GOVERNMENT EMPLOYEES INSURANCE CO. v. POMERANTZ

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW JERSEY

GOVERNMENT EMPLOYEES

INSURANCE CO., GEICO INDEMNITY

CO., GEICO GENERAL INSURANCE

COMPANY and GEICO CASUALTY

CO.,

Plaintiffs,

Civ. No. 20-18532 (KM) (JBC)

vs.

OPINION

STELTON RADIOLOGY

CORPORATION, DMITRIY STOLYAR,

OLGA GALKINA, RAPID IMAGING

CORP., DYNAMIC MEDICAL

IMAGING LLC, STEVEN P.

BROWNSTEIN, M.D., EAST

BRUNSWICK IMAGING CENTER,

LLC, ROMAN SHAPOSHNIKOV, and

SOUTH PLAINFIELD RADIOLOGY

CORPORATION,

Defendants.

KEVIN MCNULTY, U.S.D.J.:

Government Employees Insurance Co., GEICO Indemnity Co., GEICO

General Insurance Company, and GEICO Casualty Co. (collectively, “GEICO”),

are automotive insurers. GEICO alleges that defendants, who are medical

facilities and their owners, submitted or caused to be submitted thousands of

fraudulent claims for reimbursement of medical expenses. GEICO seeks to

recover more than $5,900,000.00 that it paid to defendants. The amended

complaint contains twenty-two Counts, including unjust enrichment, common

law fraud, violations of the Racketeer Influenced and Corrupt Organizations Act

(“RICO”), and violations of the New Jersey Insurance Fraud Prevention Act

(“NJIFPA”). Defendants Dynamic Medical Imaging LLC and Steven P.

Brownstein (collectively the “Dynamic defendants”) now move to dismiss the

counts pleaded against them for failure to state a claim, under Rule 12(b)(6).

(DE 71.) Defendants Stelton Radiology Corporation, Dmitriy Stolyar, Olga

Galkina, Rapid Imaging Corp., East Brunswick Imaging Center, LLC, Roman

Shaposhnikov, and South Plainfield Radiology Corporation (collectively the

“Stelton defendants”) move to compel arbitration and in the alternative dismiss

the Counts pleaded against them under Rule 12(b)(6). (DE 77.) For the reasons

set forth below, both motions are GRANTED in part and DENIED in part.

I. BACKGROUND1

The allegations of the amended complaint are as follows: GEICO is an

automotive insurer which has sued defendants to recover amounts GEICO paid

on fraudulent “no-fault,” “personal injury protection” (“PIP”) claims. Those

claims were primarily for MRIs that are alleged to have been medically

unnecessary or otherwise un-reimbursable. (Am. Compl. ¶ 1, 7.) The

defendants are a set of New Jersey radiology facilities and their owners. (Id. ¶

8–18.) No longer included as a defendant is Allen Pomerantz, who performed

most of the allegedly fraudulent MRIs at the various radiology facilities and

served as the medical director at Stelton Radiology, Rapid Imaging, and South

Plainfield Radiology. (Id. ¶ 19–20.)

In short, GEICO alleges that thousands of insured drivers from New York

and New Jersey who suffered at worst minor soft tissue injuries in minor

automobile crashes were referred to defendants’ businesses and given

1 Certain key items from the record will be abbreviated as follows:

DE = Docket entry number in this case

Am. Compl. = GEICO’s Amended Complaint (DE 65)

Dynamic Br. = Dynamic defendants’ brief in support of their motion to

dismiss (DE 71-4)

Stelton Br. = Stelton Defendants’ brief in support of their motion to

dismiss and compel arbitration (DE 77-1)

medically unnecessary MRIs.2 (Id. ¶ 61–66.) Under New York and New Jersey

law, automobile insurance policies provide benefits for personal injuries

sustained in an accident involving the covered automobile, regardless of

whether the driver was at fault for the accident. (Id. ¶ 31–32, 49–51.) This

coverage is called “personal injury protection,” or “PIP.” (Id.) When insureds

receive treatment, they can assign their right to PIP benefits to their medical

providers, who can then seek direct reimbursement from insurance companies.

(Id. ¶ 32, 51.) Defendants are such medical providers, i.e., assignees of their

patients’ PIP benefits.

GEICO alleges that its payments to defendants were fraudulently

obtained for several reasons. The core allegation is that defendants billed for

and exaggerated the results of medically unnecessary MRIs that were provided

based on pre-determined protocols to generate profits for the defendants.

GEICO also alleges that the treatments did not qualify for PIP reimbursement

for other reasons, including that Pomerantz was an independent contractor not

an employee (id. ¶ 129), and that Stelton Radiology, Rapid Imaging and South

Plainfield Radiology operated without legitimate medical directors (id. ¶ 138–

140).

GEICO’s insurance policies with its insureds include a “GEICO Decision

Point Review Plan and Precertification Requirements” (“DPRP”). (DE 77-3, Ex.

1.) The DPRP allows the assignment of benefits from insureds to medical

providers but requires the providers to submit disputes to Alternative Dispute

Resolution after an internal appeal process. (Id. at 9.) The section of the DPRP

titled “Dispute Resolution” states in full:

If there is a dispute as to any issue arising under this

Decision Point Review/Precertification Plan, or in connection with

any claim for Personal Injury Protection benefits, a request for the

resolution of that dispute may be made by the Insured/Eligible

Injured Person, GEICO, or a treating health care provider who has

2 Patients have to be referred by a doctor to receive an MRI at the facilities. No

kickback scheme is alleged, however, and the possibility of such a scheme is

discussed only in the most general terms. (Am. Compl. ¶ 72–75.)

a valid Assignment of Benefits from the Insured or Insured/Eligible

Injured Person. The request for dispute resolution may also

include a request by any of these parties for review by a Medical

Review Organization.

If we, GEICO, and/or any person seeking Personal Injury

Protection benefits, do not agree as to the recovery of such

benefits, or with any decision made or arising pursuant to this

Decision Point Review/Precertification Plan, then the matter is

required and can only be resolved by a dispute resolution

organization pursuant to New Jersey law rather than in the Superior

Court of New Jersey. A health care provider is required to have

fully complied with all aspects of this Decision Point

Review/Precertification Plan, including but not limited to having

fully complied with the Internal Appeal Process, prior to filing any

claim or action in dispute resolution.

(Id. at 10 (emphasis added).) In addition, GEICO provides a standard form that

allows its insureds to assign their benefits to providers in exchange for medical

services. That form requires that the provider agree to “submit disputes as

defined in the Plan to the Internal Dispute Resolution process set forth

therein.” “After final determination,” it continues, “I (we) will submit disputes

not resolved by the Inter[n]al Dispute Resolution process to the Personal Injury

Protection dispute resolution process set forth in N.J.A.C. 11:3-5.” (Id. at 13.)

