Sky Medical Supply Inc. v. SCS Support Claims Services, Inc. et al

Filing 293

ORDER granting #252 Motion to Dismiss for Failure to State a Claim; granting #256 Motion to Dismiss for Failure to State a Claim; granting #258 Motion to Dismiss for Failure to State a Claim; granting #260 Motion to Dismiss for Failure to State a Claim; granting #263 Motion to Dismiss for Failure to State a Claim. For the reasons set forth herein, the Court grants all moving defendants' motions to dismiss the RICO claims against them, without prejudice. Because the Court has dismissed all federal claims in this action, the Court declines at this juncture to exercise supplemental jurisdiction over the remaining declaratory judgment and state law claims, and those claims are dismissed without prejudice. Finally, the Court grants plaintiff's request for leave to amend its RICO claims. Plaintiff shall file a second amended complaint no later than thirty days from the date of this Memorandum and Order. If plaintiff does not do so, then the Court will order the Clerk of the Court to close this case and enter a judgment for all defendants that is consistent with this Memorandum and Order. SO ORDERED. Ordered by Judge Joseph F. Bianco on 5/7/2014. (Gibaldi, Michael)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
_____________________
No 12-CV-6383 (JFB) (AKT)

_____________________

SKY MEDICAL SUPPLY INC.,
Plaintiff,
VERSUS

SCS SUPPORT CLAIMS SERVICES, INC., ET AL.,
Defendants.
___________________
MEMORANDUM AND ORDER
May 7, 2014
___________________

JOSEPH F. BIANCO, District Judge:

benefits furnished to injured parties, many of
which have been denied, plaintiff asserts
financial loss as a result of defendants’
alleged scheme.

Plaintiff Sky Medical Supply, Inc. (“Sky
Medical” or “plaintiff”) commenced this
action on December 27, 2012, against close
to ninety individual and corporate
defendants, alleging violations of the
Racketeering Influenced and Corrupt
Organizations Act, 18 U.S.C. § 1961 et seq.
(“RICO”) and numerous state law claims. On
July 31, 2013, plaintiff filed an amended
complaint, which reduced the number of
defendants to forty-four. The gravamen of the
amended complaint is that defendants—
vendors who handle independent medical
examinations (“IMEs”) and peer reviews for
no-fault insurance companies, their owners,
and the doctors who claim to have performed
these IMEs and peer reviews—have colluded
to generate fraudulent IME and peer review
reports that result in the denial of no-fault
insurance claims. As a medical equipment
provider who has submitted claims to nofault insurers for the reimbursement of

Numerous defendants have moved to
dismiss the amended complaint pursuant to
Federal Rule of Civil Procedure 12(b)(6). For
the reasons set forth below, the motions to
dismiss are granted in part, and plaintiff’s
request for leave to file a second amended
complaint is granted. First, the Court cannot
determine at this juncture whether plaintiff’s
RICO claims are time-barred, particularly in
light of plaintiff’s allegations of fraudulent
concealment. Second, the Court concludes
that plaintiff has adequately alleged RICO
violations (both its substantive and
conspiracy provisions) as to all moving
defendants who are actually named
defendants in the RICO causes of action.
Third, the Court concludes that plaintiff has
failed to satisfy RICO’s ripeness
requirement, i.e., to allege clear and definite

1

damages that were caused by the alleged
RICO violations. According to plaintiff’s
own representations to the Court, plaintiff is
currently challenging the denials of an
unknown number of its no-fault claims in
arbitration proceedings and state court
actions. At issue in those proceedings are the
same no-fault claims whose denials have
prompted this action. Thus, the full extent of
plaintiff’s RICO damages is contingent upon
the results in pending proceedings, and is not
clear and definite at this time. Under these
circumstances, clear Second Circuit law
requires dismissal of plaintiff’s RICO claims,
as to all defendants, without prejudice to
plaintiff bringing its RICO claims once its
damages have become clear and definite.
Fourth, the Court concludes that plaintiff has
adequately alleged the causation element of a
RICO claim. In sum, the Court concludes that
plaintiff’s RICO claims must be dismissed
without prejudice. Because the RICO claims
are plaintiff’s only federal claims, the Court
declines to exercise supplemental jurisdiction
over plaintiff’s remaining state law claims.

when its RICO injury has become clear and
definite.
I. BACKGROUND
A. New York No-Fault Insurance Law
Under New York’s no-fault automobile
insurance scheme, an insurer can deny an
insured’s claim for medical treatment if the
treatment is not medically necessary. See
N.Y. Comp. Codes R. & Regs. tit. 11, § 651.1; see also McGee v. State Farm Mut. Auto.
Ins. Co., No. 08-CV-392 (FB) (CLP), 2009
WL 2132439, at *1 (E.D.N.Y. July 10, 2009)
[hereinafter McGee I]; Healing Hands
Chiropractic, PC v. Nationwide Assurance
Co., 787 N.Y.S.2d 645, 647 (N.Y. Civ. Ct.
2004). To verify a treatment’s medical
necessity, an insurer may require the claimant
to “submit to medical examination by
physicians selected by, or acceptable to, the
[insurer], when, and as often as, the [insurer]
may reasonably require.” N.Y. Comp. Codes
R. & Regs. tit. 11, § 65-1.1. “These
examinations are referred to as ‘independent
medical examinations’ (‘IMEs’).” McGee I,
2009 WL 2132439, at *1. An insurer may
also submit the injured party’s medical and
other records to a third party physician, who
reviews the records and renders an opinion on
the medical necessity of the treatment at issue
in a so-called “peer review report.” See, e.g.,
Consol. Imaging P.C. v. Travelers Indem.
Co., 924 N.Y.S.2d 308 (N.Y. Civ. Ct. 2011).
The insurer may deny a claim for lack of
medical necessity on the basis of an IME or
peer review report. See, e.g., Healing Hands,
787 N.Y.S.2d at 647.

The Court also considers plaintiff’s
request for leave to file a second amended
complaint. Specifically, plaintiff’s counsel
indicated at oral argument that plaintiff could
remedy its inadequate allegations of RICO
damages by including in a second amended
complaint a list of all denied no-fault claims
underlying this lawsuit, along with
information about whether each claim is
pending or not in state court or arbitration
proceedings. Given plaintiff’s counsel’s
representation at oral argument, and the fact
that plaintiff’s RICO claims are otherwise
well-pleaded, the Court grants plaintiff leave
to amend its RICO claims within thirty days
of this Memorandum and Order. If plaintiff
does not file a second amended complaint
within thirty days, then the Court will order
the Clerk of the Court to close the case and
enter judgment of dismissal, without
prejudice to plaintiff bringing a new action

After an insurer denies a claim, the
claimant “is entitled to ‘seek immediate
redress, and to recover both the amount of
any overdue claim and reasonable attorney’s
fees in securing payment.’” Hosp. for Joint
Diseases v. Allstate Ins. Co., 773 N.Y.S.2d
427, 428 (N.Y. App. Div. 2004) (quoting

2

Roggio v. Nationwide Mut. Ins. Co., 66
N.Y.2d 260, 262 (1985)). Specifically, the
claimant has two options: (1) “file suit
seeking payment of the claim,” or (2)
“pursuant to Insurance Law § 5106(b),
submit the dispute to arbitration, pursuant to
simplified procedures promulgated by the
Insurance Department.” Id. at 428–29.

Defendant SCS is a medical consulting
vendor that contracts with no-fault insurance
carriers to perform IMEs and peer reviews.
(Id. ¶¶ 12, 79.) SCS is owned by defendant
Linda Ackerman (“Ackerman”), but
defendant Eitan Dagan (“Dagan”) manages
and controls all of SCS’s operations. (Id.
¶ 13, 79.)

B. Allegations in the Amended Complaint
and Amended RICO Statement

Defendant Patient Focus provides back
office and clerical services to no-fault IME
and peer review vendors like SCS. (Id. ¶¶ 13,
80.) Although Patient Focus is a professional
corporation, plaintiff alleges that unlicensed
individuals are the actual owners of Patient
Focus, in violation of New York law. (Id.
¶ 102.) Specifically, Patient Focus is
formally owned by defendant Tatiana
Sharahy (“Sharahy”). (Id. ¶ 13, 31, 80.)
However, plaintiff asserts that Patient Focus
is actually owned and operated by defendants
Svetlana Osiashvili (“S. Osiashvili”),
Benjamin Osiashvili (“B. Osiashvili”),
Mikael Osiashvili (“M. Osiashvili”), Aleksey
Vayner (“Vayner”), and five unidentified
individuals. (Id. ¶¶ 13, 80.) S. Osiashvili, B.
Osiashvili, and M. Osiashvili operate Patient
Focus through their management company,
defendant Nationwide Management Inc.
(“Nationwide”); Vayner operates Patient
Focus through his management company,
defendant BAB Management Inc. (“BAB”);
and the five unidentified individuals operate

The following facts are taken from the
amended complaint, amended RICO
statement, and the exhibits attached thereto,
and are not findings of fact by the Court.
Instead, the Court will assume these facts to
be true and, for purposes of the pending
motions to dismiss, will construe them in a
light most favorable to plaintiff, the nonmoving party.1
1. The Parties
Plaintiff is a medical equipment provider
that furnishes medical equipment to injured
parties who are covered by no-fault
insurance. (Am. Compl. ¶¶ 72–75.) In
exchange for plaintiff’s medical equipment,
an individual assigns plaintiff his insurance
claim. (Id. ¶ 73.) Plaintiff then submits a
claim for reimbursement to the individual’s
no-fault insurer. (Id. ¶¶ 72–75.)
“On a motion to dismiss RICO claims, the Court
must accept the factual allegations contained in the
Complaint and RICO Statement as true, and draw all
reasonable inferences in favor of the nonmovant . . . .” Allen v. New World Coffee, Inc., No. 00CV-2610 (AGS), 2001 WL 293683, at *2 (S.D.N.Y.
Mar. 27, 2001); see McLaughlin v. Anderson, 962 F.2d
187, 189 (2d Cir. 1992) (“In analyzing the issues on
this motion to dismiss, we must take as true the facts
as alleged in the complaint and as supplemented by the
RICO case statement ordered by the district court.”).
Although the Court considers the allegations in the
amended RICO statement in deciding the present
motions, the Court regards the amended complaint,
and not the amended RICO statement, as the
1

controlling pleading concerning the complete list of
defendants, causes of action, and theories of the case.
See, e.g., DelRio-Mocci v. Connolly Props. Inc., Civil
Action No. 08-2753 (WJM), 2009 WL 2989537, at *3
(D.N.J. Sept. 16, 2009) (“[T]he purpose of a RICO
case statement is to enhance a vague complaint with
additional details, not to raise new arguments or
theories of the case for the first time.”), aff’d, 672 F.3d
241 (3d Cir. 2012). This is significant because, as
discussed infra, plaintiff filed the amended complaint
after filing the amended RICO statement, and the
amended RICO statement identifies as defendants
many individuals whom the original complaint had
named as defendants, but who are no longer
defendants according to the amended complaint.

3

Patient Focus through their own, unidentified
management companies. (Id. ¶¶ 13, 80.) The
amended complaint outlines specific steps
that these individuals have allegedly taken to
obscure Patient Focus’s true ownership. (See
id. ¶¶ 103–07.) These steps include the
alleged creation of fake rental invoices and
lease agreements, forgery, perjury, and the
failure to file certain financial documents
with the New York Department of Taxation
and Finance. (Id. ¶ 103.)

