Allstate Insurance Company et al v. Elzanaty et al
Filing
269
MEMORANDUM OF DECISION AND ORDER - Accordingly, for the reasons set forth herein and for the reasons stated by the parties on the record before this Court on April I, 2013, this litigation is stayed pursuant to the terms outlined in the Agreement. In addition, this Decision and Order shall incorporate all additional terms of the Agreement Finally, for the reasons set forth above and pursuant to 28 U.S.C. 1292(b ), the Court grants the Uptown Defendants' unopposed request to certify an inte rlocutory appeal of the Order dated January 4, 2013 (filed with the Clerk of the Court on January 7, 2013at Dkt. #225) and the Uptown Defendants may petition the Second Circuit within ten days hereof for permission to commence an appeal. Ordered by Judge Arthur D. Spatt on 5/16/13. (Coleman, Laurie)
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Case 2:11-cv-03862-ADS-ARL Document 268-2 Filed 05/15/13 Page 2 of 11 PageiD #: 7602
UNITED STATES DISTRICf COURT
EASTERN DISTRICf OF NEW YORK
------~--------···-------------------------------x
II- CV-3862 (ADS) (ARL)
ALLSTATE INSURANCE COMPANY, ALLSTATE
INDEMNITY COMPANY, and ALLSTATE PROPERTY
& CASUALTY INSURANCE COMPANY,
Plaintiffs,
MEMORANPUM AND ORDER
Fl LED
-against-
IN CLERK'S OFFICE
U.S. DISTRiCT COURT E D.N,Y.
*
*
IDSHAM ELZANATY, HISHAM AHMED EL-SHERBINY,
ALAN GOLDENBERG, CAN MEDICAL, P.C., UPTOWN
MAY 16 2013
HEAL1H CARE MANAGEMENT, INC. d/b/a EAST
TREMONT MEDICAL CENTER, NEW YORK.NEURO &
LONG ISlAND OFFICE
REHAB CENTER, and JEROME FAMILY HEAL1H CENTER,
and ALL STAR HEALTH CARE MANAGEMENT, INC.,
Defendants.
--------------------------------------------x
APPREARANCES:
THE LAW OFFICES OF ROBERT P. MACCillA & ASSOCIATES
Attorneys for the Plaintiffs
98 Front Street
Mineola, New York 11501
By: Robert Phillip Macchia, Esq.
Melunet F. Gokce, Esq., Of Counsel
SMITH & BRINK, P.C.
Attorneys for Plaintiffs
1325 Franklin Avenue, Suite 320
Garden City, NY 11530
By:
Michael W. Whitcher, Esq.
Nathan A. Tilden, Esq.
Richard D. King, Esq., OfCo1lllSel
CADWALADER WICKERSHAM & TAFT LLP
Attorneys for Plaintiffs
I World Financial Center
New York, NY 10281
By:
William J. Natbony, Esq., Of Counsel
I
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BLODNICKFAZIO & ASSOCIATES, P.C.
Attorneys for-Defendants Hisham Elzanaty,
Hisham Ahmed El-Sherbiny, Alan Goldenberg, and
Uptown Health Care Management, Inc. (the "Uptown Defendants").
1325 Franklin Avenue, Suite 555
Garden City, NY 11530
By: Edward K. Blodnick, Esq.
Thomas R. Fazio, Esq.
Steven R. Talan, Esq., Of Counsel
SPATI, District Judge.
Defendants -Uptown Healthcare Management Inc. ("Uptown"), Hisham Elzanaty, Alan
Goldenberg and Hisham Ahmed El-Sherbiny (collectively, the "Uptown Defendants'')- have
moved for an order certifYing an interlocutory appeal to the Second Circuit pursuant to 28 U .S.C.
§ 1292(b) from the Court's January 7, 2013 Memorandum and Order (the "Order'') denying their
motion to dismiss and/or abstain pursuant to Rules 12(c) and 12(b)(l) of the Federal Rules of
Civil Procedure. The Uptown Defendants assert that the novel question of first impression of
whether the New York State Department ofHealth's issuance of a license to and continued
oversight of a healthcare provider, pursuant to Article 28 of the New York State Public Health
Law and the rules and regulations promulgated thereto, preclude an insurer from challenging the
eligibility of such healthcare provider to receive no-fault reimbursement under Section
5102(aXI) of the New York State Insurance Law by asserting, pursuant to 11 N.Y.C.R.R. § 653.16(aX12), tbatsaid healthcare provider fails to meet any applicable New York State or local
licensing requjmnent. For the reasons set forth below, the Uptown Defendants' unopposed
motion is granted and the Uptown Defendants may petition the Second Circuit within ten days
hereof for permission to commence an aj)peal.