Thus, GEICO policy requires medical providers who were assigned benefits to

send all disputes “in connection with any claim for Personal Injury Protection

benefits” to GEICO’s internal dispute resolution process and then to

arbitration, not to court. (Id. at 10.)

GEICO seeks to recover more than $5.9 million in reimbursements that it

paid in reliance on defendants’ allegedly fraudulent billing. (Id. ¶ 160.) GEICO’s

amended complaint asserts twenty-two causes of action. Count 1 seeks a

declaratory judgment against the radiology facilities that GEICO does not have

to pay outstanding PIP claims and that during the time period at issue the

facilities did not comply with the law. (Id. ¶ 162–168.) Counts 2, 7, 11, 15, and

19 allege violations of the New Jersey Insurance Fraud Prevention Act

(“NJIFPA”), N.J. Stat. Ann. §17:33A–1 et seq., against each radiology facility

and its owner(s). (Id. ¶ 169–172, 201–204, 225–228, 249–252, 273–276.)

Counts 3, 8, 12, 16, and 20 allege civil violations of RICO, 18 U.S.C. § 1962(c),

based on predicate racketeering acts of mail fraud. (Id. ¶ 173–180, 205–212,

229–236, 253–260, 277, 284.) Count 4 alleges conspiracy to violate RICO, 18

U.S.C. § 1962(d), against Stolyar and Galkina. (Id. ¶ 181–188.) Counts 5, 9, 13,

17 and 21 allege common law fraud against each facility and its owner(s). (Id. ¶

189–194, 213–218, 237–242, 261–266, 285–290.) Finally, Counts 6, 10, 14,

18, and 22 allege unjust enrichment against each facility and its owner(s). (Id.

¶ 195–200, 219–224, 243–248, 267–272, 291–296.)

This case was first filed on October 2, 2020, in the United States District

Court for the Eastern District of New York. (DE 1.) In December 2020, plaintiffs

consented to transfer the case to this district. (DE 27.) On January 26, 2021,

the Stelton defendants moved to compel arbitration and dismiss the complaint.

(DE 31.) On May 28, 2021, GEICO dismissed its claims against Pomerantz. (DE

45.) On July 15, 2021, GEICO moved to amend its complaint (DE 50) and

Judge James B. Clark granted that motion on August 30, 2021 (DE 61). GEICO

filed its amended complaint on September 8, 2021. (DE 65.) The Dynamic

defendants moved to dismiss the Counts pleaded against them, i.e., Counts 1,

11, 12, 13, and 14, on September 22, 2021. (DE 71.) The Stelton defendants

moved to dismiss and compel arbitration on Counts 1, 2, 3, 4, 5, 6, 7, 8, 9, 10,

15, 16, 17, 18, 19, 20, 21, and 22, i.e. all of the Counts pleaded against the

Stelton defendants, on October 6, 2021. (DE 77.) GEICO filed briefs in

opposition to the two motions (DE 75, 80) and defendants filed replies (DE 78,

84). These motions are now fully briefed and ripe for decision.

II. LEGAL STANDARDS

A. Rule 12(b)(6)

Federal Rule of Civil Procedure 12(b)(6) provides for the dismissal of a

complaint, in whole or in part, if it fails to state a claim upon which relief can

be granted. The defendant, as the moving party, bears the burden of showing

that no claim has been stated. Animal Sci. Prods., Inc. v. China Minmetals Corp.,

654 F.3d 462, 469 n.9 (3d Cir. 2011). For the purposes of a motion to dismiss,

the facts alleged in the complaint are accepted as true and all reasonable

inferences are drawn in favor of the plaintiff. New Jersey Carpenters & the Trs.

Thereof v. Tishman Constr. Corp. of New Jersey, 760 F.3d 297, 302 (3d Cir.

2014).

Federal Rule of Procedure 8(a) does not require that a complaint contain

detailed factual allegations. Nevertheless, “a plaintiff’s obligation to provide the

‘grounds’ of his ‘entitlement to relief’ requires more than labels and

conclusions, and a formulaic recitation of the elements of a cause of action will

not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Thus, the

complaint’s factual allegations must be sufficient to raise a plaintiff’s right to

relief above a speculative level, so that a claim is “plausible on its face.” Id. at

570; see also West Run Student Hous. Assocs., LLC v. Huntington Nat’l Bank,

712 F.3d 165, 169 (3d Cir. 2013). That facial-plausibility standard is met

“when the plaintiff pleads factual content that allows the court to draw the

reasonable inference that the defendant is liable for the misconduct alleged.”

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556).

While “[t]he plausibility standard is not akin to a ‘probability requirement’ ... it

asks for more than a sheer possibility.” Iqbal, 556 U.S. at 678.

B. Rule 9(b)

For claims of fraud, Federal Rule of Civil Procedure 9(b) imposes a

heightened pleading requirement, over and above that of Rule 8(a). Specifically,

it requires that “[i]n alleging fraud or mistake, a party must state with

particularity the circumstances constituting fraud or mistake.” Fed. R. Civ. P.

9(b). “Malice, intent, knowledge, and other conditions of a person’s mind,”

however, “may be alleged generally.” Id. That heightened pleading standard

requires the plaintiff to “state the circumstances of the alleged fraud with

sufficient particularity to place the defendant on notice of the precise

misconduct with which it is charged.” Frederico v. Home Depot, 507 F.3d 188,

200 (3d Cir. 2007) (internal quotation and citation omitted).

In general, “[t]o satisfy this heightened standard, the plaintiff must plead

or allege the date, time, and place of the alleged fraud or otherwise inject

precision or some measure of substantiation into a fraud allegation.” Id.

“Plaintiff must also allege who made the misrepresentation to whom and the

general content of the misrepresentation.” Lum v. Bank of Am., 361 F.3d 217,

224 (3d Cir. 2004) (internal citation omitted); see also In re Suprema

Specialties, Inc. Sec. Litig., 438 F.3d 256, 276-77 (3d Cir. 2006) (“Rule 9(b)

requires, at a minimum, that plaintiffs support their allegations of fraud with

all of the essential factual background that would accompany the first

paragraph of any newspaper story—that is, the who, what, when, where and

how of the events at issue.” (internal quotation and citation omitted)).

[Plaintiffs] need not, however, plead the “date, place or time” of the

fraud, so long as they use an “alternative means of injecting

precision and some measure of substantiation into their allegations

of fraud.” The purpose of Rule 9(b) is to provide notice of the “precise

misconduct” with which defendants are charged and to prevent false

or unsubstantiated charges. Courts should, however, apply the rule

with some flexibility and should not require plaintiffs to plead issues

that may have been concealed by the defendants.