Under their arrangement, Dagan—operating
through SCS—contracted with no-fault
insurers to perform IMEs and peer reviews.
(Id.) Pursuant to these contracts, SCS agreed
to scan all medical records at the insurer’s
place of business, to find the medical
consultants who would conduct the peer
reviews and IMEs, and to provide a venue for
the IMEs to be administered. (Id. ¶¶ 81–82.)
The remaining Manager Defendants—
operating through Patient Focus—handled
the administrative duties essential to carrying
out these tasks. (Id. ¶ 83.) They provided the
personnel necessary to scan the medical
records, selected the doctors whose names
would appear on the reports, arranged for
doctors to perform IMEs, and scheduled
court appearances for those doctors to testify
in support of their reports. (Id.)

Defendants Sharahy, Mitchell Ehrlich
(“Ehrlich”), Joseph C. Cole (“Cole”), Julio
Westerband (“Westerband”), William A.
Ross (“W. Ross”), Warren Cohen (“Cohen”),
Renat R. Sukhov (“Sukhov”), William S.
Kritzberg (“Kritzberg”), Robert A. Sohn
(“Sohn”), Stanley Ross (“Ross”), Mitchell L.
Weisman (“Weisman”), Mark Weber
(“Weber”), Gary J. Florio (“Florio”),
Antonio Martins (“A. Martins”), Damion A.
Martins (“D. Martins”), Dante Brittis
(“Brittis”),
Christopher
Ferrante
(“Ferrante”), Brian Freindlich (“Freindlich”),
Wayne Kerness (“Kerness”), Denis Mann
(“Mann”), Andrew Miller (“Miller”),
Andrew Bazos (“Bazos”), and Drew Stein
(“Stein”)
(collectively,
the
“Doctor
Defendants”) are medical doctors and
independent medical consultants who
provide IME and peer review reports in
response to requests made by SCS and
Patient Focus. 2 (Id. ¶¶ 31–53; Am. RICO
Statement, at 9–24.)

According to the amended complaint, no
doctor was ever involved in the preparation
or review of the IME and peer review reports.
(Id. ¶ 89.) Instead, after the medical records
were scanned in New York, they were sent to
Florida, where individuals working at the
direction of Yaniv Dagan, Dagan’s brother,
used a computer software program to create
and electronically sign peer review reports.
(Id. ¶ 84.) The results of each IME and peer
review report were predetermined to
conclude that the medical treatment at issue
was not medically necessary; they did not
depend on the individual circumstances of a
particular claim. (Id. ¶ 89(a)–(b).) However,
each report contained the name and signature
of a doctor, who averred that he or she had
prepared and read the report, “certif[ied] and
affirm[ed]” the findings and conclusions in
the report, and stated that he or she had
reviewed all medical records in the file. (Id.
¶¶ 84, 89(c)–(f).)
Contrary
to
these
representations, plaintiff asserts that the
Manager Defendants used unlicensed

2. The Alleged Fraud
Dagan, S. Osiashvili, B. Osiashvili, M.
Osiashvili, Vayner, and the five unidentified
individuals (collectively, the “Manager
Defendants”) allegedly partnered to generate
a mass production of fraudulent IME and
peer review reports. (Am. Compl. ¶ 81.)
2

At oral argument, counsel for plaintiff informed the
Court that he believes defendants W. Ross and S. Ross

are now deceased. However, none of the parties have
confirmed at this time whether that is the case.

4

individuals to prepare the reports, whose
results were predetermined, and paid the
Doctor Defendants for the use of their names
on the reports. (Id. ¶¶ 85–86, 89.) Once the
reports were completed and signed, they were
sent by mail and e-mail to the insurance
carriers, who relied on the reports to
determine whether to deny a given insurance
claim for medical treatment as not medically
necessary. (Id. ¶ 84.) Because there is no
review of IME or peer review reports (other
than by filing a lawsuit or commencing
arbitration), plaintiff claims that the
defendants have been able to perpetuate this
alleged scheme without detection. (Id. ¶¶ 77–
78.)

review reports at issue, the amended
complaint alleges that many of the IME and
peer review reports submitted through SCS
were nearly identical. (Id. ¶ 92.) In fact,
plaintiff alleges that it has submitted dozens
of sample IME and peer review reports to a
linguistics expert, who found “evidence of
plagiarism and common authorship.” (Id.
¶ 93.) Not only do the reports contain
common language, but also the analysis in
these reports “never varie[d] in any
meaningful way, regardless of the merits of
the claims and medical conditions of the
injured parties whose records are allegedly
reviewed.” (Id. ¶ 94.) Moreover, the peer
review reports at issue consistently cited the
same medical literature that the Doctor
Defendants allegedly knew to be outdated or
irrelevant. (Id. ¶ 95.) These reports also
“fail[ed] to discuss in any detail how the
medical records allegedly reviewed by the
Doctor Defendants factored into their
determinations.” (Id. ¶ 97)

By allowing SCS and Patient Focus to
create and sign IME and peer review reports
in their names, the Doctor Defendants were
allegedly paid for the creation of more IME
and peer review reports than they possibly
could have genuinely produced. (Id. ¶ 85.)
For instance, over an unspecified period of
time, Sharahy, W. Ross, and Florio each have
purportedly reviewed between 750,000 and
one million pages of medical records, and
over 23,000 reports bearing one of the three’s
names have been submitted to no-fault
insurers with a recommendation that the
claimed treatment was not medically
necessary. (Id. ¶ 91.) In addition, more
denials of no-fault claims led to more court
appearances for the Doctor Defendants, who
were paid to give testimony in support of
their IME and peer review reports. (Id. ¶¶ 85–
86.) Specifically, in 2010, Sharahy, W. Ross,
and Florio each appeared in court to testify in
support of IME and peer review reports on at
least one hundred days. (Id. ¶ 91.) They were
paid only to appear in court—not to review
the underlying reports—which plaintiff
asserts is “an indication that testimony would
be predetermined.” (Id.)

As the assignee of injured parties’
insurance claims, plaintiff has submitted
claims for reimbursement to no-fault
insurers. In many cases, plaintiff’s claims
have been denied based on the conclusions of
the IME and peer review reports created by
SCS and Patient Focus. (Id. ¶¶ 130–31.)
Although plaintiff has not specified precisely
how many of its insurance claims were
denied on the basis of the alleged fraud,
plaintiff has appended to the amended
complaint a “Report and Denial Chart,”
which is “a sample of the claims, which is
certainly not exhaustive, that were denied as
a direct result of Defendants’ collective
activity.” (Id. ¶ 134.) Specifically, this chart
shows in table form the following
information for 103 peer review reports: (1)
the date the report was mailed, (2) the name
of the Doctor Defendant that appears on the
report, (3) the state to which the report was
mailed from Florida, (4) the date the insurer
denied plaintiff’s claim, (5) the name of the

As further evidence that the Doctor
Defendants never created the IME and peer
5

injured party, and (6) the allegedly false
statements contained in the report. (Id. ¶ 134
& Ex. 1.) Plaintiff has alleged that the
following five statements in each report are
fraudulent: (1) the Doctor Defendant certified
and affirmed that he or she had prepared and
read the report, (2) the Doctor Defendant
certified and affirmed his or her findings and
conclusions, (3) the Doctor Defendant
electronically signed the report, (4) the
Doctor Defendant claimed to have reviewed
the medical records listed in the report, and
(5) the report itself claimed that its purpose
was to “determine the medical necessity of”
the treatment at issue. (Id.; see also id. ¶ 117
(identifying these statements as the basis for
mail fraud).)

between the original complaint and the
amended RICO statement. After the
conference, Magistrate Judge Boyle granted
defendants’ request to stay discovery pending
the outcome of their motions to dismiss.
Thereafter, the parties participated in a
telephone conference with the undersigned
on June 17, 2013, at which time the
undersigned directed plaintiff to file an
amended complaint.
Plaintiff filed the amended complaint on
July 31, 2013. Many of the defendants moved
to dismiss on October 23, 2013. Plaintiff
opposed the motions on January 6 and 7,
2014. The moving defendants replied on
February 11, 2014. The Court heard oral
argument on the motions on February 20,
2014. The Court has fully considered the
submissions of the parties.

C. Procedural History
Plaintiff commenced this action on
December 27, 2012. Many of the defendants
named in the original complaint requested a
pre-motion conference in anticipation of
moving to dismiss the complaint. The Court
held a pre-motion conference on April 3,
2013, at which time the Court set a briefing
schedule on the anticipated motions to
dismiss.

II. STANDARDS OF REVIEW
In reviewing a motion to dismiss pursuant
to Rule 12(b)(6), the Court must accept the
factual allegations set forth in the complaint
as true and draw all reasonable inferences in
favor of the plaintiff. See, e.g., Cleveland v.
Caplaw Enters., 448 F.3d 518, 521 (2d Cir.
2006); Nechis v. Oxford Health Plans, Inc.,
421 F.3d 96, 100 (2d Cir. 2005).3 “In order to
survive a motion to dismiss under Rule
12(b)(6), a complaint must allege a plausible
set of facts sufficient ‘to raise a right to relief
above the speculative level.’” Operating
Local 649 Annuity Trust Fund v. Smith
Barney Fund Mgmt. LLC, 595 F.3d 86, 91 (2d
Cir. 2010) (quoting Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007)). This
standard does not require “heightened fact
pleading of specifics, but only enough facts

Meanwhile, several defendants requested
that Magistrate Judge Boyle stay discovery
while motions to dismiss were pending. In
response, on April 2, 2013, Magistrate Judge
Boyle ordered plaintiff to file a RICO case
statement. Plaintiff filed the RICO case
statement on May 2, 2013. Several weeks
later, on May 29, 2013, plaintiff moved to file
an amended RICO case statement, which
Magistrate Judge Boyle granted. During a
status conference held on June 5, 2013, Judge
Boyle suggested that plaintiff file an
amended complaint in light of discrepancies
3

The Court also accepts the factual allegations set
forth in plaintiff’s amended RICO statement as true,
and draws all reasonable inferences in plaintiff’s

favor. See, e.g., McLaughlin, 962 F.2d at 189; Allen,
2001 WL 293683, at *2.

6

to state a claim to relief that is plausible on its
face.” Twombly, 550 U.S. at 570.

motion to dismiss stage. E.g. Nasso v. Bio
Reference Labs., Inc., 892 F. Supp. 2d 439,
446 (E.D.N.Y. 2012) (citing Shemtob v.
Shearson, Hammill & Co., 448 F.2d 442, 444
(2d Cir. 1971)).

The Supreme Court clarified the
appropriate pleading standard in Ashcroft v.
Iqbal, setting forth two principles for a
district court to follow in deciding a motion
to dismiss. 556 U.S. 662 (2009). The Court
instructed district courts first to “identify[ ]
pleadings that, because they are no more than
conclusions, are not entitled to the
assumption of truth.” Id. at 679. “While legal
conclusions can provide the framework of a
complaint, they must be supported by factual
allegations.” Id. Second, if a complaint
contains “well-pleaded factual allegations, a
court should assume their veracity and then
determine whether they plausibly give rise to
an entitlement to relief.” Id.