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The Parties
The plaintiffs in this action, Allstate Insurance Company, Allstate Indemnity Company,
and Allstate Property & Casualty Insurance Company (collectively "Allstate'') are the issuers of
policies of automobile insurance in New York State and have brought the instant action under
the federal RICO laws and state common law seeking to recover payments made to certain
defendants pursuant to New York State's No-Fault laws. In general terms, Allstate claims that
the defendants were ineligible to receive such payments because they were operated and/or
maintained in violation of the provisions of their license. Allstate relies upon 11 N.Y.C.R.R. 653.16(aX12) which provides that:
A provider of health care services is not eligible for reimbursement under section
5102(a)(l) of the Insurance Law if the provider fails to meet any applicable New York
State or local licensing requirement necessary to perform such service in New York or
meet any applicable licensing requirement necessary to perform such service in any other
state in which such service is performed.
Allstate further seeks declaratory judgment that Uptown's activities ''were and continue to be
unlawful" and that "by dint of its illegal and fraudulent activity, Uptown/the Article 28 Entities
have no right to receive" payment for the medical services that it rendered to Allstate's insureds.
Defendant Uptown is a diagnostic and treatment center including an ambulatory surgical
center licensed by the New York State Department of Health pursuant to Article 28 of the New
York Public Health Law. Uptown asserts that, because of the extensive review process
surrounding ilS initial licensing and because it is subject to continuous review and oversight from
the New Yorlc State Department of Health, it is, as a matter of law, in compliance with the
applicable licensing requirements and eligible to receive no-fault reimbursement. Uptown
further points to the fact that it went through, among other oversight and review processes,
recertification surveys conducted by the New York State Department of Health andre-
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accreditation inspections during the time frame that Allstate asserts it was operating in violation
of licensing requirements.
Background
On January 7, 2013, this Court denied the Uptown Defendants' motion to abstain and/or
dismiss. Familiarity with this Order is presumed. On February 8, 2013, the Uptown Defendants
commenced the instant motion seeking certification of an immediate interloCutory appeal of the
Order pursuant to 28 U.S.C. 1292(b) for the certification of the question to the New York State
Court of Appeals.
Allstate advised the Court that it would not oppose the Uptown Defendants' application
to this Court. The parties have entered into an Agreement (the "Agreement") regarding the
procedure relative to the certification of the interlocutory appeal- which this Court has soordered and has incorporated into its Order. The parties appeared for a conference before this
Court on April!, 2013. Specifically, the parties have agreed upon the following question to be
presented to the Second Circuit for certification to the New York State Court of Appeals
or, in
the alternative, to be decided by the Second Circuit:
Whether the New York State Department of Health's issuance of a license to and
continued oversight of a healthcare provider, pursuant to Article 28 of the New York
State Public Health Law and the rules and regulations promulgated thereto, preclude an
insurer from challenging the eligibility of such healthcare provider to receive no-fault
reimbursement under Section 5102(a)(l) of the New York State Insurance Law by
asserting, pursuant to 11 N.Y.C.R.R. § 65-3.16(a)(l2), that said healthcare provider fails
to meet any applicable New York State or local licensing requirement?
Dbeussion
I. The Standard For Certification Under§ 1292(b)
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Section 1292(b) provides that a district court may certify an interlocutory order for appeal
if it is of the opinion that (I) the order "involves a controlling question oflaw''; (2) "as to which
there is substantial ground for difference of opinion," and (3) an immediate appeal"may
materially advance the ultimate termination of the litigation". 28 U.S. C. § 1292(b). In
considering a request for certification, the district court must carefully assess whether each of the
three conditions for certification is met Primavera FJ!milienstifung v. Askin. 139 F.Supp.2d 567
(S.D.N.Y. May 07, 2001) citing German v. Federal Home Loan Mortgage Com., 896 F.Supp.
1385, 1398 (S.D.N.Y.l995); Gottesman v. General Motors Corp., 268 F.2d 194, 196 (2d
Cir.1959) (certification to be "strictly limited to the precise conditions stated in the law''). The
determination of whether Section 1292(b) certification is appropriate under the above standards
is in the discretion of the district court. See Primavera, supra; Allstate Ins. Co. v. Valley
Physical Medicine & Rehabilitation, P.C .. Not Reported in F.Supp.2d, 2008 WL 4856103
(E.D.N.Y. 2008); Ferraro v. Secretazy ofU.S. Dept. of Health & Human Servs., 780 F.Supp.
978, 979 (E.D.N. Y.1992); 16 Charles A. Wright et al., Federal Practice and Procedure § 3929
(1977 & Supp.1996).