Rolo v. City Investing Co. Liquidating Trust, 155 F.3d 644, 658 (3d Cir. 1998)

(quoting Seville Indus. Mach. v. Southmost Mach., 742 F.2d 786, 791 (3d Cir.

1984) and citing Christidis v. First Pa. Mortg. Trust, 717 F.2d 96, 99 (3d Cir.

1983)).

C. Arbitration

“[W]hen it is clear on the face of the complaint that a validly formed and

enforceable arbitration agreement exists and a party’s claim is subject to that

agreement, a district court must compel arbitration under a Rule 12(b)(6)

pleading standard . . . .” MZM Constr. Co. v. N.J. Bldg. Laborers Statewide

Benefit Funds, 974 F.3d 386, 406 (3d Cir. 2020). At this stage, judicial review

is limited to two threshold questions: “(1) Did the parties seeking or resisting

arbitration enter into a valid arbitration agreement? (2) Does the dispute

between those parties fall within the language of the arbitration agreement?”

John Hancock Mut. Life Ins. Co. v. Olick, 151 F.3d 132, 137 (3d Cir.1998); see

also CardioNet, Inc. v. Cigna Health Corp., 751 F.3d 165, 172 (3d Cir. 2014).

Because neither party contests the validity of the Agreement, I assess only

whether the disputes at issue fall within the scope of the Agreement’s

arbitration clause and whether New Jersey law allows such disputes to be

arbitrated.

Unless otherwise agreed, the arbitrability of a dispute is generally a

question for judicial determination. See First Options of Chicago, Inc. v. Kaplan,

514 U.S. 938, 944 (1995). What is more, New Jersey’s Arbitration Act states

that “[t]he court shall decide whether an agreement to arbitrate exists or a

controversy is subject to an agreement to arbitrate.” N.J. Stat. Ann. § 2A:23B-

6(b). No party having contended otherwise, I assume without further analysis

that the Agreement leaves the question of arbitrability to judicial

determination. See Granite Rock Co. v. Int’l Bhd. of Teamsters, 561 U.S. 287

(2010). “When deciding whether the parties agreed to arbitrate a certain matter

(including arbitrability), courts generally ... should apply ordinary state-law

principles that govern the formation of contracts.” Moon v. Breathless Inc., 868

F.3d 209, 212–13 (3d Cir. 2017). Thus, in determining whether the dispute is

arbitrable, I apply the law of this forum: New Jersey contract law. Aliments

Krispy Kernels, Inc. v. Nichols Farms, 851 F.3d 283, 289 (3d Cir. 2017).

III. DISCUSSION

The Stelton defendants’ motion to compel arbitration I grant in part,

concluding that all Counts pleaded against them must be arbitrated, with the

exception of the NJIFPA Counts. Those remaining NJIFPA claims survive the

Stelton defendants’ 12(b)(6) motion and will go forward. The Dynamic

defendants did not move to compel arbitration, but only for dismissal pursuant

to Rule 12(b)(6). That motion is denied. Finally, I conclude that the declaratory

judgment Count brought against the radiology facilities must for the most part

be dismissed, reserving one issue as to New York insureds.

A. Stelton Defendants’ Motion to Compel Arbitration

The Stelton defendants move to compel arbitration of all claims brought

against them. Those claims, they argue, should be arbitrated both under the

New Jersey Automobile Insurance Cost Reduction Act (the “Auto Act”) and

under the arbitration clause contained in GEICO’s insurance policies. (Stelton

Br. at 7–17.) I find that although the Auto Act does not require arbitration, the

arbitration provision of GEICO’s DPRP does.

The Auto Act, N.J. Stat. Ann. § 39:6A-5.1, provides that “[a]ny dispute

regarding the recovery of medical expense benefits or other benefits provided

under personal injury protection coverage … arising out of the operation,

ownership, maintenance or use of an automobile may be submitted to dispute

resolution on the initiative of any party to the dispute, as hereinafter provided.”

N.J. Stat. Ann. § 39:6A-5.1(a). The Act defines the types of disputes for which

arbitration is required:

[D]isputes involving medical expense benefits may include, but not

necessarily be limited to, matters concerning: (1) interpretation of

the insurance contract; (2) whether the treatment or health care

service which is the subject of the dispute resolution proceeding is

in accordance with the provisions of section 4 of P.L.1972, c. 70

(C.39:6A-4), section 4 of P.L.1998, c. 21 (C.39:6A-3.1) or section 45

of P.L.2003, c. 89 (C.39: 6A-3.3) or the terms of the policy; (3) the

eligibility of the treatment or service for compensation; (4) the

eligibility of the provider performing the treatment or service to be

compensated under the terms of the policy or under regulations

promulgated by the commissioner, including whether the person is

licensed or certified to perform such treatment; (5) whether the

disputed medical treatment was actually performed; (6) whether

diagnostic tests performed in connection with the treatment are

those recognized by the commissioner; (7) the necessity or

appropriateness of consultations by other health care providers; (8)

disputes involving application of and adherence to fee schedules

promulgated by the commissioner; and (9) whether the treatment

performed is reasonable, necessary, and compatible with the

protocols provided for pursuant to P.L.1998, c. 21 (C.39:6A-1.1 et

al.).

N.J. Stat. Ann. § 39:6A-5.1(c). This provision was intended to reduce the

number of PIP claims being contested in court. See State Farm Mut. Auto. Ins.

Co. v. Molino, 289 N.J. Super. 406, 410 (App. Div. 1996). For example, if GEICO

asserted that it should not be required to pay a specific claim because it was

medically unnecessary, it would be required to submit such a dispute to

arbitration. The Stelton defendants, however, go farther; they argue that

GEICO’s RICO, common law fraud, unjust enrichment, and NJIFPA claims

must likewise be submitted to arbitration because they are disputes “regarding

the recovery of medical expense benefits or other benefits provided under

personal injury protection coverage.” (Stelton Br. at 10.) Courts, however, have

repeatedly rejected this argument.

In cases such as GEICO v. Reg'l Orthopedic Prof’l Ass’n, courts in this

district have held that RICO and other fraud claims “go beyond” the type of PIP

disputes for which arbitration is mandatory, and can therefore be heard in

court. No. 17-1615(RMB/JS), 2017 U.S. Dist. LEXIS 197599, at *3 (D.N.J. Dec.