The Court notes that, in adjudicating a
motion to dismiss under Rule 12(b)(6), it is
entitled to consider: (1) facts alleged in the
complaint and documents attached to it or
incorporated in it by reference, (2) documents
integral to the complaint and relied upon in it,
even if not attached or incorporated by
reference, (3) documents or information
contained in defendant’s motion papers if
plaintiff has knowledge or possession of the
material and relied on it in framing the
complaint, (4) public disclosure documents
required by law to be, and that have been,
filed with the Securities and Exchange
Commission, and (5) facts of which judicial
notice may properly be taken under Rule 201
of the Federal Rules of Evidence. E.g. Jones
v. Nickens, 961 F. Supp. 2d 475, 483
(E.D.N.Y. 2013); David Lerner Assocs., Inc.
v. Phila. Indem. Ins. Co., 934 F. Supp. 2d
533, 539 (E.D.N.Y. 2013), aff’d, 542 F.
App’x 89 (2d Cir. 2013); SC Note
Acquisitions, LLC v. Wells Fargo Bank, N.A.,
934 F. Supp. 2d 516, 524 (E.D.N.Y. 2013),
aff’d, 548 F. App’x 741 (2d Cir. 2014).

In addition, where a case concerns
allegations of fraud or mistake, Rule 9(b) of
the Federal Rules of Civil Procedure requires
claims to be pled with particularity. See Fed.
R. Civ. P. 9(b) (“In alleging fraud or mistake,
a party must state with particularity the
circumstances
constituting
fraud
or
mistake.”); see, e.g., Lundy v. Catholic
Health Sys. of Long Island Inc., 711 F.3d 106,
119 (2d Cir. 2013) (RICO claim with
predicate act of mail fraud is subject to
heightened pleading standard of Rule 9(b)).
Generally, to comply with Rule 9(b)’s
specificity requirements, “‘the complaint
must: (1) specify the statements that the
plaintiff contends were fraudulent, (2)
identify the speaker, (3) state where and when
the statements were made, and (4) explain
why the statements were fraudulent.’” Lerner
v. Fleet Bank, N.A., 459 F.3d 273, 290 (2d
Cir. 2006) (quoting Mills v. Polar Molecular
Corp., 12 F.3d 1170, 1175 (2d Cir. 1993));
see Lundy, 711 F.3d at 119. Conclusory
allegations of fraud will not survive Rule
9(b)’s heightened pleading standard, and
therefore, will be subject to dismissal at the

III. RICO
Under RICO, it is “unlawful for any
person employed by or associated with any
enterprise engaged in, or the activities of
which affect, interstate or foreign commerce,
to conduct or participate, directly or
indirectly, in the conduct of such enterprise’s
affairs through a pattern of racketeering
activity or collection of unlawful debt.” 18
U.S.C. § 1962(c). Section 1962(d) makes it
“unlawful for any person to conspire to
violate . . . the provisions of subsection . . .
(c).” 18 U.S.C. § 1962(d). “When § 1962 is
violated, in addition to criminal penalties, the
7

RICO statutes also authorize civil lawsuits,
which, if successful, can entitle a plaintiff to
treble damages, costs, and attorney’s fees.”
DLJ Mortg. Capital, Inc. v. Kontogiannis,
726 F. Supp. 2d 225, 236 (E.D.N.Y. 2010)
(citing 18 U.S.C. § 1964(c)). Specifically,
RICO provides a private cause of action for
“[a]ny person injured in his business or
property by reason of a violation of section
1962 of this chapter.” 18 U.S.C. § 1964(c).
“From this language, courts have extracted
the conditions a plaintiff must meet to satisfy
RICO’s standing requirements: ‘(1) a
violation of section 1962; (2) injury to
business or property; and (3) causation of the
injury by the violation.’” First Nationwide
Bank v. Gelt Funding Corp., 27 F.3d 763, 767
(2d Cir. 1994) (quoting Hecht v. Commerce
Clearing House, Inc., 897 F.2d 21, 23 (2d
Cir. 1990)).

dismiss stage). Accordingly, courts have
expressed skepticism toward civil RICO
claims. See, e.g., DLJ Mortg. Capital, 726 F.
Supp. 2d at 236 (“[P]laintiffs have often been
overzealous in pursuing RICO claims,
flooding federal courts by dressing up run-ofthe-mill fraud claims as RICO violations.”).
Although civil RICO presents many
hurdles for a plaintiff to overcome, the
Supreme Court has also “made clear that it
would not interpret civil RICO narrowly.”
Attorney Gen. of Canada v. R.J. Reynolds
Tobacco Holdings, Inc., 268 F.3d 103, 139
n.6 (2d Cir. 2001) (citing Sedima, S.P.R.L. v.
Imrex Co., 473 U.S. 479 (1985)). In Sedima,
the Supreme Court rejected an interpretation
of civil RICO that would have confined its
application to “mobsters and organized
criminals.” 473 U.S. at 499. Instead, the
Court held: “The fact that RICO has been
applied in situations not expressly anticipated
by Congress does not demonstrate ambiguity.
It demonstrates breadth.” Id. (internal citation
and quotation marks omitted); see also Anza
v. Ideal Steel Supply Corp., 547 U.S. 451, 479
(2006) (Breyer, J., concurring in part and
dissenting in part) (“RICO essentially seeks
to prevent organized criminals from taking
over or operating legitimate businesses. Its
language, however, extends its scope well
beyond those central purposes.”). Thus, a
court should not dismiss a civil RICO claim
if the complaint adequately alleges all
elements of such a claim, even if the alleged
conduct is not quintessential RICO activity.

Courts have described civil RICO as “‘an
unusually potent weapon—the litigation
equivalent of a thermonuclear device.’”
Katzman v. Victoria’s Secret Catalogue, 167
F.R.D. 649, 655 (S.D.N.Y. 1996) (quoting
Miranda v. Ponce Fed. Bank, 948 F.2d 41, 44
(1st Cir. 1991)), aff’d, 113 F.3d 1229 (2d Cir.
1997). “Because the ‘mere assertion of a
RICO claim . . . has an almost inevitable
stigmatizing effect on those named as
defendants, . . . courts should strive to flush
out frivolous RICO allegations at an early
stage of the litigation.’” Id. (quoting
Figueroa Ruiz v. Alegria, 896 F.2d 645, 650
(1st Cir. 1990)); see DLJ Mortg. Capital, 726
F. Supp. 2d at 236. Indeed, although civil
RICO may be a “potent weapon,” plaintiffs
wielding RICO almost always miss the mark.
See Gross v. Waywell, 628 F. Supp. 2d 475,
479–83 (S.D.N.Y. 2009) (conducting survey
of 145 civil RICO cases filed in the Southern
District of New York from 2004 through
2007, and finding that all thirty-six cases
resolved on the merits resulted in judgments
against the plaintiffs, mostly at the motion to

With the foregoing principles in mind, the
Court evaluates the moving defendants’
objections to the sufficiency of plaintiff’s
pleadings.
A. Statute of Limitations
“RICO claims are subject to a four-year
statute of limitations.” Koch v. Christie’s
Int’l PLC, 699 F.3d 141, 148 (2d Cir. 2012);

8

year ‘window’ before suit was filed . . . .”
(emphasis in original)).

see Agency Holding Corp. v. Malley-Duff &
Assocs., Inc., 483 U.S. 143, 156–57 (1987).
In Bankers Trust Co. v. Rhoades, the Second
Circuit held that “each time a plaintiff suffers
an injury caused by a violation of 18 U.S.C.
§ 1962, a cause of action to recover damages
based on that injury accrues to plaintiff at the
time he discovered or should have discovered
the injury.” 859 F.2d 1096, 1102 (2d Cir.
1988). This is known as the “separate
accrual” rule, “under which a new claim
accrues, triggering a new four-year
limitations period, each time plaintiff
discovers, or should have discovered, a new
injury caused by the predicate RICO
violations.” Bingham v. Zolt, 66 F.3d 553,
559 (2d Cir. 1995). In Bingham, the Second
Circuit recognized the following, “necessary
corollary of the separate accrual rule”:

Here, defendants argue that most, if not
all, of plaintiff’s claims are time-barred
because most of plaintiff’s no-fault claims
appended to the amended complaint were
denied more than four years before plaintiff
commenced this action. Plaintiff responds
that it only discovered the alleged fraud less
than one year before filing suit (see Am.
Compl. ¶ 57), that it did not miss any “storm
warnings” before discovering the alleged
fraud, and that, in any event, defendants’
fraudulent concealment tolled the statute of
limitations (see id. ¶¶ 122–29).
“At this time, the Court will not make a
ruling as to whether [plaintiff’s] claims are
barred by the statute of limitations.” Allstate
Ins. Co. v. Elzanaty, 916 F. Supp. 2d 273, 300
(E.D.N.Y. 2013). As a preliminary matter,
the Court notes that plaintiff’s causes of
action under RICO accrued when plaintiff
discovered or should have discovered that its
claims were fraudulently denied, and not
when its claims for reimbursement were
denied, as some defendants suggest. See, e.g.,
Koch, 699 F.3d at 151–53 (RICO cause of
action accrued when plaintiff became aware
that wine might have been fraudulently
labeled, not when he first purchased the
wine). Furthermore, the matter of when
plaintiff discovered or should have
discovered the alleged fraud is a “fact
sensitive issue” that “cannot be determined at
this time.” Elzanaty, 916 F. Supp. 2d at 300–
01; see, e.g., State Farm Mut. Auto. Ins. Co.
v. Rabiner, 749 F. Supp. 2d 94, 104
(E.D.N.Y. 2010) (“In light of Plaintiff’s
allegations, it is plausible that Plaintiff could
not discover defendants’ fraudulent acts until
sometime after the actual injury occurred.
Without discovery, the Court cannot make
the ‘fact-sensitive’ determination of when
this fraud could reasonably have been
discovered.” (citation omitted)); State Farm

plaintiff may only recover for
injuries
discovered
or
discoverable within four years
of the time suit is brought. As
long
as
separate
and
independent injuries continue
to flow from the underlying
RICO violations—regardless
of when those violations
occurred—plaintiff may wait
indefinitely to sue, but may
then win compensation only
for injuries discovered or
discoverable within the fouryear “window” before suit
was filed, together, of course,
with any provable future
damages.
Id. at 560 (internal citations omitted); see,
e.g., Elsevier, Inc. v. Grossman, No. 12-CV5121 (KPF), 2013 WL 6331839, at *8
(S.D.N.Y. Dec. 5, 2013) (“Regardless of
when Plaintiff discovered its claims, Plaintiff
may only be compensated for injuries
discovered or discoverable within the four-

9

Mut. Auto. Ins. Co. v. Accurate Med., P.C.,
No. 07-CV-51 (ENV)(MDG), 2007 WL
2908205, at *2 (E.D.N.Y. Oct. 4, 2007)
(“[D]efendants’ argument that plaintiff’s
claims . . . are barred by the statute of
limitations necessarily assumes facts that are
beyond the pleadings and that have yet to be
developed.”). For the same reason, “the Court
cannot decide at this early stage whether the
doctrine of fraudulent concealment will
ultimately be successful.” Elzanaty, 916 F.
Supp. 2d at 301. Therefore, at this juncture,
the Court denies the motions to dismiss the
RICO claims as time-barred.

