# Government Employees Insurance Company v. Advanced Comprehensive Laboratory, LLC

> District Court, E.D. New York · December 1, 2020

URL: https://www.frixlaw.com/law-library/cases/10305480

## Case

- **Court:** District Court, E.D. New York
- **Decided:** December 1, 2020
- **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/10305480

## How later opinions describe it (automated extraction)

- holding in case involving down-stream MRI providers that “[s]ince the defense of lack of medical necessity may indisputably be raised by the defendants [insurers] against the injured party, it is available as against radiologists who accept assignments of no-fault benefits”
- finding that “all parties will benefit from having the issue of fraudulent incorporation determined in one action”
- finding serious question going to the merits where complaint alleged “complicated scheme” of fraud

## Opinion text

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
-----------------------------------X
GOVERNMENT EMPLOYEES INSURANCE
COMPANY, GEICO INDEMNITY COMPANY,
GEICO GENERAL INSURANCE COMPANY,
GEICO CASUALTY COMPANY,

Plaintiffs,
MEMORANDUM & ORDER
-against- 20-CV-2391 (KAM)

ADVANCED COMPREHENSIVE LABOROTAORY,
LLC D/B/A TOPLAB, MARK GLADSTEIN,
M.D., VICTORIA FRENKEL, AND JOHN
DOES NOS. “1” THROUGH “10,”

Defendants.
-----------------------------------X
KIYO A. MATSUMOTO, United States District Judge:
Plaintiffs Government Employees Insurance Company,
GEICO Indemnity Company, and GEICO Casualty Company (together,
“plaintiffs” or “GEICO”), commenced this litigation against
Advanced Comprehensive Laboratory, LLC d/b/a TopLab (“Advanced
Labs”), Mark Gladstein, M.D., and Victoria Frenkel
(collectively, “defendants”) on May 29, 2020. (ECF No. 1,
Complaint (“Compl.”).) On September 22, 2020, GEICO moved for
injunctive relief, seeking: (1) a stay of all collection
arbitrations arising under New York’s No-Fault insurance laws,
and pending before the American Arbitration Association (“AAA”),
between defendant Advanced Labs and GEICO, until resolution of
the instant federal action; and (2) an injunction prohibiting
Advanced Labs, along with its record owners, Gladstein and
Frenkel, from commencing any new No-Fault collection
arbitrations or civil collection lawsuits against GEICO on
behalf of Advanced Labs, until this action is resolved. (ECF

No. 18-2, Memorandum of Law in Support of Plaintiffs’ Motion
(“Pl. Mem.”), 1.) For the reasons set forth below, plaintiffs’
motion for injunctive relief is granted.
BACKGROUND
I. New York’s No-Fault Insurance Laws
New York enacted the Comprehensive Automobile
Insurance Reparations Act, New York Insurance Law (“N.Y. Ins.
Law”) §§ 5101–5109, for the purpose of “ensur[ing] prompt
compensation for losses incurred by accident victims without
regard to fault or negligence, to reduce the burden on the
courts[,] and to provide substantial premium savings to New York
motorists.” Med. Soc'y of State of N.Y. v. Serio, 800 N.E.2d

728, 731 (N.Y. 2003) (citing Governor’s Mem. approving L. 1973,
ch. 13, 1973 McKinney’s Session Laws of N.Y., at 2335). No-
Fault insurers, like GEICO, may reimburse patients up to $50,000
without proof of the other driver’s fault; reimbursements may
include necessary expenses incurred for medical or other
professional health services. See N.Y. Ins. Law §§ 5102(a)(1),
(b). Insurers are required to verify a claim, and then pay or
deny the claim within 30 days. See N.Y. Ins. Law § 5106(a);
N.Y. Comp. Codes R. & Regs. (“NYCRR”) tit. 11 §§ 65–3.8(a), (c).
Under New York law, an insured may assign his or her benefits
“directly to providers of health care services.” 11 NYCRR § 65-
3.11(a). The regulations specify the criteria needed for a

health care provider to receive direct payment from the insurer.
See 11 NYCRR § 65-3.11(b).
Section 5106 of the New York Insurance Law creates a
“[f]air claims settlement” procedure for all No-Fault claims.
No-Fault benefits are deemed overdue if they are not paid or
denied within 30 calendar days after proof of claim is
submitted. See N.Y. Ins. L. § 5106(a); 11 NYCRR § 65-3.8(c).
If an insurer fails to comply with this timeframe, it will be
precluded from asserting many (but not all) defenses to
coverage, including most fraud-based defenses. See Fair Price
Med. Supply Corp. v. Travelers Indem. Co., 890 N.E.2d 233, 236
(N.Y. 2008); Cent. Gen. Hosp. v. Chubb Grp. of Ins. Companies,