1, 2017); see also GEICO v. Adams Chiropractic Ctr. P.C., No. 19-

20633(SDW)(ESK), 2020 U.S. Dist. LEXIS 30753, at *2 n.3 (D.N.J. Feb. 24,

2020) (“it is well-established that NJIFPA, RICO or common law fraud claims

are not subject to mandatory arbitration under New Jersey's no-fault insurance

statute”). The cases cited by the Stelton defendants are not on point. Those

cases involve garden-variety PIP disputes, not RICO, fraud, or NJIFPA claims.3

In short, the statutory arbitration scheme is meant to stop routine PIP claims

from clogging the courts, not to prevent insurers from pursuing broader fraud

and racketeering allegations in court.

3 For example, Endo Surgi Ctr., P.C. v. Liberty Mut. Ins. Co., 391 N.J. Super. 588,

591 (App. Div. 2007), involves a dispute over PIP benefits with no reference to common

law fraud or RICO claims. See also State Farm Ins. Co. v. Sabato, 337 N.J. Super. 393,

396 (App. Div. 2001) (same). Similarly, PacifiCare Health Sys. v. Book, 538 U.S. 401,

407 (2003) and Caruso v. Ravenswood Developers, Inc., 337 N.J. Super. 499, 508

(App. Div. 2001) merely establish that RICO claims may be subject to arbitration but

have nothing whatsoever to do with New Jersey’s PIP arbitration scheme.

The fact that the Auto Act does not mandate arbitration, however, is not

the end of the story. GEICO’s policies with its insureds include a broad

arbitration agreement as part of the DPRP, which covers medical providers who

accept the assignment of insureds’ benefits. (DE 77-3, Ex. 1 at 13.) The DPRP

arbitration agreement states that “[i]f there is a dispute as to any issue arising

under this Decision Point Review/Precertification Plan, or in connection with

any claim for Personal Injury Protection benefits,” a request for dispute

resolution may be made. If either party objects to the result of the dispute

resolution, “then the matter is required and can only be resolved by a dispute

resolution organization pursuant to New Jersey law rather than in the Superior

Court of New Jersey.” (Id. at 10.)

Neither party disputes that this arbitration agreement was validly

formed. It is true, of course, that parties who agree to arbitrate some disputes

do not necessarily agree to arbitrate every dispute that might arise between

them. See Volt Info. Scis., Inc. v. Bd. of Trs. of the Leland Stanford Junior

Univ., 489 U.S. 468, 479 (1989) (“parties are generally free to structure their

arbitration agreements as they see fit”). Accordingly, “a court may order

arbitration of a particular dispute only where the court is satisfied that the

parties agreed to arbitrate that dispute.” Granite Rock Co. v. Int'l Bhd. of

Teamsters, 561 U.S. 287, 297 (2010) (emphasis in original). Ultimately, then,

whether a dispute falls within the scope of an arbitration clause depends upon

(1) the breadth of the arbitration clause, and (2) the nature of the given claim.

See CardioNet, 751 F.3d at 172.

The arbitration clause here is quite broad, and I find that it

unambiguously covers GEICO’s claims against the Stelton defendants. The key

phrase in the arbitration agreement states that disputes “as to any issue

arising under this Decision Point Review/Precertification Plan, or in connection

with any claim for Personal Injury Protection benefits” must be arbitrated. New

Jersey courts have read both phrases, “arising out of” and “in connection with,”

to mandate arbitration in almost all cases. See Curtis v. Cellco P’ship, 413 N.J.

Super. 26, 37 (App. Div. 2010) (describing as “extremely broad” a clause

mandating the arbitration of “any controversy or claim arising out of or related

to this [A]greement or any service provided under or in connection with this

[A]greement”); Angrisani v. Fin. Tech. Ventures, L.P., 402 N.J. Super. 138, 149

(App. Div. 2008) (describing such language as “extremely broad”); see also

Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 US 614, 617

(1985). “Such broad clauses have been construed to require arbitration of any

dispute between the contracting parties that is connected in any way with their

contract.” Curtis, 413 N.J. Super. at 38. It thus appears that the scope of

GEICO’s arbitration clause sweeps much more broadly than the Auto Act; the

contractual clause would require arbitration of its fraud, unjust enrichment,

NJIFPA, and RICO claims, because all of those claims arose “under” and “in

connection with” the payment of PIP benefits.

GEICO does not dispute that its arbitration clause is broad enough to

cover its claims in this case. Rather, it makes two less direct arguments. First,

GEICO argues that “the arbitration clauses in GEICO’s automobile insurance

policies are not voluntary in any meaningful sense” and thus should not be

enforced. Second, it cites cases in which NJIFPA claims were deemed

unarbitrable. (DE 80 at 15.) The first argument fails entirely, and the second

succeeds only in relation to NJIFPA claims.

GEICO is here attacking its own arbitration clause as not “voluntary.” It

is a fundamental principle of contract law that, all other things being equal,

contracts are to be construed against the drafter. See Terminal Construction

Corp. v. Bergen County Hackensack River Sanitary Sewer Dist. Authority, 18

N.J. 294, 302 (1955). Here, GEICO itself drafted the DPRP and its arbitration

clause and fully controlled its wording. The clause is voluntary in the sense

that GEICO drafted it and remains free to change it for future insurance

contracts. For now, however, I must find that GEICO manifested a clear intent

to be bound by the unambiguous language of its own arbitration clause.

GEICO’s second argument—one not of contract interpretation but of

governing law—is more plausible, and partly successful. GEICO cites several

cases in which courts have refused to order arbitration of NJIFPA claims, even

where an arbitration clause in the underlying insurance contract might

otherwise require it.4 (DE 80 at 9.) In particular, the NJIFPA provides that an

“insurance company damaged as the result of a violation of any provision of

this act may sue therefor in any court of competent jurisdiction.” N.J. Stat.

Ann. § 17:33A–7(a). Several courts have interpreted this provision to mean that

“the Legislature did not contemplate that a claim of a violation of the Insurance

Fraud Prevention Act would be heard by an arbitrator.” Nationwide Mut. Fire

Ins. Co. v. Fiouris, 395 N.J. Super. 156, 161 (App. Div. 2007). In Fed. Ins. Co. v.

von Windherburg-Cordeiro, a court in this district similarly held that the

structure and history of the NJIFPA compels the conclusion that “state law

requires [plaintiff’s] IFPA claim be brought in a judicial forum” even when a

contractual arbitration clause is present. No. CIV.A. 12-2491 JAP, 2012 WL

6761877, at *4 (D.N.J. Dec. 31, 2012); see also Citizens United Reciprocal

Exchange v. Meer, 321 F. Supp. 3d 479, 492 (D.N.J. 2018).

