Government Employees Insurance Company et al v. Macias et al

Filing 10

MEMORANDUM DECISION AND OPINION dated 9/7/21 re: Improper Joinder. ( Ordered by Judge Brian M. Cogan on 9/4/2021 ) (Guzzi, Roseann)

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

X
:
: MEMORANDUM DECISION
: AND ORDER
:
Plaintiffs,
:
21-cv-4545 (BMC)
:
- against :
RENAN MACIAS, M.D., et al.,
:
:
Defendants.
:
------------------------------------------------------------- X
COGAN, District Judge.
Plaintiffs’ action arises from a familiar set of facts: automotive accident insurance
companies assert allegations surrounding the submission of fraudulent policy claims under New
York’s no-fault insurance scheme. These cases are a staple of insurance fraud litigation in this
district. In bringing these suits, such plaintiffs routinely join many alleged fraudsters in a single
complaint, in which the defendants are alleged to have engaged in separate but similarly
implemented fraudulent schemes. 1 As I have done in other cases, I issued an order to show
cause why this case should not be dismissed for improper joinder or, alternatively, why I should
not dismiss most of the defendants except one group of defendants who worked in concert,
without prejudice to refiling against each group of defendants who are alleged to have worked in
concert. See Allstate Ins. Co. v. Baturov, No. 19-cv-5570, 2021 WL 2409681, at *1 (E.D.N.Y.
June 14, 2021). In responding, plaintiffs assert that the defendants are properly joined as there
are common questions of law and fact and that joinder of these claims serves judicial efficiency.

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See, e.g., Complaint, Allstate Ins. Co. v. Abayev, 20-cv-3302, ECF No. 1 (E.D.N.Y. Jul. 23, 2020) (naming 58
defendants and alleging 28 separate but similarly implemented fraudulent schemes); Complaint, Gov’t Emps. Ins.
Co. et al v. Prescott et al., 1:14-cv-00057, ECF No. 1 (E.D.N.Y. Jan. 6, 2014) (naming 17 defendants and alleging 3
separate but similarly implemented fraudulent schemes).

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Pursuant to Rule 20(a)(2) of the Federal Rules of Civil Procedure, persons may be joined
in one action as defendants if (A) any right to relief is asserted against them jointly, severally, or
in the alternative with respect to or arising out of the same transaction, occurrence, or series of
transactions or occurrences; and (B) any question of law or fact common to all defendants will
arise in the action. The second factor is clearly satisfied here. This action, and likely most or all
of plaintiffs’ insurance fraud actions, contains common questions because defendants are alleged
to have engaged in similar schemes. This is especially true as here where the schemes
principally surround billing for two highly specialized diagnostic tests.
However, “[j]oinder under Rule 20 requires, in addition to a common question of law or
fact, that the plaintiffs assert a right to relief arising from the same transaction or occurrence” or
joint and several liability. Scott v. Chipotle Mexican Grill, Inc., 954 F.3d 502, 520 (2d Cir.
2020) (colatus). Plaintiffs acknowledge that they do not assert any right to relief that would hold
all defendants jointly or severally liable. Therefore, we must look to whether these allegations
are part of the same “transaction or occurrence.” Here, courts “look to the logical relationship
between the claims and determine ‘whether the essential facts of the various claims are so
logically connected that considerations of judicial economy and fairness dictate that all the issues
be resolved in one lawsuit.’” Kalie v. Bank of Am. Corp., 297 F.R.D. 552, 557 (S.D.N.Y. 2013)
(quoting United States v. Aquavella, 615 F.2d 12, 22 (2d Cir. 1979)). Moreover, “the overlap in
questions of law or fact must be ‘substantial’ in order for joinder to be appropriate.” Golden
Goose Deluxe Brand v. Aierbushe, 2019 WL 2162715, at *1 (S.D.N.Y. May 16, 2019).
Although “joinder of claims, parties and remedies is strongly encouraged,” under Rule
20, district courts have discretion in deciding whether to permit joinder, Sonn v. Wal-Mart
Stores, Inc., No. 06-cv-1816, 2006 WL 2546545, at *2 (E.D.N.Y. Sept. 1, 2006). Therefore,

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while a “district judge may have discretion to entertain these actions based on allegations that
defendants engaged in separate but similarly implemented schemes . . . the toll these actions take
on the judicial system and the minimal efficiencies gained caution against that approach.”
Baturov, 2021 WL 2409681, at *2.
In the instant case, aside from a single declaratory judgment claim, plaintiffs do not assert
any claims against all defendants or allege that defendants worked together. In fact, plaintiffs
explicitly acknowledge that they are asserting “separate fraud and RICO claims against the four
groups of [d]efendants.” These four groups operated independently of one another, at different
time periods at the clinic locations, and with largely different participants.
Plaintiffs contend that their complaint’s allegations “strongly indicate an
interconnectedness among the [d]efendants” and that their conduct gives “rise to the inference
that the fraud described in the [c]omplaint is interrelated.” In support of such
interconnectedness, plaintiffs point out that defendants “performed the same highly specialized
neurological testing,” “received referrals from certain of the same medical practitioners,” and
that certain of defendants’ submissions to GEICO “contained substantially identical language.”
However, even with these contentions, as plaintiffs indicate, such interconnectedness is still just
that – an inference. The claims here do not necessarily or readily appear “logically connected”
and thus do not arise out of the same transaction or occurrence or series of transactions or
occurrences.
When the requirements of Rule 20 are not met, Rule 21 affords a district court “broad
discretion” in fashioning an appropriate remedy, including the possibility of dropping a party “at
any time.” Fed. R. Civ. P. 21. In the Batrurov order to show cause, I proposed two remedies to
plaintiff: (i) dismissal of the case, without prejudice to refiling against each separate group of

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defendants; or (ii) dismissal of most of the defendants except one group, without prejudice to
refiling separate cases against each of the other groups of defendants.
Anticipating my ruling in this case, plaintiffs have helpfully provided a proposed
breakdown, which breaks up defendants into three separate groups. While, in their motion,
plaintiffs recognize that there are “essentially four groups of [d]efendants,” plaintiffs suggest
joining two groups because of “significantly similar, overlapping and interconnected fraudulent
conduct.” Plaintiffs cite numerous further points of connection among this subgroup of
defendants, including that the two providers employed the same independent contractor as a
reading neurologist. Therefore, the Court believes that adopting the plaintiffs’ proposed
breakdown best serves the purpose of promoting judicial economy.
The Court will instruct the Clerk to (a) terminate all defendants in this action except
Renan Macias, M.D. and John Does 1 through 10 (“John Does”); (b) open separate index
numbers for both (i) Joseph Dorsten, D.O., Lifeline Medical Imaging P.C., Hillside Primary
Medical Care, P.C., and John Does; and (ii) Amit Khaneja, M.D., Amit Khaneja Neurology
Practice, PLLC, and John Does; (c) file this Order as the initial filing in each of the new cases;
and (d) have each new case randomly assigned to a District Judge and Magistrate Judge.
Within 20 days of the opening of the new cases, plaintiffs in this case and in each new
case shall: (a) file a complaint (or, in the instant case, an amended complaint), limited to the
plaintiffs and defendants named in each action; (2) pay the filing fee and request issuance of
summonses in each action. The commencement date of the new cases shall be deemed to be the

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commencement date of this action for all purposes except as to Federal Rule of Civil Procedure
4(m). As to that rule, the commencement date shall be deemed to be the date on which the Clerk
opens the new actions.
SO ORDERED.

Digitally signed by Brian
M. Cogan
______________________________________
U.S.D.J.

Dated: Brooklyn, New York
September 4, 2021

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