1. Violations of 18 U.S.C. § 1962
The first element of a civil RICO claim is
the violation of 18 U.S.C. § 1962. Here,
plaintiff alleges violations of §§ 1962(c)
(RICO’s substantive provision) and 1962(d)
(RICO conspiracy). The Court considers
each, in turn.
a. Violation of § 1962(c)
To state a violation of § 1962(c), a
plaintiff must plead “‘(1) conduct, (2) of an
enterprise, (3) through a pattern (4) of
racketeering activity.’” Anatian v. Coutts
Bank Ltd., 193 F.3d 85, 88 (2d Cir. 1999)
(quoting Sedima, 473 U.S. at 496); see also
S.Q.K.F.C., Inc. v. Bell Atl. TriCon Leasing
Corp., 84 F.3d 629, 633 (2d Cir. 1996) (“[A]
plaintiff must allege that a defendant,
‘employed by or associated with’ an
enterprise affecting interstate or foreign
commerce, conducted or participated in the
conduct of this enterprise’s affairs ‘through a
pattern of racketeering activity.’” (quoting 18
U.S.C. § 1962(c); Moss v. Morgan Stanley
Inc., 719 F.2d 5, 17 (2d Cir. 1983))).4

B. Elements of a RICO Cause of Action
Because the Court cannot conclude at this
juncture that plaintiff’s claims are timebarred, the Court turns to the sufficiency of
plaintiff’s pleadings as it relates to the
elements of a RICO claim. As stated supra, a
RICO claim contains three elements: (1) a
violation of 18 U.S.C. § 1962; (2) injury to
plaintiff’s business or property; and (3)
causation of the injury by the violation. The
Court groups the moving defendants’
arguments by element. For the reasons
discussed below, the amended complaint has
adequately alleged the first and third
elements, but has failed to allege the second
element (i.e., RICO injury). Accordingly, the
Court dismisses the amended complaint,
without prejudice to plaintiff either filing a
second amended complaint or commencing a
new action when its RICO injury becomes
clear and definite.

i. Enterprise
A RICO enterprise “includes 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). Although RICO “does not
specifically define the outer boundaries of the
‘enterprise’ concept,” Boyle v. United States,
556 U.S. 938, 944 (2009), it is clear that “any

4

Additionally, plaintiff must allege that the enterprise
is engaged in, or the activities of the enterprise affect,
interstate or foreign commerce. 18 U.S.C. § 1962(c).
However, “RICO plaintiffs may satisfy this element
by showing only ‘a minimal effect on interstate
commerce.’” First Capital Asset Mgmt., Inc. v.
Satinwood, Inc., 385 F.3d 159, 173 n.12 (2d Cir. 2004)
(quoting De Falco v. Bernas, 244 F.3d 286, 309 (2d

Cir. 2001)). Here, defendants do not challenge the
commerce clause element of plaintiff’s RICO claims,
and the Court notes that the alleged fraud occurred
across state lines. “Thus, Plaintiff[] alleged at least a
de minimis impact on interstate or foreign commerce.”
Id.

10

legal entity may qualify as a RICO
enterprise,” First Capital Asset Mgmt., 385
F.3d at 173.

344 (2d Cir. 1994); see, e.g., 4 K & D Corp.
v. Concierge Auctions, LLC, --- F. Supp. 2d ---, No. 13-CV-2527 (JGK), 2014 WL
904451, at *4 (S.D.N.Y. Mar. 10, 2014)
(“Courts
have
repeatedly dismissed
§ 1962(c) claims alleging that a corporation
was simultaneously a RICO ‘person’ and a
RICO ‘enterprise’ (or part of a RICO
‘enterprise’ from which the corporation is not
distinct).”) (collecting cases). 6 In sum,
plaintiff has properly pleaded a RICO
enterprise.

In the instant case, plaintiff alleges that
SCS and Patient Focus are the RICO
enterprises. (Am. Compl. ¶¶ 142, 158, 172,
188, 202, 218, 234, 250.) Defendants argue
that plaintiff has failed to allege a RICO
enterprise because it has not pleaded the
elements of an association-in-fact enterprise.5
This argument misses the mark. Plaintiff does
not allege an association-in-fact enterprise;
instead, it alleges that SCS and Patient Focus
themselves are the enterprises, “and
corporations are expressly included in the
definition of enterprise.” Allstate Ins. Co. v.
Lyons, 843 F. Supp. 2d 358, 368 (E.D.N.Y.
2012) (rejecting similar argument concerning
failure to plead association-in-fact enterprise,
where alleged enterprises were professional
corporations). By identifying SCS and
Patient
Focus—a
corporation
and
professional corporation, respectively—as
the RICO enterprises, plaintiff has properly
pleaded the enterprise element of a RICO
claim. Moreover, SCS and Patient Focus
themselves are not included as RICO
defendants. Thus, plaintiff does not run afoul
of the so-called distinctness requirement,
according to which “a corporate entity may
not be both the RICO person [who is held
liable] and the RICO enterprise under section
1962(c).” Riverwoods Chappaqua Corp. v.
Marine Midland Bank, N.A., 30 F.3d 339,

ii. Conduct
In addition to pleading a RICO enterprise,
a civil RICO plaintiff must also allege that
each
defendant
“conduct[ed]
or
participate[d], directly or indirectly, in the
conduct of such enterprise’s affairs.” 18
U.S.C. § 1962(c). The Supreme Court has
interpreted this statutory language to mean
that the RICO defendant must have
participated “in the operation or management
of the enterprise.” DeFalco, 244 F.3d at 309
(citing Reves v. Ernst & Young, 507 U.S. 170,
185 (1993)); see, e.g., First Capital Asset
Mgmt., 385 F.3d at 176 (holding that “‘one is
liable under RICO only if he participated in
the operation or management of the
enterprise itself’” (quoting Azrielli v. Cohen
Law Offices, 21 F.3d 512, 521 (2d Cir.
1994))). Under this standard, a person may
not be held liable merely for taking directions
and performing tasks that are “necessary and

“[A]n association-in-fact enterprise is ‘a group of
persons associated together for a common purpose of
engaging in a course of conduct.’” Boyle, 556 U.S. at
946 (quoting United States v. Turkette, 452 U.S. 576,
583 (1981)). In Boyle, the Supreme Court held that “an
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.” Id. Where a complaint alleges
an association-in-fact enterprise, courts in this Circuit
look to the “hierarchy, organization, and activities” of
the association to determine whether “its members

functioned as a unit.” First Capital Asset Mgmt., 385
F.3d at 174 (internal citations and quotation marks
omitted).
6
The distinctness requirement “does not foreclose the
possibility of a corporate entity being held liable as a
defendant under section 1962(c) where it associates
with others to form an enterprise that is sufficiently
distinct from itself.” Riverwoods Chappaqua, 30 F.3d
at 344 (emphasis added). Thus, “a defendant may be a
RICO person and one of a number of members of the
RICO enterprise.” Id. (internal quotation marks
omitted).

5

11

helpful to the enterprise,” or for providing
“goods and services that ultimately benefit
the enterprise.” U.S. Fire Ins. Co. v. United
Limousine Serv., Inc., 303 F. Supp. 2d 432,
451–52 (S.D.N.Y. 2004) (internal citations
and quotation marks omitted). Instead, “the
RICO defendant must have played ‘some part
in directing [the enterprise’s] affairs.’” First
Capital Asset Mgmt., 385 F.3d at 176
(quoting De Falco, 244 F.3d at 310)
(emphasis and brackets in original). “In this
Circuit, the ‘operation or management’ test
typically has proven to be a relatively low
hurdle for plaintiffs to clear, especially at the
pleading stage.” Id. (internal citations
omitted); see, e.g., Aiu Ins. Co. v. Olmecs
Med. Supply, Inc., No. 04-CV-2934 (ERK),
2005 WL 3710370, at *8 (E.D.N.Y. Feb. 22,
2005) (“[W]here the role of the particular
defendant in the RICO enterprise is unclear,
plaintiffs may well be entitled to take
discovery on this question.”).

satisfy the participation requirement of
RICO, since participation requires some part
in directing the affairs of the enterprise
itself.”); Indus. Bank of Latvia v. Baltic Fin.
Corp., No. 93-CV-9032 (LLS), 1994 WL
286162, at *3 (S.D.N.Y. June 27, 1994)
(dismissing RICO claim against bank and
individual officers on basis that providing
“banking services—even with knowledge of
the fraud—is not enough to state a claim
under § 1962(c)”). Instead, the amended
complaint and amended RICO statement
allege that the Doctor Defendants were “vital
actors who enabled the scheme” by allowing
others to use their names on IME and peer
review reports, and by testifying falsely in
support of those reports. Aiu Ins., 2005 WL
3710370, at *8–9 (holding that complaint
adequately
pleaded
participation
of
defendant-doctors in conduct of RICO
enterprise concerning insurance fraud, where
complaint alleged that doctors had provided
misleading prescriptions that “facilitated the
submission of fraudulent claims to
plaintiffs”); see also U.S. Fire Ins., 303 F.
Supp. 2d at 453 (holding that defendants
were “key participants” in conducting RICO
enterprise
“by
making
critical
misrepresentations,
creating
false
documents, and . . . serving as the point of
communication”). Furthermore, “[g]iven the
early stage of the proceedings, plaintiff[] may
not yet have had the opportunity to fully
understand the nature of the roles of each
category of defendant with regard to their
respective management or operation
capacity.” Aiu Ins., 2005 WL 3710370, at *9.
However, plaintiff has alleged enough to
withstand a motion to dismiss on this issue,
and “[a]ny future doubts involving moving
defendants’ relative level of participation
should be resolved on summary judgment.”
Id.7

In the instant case, several of the Doctor
Defendants and Vakhidova contend that
plaintiff has failed to allege their
participation in the operation or management
of SCS and/or Patient Focus. The Court
disagrees. Based on the allegations in the
amended complaint and the amended RICO
statement, which the Court must accept as
true for purposes of the instant motions, the
Doctor Defendants did more than merely
provide professional services to SCS and
Patient Focus. Cf. Azrielli, 21 F.3d at 521–22
(holding that provision of legal services
related to fraudulent real estate transaction
was not management of RICO enterprise);
Hayden v. Paul, Weiss, Rifkind, Wharton &
Garrison, 955 F. Supp. 248, 254 (S.D.N.Y.
1997) (“[I]t is well established that the
provision of professional services by
outsiders, such as accountants, to a
racketeering enterprise, is insufficient to
7

Plaintiff has not alleged any RICO cause of action
against defendant Vakhidova. Accordingly, the Court

need not consider whether plaintiff has alleged a
plausible RICO claim against Vakhidova.

12

iii. Pattern

time. Predicate acts extending
over a few weeks or months
and threatening no future
criminal conduct do not
satisfy this requirement:
Congress was concerned in
RICO
with
long-term
criminal conduct. Often a
RICO action will be brought
before continuity can be
established in this way. In
such cases, liability depends
on whether the threat of
continuity is demonstrated.

The pattern element of a RICO claim
requires the plaintiff to “plead at least two
predicate acts, show that the predicate acts
are related, and that they amount to, or pose a
threat of, continuing criminal activity.”
Schlaifer Nance & Co. v. Estate of Warhol,
119 F.3d 91, 97 (2d Cir. 1997) (citing H.J.
Inc. v. Nw. Bell Tel. Co., 492 U.S. 229, 239
(1989)); see 18 U.S.C. §§ 1961(5), 1962(c).
The predicate acts must have been committed
within ten years of each other. 18 U.S.C.
§ 1961(5). “Predicate acts are ‘related’ for
RICO purposes when they ‘have the same or
similar purposes, results, participants,
victims, or methods of commission, or
otherwise are interrelated by distinguishing
characteristics and are not isolated events.’”
Schlaifer Nance & Co., 119 F.3d at 97
(quoting H.J. Inc., 492 U.S. at 240). As to the
threat of continued criminal activity, “a
plaintiff in a RICO action must allege either
an ‘open-ended’ pattern of racketeering
activity (i.e., past criminal conduct coupled
with a threat of future criminal conduct) or a
‘closed-ended’ pattern of racketeering
activity (i.e., past criminal conduct
‘extending over a substantial period of
time’).” GICC Capital Corp. v. Tech. Fin.
Grp., Inc., 67 F.3d 463, 466 (2d Cir. 1995).
The Supreme Court has explained the
continuity requirement as follows:

H.J. Inc., 492 U.S. at 241–42 (emphasis in
original).
“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.” Cofacredit, S.A. v. Windsor
Plumbing Supply Co., 187 F.3d 229, 242 (2d
Cir. 1999). Alternatively, to establish a
“closed period of repeated conduct”
sufficient to satisfy the continuity
requirement, H.J. Inc., 492 U.S. at 241, “‘a
plaintiff must provide some basis for a court
to conclude that defendants’ activities were
neither isolated nor sporadic,’” and that
defendants engaged in such activity for a
substantial period of time. De Falco, 244
F.3d at 321 (quoting GICC Capital, 67 F.3d
at 467 (additional quotation marks omitted));
accord Kades v. Organic Inc., No. 00-CV3671 (LTS), 2003 WL 470331, at *12
(S.D.N.Y. Feb. 24, 2003).