Interlocutory appeals under Section 1292(b) are an exception to the general policy against
piecemeal appellate review embodied in the final judgment rule. "Since the statute was enacted
in 1958, the Second Circuit has repeatedly emphasized that a district court is to 'exercise great
care in making a § 1292(b) certification.' Primav~ supra, citing Westwood Pharmaceuticals.
Inc. v. National Fuel Gas Dist Corp .. 964 F.2d 85, 89 (2d Cir.!992); see also Klinghofferv.
S.N.C. Achille Lauro, 921 F.2d 21,25 (2d Cir.J990). Certification is only Warranted in
"exceptional cases," where early appellate review "might avoid protracted and expensive
litigation." I electronics Proorietary. Ltd. v. Medtronic. Inc.. 690 F.Supp. 170, 172
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(S.D.N.Y.l987); see also Getman 896 F.Supp. at 1398. Section 1292(b) was not intended "to
open the floodgates to a vast number of appeals from interlocutory orders in ordinary litigation"
Telect:ronics, 690 F.Supp. at 172, or to be a ''vehicle to provide early review of difficult rulings
in hard cases." German, 896 F.Supp. at 1398; see also Abortion Rights Mobilization. Inc. v.
~
552 F.Supp. 364, 366 (S.D.N.Y.1982); McCann v. Commypications Design Cor,p., 775
F.Supp. 1506, 1534 (D.Conn.l991).
The institutional efficiency of the federal court system is among the chief concerns
~mderlying Section
1292(b). See Forsyth v. Kleindienst, 599 f".2d 1203 (3d Cir.J979). The
efficiency of both the district court and the appellate court are to be considered, and the benefit to
the district court of avoiding unnecessary trial must be weighed against the inefficiency of
having the Court of Appeals hear multiple appeals in the same case. See Harriscom Svenska AB
v. Harris Com., 947 F.2d 627,631 (2d Cir.l991); see generally 16 Charles A. Wright et al., 16
Federal Practice and Procedure § 3930 (2d ed.1996).
II.
The Existence of a Controlling Question of Law
In determining whether a controlling question oflaw exists the district court should
consider whether reversal of the district court's opinion could result in dismissal of the action;
reversal of the district court's opinion, even though not resulting in dismissal, could significantly
affect the conduct of the action; or the certified issue has precedential value for a large number of
cases. See !Ginghoffer, 921 F.2d at 24-25; In re Oxford Health Plans. Inc., 182 F.R.D. 51,54-5 5
(S.D.N.Y.l998).
Here, both factors are present which make clear the existence of a controlling issue oflaw
and justifY an interlocutory appeal. A reversal of this Court's opinion would substantially alter
the landscape of the present suit and avoid extensive and expensive discovery, motion practice
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and trial practice where the question of law is both novel and of first impression, controlling and
discrete. Further, this Court understands that there are similar issues in cases before other Courts
in this District, e.g. GEICO et. al.. v. Uptown Health Care Management_ Inc. et. al., 11 CV 1453
(FB) (RIM), and an appeal pending between the same parties here has been noticed in the New
York State Supreme Court, Appellate Division, First Department.
This Court recognizes that the parties have distilled the matter down to a pure question of
law which is suitable for the Second Circuit to certify as a question to the New York State Court
of Appeals, or if it so determines, decide itself. The answer to this question will result in a
dispositive answer which will both advance the termination of the instant litigation and avoid the
potential of contlicting decisions within this District and between the State and Federal Courts .
Moreover, finality on this important issue will impact the vast majority and the most significant
claims in this case.
ill.
The Interlocutory Appeal will Advance the Ultimate Termination of the Litigation
Inunediate appeal may he considered to advance the ultimate termination of the litigation
if "'appeal promises to advance the time for trial or to shorten the time required for trial.'" In re
Oxford_ 182 F.R.D. at 53 (quoting 16 Charles A. Wright& Arthur Miller, Federal Practice and
Procedure § 3930 at 432 (2d ed.1996)). However, the advancement must he "material [ ]," 28
U.S.C. § 1292(b); see In re Duplan, 591 F.2d at 148 n. 11 ('"The critical requirement is that [an
interlocutory appeal] have the potential for substantially accelerating the disposition of the
litigation.'") (quoting 9 James Wm. Moore et al, Moore's Federal Practice, '1!110.22[2] at 260
(1975)).
Although technically the question of whether there is a controlling issue oflaw is distinct
from the question of whether certification would materially advance the ultimate termination of
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the litigation, in practice the two questions are closely connected. See The Duplan Com. v.