681 N.E.2d 413, 415 (N.Y. 1997). A claimant may bring an action
in state court to recover overdue No-Fault benefits, and in any
such action the claimant need only show that the prescribed
statutory billing forms were mailed and received and that the
benefits are overdue. See Viviane Etienne Med. Care, P.C. v.
Country-Wide Ins. Co., 35 N.E.3d 451, 457 (N.Y. 2015). In
addition, insurers are required to include a clause in their
policies allowing the claimant to seek arbitration of their
claims for No-Fault benefits. See N.Y. Ins. L. § 5106(b); 11
NYCRR § 65-1.1(a), (d).
New York’s No-Fault insurance law establishes the
procedures for arbitration of disputed claims. See 11 NYCRR §

65–4.5. By statute, the New York Department of Financial
Services Superintendent has designated AAA as the body
responsible for administration of the No-Fault arbitration
process. Id. § 65-4.2(a)(2). Insurers generally bear the costs
associated with the arbitration process in direct proportion to
the frequency with which they are named as respondents. Id. §
65-4.2(c)(1). The Second Circuit has commented that the
“arbitration process for No-Fault coverage is an expedited,
simplified affair meant to work as quickly and efficiently as
possible. Discovery is limited or non-existent. Complex fraud
and racketeering claims, maturing years after the initial

claimants were fully reimbursed, cannot be shoehorned into this
system.” Allstate Ins. Co. v. Mun, 751 F.3d 94, 99 (2d Cir.
2014) (citing 11 NYCRR § 65-4.5)).
An insurer who pays No-Fault benefits and subsequently
discovers fraud may bring an action for damages. See State Farm
Mut. Auto. Ins. Co. v. James M. Liguori, M.D., P.C., 589 F.
Supp. 2d 221, 229-235 (E.D.N.Y. 2008); State Farm Mut. Auto.
Ins. Co. v. CPT Med. Servs., P.C., 2008 WL 4146190, at *6-7
(E.D.N.Y. Sept. 5, 2008). The insurer may also bring an action
for a declaratory judgment that it is not liable for any unpaid
claims where the provider has committed fraud or breached
applicable No-Fault regulations. See 28 U.S.C. § 2201; Gov’t
Emps. Ins. Co. v. Jacques, 2017 WL 9487191, at *9-*11 (E.D.N.Y.
Feb. 13, 2017), report and recommendation adopted, 2017 WL
1214460 (E.D.N.Y. Mar. 31, 2017); State Farm Mut. Auto. Ins. Co.

v. Cohan, 2009 WL 10449036, at *4 (E.D.N.Y. Dec. 30, 2009),
report and recommendation adopted, 2010 WL 890975 (E.D.N.Y. Mar.
8, 2010). If an insurer is precluded from asserting a defense
to coverage (such as provider fraud) due to its noncompliance
with the 30-day rule, however, it will also be precluded from
obtaining a declaratory judgment on those same grounds. See
Allstate Ins. Co. v. Williams, 2015 WL 5560543, at *7 (E.D.N.Y.
Aug. 28, 2015), report and recommendation adopted, 2015 WL
5560546 (E.D.N.Y. 2015); Gov’t Emps. Ins. Co. v. AMD
Chiropractic, P.C., 2013 WL 5131057, at *8 (E.D.N.Y. Sept. 12,

2013).
II. GEICO’s Allegations
GEICO alleges that, since 2018, the defendants have
submitted more $10 million in fraudulent laboratory toxicology
billings to GEICO for medically unnecessary screening tests as
part of a scheme designed to exploit New York’s No-Fault
insurance laws. (Compl. ¶¶ 2, 51.) Defendants allegedly
perpetrated the fraudulent scheme using unlawful referral and
kickback arrangements to fraudulently bill GEICO for urine
screening tests purportedly provided to individual-insureds, who
claimed eligibility for coverage under GEICO’s no-fault
insurance policies. (Id. ¶ 2.) Through this unlawful scheme,