“Continuity” is both a closedand open-ended concept,
referring either to a closed
period of repeated conduct, or
to past conduct that by its
nature projects into the future
with a threat of repetition. . . .
A party alleging a RICO
violation may demonstrate
continuity over a closed
period by proving a series of
related predicates extending
over a substantial period of

Many of the Doctor Defendants argue
that plaintiff has failed to allege a pattern of
racketeering by each of them individually.
See, e.g., Hoatson v. N.Y. Archdiocese, No.
05-CV-10467 (PAC), 2007 WL 431098, at
*3 (S.D.N.Y. Feb. 8, 2007) (granting motion
to dismiss civil RICO claims where “[t]here

13

is not even a minimal attempt to allege which
predicate acts were performed by which
Defendants”), aff’d, 280 F. App’x 88 (2d Cir.
2008); Merrill Lynch, Pierce, Fenner &
Smith, Inc. v. Young, No. 91-CV-2923
(CSH), 1994 WL 88129, at *28 (S.D.N.Y.
Mar. 15, 1994) (“The Court must consider
whether the Complaint adequately alleges a
pattern of racketeering acts as to each
defendant.”). Specifically, they contend that,
even if plaintiff has adequately alleged
predicate acts—an issue the Court considers
separately, infra—plaintiff has not alleged
that each engaged in a pattern of RICO
predicate acts.

closed-ended continuity. De Falco, 244 F.3d
at 321. Furthermore, “[w]hile closed ended
continuity is primarily concerned with the
time period of the activities, the court also
considers factors such as the ‘number and
variety of predicate acts, the number of both
participants and victims, and the presence of
separate schemes’ as relevant when
determining whether closed ended continuity
exists.” SKS Constructors, Inc. v. Drinkwine,
458 F. Supp. 2d 68, 78 (E.D.N.Y. 2006)
(quoting De Falco, 244 F.3d at 321).
In the instant case, of all Doctor
Defendants moving on this issue, plaintiff
alleges that the following committed multiple
acts of mail fraud over a period lasting longer
than two years: Brittis (see Am. Compl. Ex.
6; Am. RICO Statement, at 20 & Ex. 16);
Cohen (see Am. RICO Statement, at 13–14);
Cole (see Am. Compl. Ex. 6; Am. RICO
Statement, at 11–12 & Ex. 6); Kerness (see
Am. RICO Statement, at 22–23); Mann (see
id. at 23–24 & Ex. 18); D. Martins (see id. at
19 & Ex. 15); S. Ross (see id. at 16 & Ex.
11) 8 ; Sohn (see Am. Compl. Ex. 6; Am.
RICO Statement, at 15); Sukhov (see Am.
Compl. Ex. 6; Am. RICO Statement, at 14–
15 & Ex. 9); Weber (see Am. Compl. Ex. 6;
Am. RICO Statement, at 17 & Ex. 12); and
Westerband (see Am. Compl. Exs. 1, 6; Am.
RICO Statement, at 12 & Ex. 7). These
allegations that the foregoing Doctor
Defendants committed multiple acts of mail
fraud over a period spanning more than two

(1) Closed-Ended Continuity
With respect to closed-ended continuity,
“[p]redicate acts extending over a few weeks
or months . . . do not satisfy this
requirement.” Cofacredit, 187 F.3d at 242
(quoting H.J. Inc., 492 U.S. at 242). In
calculating the duration of the pattern of
racketeering activity, actions that do not
constitute predicate racketeering activity are
not included; rather, the duration “is
measured by the RICO predicate acts the
defendants commit.” De Falco, 244 F.3d at
321 (citing Cofacredit, 187 F.3d at 243;
GICC Capital, 67 F.3d at 467). Notably,
“[s]ince the Supreme Court decided H.J.,
Inc., [the Second Circuit] has never held a
period of less than two years to constitute a
‘substantial period of time’” for purposes of

determining the continuity of any scheme, ‘then
schemes could remain in force, provided the
orchestrators changed targets prior to the actual
accrual of a ‘substantial’ period of time.’” Id. (quoting
Wells Fargo Century, Inc. v. Hanakis, No. 04-CV1381 (SLT) (VVP), 2005 WL 1523788, at *5
(E.D.N.Y. June 28, 2005)). Accordingly, allegations
that S. Ross permitted his name to be used on
fraudulent IME and peer review reports are relevant to
the pattern element of the RICO claims, even if some
of those reports were not prepared for plaintiff’s nofault claims.

8

Defendant S. Ross argues that most of the reports
bearing his name relate to a different medical supply
company—Alfa Medical Supplies, Inc.—and not Sky
Medical. However, with respect to the pattern element
of a RICO claim, “[w]hile Plaintiff may not be able to
collect damages with respect to the injuries of other,
unnamed parties, it does not necessarily follow that
Plaintiff may not allege injury to others in support of
allegations of an ongoing fraudulent scheme, or
pattern of racketeering activity.” SKS Constructors,
458 F. Supp. 2d at 80. “[I]f only those acts involving
the named plaintiff could be considered when

14

years are sufficient to satisfy the pattern
requirement of a RICO claim at this juncture.

of operating that business, or that the nature
of the predicate acts themselves implies a
threat of continued criminal activity.’” Id.
(quoting Cofacredit, 187 F.3d at 243).

However, plaintiffs have not sufficiently
alleged closed-end continuity with respect to
some of the moving Doctor Defendants.
Specifically, plaintiffs have failed to allege
that the following Doctor Defendants
committed acts of mail fraud over a period of
two years or more: Ehrlich (reports dated
2007 and 2008); Ferrante (reports dated 2007
and 2008); Kritzberg (reports dated 2011);
and Weisman (reports dated 2011 and 2012).
(See Am. Compl. Exs. 1, 6; Am. RICO
Statement.) Given the shorter period of time
within which these defendants allegedly
committed mail fraud, the Court concludes
that plaintiff has not adequately alleged
closed-end continuity with respect to these
defendants. See, e.g., DeFalco, 244 F.3d at
322 (holding that period of “less than a year
and a half” was “of insufficient length to
demonstrate closed-ended continuity under
this Court’s precedents”); see also Landy v.
Mitchell Petroleum Tech. Corp., 734 F. Supp.
608, 624 (S.D.N.Y. 1990) (closed-end
continuity requirement met only with respect
to defendants who had allegedly committed
predicate acts over extended period of time,
but not with respect to those defendants
whose alleged role had lasted a few months).

Under
this
standard,
plaintiff’s
allegations suffice to establish open-ended
continuity with respect to all moving
defendants. Specifically, the gravamen of
plaintiff’s amended complaint and amended
RICO statement is that SCS and Patient
Focus operated primarily by committing mail
fraud, even if they also conducted some
legitimate business. Moreover, plaintiff
alleges that each moving defendant played
some role in this fraudulent scheme.
Accordingly, “[w]hile this may prove to be a
difficult fact to establish at trial, it is
sufficient to establish open ended continuity
for the purpose of this motion to dismiss.”
SKS Constructors, 458 F. Supp. 2d at 80; see,
e.g., Lyons, 843 F. Supp. 2d at 370 (holding
that open-ended continuity allegation
withstands a motion to dismiss where “it
would be reasonable to infer that defendants’
acts of mail fraud constituted a regular way
of conducting the affairs of [the alleged
RICO enterprises]”).
iv. Racketeering Activity
RICO defines racketeering activity to
mean “any act which is indictable” under
specified provisions of Title 18, including
mail fraud. 18 U.S.C. § 1961(1)(B). Here, the
amended complaint relies on the mailings of
the IME and peer review reports to establish
mail fraud as the predicate act to RICO
liability. “‘To prove a violation of the mail
fraud statute, plaintiff[] must establish the
existence of a fraudulent scheme and a
mailing in furtherance of the scheme.’”
Lundy, 711 F.3d at 119 (quoting McLaughlin
v. Anderson, 962 F.2d 187, 190–91 (2d Cir.
1992)). Moreover, pursuant to Federal Rule
of Civil Procedure 9(b), a plaintiff must plead

(2) Open-Ended Continuity
In the alternative, plaintiff argues that it
has alleged open-ended continuity with
respect to all defendants. “Where an
inherently unlawful act is performed at the
behest of an enterprise whose business is
racketeering activity, there is a threat of
continued criminal activity, and thus openended continuity.” DeFalco, 244 F.3d at 323.
“However, ‘where the enterprise primarily
conducts a legitimate business, there must be
some evidence from which it may be inferred
that the predicate acts were the regular way

15

the elements of mail fraud with particularity
in order to survive a motion to dismiss, and
“[b]are-bones allegations do not satisfy Rule
9(b).” Id. Rather, as noted supra, “the
‘complaint must adequately specify the
statements it claims were false or misleading,
give particulars as to the respect in which
plaintiff contends the statements were
fraudulent, state when and where the
statements were made, and identify those
responsible for the statements.’” Id. (quoting
Cosmas v. Hassett, 886 F.2d 8, 11 (2d Cir.
1989)).

that the Doctor Defendants could not have
possibly created the thousands of medical
records that they claim to have prepared,
particularly in light of the number of days
they appear in court each year to testify in
support of those reports. (See Am. Compl.
¶ 91.) Moreover, the amended complaint
alleges that many of the IME and peer review
reports were identical and failed to discuss in
any detail how the specific medical records
factored into the report’s ultimate conclusion.
(Id.
¶¶ 92–97.)
Although
plaintiff
acknowledges that the use of boilerplate
reports, without more, is not conclusive
evidence of fraud, the allegation of identical
reports in the context of all other allegations
in the amended complaint suffices to
withstand a motion to dismiss. In short,
plaintiff is not required to prove mail fraud at
this juncture, and the allegations in the
amended complaint, amended RICO
statement, and exhibits attached thereto
“clearly direct[] defendants to the specific
misrepresentations [plaintiff] is alleging.
Under the circumstances, the specificity
requirement of 9(b) requires no more
regarding the who, what, where, when, how,
and why of the alleged fraud in this case.”
Lyons, 843 F. Supp. 2d at 373.