Defendants have a response. They argue that, if the NJIFPA trumps the

contract, the Federal Arbitration Act trumps the NJIFPA, and requires

arbitration of the disputes. (Stelton Br. at 12.) But there is a response to the

response. As I held in Meer, the preemptive effect of the FAA is nullified in

these circumstances by the McCarran-Ferguson Act, 15 U.S.C. § 1012(b), thus

restoring the supremacy of state law. Under McCarran-Ferguson, state laws

regulating insurance may not be preempted by federal statutes if: “(1) the state

statute was enacted ‘for the purpose of regulating the business of insurance,’

(2) the federal statute does not ‘specifically relate to the business of insurance,’

and (3) the federal statute would ‘invalidate, impair, or supersede’ the state

4 GEICO also cites cases in which courts have declined to compel arbitration of

RICO, unjust enrichment, and common law fraud claims based solely on the Auto Act.

Those cases, however, did not involve an arbitration clause, which provides a separate

basis for arbitration.

statute.” Meer, 321 F. Supp. 3d at 492 (quoting Suter v. Munich Reinsurance

Co., 223 F.3d 150, 160 (3d Cir. 2000)). In Meer, I concluded that these

circumstances trigger McCarran-Ferguson:

In light of these factors, the FAA does not supersede the NJIFPA,

but the other way around. The NJIFPA is specific to insurance; the

FAA is not; and applying the FAA in this case would invalidate,

impair, or supersede the NJIFPA. Reverse preemption under the

McCarran-Ferguson Act therefore applies, and CURE may litigate

its NJIFPA claims in court, notwithstanding the FAA.”

321 F. Supp. 3d at 492 (cleaned up).

Because the FAA does not compel arbitration, I must follow the

precedents which state clearly that NJIFPA claims cannot be arbitrated. The

Stelton defendants’ motion is denied to the extent it seeks to compel arbitration

of GEICO’s NJIFPA claims.5

My conclusion is different, however, as to GEICO’s RICO, unjust

enrichment, and common law fraud claims. As to them, there is no analogue to

the NJIFPA’s statutory bar to arbitration. The U.S. Supreme Court has

specifically held that agreements to arbitrate RICO claims in the insurance

fraud context can be enforced. PacifiCare Health Sys. v. Book, 538 U.S. 401,

407 (2003). Similarly, the New Jersey Supreme Court has upheld compelled

arbitration of common law fraud claims. Goffe v. Foulke Mgmt. Corp., 238 N.J.

191, 212 (2019).

I must therefore reject GEICO’s argument that the NJIFPA claims, on the

one hand, and GEICO’s RICO, unjust enrichment, and common law fraud

claims, on the other hand, must receive parallel treatment with respect to

arbitration. (DE 80 at 17.) First, it is highly dubious that the FAA is reverse-

preempted by McCarran-Ferguson in relation to the RICO, unjust enrichment,

5 There are good arguments that the language of the NJIFPA is better read as

permitting, rather than mandating, claims to be litigated in court. (DE 84 at 6–7.) The

NJIFPA’s explicit authorization of court proceedings was perhaps included to

distinguish the PIP requirement of arbitration. It does not necessarily follow that

NJIFPA precludes arbitration. But precedent is conclusively to the contrary, and I

follow it in holding that NJIFPA claims cannot be arbitrated.

and common law fraud claims, inasmuch as none of those statutes or causes

of action were enacted “for the purpose of regulating the business of

insurance.” Moreover, even setting aside the FAA, New Jersey has its own

policy in favor of arbitration, and that policy has teeth. Recently the New Jersey

Supreme Court considered a case regarding a transportation worker who fell

within an exemption to the FAA, so that arbitration was not compelled by

federal law. That Court held that arbitration could nevertheless be compelled

under the New Jersey Arbitration Act (“NJAA”), N.J. Stat. Ann. § 2A:23B-1 et

seq. The NJAA, the Supreme Court held, “is nearly identical to the FAA and

enunciates the same policies favoring arbitration.” Arafa v. Health Express

Corp., 243 N.J. 147 (2020). Even assuming arguendo that the FAA does not

apply to GEICO’s remaining, non-NJIFPA claims against the Stelton

defendants, arbitration could be compelled under the NJAA.

The Stelton defendants’ motion to compel arbitration is therefore granted

as to GEICO’s unjust enrichment, common law fraud, and RICO claims against

them. The motion is denied as to the NJIFPA claims.

B. Stelton Defendants’ motion to dismiss NJIFPA claims

The NJIFPA claims, then, will not be arbitrated but will remain here in

court. I therefore consider next the Stelton Defendants’ motion to dismiss the

NJIFPA claims for failure to state a claim, pursuant to Fed. R. Civ. P. 12(b)(6).

Defendants assert that GEICO has failed to plead its NJIFPA Counts with

sufficient specificity under the heightened pleading standard of Fed. R. Civ. P.

9(b). (Stelton Br. at 22.) I find that GEICO has met this standard and therefore

decline to dismiss the NJIFPA claims against the Stelton Defendants.

A person or practitioner violates the NJIFPA if he or she:

(1) Presents or causes to be presented any written or oral statement

as part of, or in support of or opposition to, a claim for payment or

other benefit pursuant to an insurance policy or the “Unsatisfied

Claim and Judgment Fund Law,” P.L.1952, c. 174 (C.39:6-61 et

seq.), knowing that the statement contains any false or misleading

information concerning any fact or thing material to the claim; or

(2) Prepares or makes any written or oral statement that is intended

to be presented to any insurance company, the Unsatisfied Claim

and Judgment Fund or any claimant thereof in connection with, or

in support of or opposition to any claim for payment or other benefit

pursuant to an insurance policy or the “Unsatisfied Claim and

Judgment Fund Law,” P.L.1952, c. 174 (C.39:6-61 et seq.), knowing

that the statement contains any false or misleading information

concerning any fact or thing material to the claim; or

(3) Conceals or knowingly fails to disclose the occurrence of an event

which affects any person’s initial or continued right or entitlement

to (a) any insurance benefit or payment or (b) the amount of any

benefit or payment to which the person is entitled . . . .

N.J. Stat. Ann. § 17:33A-4. The NJIFPA grants an insurer a private right of

action to seek compensation for such fraud, including recovery of attorneys’

fees. Id. § 17:33A-7a. If the defendant has engaged in a pattern of IFPA

violations, the insurer can seek treble damages. Id. § 17:33A-7b.

The Stelton defendants’ claims for allegedly medically unnecessary MRIs

fall within the NJIFPA. The NJIFPA prohibits the submission of insurance

reimbursement claims when a party knows that the claim contains false or

misleading information concerning any fact or thing material to the claim, and

prohibits concealment or knowing failure to disclose an event that affects the

eligibility for reimbursement or the amount of the reimbursement. N.J. Stat.