Gladstein, Frenkel, and John Doe defendants “1”-“10” accessed a
network of New York-based patients to fraudulently bill GEICO
without providing “genuine patient care.” (Id. ¶ 3.) In other
words, GEICO alleges that the urine drugs screens were medically
unnecessary, illusory, and intended only to exploit the patients
for financial gain. (Id. ¶¶ 1,4,6, 51.)
GEICO seeks to recover more than $945,000 that
defendants obtained from GEICO and further seeks a declaration
from the court, pursuant to 28 U.S.C. §§ 2201, 2202, that GEICO
is not legally obligated to reimburse Advanced Labs for over
$8,800,000 in pending No-Fault claims that defendants either

submitted or caused to be submitted on or behalf of Advanced
Labs. (Compl. ¶ 4.) GEICO also seeks recovery of approximately
$945,000 in fraudulent bills submitted through Advanced Labs,
and asserts causes of action under the Racketeering Influenced
and Corrupt Organizations Act (“RICO”), conspiracy to violate
RICO, common law fraud, aiding and abetting fraud, and unjust
enrichment. (Id. ¶¶ 128-62.)
III. Collection Proceedings
According to a declaration submitted by GEICO Claims
Manager Robert Weir, Advanced Labs is currently prosecuting more

than 2,430 collection arbitrations against GEICO before AAA.
(ECF No. 18-5, Declaration of Robert Weir (“Weir Decl.”), ¶ 7.)
Advanced Labs served approximately 125 arbitrations on GEICO
after the commencement of this federal suit. (Id. ¶ 8.)
On over 3,000 separate occasions, Advanced Labs submitted
charges to GEICO for quantitative urine drug screens totaling
over $8,000,000. (Id. ¶ 6.) In total, Advanced Labs submitted
more than $10,000,000 in billing charges to GEICO since 2018 for
reimbursement. (Id. ¶ 8.) GEICO seeks to stay these pending
arbitrations and enjoin defendants from filing additional
arbitrations and collection actions. (Id. ¶ 9.)
In support of plaintiffs’ requested relief, Weir

asserts the procedures and practices in No-Fault arbitration
proceedings impose critical handicaps on insurers like GEICO.
Insurers generally are not permitted to seek or obtain pre-
hearing discovery beyond the discrete bill and claim at issue,
which hinders an insurer’s ability to demonstrate a pattern of
medically unnecessary treatment or fraudulent billing practices
across multiple patients and claims. (Id. ¶ 18.) During the
pendency of this case, the defendants have continued to pursue
collection of individual bills through arbitration and state
court proceedings. (Pl. Mem. 2; Weir Decl. ¶ 7.) GEICO argues
that the statutorily expedited No-Fault arbitration procedures
and civil court proceedings cannot accommodate the time or

resources needed for GEICO to demonstrate the complex
“fraudulent scheme involving fraudulent behavior that – by
Defendants’ design – is not readily apparent from the face of
any individual bill or treatment record.” (Weir Decl. ¶ 21.)
DISCUSSION
GEICO moves to stay and enjoin defendants’ No-Fault
collection proceedings. Courts in this circuit have looked to
the preliminary injunction standard under similar circumstances.
See Gov't Emps. Ins. Co. v. Cean, No. 19-cv-2363 (PKC)(SMG),
2019 WL 6253804, at *4 (E.D.N.Y. Nov. 22, 2019) (citing Allstate
Ins. Co. v. Elzanaty, 929 F. Supp. 2d 199, 217 (E.D.N.Y. 2013));
see also Moore v. Consol. Edison Co. of N.Y., 409 F.3d 506, 510

(2d Cir. 2005). To justify a preliminary injunction, “a movant
must demonstrate (1) irreparable harm absent injunctive relief;
and (2) ‘either a likelihood of success on the merits, or a
serious question going to the merits to make them a fair ground
for trial, with a balance of hardships tipping decidedly in the
plaintiff's favor.’” Metro. Taxicab Bd. of Trade v. City of New
York, 615 F.3d 152, 156 (2d Cir. 2010) (quoting Almontaser v.
New York City Dept. of Educ., 519 F.3d 505, 508 (2d Cir.
2008)). “The showing of irreparable harm is [p]erhaps the
single most important prerequisite for the issuance of a
preliminary injunction, and the moving party must show that
injury is likely before the other requirements for an injunction
will be considered.” Elzanaty, 929 F. Supp. 2d at 221 (quoting
Kamerling v. Massanari, 295 F.3d 206, 214 (2d Cir. 2002)).

As a threshold matter, the court notes that GEICO’s
complaint and the instant federal action are substantially
similar to several ongoing actions involving analogous
allegations of widespread fraudulent medical billing under New
York’s No-Fault insurance laws. See Gov't Employees Ins. Co. v.
Moshe, No. 20-cv-1098(FB)(RER), 2020 WL 3503176, at *4 (E.D.N.Y.
June 29, 2020); Gov't Employees Ins. Co. v. Strut, No. 19-cv-728
(JLS), 2020 WL 1820500, at *3 (W.D.N.Y. Apr. 10, 2020); Gov’t
Employees Ins. Co. v. Wellmart RX, Inc., 435 F. Supp. 3d 443,
456 (E.D.N.Y. 2020), appeal dismissed (May 11, 2020); Cean, 2019
WL 6253804, at *6; State Farm Mut. Auto. Ins. Co. v. Parisien,
352 F. Supp. 3d 215, 235 (E.D.N.Y. 2018); Gov't Employees Ins.