The moving defendants argue first that
plaintiff has failed to allege a fraudulent
scheme with particularity. This Court
disagrees. The amended complaint alleges
that the following statements in the IME and
peer review reports were false: the prepared
and read statement, the findings and
conclusions statement, the fraudulent
signature, the review of records statement,
and the predetermined results statement. (See
Am. Compl. ¶¶ 7, 89.) In addition, Exhibit 1
to the amended complaint identifies specific
reports containing the allegedly fraudulent
statements, and provides the following
information for each report: the date it was
mailed, the insurance company recipient, the
name of the doctor on the report, the date that
plaintiff’s claim was denied, and the injured
party’s name. Finally, as discussed supra, the
amended complaint alleges the manner in
which those statements were false by alleging
specific facts that, if true, would support the
existence of a fraudulent scheme. Contrary to
defendants’ arguments on this point, the
amended complaint goes beyond the
conclusory accusation that the statements
were false. Instead, the amended complaint
provides specific allegations that explain why
plaintiff believes the IME and peer review
reports were generated with predetermined
results and without the involvement of
doctors. Specifically, plaintiffs have alleged

McGee v. Allstate Insurance Co., a
decision upon which defendants rely, is
distinguishable from the instant case. See No.
08-CV-842, 2011 WL 3497527 (E.D.N.Y.
Aug. 3, 2011) [hereinafter McGee II]. In
McGee II, as is the case here, the court
considered whether the plaintiff had
sufficiently alleged that the defendants’
creation of IME and peer review reports
constituted mail fraud. See id. The court held
that the plaintiff had failed to do so, even
though the plaintiff had attached to his
complaint sixty-one IME and peer review
reports containing allegedly false statements.
McGee II held that those reports did “little to
advance the ball” because the complaint had

16

direction of the Manager Defendants,” and
that the “Doctor Defendants authorized the
mailings of the reports bearing their names
and purported signatures.” (Am. Compl.
¶ 118.) These allegations, along with
plaintiff’s inclusion of specific dates that the
allegedly fraudulent reports were mailed, are
enough to withstand a motion to dismiss on
this issue. See, e.g., Tocco, 135 F.3d at 124;
cf. McGee I, 2009 WL 2132439, at *5
(dismissing RICO claim based on mail and
wire fraud because “the Complaint
specifie[d] no dates of any uses of the
interstate mails or wires”).

failed to explain why the specific statements
in the reports were fraudulent. See id. at *3.
Here, by contrast, as explained supra,
plaintiff has provided supporting allegations
explaining why the IME and peer review
reports were fraudulent.
Second, some of the moving defendants
also argue that, even if plaintiff has pleaded a
fraudulent scheme with particularity, it has
failed to allege that each defendant
committed the fraud by the use of the mails.
The Court disagrees with defendants on this
point, as well. To establish the mailing
element of mail fraud, “there is no
requirement that the defendant personally
mail a letter”; instead, “the plaintiff must
show ‘1) that the defendant ‘caused’ the
mailing . . . and 2) that the mailing was for
the purpose of executing the scheme or . . .
‘incidental to an essential part of the
scheme.’’” McLaughlin, 962 F.2d at 191
(quoting United States v. Bortnovsky, 879
F.2d 30, 36 (2d Cir. 1989) (quoting Pereira
v. United States, 347 U.S. 1, 8–9 (1954))).
Moreover, the Second Circuit has
“‘construed [the mail fraud statute’s]
causation
requirement
liberally.”
Abramovich v. Oliva, No. 11-CV-1755
(ERK)(SMG), 2012 WL 3597444, at *10
(E.D.N.Y. Aug. 20, 2012) (quoting United
States v. Tocco, 135 F.3d 116, 124 (2d Cir.
1998)) (alteration in original). “In order to
show that the defendant ‘caused’ the mailing,
it need only be shown that he acted ‘with
knowledge that the use of the mails will
follow in the ordinary course of business,’ or
that ‘such use can reasonably be foreseen,
even though not actually intended.’” Tocco,
135 F.3d at 124 (quoting Pereira, 347 U.S. at
8–9).

b. Violation of § 1962(d)
Plaintiff has also alleged that the
Manager Defendants and Doctor Defendants
violated 18 U.S.C. § 1962(d) by conspiring to
violate § 1962(c). Section 1962(d) makes it
“unlawful for any person to conspire to
violate . . . the provisions of subsection . . .
(c).” 18 U.S.C. § 1962(d). Based upon this
language, “the Second Circuit has instructed
that a plaintiff must prove that (i) the
defendants agreed to form and associate
themselves with a RICO enterprise; (ii) the
defendants agreed to commit two predicate
acts in furtherance of a pattern of
racketeering activity in connection with the
enterprise; and (iii) if the agreed-upon
predicate acts had been carried out, they
would have constituted a pattern of
racketeering activity.” Elsevier, 2013 WL
6331839, at *11 (citing Cofacredit, 187 F.3d
229, 244–45 (2d Cir. 1999)). “Because the
core of a RICO civil conspiracy is an
agreement to commit predicate acts, a RICO
civil conspiracy complaint, at the very least,
must allege specifically such an agreement.”
Hecht, 897 F.2d at 25. Although a plaintiff is
not subject to the heightened pleading
requirements of Federal Rule of Civil
Procedure 9(b) in pleading a RICO
conspiracy, see id. at 26 n.4, a RICO

The allegations in the amended complaint
satisfy this standard. In particular, plaintiff
specifically alleges that the reports “were
physically mailed by persons acting at the

17

conspiracy claim “should be more than a
conclusory add-on at the end of a complaint.”
FD Prop. Holding, Inc. v. U.S. Traffic Corp.,
206 F. Supp. 2d 362, 373 (E.D.N.Y. 2002)
(internal citations omitted); see, e.g., 4 K & D
Corp., 2014 WL 904451, at *12 (dismissing
RICO conspiracy claim where plaintiffs
alleged “no facts to show specifically that the
defendants had any ‘meeting of the minds’ in
the alleged violations”).

conspiracy] is unmistakable.”))); see also
Hoyle v. Dimond, 612 F. Supp. 2d 225, 233
(W.D.N.Y. 2009) (holding that plaintiff
adequately alleged agreement between
defendants to commit at least two predicate
acts, where plaintiff stated plausible violation
of § 1962(c) by alleging specific facts of
defendants’ scheme to defraud); Burke v.
Dowling, 944 F. Supp. 1036, 1068 (E.D.N.Y.
1995) (same).

Under this standard, plaintiff has alleged
a plausible RICO conspiracy committed by
the Manager Defendants and Doctor
Defendants. As detailed supra, the amended
complaint, amended RICO statement, and
attached exhibits, contain detailed allegations
about a fraudulent scheme perpetuated by
these defendants. These allegations are not
conclusory. Instead, the pleadings outline the
specific role played by the Manager
Defendants in running SCS and Patient
Focus, and in coordinating the production of
fraudulent IME and peer review reports. The
pleadings and exhibits attached thereto also
identify specific IME and peer review reports
bearing the names of the Doctor Defendants,
which plaintiff alleges are fraudulent. These
well-pleaded allegations that each of the
Manager Defendants and Doctor Defendants
violated § 1962(c) also support an inference
of an agreement to join a RICO conspiracy.
See City of New York v. Chavez, No. 11-CV2691 (BSJ), 2012 WL 1022283, at *8
(S.D.N.Y. Mar. 26, 2012) (“Thus, to the
extent the Complaint adequately alleges that
the Chavez defendants have committed
CCTA violations in furtherance of the CD2U
enterprise, it also alleges facts supporting an
inference of an agreement to join the RICO
conspiracy.” (citing United States v.
O’Mally, 796 F.2d 891, 399 (7th Cir. 1986)
(“When a defendant has personally
committed several acts of racketeering in
furtherance of the enterprise’s affairs, the
inference of an agreement [to join the

*

*

*

In sum, plaintiff has adequately alleged
that all moving defendants who are included
as RICO defendants violated 18 U.S.C.
§§ 1962(c) and 1962(d).
2. Injury
“‘A RICO plaintiff ‘only has standing if,
and can only recover to the extent that, he has
been injured in his business or property by the
conduct
constituting
the
[RICO]
violation[,]’’ and only when his or her ‘actual
loss becomes clear and definite.’” Denney v.
Deutsche Bank AG, 443 F.3d 253, 266 (2d
Cir. 2006) (quoting First Nationwide Bank,
27 F.3d at 767–69 (quoting Sedima, 473 U.S.
at 496)); see also Motorola Credit Corp. v.
Uzan, 322 F.3d 130, 135 (2d Cir. 2003)
(where amount of damages was not “clear
and definite,” holding that “Plaintiffs lack
statutory standing under RICO because their
claims are unripe”). Under this rule, a claim
will be dismissed for lack of statutory
standing “where the extent of damages are
still unknown, [and therefore] a RICO injury
remains speculative and unprovable.” DLJ
Mortg. Capital, 726 F. Supp. 2d at 237
(internal citations and quotation marks
omitted). “That is because RICO damages are
netted against recovery obtained by collateral
and other sources. . . .” Uzan, 322 F.3d at
135. In essence, therefore, “statutory
standing under RICO incorporates an

18

enhanced ripeness requirement.” DLJ Mortg.
Capital, 726 F. Supp. 2d at 237.

and arbitration proceedings that plaintiff is
not entitled to reimbursement for its claims.

Defendants contend that plaintiff’s
claims do not satisfy RICO’s ripeness
requirement. As noted supra, when a no-fault
insurer denies a claim for benefits, the
claimant has two options to obtain relief: (1)
file suit against the insurer in New York Civil
Court, or (2) submit the dispute to arbitration.
Here, by plaintiff’s own admission, plaintiff
is currently litigating in state court or
arbitration at least some of the no-fault claims
that form the basis for the present action.
Before filing the amended complaint, in a
conference before Magistrate Judge Boyle,
counsel for plaintiff confirmed that many of
the no-fault claim denials underlying its
RICO claims were “open claims,” meaning
their validity was currently being litigated in
state court or arbitration. (See ECF No. 215;
Zwerling Decl., Oct. 23, 2013, Ex. 9, at 42–
44.) Plaintiff’s counsel informed Magistrate
Judge Boyle that it would not be difficult to
provide the Court with a spreadsheet showing
the status of each no-fault claim (i.e., whether
plaintiff sought to litigate the claim in state
court or arbitration, and whether that claim is
still pending). (See id.) However, plaintiff
filed no such spreadsheet, and the amended
complaint does not indicate how many of
plaintiff’s no-fault claims underlying the
RICO causes of action are currently pending
in other fora. At oral argument on February
20, 2014, plaintiff’s counsel again confirmed
that some portion of the no-fault claim
denials are being litigated in state court or
arbitration. Thus, of all the no-fault claims
that plaintiff asserts were wrongfully denied
as a result of defendants’ alleged fraudulent
scheme, at least some are being litigated in
state court or arbitration. In other words, the
extent of the injury plaintiffs have alleged—
wrongful denial of their insurance claims—is
contingent upon determinations in state court

Plaintiff does not dispute the fact that
some portion of its alleged RICO injury is
contingent upon the results of pending
litigation in state court and arbitration
proceedings. Nonetheless, plaintiff contends
that the line of cases dismissing RICO claims
on ripeness grounds “is limited to the context
of secured lenders pursuing nonpaying
debtors.” (Pl.’s Opp’n to SCS’s Mot. at 3.)
The Court disagrees. Although many of the
cases in this area do concern secured
creditors bringing a RICO claim against a
debtor before attempting to collect on the
debt at issue, the “clear and definite”
principle is not so limited. See, e.g., Am. Med.
Ass’n v. United Healthcare Corp., 588 F.
Supp. 2d 432, 441 (S.D.N.Y. 2008) (“If the
Second Circuit intended for its decisions in
this line to be interpreted so narrowly, it
would have explicitly said so in at least one
of the cases within the line of prevailing case
law. Plaintiffs’ argument that the doctrine is
only applicable in instances of third party
debt lacks the requisite foundation.”); see
also Denney, 443 F.3d at 266 (in class action
against professional advisors for improper
and fraudulent tax counseling, holding that
some class members failed to meet the clear
and definite damages element of civil RICO
because some members had not yet been
assessed a tax penalty); DeSilva v. N. ShoreLong Island Jewish Health Sys., Inc., 770 F.
Supp. 2d 497, 521 (E.D.N.Y. 2011) (where
plaintiffs claimed that defendant-hospital’s
fraud had prevented them from bringing
timely claims for unpaid wages, RICO claim
was unripe because plaintiffs had not yet
attempted to sue for unpaid wages, and thus
“the injury alleged was contingent upon
uncertain
litigation-related
events”).
Moreover, the rationale for the ripeness
requirement—that a RICO injury is
speculative where the net amount of a

19

plaintiff’s damages is subject to change—
applies with full force to cases where the
RICO damages depend on the results of
pending litigation or arbitration proceedings.