Ann. § 17:33A-4. That statutory prohibition sweeps more broadly than

common law fraud:

Unlike common law fraud, proof of fraud under the [NJ]IFPA does

not require proof of reliance on the false statement or resultant

damages, nor proof of intent to deceive. The New Jersey Supreme

Court has also held that we must construe the [NJIFPA]’s provisions

liberally to accomplish the Legislature’s broad remedial goals.

Lincoln Nat’l Life Ins. Co. v. Schwarz, No. 9-cv-3361, 2010 WL 3283550, at *16

(D.N.J. Aug. 18, 2010) (internal citations and quotation marks omitted); see

also Liberty Mut. Ins. Co. v. Land, 892 A.2d 1240, 1246–47 (N.J. 2006); State v.

Nasir, 809 A.2d 796, 802–03 (N.J. Super. Ct. App. Div. 2002).

GEICO’s amended complaint sufficiently alleges that defendants violated

the NJIFPA by billing GEICO for medically unnecessary MRI treatments. The

amended complaint provides dozens of claim-specific examples of what GEICO

alleges were fraudulent actions. The Stelton defendants assert that GEICO has

not made its allegations with the specificity required by Rule 9(b), but this

argument fails. GEICO factually alleges, with numerous claim-specific

examples, the practices of the Stelton defendants that violated the NJIFPA,

raising its allegations to the level of plausibility. For example, GEICO provides

nearly three dozen claim-specific examples of insureds experiencing minor car

crashes, and then receiving MRIs at the Stelton defendants’ facilities just a few

weeks later—much sooner than the recommended eight-to-ten-week period of

conservative treatment that a patient should undertake before receiving an

MRI. (Am. Compl. ¶ 80–81.) Similarly, GEICO provides numerous examples of

cases in which two individuals were in the same car crash and later received

an identical MRI at a Stelton facility, often less than eight weeks after the

accident. (Id. ¶ 92.) Such selected examples constitute sufficient support for

the allegations; GEICO is not required to set forth the evidentiary particulars of

each of the many allegedly false claims submitted in violation of the NJIFPA at

this, the pleading stage.

The Stelton defendants’ motion to dismiss is therefore denied with regard

to the NJIFPA counts.

C. Dynamic Defendants’ Motion to Dismiss

Because the Dynamic defendants have not moved to compel arbitration, I

confine my analysis to whether GEICO’s claims against the Dynamic

Defendants must be dismissed on a 12(b)(6) standard. I find that GEICO has

properly stated a claim for each Count under the heightened fraud pleading

standard, so the Rule 12(b)(6) motion to dismiss is denied.

i. Common Law Fraud

I begin with GEICO’s claims of common law fraud against the Dynamic

defendants. (Am. Compl. ¶ 237–242). Under New Jersey law, the five elements

of common law fraud are: “(1) a material misrepresentation of a presently

existing or past fact; (2) knowledge or belief by the defendant of its falsity; (3)

an intention that the other person rely on it; (4) reasonable reliance thereon by

the other person; and (5) resulting damages.” Gennari v. Weichert Co. Realtors,

691 A.2d 350, 367 (N.J. 1997); see Frederico, 507 F.3d at 200; Stockroom, Inc.

v. Dydacomp Dev. Corp., 941 F. Supp. 2d 537, 546 (D.N.J. 2013).

The Dynamic defendants argue that GEICO fails to plead fraud with

particularity under Rule 9(b), and in particular that it fails to adequately plead

a misrepresentation of fact. (Dynamic Br. at 12–20.) As outlined in more detail

above, a plaintiff alleging fraud “must plead or allege the date, time and place

of the alleged fraud or otherwise inject precision or some measure of

substantiation into a fraud allegation.” Frederico, 507 F.3d at 200. The

governing principle is that “a party must plead [its] claim with enough

particularity to place defendants on notice of the ‘precise misconduct with

which they are charged.’” United States ex rel. Petras v. Simparel, Inc., 857 F.3d

497, 502 (3d Cir. 2017).

GEICO puts forward several theories of common law fraud based on

different kinds of alleged misrepresentations. Thus the complaint alleges that

defendants submitted claims for services that were not medically necessary, or

that were not actually provided at all, or that were provided by independent

contractors who are ineligible for reimbursement under New York law, or that

were performed at radiology centers that did not comply with various state

regulations.6 (Am. Compl. ¶ 341 [p.95].) Under any of these theories, GEICO

has adequately set forth the five legal elements of common law fraud. The

question raised by Dynamic is whether those elements are supported by

sufficient factual allegations.

6 The independent contractor issue is complex, and the laws of New York and

New Jersey are, to a large degree in conflict. Because GEICO has stated a claim,

irrespective of the independent contractor theory, it is not necessary to determine the

narrow issue of whether services performed by an independent contractor in New

Jersey on New York insureds are eligible for reimbursement.

First, GEICO has adequately alleged that there have been material

misrepresentations in defendants’ reimbursement claims. For instance,

GEICO’s complaint specifically identifies numerous claims where the insureds

were involved in relatively minor accidents. GEICO alleges that those accidents

involved “low-speed, low-impact collisions, that the insureds’ vehicles were

drivable following the accidents, and that no one was seriously injured in the

underlying accidents, or injured at all.” (Am. Compl. ¶ 101). Many of these

insureds, says GEICO, did not seek treatment at hospitals. Id. Similarly,

GEICO gives numerous examples of minor car crashes involving two

individuals who later received allegedly unnecessary MRIs on the same day. (Id.

¶ 92.) GEICO claims that these selected, claim-specific examples are strong

evidence of a pattern of fraud. GEICO has also attached to its amended

complaint Appendix 3, a spreadsheet listing 3,828 allegedly fraudulent bills

submitted to GEICO by the Dynamic defendants through the mail. Fraudulent

they may turn out to be, or not, but as allegations they are sufficiently

specific.7

GEICO’s allegations against the Dynamic defendants are somewhat

sketchier than those against the Stelton defendants. As the Dynamic

defendants point out, GEICO provides only one example of an insured who

received an MRI from the Dynamic defendants sooner than the recommended

eight to ten weeks after an accident. (Dynamic Br. at 16.) (For other

defendants, there are multiple such examples. E.g., Am. Compl. ¶ 101(viii).)

Despite this difference, GEICO still provides dozens of other claim-specific

examples of allegedly fraudulent bills submitted by the Dynamic defendants.

For example, GEICO presents five claim-specific examples where two

individuals were in the same minor car crash, and later had identical MRIs at

7 The spreadsheet itself is not direct evidence of fraud. It is merely a list of bills,

with the code for the service performed, dates, dollar amounts, and so on. Of course,

we are at the pleading stage; the attached spreadsheet, without necessarily rising to

evidentiary status, serves to clarify what is being alleged. For that limited purpose, it

lends specificity to the allegations.

