# GOVERNMENT EMPLOYEES INSURANCE CO. v. POMERANTZ

> District Court, D. New Jersey · May 11, 2022

URL: https://www.frixlaw.com/law-library/cases/10272992

## Case

- **Court:** District Court, D. New Jersey
- **Decided:** May 11, 2022
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10272992

## How later opinions describe it (automated extraction)

- 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”
- describing such language as “extremely broad”

## Opinion text

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

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10272992. Public record. Not legal advice.