F. App’x 711, 713 (2d Cir. 2009) (summary
order) (“Appellants argue that Uzan is
limited to cases where a plaintiff has failed to
exhaust its contractual remedies, but Uzan’s
reasoning broadly extends to non-contractual
remedies as well.”). As a consequence of the
pending litigation in Uzan, the Second
Circuit ordered dismissal “without prejudice
to reassertion at some appropriate later time.”
Uzan, 322 F.3d at 136–37.9

The Second Circuit’s decision in Uzan
illustrates the principle’s application to the
present case. There, the plaintiffs had entered
into financing agreements with a Turkish
telecommunications company (Telsim), and,
following several non-payments, the
plaintiffs initiated arbitration proceedings
against Telsim in Switzerland. See 322 F.3d
at 132. Plaintiffs also filed a RICO claim
against individuals alleged to have impaired
the collateral for the financing agreements.
See id. The Second Circuit held that
plaintiff’s RICO claim should have been
dismissed because the plaintiffs had not yet
foreclosed on the loans at issue, and because
there were arbitration proceedings pending
that concerned the same underlying
transactions. See id. at 136. The Second
Circuit recognized that “the RICO damages
sought are in respect of a loss that would be
abated to the extent that: Plaintiffs realize
value on the collateral; Plaintiffs recover in
the Swiss arbitrations; or the size of the debt
on the underlying contracts, or the obligation
to pay it, is affected by any ruling on Telsim’s
defenses in the Swiss arbitration that is
binding and enforceable.” Id. (emphasis
added). In other words, separate and apart
from the issue of plaintiff’s status as a
secured creditor, Uzan holds that a plaintiff’s
damages are not “clear and definite” so long
as that plaintiff’s damages could be mitigated
or abated in pending litigation. See
Harbinger Capital Partners Master Fund I,
Ltd. v. Wachovia Capital Markets, LLC, 347

Likewise, in this case, plaintiff’s damages
are not “clear and definite” for so long as
some of the no-fault claims that form the
basis of plaintiff’s RICO causes of action are
still being litigated in state court or
arbitration. Plaintiff could prevail on some or
all of those claims, which would reduce the
amount that plaintiff could recover under
RICO. Accordingly, at this juncture, all of
plaintiff’s RICO causes of action must be
dismissed without prejudice. See, e.g.,
Harbinger Capital Partners Master Fund I,
347 F. App’x at 713 (affirming dismissal of
RICO claim on basis that bankruptcy
proceedings were still pending, and,
therefore, the Second Circuit could not
determine whether those proceedings would
mitigate any of plaintiff’s damages); DLJ
Mortg. Capital, 726 F. Supp. 2d at 239
(dismissing RICO claim where “the amended
complaint itself demonstrates that DLJ is
already pursuing other contractual and legal
remedies to recover damages arising out of
the fraudulent transactions”); DeSilva, 770 F.
Supp. 2d at 521 (holding that RICO claim
was unripe where injury was premised on
“hypothetical inability to recover” from
defendant).10

9

Additionally, in Uzan, it was irrelevant to the Second
Circuit that the borrower (Telsim) was not a party to
the RICO action. See 322 F.3d at 136. Accordingly, in
this case, as well, it does not matter that the pending
state court litigation and arbitration proceedings
involve plaintiff and insurance companies, even

though the insurance companies are not parties to this
action.
10
Plaintiff’s reliance on Brown v. Cassens
Transportation Co., 675 F.3d 946 (6th Cir. 2012), and
Jackson v. Segwick Claims Management Services,

20

The Lyons decision, upon which plaintiff
relies, is not to the contrary. In Lyons, the
plaintiff sought to recover damages based on
the defendants’ allegedly fraudulent claims
for no-fault insurance benefits. 843 F. Supp.
at 374. On the issue of RICO injury, the
defendants argued that the plaintiff had not
sustained clear and definite damages because
the plaintiff could recover money “through
state lawsuits for fraud, which would mitigate
any injury suffered.” Id. The court rejected
this argument and held that the plaintiff’s
damages were sufficiently clear and definite.
Id. Critically, unlike this case, Lyons
concerned allegedly fraudulent claims for nofault benefits that the plaintiff-insurance
company
had
already
paid,
and,
consequently, no state court litigation or
arbitration proceedings concerning those
claims could have been pending. See id. at
365–66. At most, therefore, Lyons holds that
a plaintiff need not exhaust all possible

remedies in state court before bringing a
RICO suit. However, Lyons says nothing
about the situation in the instant case, where
there is pending litigation in a different
judicial forum that could reduce or eliminate
the plaintiff’s alleged RICO injury. Contrary
to plaintiff’s suggestion, therefore, this
Court’s holding does not mean that a plaintiff
must commence a state court action or
arbitration proceeding for each and every nofault claim denial before commencing a
RICO suit.

Inc., 699 F.3d 466 (6th Cir. 2012) [hereinafter Jackson
I], is unpersuasive for two reasons. First, the Sixth
Circuit reheard the Jackson case en banc—thereby
vacating Jackson I—and overruled Brown in the same
opinion. See Jackson v. Segwick Claims Mgmt. Servs.,
Inc., 731 F.3d 556, 558–59 (6th Cir. 2013) (en banc).
Second, and more importantly, to the extent plaintiff
contends that Brown and Jackson I support its
argument on the issue of ripeness, the Jackson I
decision explicitly acknowledged that the Sixth
Circuit’s approach is fundamentally at odds with the
Second Circuit’s approach. See 699 F.3d at 478 (“We
acknowledge that one of our sister circuits currently
disagrees with this approach. The Second Circuit has
adopted a rule that RICO claims are not ripe until the
amount of damages becomes clear and definite.”
(internal quotation marks omitted)). Of course, this
Court is bound to follow binding precedent of the
Second Circuit.

ripeness requirement: “(1) whether an issue is fit for
judicial decision and (2) whether and to what extent
the parties will endure hardship if decision is
withheld”). RICO ripeness, which derives from the
RICO statute itself, “is a more rigorous matter than
standing under Article III,” Denney, 443 F.3d at 266,
and is certainly a more rigorous matter than prudential
ripeness. Thus, while the prudential ripeness factors
may lead a court to decline to hear an otherwise ripe
dispute, the prudential ripeness factors may not be
used to hold that a RICO claim is ripe for review even
though the claim fails the statutory ripeness
requirement.
11
The Court also rejects plaintiff’s argument that,
even if its RICO claims to recover the amount of
wrongfully denied no-fault claims is unripe, plaintiff’s
RICO claims are ripe to the extent plaintiff seeks to
recover attorneys’ fees and costs incurred by litigating
these claims in state court and arbitration. (See Pl.’s
Opp’n to SCS’s Mot. at 9–10); cf. Stochastic
Decisions, Inc. v. DiDomenico, 995 F.2d 1158, 1166
(2d Cir. 1993) (recognizing that “legal fees may
constitute RICO damages when they are proximately
caused by a RICO violation”). Even assuming
arguendo that plaintiff could divide its RICO damages
in this way to avoid dismissal, the Court determines
that the amount of these RICO damages also depends

Accordingly, the Court grants the moving
defendants’ motions to dismiss all RICO
claims based on plaintiff’s failure to allege a
clear and definite RICO injury. As noted
infra, dismissal is without prejudice to
plaintiff filing a second amended complaint
or commencing a new action when its
damages become clear and definite.11

In addition, plaintiff’s attempt to import the Second
Circuit’s prudential ripeness doctrine into the RICO
ripeness requirement misses the mark. (See Pl.’s
Opp’n to SCS’s Mot. at 6–8); cf. Simmonds v.
Immigration & Naturalization Serv., 326 F.3d 351,
359 (2d Cir. 2003) (setting forth the following factors
for a court to consider in deciding whether a case is
unripe for review even though it satisfies Article III’s

21

553 U.S. 639, 658 (2008) (“Of course, none
of this is to say that a RICO plaintiff who
alleges injury ‘by reason of’ a pattern of mail
fraud can prevail without showing that
someone relied on the defendant’s
misrepresentations.”) (emphasis in original));
see, e.g., UFCW Local 1776, 620 F.3d at 132.

3. Causation
As to the causation element, a plaintiff
must allege that the defendant’s alleged
RICO violation was both the “but-for” and
proximate cause of his injury. E.g. Hemi
Grp., LLC v. City of New York, 559 U.S. 1, 9
(2010); Holmes v. Sec. Investor Prot. Corp.,
503 U.S. 258, 266 (1992); UFCW Local 1776
v. Eli Lilly & Co., 620 F.3d 121, 132 (2d Cir.
2010); First Nationwide Bank, 27 F.3d at
769. “Central to the notion of proximate
cause is the idea that a person is not liable to
all those who may have been injured by his
conduct, but only to those with respect to
whom his acts were ‘a substantial factor in
the sequence of responsible causation,’ and
whose injury was ‘reasonably foreseeable or
anticipated as a natural consequence.’” First
Nationwide Bank, 27 F.3d at 769 (quoting
Hecht, 897 F.2d at 23–24). As the Supreme
Court has explained, “proximate cause . . .
requires ‘some direct relation between the
injury asserted and the injurious conduct
alleged.’ A link that is ‘too remote,’ ‘purely
contingent,’ or ‘indirec[t]’ is insufficient.”
Hemi Grp., 559 U.S. at 9 (quoting Holmes,
503 U.S. at 268, 271, 274). Moreover, “where
mail fraud is the predicate act for a civil
RICO claim, the proximate cause element
articulated in Holmes requires the plaintiff to
show ‘reasonable reliance.’” Bank of China,
N.Y. Branch v. NBM LLC, 359 F.3d 171, 176
(2d Cir. 2004). “The Supreme Court has held
that a plaintiff alleging a RICO violation need
not demonstrate first person reliance to
establish causation, but proof of at least thirdparty reliance is required.” Envtl. Servs., Inc.
v. Recycle Green Servs., Inc., --- F. Supp. 2d
----, No. 13-CV-4568 (ADS) (WDW), 2014
WL 1259959, at *9 (E.D.N.Y. Mar. 25, 2014)
(citing Bridge v. Phoenix Bond & Indem. Co.,

In the instant case, the moving defendants
argue that plaintiff has failed to allege
causation for two reasons: (1) plaintiff
alleges that almost all IME and peer review
reports created by defendants concluded that
the medical service at issue was unnecessary
(see Am. Compl. ¶ 98 (“The peer review
reports issued by Defendants almost
universally find every service and supply in
question to lack medical necessity . . . .”));
and (2) non-party insurance companies, not
defendants, ultimately decided to deny
plaintiff’s claims for no-fault benefits.
The Court concludes that plaintiff has
sufficiently alleged but-for and proximate
causation with respect to all moving
defendants. On the first issue, plaintiff
concedes that it may base its RICO claims
only on the IME and peer review reports that
recommended the denial of plaintiff’s nofault claims. (See Pl.’s Opp’n to SCS’s Mot.
at 30.) However, the causal relationship
between those reports and plaintiff’s injury is
not undermined by the existence of other
reports recommending the grant of certain
no-fault claims. As to the second issue,
defendants are not immune from RICO
liability simply because non-party insurance
companies, and not defendants, denied
plaintiff’s no-fault claims. Plaintiff has
alleged specifically that insurance companies
relied upon the allegedly fraudulent IME and
peer review reports in denying plaintiff’s

upon whether plaintiff is successful in the pending
state court actions and arbitration proceedings. If
plaintiff prevails in any of those actions, it may be
entitled to recover certain fees and costs. See N.Y. Ins.