Dynamic Medical. (Am. Compl. ¶ 92.) In addition, GEICO presents five claim-

specific examples of patients who were in minor car crashes and whose MRIs,

Pomerantz determined, revealed multiple disc herniations, a degree of injury

that is inconsistent with the underlying crash. (Id. ¶ 101.) Finally, GEICO has

also identified three cases where Pomerantz, working at Dynamic Medical,

identified abnormalities in entirely normal MRI results. (Id. ¶ 127.) All of these

allegations support a state of facts which, if proven, would constitute common

law fraud. Such patterns of alleged misbehavior render plausible GEICO’s

theory that the Dynamic defendants were engaged in systematic material

misrepresentation of the medical necessity of the MRIs they performed.

Second, GEICO has adequately pleaded Dynamic defendants’ knowledge

or belief as to the falsity of these misrepresentations. The Dynamic defendants

submitted more than 3,000 claims to GEICO for allegedly unnecessary MRIs

and other treatments. Given the high volume of allegedly false or ineligible bills,

it is a reasonable inference that the Dynamic defendants acted knowingly.

Third, GEICO has also alleged that defendants intended for GEICO to

rely on the material misrepresentations. This is not controversial. Defendants

billed the services and submitted PIP reimbursement claims to GEICO; GEICO

was required to under the NJ Auto Act, and did, disburse money to the

defendants in payment of the claims.

Finally, GEICO has also pled that it reasonably relied on defendants’

actions and sustained damages as a result. GEICO received and approved the

claims, and paid out on them.

Therefore, GEICO has adequately pleaded its claim for common law

fraud. The Dynamic defendants’ motion to dismiss this Count is denied.

ii. RICO

GEICO asserts a civil RICO claim under 18 U.S.C § 1962(c). (Am. Compl.

¶ 229–236; see 18 U.S.C. § 1964 (granting civil remedies for RICO violation).)

This claim is asserted against Brownstein, who is alleged to have conducted the

affairs of an enterprise, Dynamic Medical, through a pattern of racketeering.

Section 1962(c) makes it “unlawful for any person employed by or

associated with any enterprise engaged in, or the activities of which effect,

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)); see In re Ins.

Brokerage Antitrust Litig., 618 F.3d 300, 362-63 (3d Cir. 2010). To establish a

claim under section 1962(c), a plaintiff must allege (1) conduct (2) of an

enterprise (3) through a pattern (4) of racketeering activity. Sedima, S.P.R.L. v.

Imrex Co., 473 U.S. 479, 482-83 (1985); see also District 1199P Health &

Welfare Plan v. Janssen, L.P., 784 F.Supp.2d 508, 518–19 (D.N.J. 2011)

(citation omitted).

The term “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.” Ins. Brokerage, 618 F.3d at 362–

63 (citing 18 U.S.C. § 1961(4)). With respect to the pattern of racketeering

activity, the statute “requires at least two acts of racketeering activity within a

ten-year period,” which may include federal mail fraud under 18 U.S.C. § 1341.

Id. (citations omitted). In addition, “the 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 violation.” Sedima, 473 U.S. at 496.

The Dynamic defendants argue that GEICO fails to state a RICO claim

and that the RICO allegations are not sufficiently particularized. (Dynamic Br.

at 22–23.) I disagree.

First, GEICO properly alleges facts supporting predicate acts of

racketeering—i.e., mail fraud in the submission of knowingly false PIP claims.

See 18 U.S.C. § 1341. Second, GEICO has pled the RICO claims with the

requisite specificity. GEICO asserts its RICO claim in relation to its theories of

fraud based on the provision of medically unnecessary MRIs and the failure of

the radiology centers, including Dynamic Medical, to comply with state laws.

(Am. Compl. ¶ 231.) A fraudulent scheme, for the reasons stated above, is pled

with the requisite particularity, lacking only the additional element of mailing

in furtherance. The Amended Complaint contains dozens of claim-specific

examples of allegedly fraudulent MRIs. Furthermore, the appendix contains

thousands of examples of bills submitted to GEICO, which, if proven to

represent bills for fraudulent services, constitute mail fraud, the predicate act

alleged under RICO. The frauds are alleged to constitute a “pattern,” having

been both interrelated and continuous since at least 2012. See H.J. Inc. v. Nw.

Bell Telephone Co., 492 U.S. 229 (1989) (addressing the requirements for a

“pattern of racketeering activity,” including continuity and predicate acts); see

also Kehr Packages, Inc. v. Fidelcor, Inc., 926 F.2d 1406 (3d Cir. 1991). These

allegations put defendants sufficiently on notice of the activities of which they

are accused and contain sufficient specificity to meet Rule 9(b)’s heightened

pleading standard.

Courts have permitted RICO claims under similar facts. For example, in

GEICO v. Korn, this court permitted a RICO claim alleging mail fraud involving

false insurance reimbursement claims. 310 F.R.D. 125, 129–31 (D.N.J. 2015).

The plaintiffs in that case alleged that defendants exaggerated the severity of

patients’ injuries, overstated the amount of time doctors spent with patients,

falsely stated that “comprehensive” and “detailed” patient histories were taken

and that “comprehensive” and “detailed” examinations were performed, and

overstated the complexity of medical decision making. Id.; see also, e.g., State

Farm Mutual Auto. Ins. Co. v. Radden, No. 14-cv-13299, 2015 WL 631965, at *2

(E.D. Mich. Feb. 13, 2015) (“State Farm sufficiently states a substantive

racketeering claim under RICO…. [T]he complaint describes a scheme involving

nearly 700 acts of mail fraud involving a like number of fraudulent claims that

occurred over a three year period.”); GEICO v. Gateva, No. 12-cv-4236, 2014

WL 1330846, at *9 (E.D.N.Y. Mar. 10, 2014) (finding a RICO violations where

“[p]laintiffs allege that [defendant] agreed to conduct or participate in the

conduct of the RICO enterprises’ affairs through a pattern of ongoing activity

consisting of repeated violations of the federal mail fraud statute, 18 U.S.C.

§ 1341, by submitting or causing to be submitted numerous fraudulent bills

seeking payment from GEICO”); GEICO v. Esses, No. 12-cv-4424, 2013 WL

5972481, at *7 (E.D.N.Y. Sept. 27, 2013) (“The defendants’ numerous mailings

of fraudulent insurance claims to [defendant] in connection with the schemes

thus constitute the predicate acts of racketeering activity that establish

violation of a [RICO].”); GEICO v. Ningning He, No. 2:19-cv-09465-KM-JBC,

2019 U.S. Dist. LEXIS 187047, at *17 (D.N.J. Oct. 29, 2019). GEICO has

alleged mail fraud with similar facts to GEICO v. Korn, and has therefore pled

its RICO claim with the requisite specificity.

