural features: a purpose,
relationships among those associated with the enterprise, and longevity sufficient to
permit these associates to pursue the enterprise's purpose.” Boyle v. United States,
556 U.S. 938, 946 (2009). A jury could conclude that Jacobson’s medical practices
“shar[ed] a common purpose to engage in a fraudulent course of conduct, namely, to
defraud plaintiffs of money by exploiting the payment formulas of the No-Fault
laws.” AIU Ins. Co. v. Olmecs Med. Supply, Inc., 2005 WL 3710370, at *7 (E.D.N.Y.
Feb. 22, 2005). This case is indistinguishable from Gov’t Emps. Ins. Co. v. AMD
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Chiropractic, P.C., 2013 WL 5131057, at *6 (E.D.N.Y. Sept. 12, 2013), in which
Judge Gershon held that an “ad hoc association” of three chiropractic practices, all
owned by the same chiropractor, and through which the chiropractor submitted
fraudulent no-fault charges to insurers, could constitute an association-in-fact
enterprise. See also Allstate Ins. Co. v. Etienne, 2010 WL 4338333, at *6 (E.D.N.Y.
2010).
4.

There is Sufficient Evidence of Mail Fraud

GEICO argues that repeated violations of the mail fraud statute, 18 U.S.C.
§ 1341, constitute the racketeering activity that supports its RICO claim. To prove
mail fraud, a plaintiff must demonstrate “(1) the existence of a scheme to defraud,
(2) defendant's knowing or intentional participation in the scheme, and (3) the use
of interstate mails . . . in furtherance of the scheme.” S.Q.K.F.C., Inc. v. Bell Atl.
TriCon Leasing Corp., 84 F.3d 629, 633 (2d Cir. 1996). Defendants argue that they
are entitled to summary judgment because GEICO cannot prove mail fraud.
Defendants’ arguments lack merit.
First, defendants argue that GEICO’s claims related to bills Jacobson
submitted based on improper CPT codes or for medically unnecessary treatment
sound in contract, not fraud, and thus cannot be the basis of a mail fraud scheme.
ECF No. 243-2 at 30–34. This argument has previously been rejected in a similar
case involving medical practitioners who submitted allegedly fraudulent no-fault
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bills to insurers. In Allstate Ins. Co. v. Ahmed Halima, 2009 WL 750199, at *8
(E.D.N.Y. Mar. 19, 2009), Judge Irizarry held that a scheme by defendants “to charge
insurers for medically unnecessary diagnostic tests [was] extraneous to any contract
between Plaintiffs and the . . . Defendants because it d[id] not concern disputes over
a contractual obligation between the parties. Instead, Plaintiffs' claims sound[ed] in
tort, not in contract.” Id. (internal quotation marks omitted). Indeed, courts have
regularly concluded that healthcare providers who “routinely ordered a predetermined protocol of medical services for their patients without regard to those
patients’ unique circumstances” and “intentionally billed for services that were not
rendered as represented” could be liable for mail fraud. See, e.g., Yehudian, 2018
WL 1767873, at *9; see also Allstate Ins. Co. v. Smirnov, 2014 WL 4437287, at *7
(E.D.N.Y. Jul. 21, 2014), report & recommendation adopted by 2014 WL 4437291
(E.D.N.Y. Sept. 8, 2014).
Second, defendants argue that GEICO cannot demonstrate that they acted with
scienter. “[A] court may not grant [summary judgment for] lack of scienter unless
the plaintiff has failed to present facts that can support an inference of bad faith or
an inference that defendants acted with an intent to deceive.” Gov’t Emps. Ins. Co.
v. Strutsovskiy, 2017 WL 4837584, at *5 (W.D.N.Y. Oct. 26, 2017) (quoting
Wechsler v. Steinberg, 733 F.2d 1054, 1059 (2d Cir. 1984)). Defendants frame this
dispute as a reasonable disagreement about the proper use of billing codes and the
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medical necessity of treatment that they performed on their patients. If the jury finds
defendants to be credible, it might conclude that they believed their billing for
treatment was appropriate. But GEICO has presented an abundance of evidence,
described earlier in this opinion, from which a jury can conclude that defendants
provided medically unnecessary treatment in order to inflate their bills and collect
no-fault benefits to which they were not entitled. Under these circumstances,
summary judgment is inappropriate. See id. (declining to grant summary judgment
in insurance fraud case where there was evidence that “defendants routinely
misrepresented the complexity of the problems presented by GEICO insureds whom
the defendants purported to treat” in order to obtain no-fault insurance payments).
Third, defendants argue that GEICO cannot demonstrate reliance. This
argument lacks merit. Reliance “will typically be a necessary step in the causal chain
linking the defendant’s alleged misrepresentation to the plaintiff’s injury” in a civil
RICO case. Sergeants Benevolent Ass’n Health & Welfare Fund v. Sanofi-Aventis
U.S. LLP, 806 F.3d 71, 87 (2d Cir. 2015). A jury could find that GEICO relied on
the representations in the bills that defendants submitted and that, but for those
representations, GEICO would not have suffered injury by paying PIP benefits to
which defendants were not entitled.
Courts have consistently held that insurers are entitled to rely on a healthcare
provider’s billing representations in similar circumstances. See Strutsovskiy, 2017
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WL 4837584, at *5 (denying summary judgment and holding that “GEICO is
entitled to rely upon the verifications submitted by healthcare providers for purposes
of paying no-fault claims—perhaps even as it investigates the veracity of those
verifications for purposes of a broader fraud claim.”); Lyons, 843 F. Supp. 2d at 375
(“It is . . . incorrect to claim that [an insurer] was remiss in relying on defendants’
facially reasonable diagnoses and claims for payment and failing to uncover their
falsity.”). GEICO’s reliance on defendants’ billing submissions is particularly
justified in this context, since New York’s no-fault laws only provide an insurer with
“30 days to review and investigate claims before paying them without risk of
penalties for denying or delaying a claim.” Matter of Med. Soc’y of N.Y. v. Serio,
100 N.Y.2d 854, 860–861 (2003); see also Lyons, 843 F. Supp. 2d at 375. Ultimately,
it will be for the jury to decide whether it was reasonable for GEICO to rely on
defendants’ billing representations for as long as it did or whether it should have
discovered any possible fraud sooner. Strutsovskiy, 2017 WL 4837584, at *5.
In sum, numerous courts in the Second Circuit have permitted insurers to
bring civil RICO claims against healthcare providers who abuse the no-fault system
to obtain payment through the submission of fraudulent bills in the regular course of
their business. I agree. GEICO has produced substantial evidence from which a
jury could conclude that defendants have engaged in such misconduct. Defendants’
motion for summary judgment on GEICO’s substantive civil RICO claims is denied.
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5.