Law § 5106; N.Y. Comp. Codes R. & Regs. tit. 11,
§ 65-4.6. Accordingly, the amount of these RICO
damages are not yet clear and definite.

22

claims. (See Am. Compl. ¶ 101 (“Plaintiff’s
claims for reimbursement were denied based
upon the fraudulent reports.”).) Indeed,
plaintiff asserts that the insurance companies
could not have denied plaintiff’s claims for
lack of medical necessity unless an IME or
peer review report supported such a
conclusion. (Id. ¶ 66); see Healing Hands
Chiropractic, 787 N.Y.S.2d at 647 (“A denial
premised on a lack of medical necessity must
be supported by competent evidence such as
an independent medical examination, a peer
review or other proof which sets forth a
factual basis and a medical rationale for
denying the claim.”). Moreover, plaintiff
alleges that the insurance companies’ denial
of claim forms “clearly state on their face that
the denials were issued as a result of the peer
review and IME reports” prepared by
defendants. (Id. ¶ 131.) Finally, plaintiff
alleges that the reports themselves “go so far
as to recommend that the insurance carriers
do not pay Plaintiff for the bills that were
submitted.” (Id. ¶ 132; see, e.g., Am. RICO
Statement Ex. 5, at 4–5 (recommending that
insurance company “[d]isallow” claims).) In
short, plaintiff has sufficiently alleged that
defendants’ alleged conduct was, at the very
least, a “substantial factor” in the insurance
companies’ decisions to deny plaintiff’s nofault claims, and that this result was
“reasonably foreseeable” by all defendants
involved in the production of IME and peer
review reports for plaintiff’s claims.12

jurisdiction over the declaratory judgment
and state law claims. The Court agrees.

IV. OTHER CLAIMS

Therefore, in the instant case, the Court,
in its discretion, declines to exercise
supplemental jurisdiction over any remaining
declaratory judgment or state law claims
because “it ‘has dismissed all claims over
which it has original jurisdiction.’” Kolari v.
N.Y.-Presbyterian Hosp., 455 F.3d 118, 122

Having determined that plaintiff’s federal
claims do not survive defendants’ motions to
dismiss, the Court concludes that retaining
jurisdiction over any declaratory judgment
claim or state law claims is unwarranted. See
28 U.S.C. § 1367(c)(3); United Mine
Workers of Am. v. Gibbs, 383 U.S. 715, 726
(1966); see also Uzan, 322 F.3d at 137 (after
holding that RICO claims should have been
dismissed for lack of standing, remanding the
case to the district court to decide whether to
retain supplemental jurisdiction over state
law claims pursuant to 28 U.S.C. § 1367(c));
Young-Wolff v. McGraw-Hill Cos., No. 13CV-4372 (KMW) (JCF), 2014 WL 349711,
at *7–8 (S.D.N.Y. Jan. 31, 2014) (holding
that, upon dismissal of all federal claims, a
court must dismiss a declaratory judgment
claim unless the court has diversity or
supplemental jurisdiction over such claim).
“In the interest of comity, the Second Circuit
instructs
that
‘absent
exceptional
circumstances,’ where federal claims can be
disposed of pursuant to Rule 12(b)(6) or
summary judgment grounds, courts should
‘abstain
from
exercising
pendent
jurisdiction.’” Birch v. Pioneer Credit
Recovery, Inc., No. 06-CV-6497T, 2007 WL
1703914, at *5 (W.D.N.Y. June 8, 2007)
(quoting Walker v. Time Life Films, Inc., 784
F.2d 44, 53 (2d Cir. 1986)).

Plaintiff also seeks a declaratory
judgment and asserts several causes of action
under New York law. Defendants argue that,
upon dismissal of the RICO claims, the Court
should decline to exercise supplemental

plaintiff’s alleged injury. (See Cohen’s Letter-Mot.)
The Court cannot resolve this factual issue on a motion
to dismiss. Instead, Cohen’s argument is better left to
a motion for summary judgment.

12

In his letter-motion to dismiss, defendant Cohen
contends that he never produced a single IME or peer
review report related to one of plaintiff’s no-fault
claims and, therefore, that he could not have caused

23

(2d Cir. 2006) (quoting 28 U.S.C.
§ 1367(c)(3)); see also Cave v. E. Meadow
Union Free Sch. Dist., 514 F.3d 240, 250 (2d
Cir. 2008) (“We have already found that the
district court lacks subject matter jurisdiction
over appellants’ federal claims. It would thus
be clearly inappropriate for the district court
to retain jurisdiction over the state law claims
when there is no basis for supplemental
jurisdiction.”); Karmel v. Claiborne, Inc.,
No. 99-CV-3608 (WK), 2002 WL 1561126,
at *4 (S.D.N.Y. July 15, 2002) (“Where a
court is reluctant to exercise supplemental
jurisdiction because of one of the reasons put
forth by § 1367(c), or when the interests of
judicial economy, convenience, comity and
fairness to litigants are not violated by
refusing to entertain matters of state law, it
should decline supplemental jurisdiction and
allow the plaintiff to decide whether or not to
pursue the matter in state court.”).

fail to state a claim. Ho Myung Moolsan Co.,
Ltd. v. Manitou Mineral Water, Inc., 665 F.
Supp. 2d 239, 250 (S.D.N.Y. 2009); see, e.g.,
Ashmore v. Prus, 510 F. App’x 47, 49 (2d
Cir. 2013) (summary order) (holding that
denial of leave to amend was proper where
barriers to relief for se plaintiff “cannot be
surmounted by reframing the complaint”).
Under this liberal standard, the Court
grants plaintiff’s request to amend its RICO
claims. First, although the Court has given
plaintiff leave to amend its complaint once
before, the Court did so only so that
plaintiff’s complaint would match its
amended RICO statement; the Court had not
identified any defects in plaintiff’s pleadings
at that time. Second, plaintiff’s counsel has
informed the Court that plaintiff could easily
address its failure to plead clear and definite
damages by submitting with an amended
complaint a list of all no-fault claims
underlying plaintiff’s RICO claims.
Moreover, for the reasons discussed supra,
plaintiff’s RICO claims are otherwise wellpleaded. Third, the Court cannot identify any
prejudice to defendants by affording plaintiff
the opportunity to amend. Whether plaintiff
amends its complaint or not, dismissal of the
RICO claims would be without prejudice.
See, e.g., Uzan, 322 F.3d at 136–37
(dismissing RICO claims without prejudice
to plaintiff bringing new action when its
damages become clear and definite).
Accordingly, the Court cannot conceive of
any meaningful difference to defendants
between plaintiff reasserting its RICO claims
in an amended complaint, or doing so in a
new action. Accordingly, the Court grants
plaintiff’s request to amend its RICO claims
against all defendants. See, e.g., Oliver Sch.,
Inc. v. Foley, 930 F.2d 248, 253 (2d Cir.
1991) (“Where the possibility exists that the
defect can be cured and there is no prejudice
to the defendant, leave to amend at least once
should normally be granted as a matter of
course.”).

Accordingly, pursuant to 28 U.S.C.
§ 1367(c)(3), the Court declines to retain
jurisdiction over plaintiff’s remaining
declaratory judgment and state law claims,
and dismisses such claims without prejudice.
V. LEAVE TO AMEND
Finally, the Court considers plaintiff’s
request for leave to file a second amended
complaint. For the following reasons, the
Court grants this request.
“When a party requests leave to amend
his complaint, permission generally should
be freely granted.” Grullon v. City of New
Haven, 720 F.3d 133, 139 (2d Cir. 2013); see
Fed. R. Civ. P. 15(a)(2) (“The court should
freely give leave [to amend] when justice so
requires.”). Nonetheless, “[a] district court
has discretion to deny leave for good reason,
including futility.” See McCarthy v. Dun &
Bradstreet Corp., 482 F.3d 184, 200 (2d Cir.
2007). Leave to amend is futile if the
amended complaint is meritless and would

24

Plaintiff shall file the second amended
complaint no later than thirty days from the
date of this Memorandum and Order. If
plaintiff does not file a second amended
complaint by that date, then the Court will
assume that plaintiff has elected to bring a
new action at some future date when its
damages become clear and definite. At that
time, if no amended complaint is filed, the
Court will order the Clerk of the Court to
close the case and enter a judgment of
dismissal, without prejudice.

Plaintiff is represented by Gary
Tsirelman, Stefan Belinfanti, Daniel Joseph
Grace, Nicholas Paul Bowers, and Sarah A.
Adam, Gary Tsirelman, P.C., 129 Livingston
Street, Brooklyn, NY 11201. Defendants
SCS, Brittis, Cole, Dagan, Ehrlich, Ferrante,
Kritzberg, Mann, Sohn, Sukhov, Weber,
Weisman, and Westerband are represented
by Andrew Leslie Zwerling and Justin M.
Vogel, Garfunkel Wild P.C., 111 Great Neck
Road, Suite 503, Great Neck, NY 11021.
Defendants Patient Focus, Sharahy, and
Vakhidova are represented by Glenn Michael
Jones, Offit Kurman, 4800 Montgomery
Lane, 9th Floor, Bethesda, MD 20814.
Defendants Nationwide, B. Osiashvili, M.
Osiashvili, S. Osiashvili, and Vayner are
represented by David S. Douglas, Gallet
Dreyer & Berkey LLP, 845 Third Avenue,
8th Floor, New York, NY 10022. Defendants
D. Martins and Kerness are represented by E.
Christopher Murray, Ruskin Moscou
Faltischek, P.C., East Tower, 15th Floor,
1425 RXR Plaza, Uniondale, NY 11556.
Defendant S. Ross is represented by Peter S.
Gordon, Gordon & Gordon, PC, 108-18
Queens Boulevard, 6th Floor, Forest Hills,
NY 11375. Defendant Cohen proceeds pro
se.

VI. CONCLUSION
For the reasons set forth herein, the Court
grants all moving defendants’ motions to
dismiss the RICO claims against them,
without prejudice. Because the Court has
dismissed all federal claims in this action, the
Court declines at this juncture to exercise
supplemental jurisdiction over the remaining
declaratory judgment and state law claims,
and those claims are dismissed without
prejudice. Finally, the Court grants plaintiff’s
request for leave to amend its RICO claims.
Plaintiff shall file a second amended
complaint no later than thirty days from the
date of this Memorandum and Order. If
plaintiff does not do so, then the Court will
order the Clerk of the Court to close this case
and enter a judgment for all defendants that is
consistent with this Memorandum and Order.
SO ORDERED.

_______________________
JOSEPH F. BIANCO
United States District Judge
Dated: May 7, 2014
Central Islip, NY
*

*

*

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