Dynamic defendants’ motion to dismiss GEICO’s civil RICO claim is

therefore denied.

iii. Unjust enrichment

The Dynamic defendants move to dismiss GEICO’s claim of unjust

enrichment. (Am. Compl. ¶ 243–48). Unjust enrichment is an equitable cause

of action that imposes liability when a “defendant received a benefit” and

defendant’s “retention of that benefit without payment would be unjust.” VRG

Corp. v. GKN Realty Corp., 135 N.J. 539, 554, 641 A.2d 519 (1994). To state a

claim for unjust enrichment under New Jersey law, a plaintiff must allege that

“(1) at plaintiffs’ expense (2) defendant received benefit (3) under circumstances

that would make it unjust for defendant to retain benefit without paying for it.”

Arlandson v. Hartz Mt. Corp., 792 F. Supp. 2d 691, 711 (D.N.J. 2011) (cleaned

up).

Dynamic defendants argue that GEICO’s claim for unjust enrichment

must be dismissed because it is based on the same theory as its common law

fraud and RICO claims. (Dynamic Br. at 24.) My discussion of those other

counts suggests that unjust enrichment, too, has been plausibly alleged. We

are, however, at the stage of alleging, not proving, and I will not require any

premature election of theories. I therefore deny Dynamic defendants’ motion to

dismiss the unjust enrichment claim.

iv. NJIFPA

Finally, the Dynamic defendants move to dismiss GEICO’s claim under

the NJIFPA. (Am. Compl. ¶ 225–28.) For the same reasons stated above in

relation to the Stelton defendants, Sec. III.B., GEICO has stated facts that raise

its NJIFPA claim against the Dynamic defendants to the level of plausibility.

The Dynamic defendants’ motion to dismiss GEICO’s NJIFPA claim will

therefore be denied.

D. Declaratory Judgment

I now turn to GEICO’s first claim, which requests a declaratory

judgment. (Am Compl. ¶ 162–168.) That count contains two claims for relief:

(a) A declaration that GEICO is not required to pay its outstanding PIP

requests for New York insureds.

(b) A declaration that the radiology facilities named as defendants “were

not in compliance with all significant laws and regulations governing

healthcare practice in New Jersey.” (Id. ¶ 168.)

In its Amended Complaint GEICO removed a request that had appeared in its

initial complaint for a declaration that it is not required to pay outstanding PIP

claims for New Jersey, as opposed to New York, insureds. (DE 1 ¶ 140; Am.

Compl. ¶ 165.) This theory was specifically foreclosed by Gov't Emps. Ins. Co v.

Tri-County. Neurology & Rehab. LLC, 721 F. App’x 118, 122 (3d Cir. 2018). The

reasoning of Tri-County, however, also mandates dismissal of claim (b),

GEICO’s request for a declaration that the radiology facilities were not in

compliance with New Jersey regulations.

In Tri-County, the U.S. Court of Appeals for the Third Circuit held that a

judicial declaration which stated that GEICO was not required to pay

outstanding PIP claims was not permissible because it interfered with the

statutorily mandated PIP arbitration scheme. Id. The PIP statute requires

arbitration of “disputes involving medical expense benefits,” defined broadly to

include disputes as to “whether the disputed medical treatment was actually

performed,” “the necessity or appropriateness of consultations by other health

care providers,” and “whether the treatment performed is reasonable,

necessary, and compatible with the protocols provided.” Therefore, the Court

reasoned, GEICO’s stated reasons to avoid paying the claims had to be

asserted in arbitration. Id. (I set aside for a moment the issue of whether this

holding applies to New York insureds.)

Tri-County’s invocation of the PIP arbitration requirement reads directly

onto requested declaration (b), supra, involving regulatory noncompliance, for

the following reason. The PIP statute also defines “disputes involving medical

expense benefits” to include “the eligibility of the provider performing the

treatment or service to be compensated under the terms of the policy or under

regulations promulgated by the commissioner, including whether the person is

licensed or certified to perform such treatment.” N.J. Stat. Ann. § 39:6A-5.1(c).

GEICO’s claims that the radiology facilities did not comply with relevant

regulations focuses largely on whether Pomerantz was unlawfully serving as

medical director. But such a defense to PIP claims, no less than a claim that

treatments were not actually performed, implicates a dispute over medical

expense benefits, and therefore must be raised in arbitration. Following Tri-

County, I find that this element of GEICO’s request for declaratory judgment

must be dismissed, as a declaration would interfere with New Jersey’s PIP

arbitration scheme.

That leaves only part of claim (a): GEICO’s request for a declaration that

it is not required to pay outstanding PIP claims for New York (as opposed to

New Jersey) insureds. This request presents a difficult choice of law question

that was not adequately briefed. It is unclear whether New York law should

apply to New York insureds, even though they sought treatment in New Jersey,

or whether New Jersey law should apply, as defendants argue. (DE 84 at 9–12.)

Moreover, it is unclear how many of the thousands of bills at issue in this case

involved New York insureds. Finding this issue to be too fact-bound for

resolution on a motion to dismiss, I decline to dismiss this portion of GEICO’s

declaratory judgment Count, i.e., issue (a) as it pertains to New York insureds

only.

IV. CONCLUSION

For the foregoing reasons, the motions to dismiss (DE 71, 77) are

resolved as follows. With regard to Count 1, the motions to dismiss the

declaratory judgment claims regarding New Jersey insureds are GRANTED,

while those relating to New York insureds are DENIED. Stelton defendants’

motion to compel arbitration (DE 77) is GRANTED with regard to Counts 3, 4,

5, 6, 8, 9, 10, 16, 17, 18, 20, 21, 22, and DENIED with regard to Counts 2, 7,

15, and 19. In addition, Stelton defendants’ Rule 12(b)(6) motion to dismiss

Counts 2, 7, 15, and 19 is DENIED. Dynamic defendants’ Rule 12(b)(6) motion

to dismiss Counts 11, 12, 13, and 14 (DE 71) is DENIED. To summarize:

Count 1 (NY insureds only), as well as Counts 2, 7, 11, 12, 13, 14, 15 and 19

will remain before this court, and all other Counts will be dismissed in favor of

arbitration.

An appropriate order accompanies this opinion.

Dated: May 11, 2022

/s/ Kevin McNulty

_____________________________

KEVIN MCNULTY

United States District Judge