There is Sufficient Evidence of RICO Conspiracy

Finally, a jury could find that Jacobson, Beynin, Park, Albis, and Zambuto
engaged in a RICO conspiracy. To prove the existence of a RICO conspiracy,
GEICO must prove the existence “(a) of an agreement to join a racketeering scheme,
(b) of the defendant’s knowing engagement in the scheme with the intent that its
overall goals be effectuated, and (c) that the scheme involved, or by agreement
between any members of the conspiracy was intended to involve, two or more
predicate acts of racketeering.” United States v. Zemlyansky, 908 F.3d 1, 11 (2d Cir.
2018).

As described above, GEICO has presented evidence of a scheme,

orchestrated by Jacobson, to engage in hundreds of instances of mail fraud in order
to collect millions of dollars in no-fault insurance benefits to which he was not
entitled. GEICO also submitted evidence that Beynin, Park, Albis, and Zambuto
performed medically unnecessary treatment and made improper referrals on behalf
of Jacobson’s practices. See, e.g., ECF Nos. 243-54 at 16–18 (Albis testifying that
he performed MUAs on behalf of Jacobson); 243-55 at 8–12, 31–34 (Park testifying
that he conducted initial patient evaluations, provided chiropractic treatment on
behalf of Jacobson’s practices, and made referrals for sensory testing); 243-56 at 9–
13, 16–17, 28–29, 62–63 (Beynin testifying that she performed MUAs and
electrodiagnostic testing on behalf of Jacobson’s practices); 243-57 at 14–16, 35–36
(Zambuto testifying that he performed MUA’s on behalf of Jacobson and referred
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patients for sensory testing). Given this evidence, a factual issue exists for the jury
concerning whether defendants participated in a RICO conspiracy. Accordingly,
defendants’ motion to deny summary judgment on GEICO’s RICO conspiracy
claims is denied.
CONCLUSION
GEICO’s motion for an adverse inference is denied. GEICO’s motion to
preclude defendants’ expert Dr. Donald T. Alosio, Jr. is granted in part. GEICO’s
motion for partial summary judgment is denied, except that its unjust enrichment
claims and declaratory judgment claims relating to work performed by NJ Pain and
NJ Neuro in New York are granted. Defendants’ motion for summary judgment is
denied.

SO ORDERED.
Edward R. Korman
Edward R. Korman
United States District Judge

Brooklyn, New York
June 24, 2021

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