Slaner. 591 F.2d 139, 148 n. 11 (2d Cir.l978); Public Interest Research Group ofNew Jersey.
Inc. v. Hercules. Inc .. 830 F.Supp. 1549, 1557 (D.N.J.1993); *571 16 Charles A. Wright et aJ.,
Federal Practice and Procedure§ 3930 (2d ed.l996).
The requirement that certification would materially advance the ultimate termination of
the litigation has been "strictly construed to preclude appeals that have no clear potential to
materially advance the litigation's termination." In re 105 E. Second St. Assocs., 1997 U.S. Dist.
LEXIS 8019, at *5-6 (S.D.N.Y. June 7, 1997). "Courts place particular emphasis on the
importance of this last factor." In re Enron Com., 2006 U.S. Dist. LIDOS 63223, at *19
(S.D.N.Y. Sept. 5, 2006).
The matter at hand largely concerns a novel and distinct question arising under New York
State Law unaddressed by by any state or federal trial or appellate authority. While in the Order
this Court found that this question was not sufficient to justify abstention, it noted the issue was
"novel" and that "there exists a precise mechanism for determining in the federal litigation how
the high court of the State of New York would decide a novel issue of state Jaw; the circuit court
may certify the issue to the State Court of Appeals." Scheo.p. 616 F.Supp.2d at 346 (citing N..L
Const.. Art. VI. § 3{9) (requiring the State Court of Appeals to allow court of appeals of the
United States to certify novel issues of state law); see also Lehman Bros. v. Schein, 416 U.S.
386. 390=391. 94 S.Ct. 1741. 40 L.Ed.2d 215 (1974) (while certification "where there is doubt as
to local law" is not obligatorY, "[i)t does, of course, in the long run save time, energy, and
resources and helps build a cooperative judicial federalism"); Arizonans for Official English v.
Arizona 520 U.S. 43. 76, 117 S.Ct. 1055. 137 L.Ed.2d 170 (1997) ("Certification procedure, in
contrast [to abstention], allows a federal court faced with a novel state-law question to put the
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question directly to the State's highest court, reducing the delay, cutting the cost, and increasing
the assurance of gaining an authoritative response.")." The Court finds that this novel issue
should be so reviewed.
Indeed, if, in advance of lengthy discovery, expected motions for summary judgment and
a potentially lengthy trial as to issues of fact, the certified question was answered in the
affinnative, the scope ofPlaintiffs' claims would be significantly narrowed. Finality will also
aid in the litigation and resolution of other similar cases.
III.
There is Substantial Ground for a Difference Of Opinion
The remaining prong of§ 1292(b) provides that there must lie a "substantial ground for a
difference of opinion [that] must arise out of a genuine doubt as to whether the court applied the
correct legal standard." Blid v. Konig, 2011 WL 4007895, at *1-3 (E.D.N. Y. Sept 8, 2011),
(citing Baumgarten v. Cntv. of Suffolk, 2010 U.S. Dist. LEXIS 111083, at *3 (E.D.N.Y. Oct. 15,
2010)). The Uptown Defendants assert that this Court's decision analyzed the scope of the
Insurance regulation in question and the progeny ofMallel!!, supra, but that there remains a
strong possibility that the New York Court of Appeals would look beyond Mallela to the
statutory scheme envisioned by the Legislature in enacting Article 28 of the Public Health Law.
Conversely, Plaintiffs assert that the Court's analysis extending the holding ofMallela is correct
and that this Court properly applied the Mallela decision.
The Court finds that there is sufficient basis for a difference of opinion as to the answer
to the proposed certified question so as to justify and warrant the certification of the issue to the
Second Circuit for the extraordinary remedy of an interlocutory appeal. The Court believes that
it will be of significant value for the parties here, and others similarly situated, to have a
dispositive answer to this question from the New York State Court of Appeals.
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Accordingly, for the reasons set forth herein and for the reasons stated by the parties on
the record before this Court on April I, 2013, this litigation is stayed pursuant to the terms
outlined in the Agreement. In addition, this Decision and Order shall incorpomte all additional
terms of the AgreemenL Finally, for the reasons set forth above and pursuant to 28 U.S.C.
1292(b), the Court grants the Uptown Defendants' unopposed request to certify an interlocutory
appeal of the Order dated January 4, 2013 (filed with the Clerk of the Court on January 7, 2013
at Dkt. #225) and the Uptown Defendants may petition the Second Circuit within ten days hereof
for permission to commence an appeal.
SO ORDERED
Dated:
Central Islip, New York
M,_,l 1£.
2013
/s/ Arthur D. Spatt
United States District Judge
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