Co. v. Mayzenberg, No. 17-cv-2802, 2018 WL 6031156, at *11
(E.D.N.Y. Nov. 16, 2018); Gov't Employees Ins. Co. v.
Strutsovskiy, No. 12-cv-330, 2017 WL 4837584, at *8 (W.D.N.Y.
Oct. 26, 2017); Elzanaty, 929 F. Supp. 2d at 223. Indeed, this
court previously granted injunctive relief in favor of GEICO in
a substantially similar action. See Wellmart, 435 F. Supp. 3d
at 456. Although defendants argue that each previous case is
factually distinguishable and thereby not persuasive authority,
this court disagrees.
Having considered the numerous district court

decisions in this Circuit addressing similar circumstances and
reviewed the factual allegations in the instant complaint, this
court concludes that GEICO has satisfied the elements for
injunctive relief. Accordingly, for the reasons set forth
below, GEICO’s motion to stay all pending No-Fault collection
arbitrations before the AAA involving Advanced Labs, and to
enjoin any future No-Fault collection arbitrations before the
AAA by Advanced Labs, pending resolution of the instant federal
action, is granted.
a. Irreparable Harm
“To establish irreparable harm, a party seeking
preliminary injunctive relief must show that ‘there is a

continuing harm which cannot be adequately redressed by final
relief on the merits’ and for which ‘money damages cannot
provide adequate compensation.’” Kamerling, 295 F.3d at 214
(quoting New York Pathological & X-Ray Labs., Inc. v. INS, 523
F.2d 79, 81 (2d Cir. 1975)). “Irreparable harm occurs where ‘an
insurer is required to waste time defending numerous no-fault
actions when those same proceedings could be resolved globally
in a single, pending declaratory judgment action.’” Moshe, 2020
WL 3503176, at *1 (quoting Parisien, 352 F. Supp. 3d at 233).
Where, as here and in Wellmart, an insurer alleges a
risk of inconsistent judgments in No-Fault arbitrations and
RICO- and fraud-based litigation in federal court, district
courts in this Circuit have found irreparable harm. See, e.g.,
Mayzenberg, 2018 WL 6031156, at *5 (“The concern is that

allowing over 180 arbitrations to be heard by a mix of
arbitrators, each of whom will likely come to their own
independent and contradictory conclusions that may be rendered
ineffective by this Court, will result in harm to GEICO from
which it cannot recover.”); Moshe, 2020 WL 3503176, at *2
(finding irreparable harm where 4,786 pending arbitrations
against GEICO presented a risk of inconsistent judgments);
Wellmart, 435 F. Supp. at 449 (finding irreparable harm where
the “crux of GEICO's argument is, absent a stay, the collection
proceedings will not merely drain GEICO of time and resources,
but will also invite inconsistent judicial outcomes”); Cean,

2019 WL 6253804, at *5 (finding irreparable harm where an
insurer spends resources “defending numerous no-fault actions”
when those actions could be resolved in a “single, pending
declaratory judgment action”); Strutsovskiy, 2017 WL 4837584, at
*6-7 (W.D.N.Y. Oct. 26, 2017) (finding irreparable harm in
similar circumstances); see also Liberty Mut. Ins. v. Excel
Imaging, 879 F. Supp. 2d 243, 264 (E.D.N.Y. 2012) (“Permitting
these individual claims to proceed to arbitration while
[insurer’s] claim for a declaratory judgment remains pending in
this court puts the plaintiffs at significant risk of multiple
judgments that may be inconsistent with the ultimate decision in

this case”). The conclusions and findings by numerous district
courts in this Circuit support this court’s conclusion that
GEICO will suffer irreparable harm without injunctive relief.
Here, GEICO alleges that defendants have perpetrated a
fraudulent medical billing scheme where defendants submitted
medically unnecessary claims for reimbursement to GEICO in
furtherance of defendants’ financial gain under New York’s No-
Fault insurance regime. (See Compl. ¶ 1.) In support of its
allegations, GEICO provides specific factual examples of
defendants’ allegedly fraudulent scheme and exploitation of the
New York No-Fault insurance system. (See Compl. at ¶¶ 81
(examples of medically unnecessary tests), 86 (examples of

Advance Labs receiving referrals and processing drug screens
after insured received anesthesia services), 89 (examples of
Advance Labs’ billing for qualitative and quantitative urine
drug screens), 96 (examples showing pattern in Advance Labs’
billing practices charging sixty-eight separate quantitative
urine drug screens).) According to GEICO, Advanced Labs is
currently prosecuting more than 2,430 collection arbitrations
against GEICO before the AAA and has served approximately 125
arbitrations on GEICO after the commencement of this federal
suit. (Weir Decl. ¶¶ 7-8.) Thus, without injunctive relief,
GEICO alleges that it will suffer irreparable harm in the form
of wasted resources and inconsistent judicial judgments. This

court agrees. Indeed, allowing the 2,430 collection
arbitrations to proceed before different arbitrators would
likely subject GEICO to “independent and contradictory
conclusions” that ultimately may “be rendered ineffective by
this Court,” pending the disposition of GEICO’s declaratory
judgment claim. Mayzenberg, 2018 WL 6031156, at *5. Moreover,
under these circumstances, the court agrees that GEICO will
suffer irreparable injury that “is neither remote nor
speculative” without injunctive relief because Advanced Labs
continues to commence arbitrations before the AAA. Grand River
Enter. Six Nations, Ltd. v. Pryor, 481 F.3d 60, 66 (2d Cir.
2007). Thus, for the reasons set forth above and as consistent

with courts across this Circuit, this court concludes that GEICO
has demonstrated irreparable harm.
In response to the decisions by district courts in
this Circuit, defendants argue that those cases are
“distinguishable in that the stays and injunctions were based on
well-pled complaints and solid factual support.” (ECF No. 19-4,
Defendants’ Memorandum of Law in Opposition (“Def. Mem.”), at
13.) Specifically, defendants argue that the previous cases
involving GEICO and allegations of fraud under New York’s No-
Fault laws, contained detailed instances of allegedly fraudulent
conduct and other indicia of wrongdoing. (Id. at 14.) In other
words, defendants argue that the evidence proffered by GEICO is

insufficient to satisfy the elements for injunctive relief. As
explained above, however, GEICO alleged specific factual
examples of purported medically unnecessary billing in the form
of drug urine tests ordered but not generated until after
interventional pain management and anesthesia services had
already been rendered.1 (See Compl. ¶¶ 81, 86, 89, 96.) GEICO’s
detailed allegations regarding the specific timing and frequency
of defendants’ urine screening tests, read collectively with
GEICO’s supporting exhibits and declarations, are sufficiently
detailed to satisfy the elements for injunctive relief.
With respect to irreparable harm, defendants rely on
Allstate Ins. Co. v. Harvey Family Chiropractic, a summary order

1 The court agrees that the instant action may be distinguishable from
Wellmart with respect to the allegation that Wellmart RX was undertaking
steps to render itself judgment proof against any potential monetary judgment
awarded to GEICO. See Wellmart, 435 F. Supp. 3d at 452. Further, the court
also agrees that the instant action, unlike other previous suits, may not
contain identical evidence such as examples of prior litigation against
defendants for healthcare fraud. See Strutsovskiy, 2017 WL 4837584, at *6
(granting injunctive relief after reviewing, among other facts, defendant’s
felony conviction in connection with an insurance fraud scheme).
Nonetheless, in light of the evidence provided by GEICO and the detailed
allegations in the complaint, the court concludes that GEICO satisfied the
elements for injunctive relief for the reasons explained herein. See Moshe,
2020 WL 3503176, at *2 (rejecting insufficient proof of fraud argument and
granting injunctive relief, reasoning that “a complaint alone can be
sufficient to grant an injunction”); Strut, 2020 WL 1820500, at *2 (rejecting
insufficient proof argument where complaint provided “examples to support
each of [GEICO’s] fraud theories, citing specific patients, accident dates,
and treatment dates.”); Excel Imaging, 879 F. Supp. 2d at 254-64 (staying
arbitration based on facts “primarily from the complaint”).
issued by the Second Circuit which affirmed the denial of
Allstate’s request to stay No-Fault arbitrations and civil court
collection suits. 677 F. App’x 716 (2d Cir. 2017). For the
reasons set forth in this court’s decision in Wellmart, however,
Harvey does not support the proposition that injunctive relief

cannot be granted in the light of “the risk of inconsistent
judgments, or of the risk that money damages would not be
available if plaintiff ultimately obtained a declaratory
judgment.” 435 F. Supp. 3d at 451; see also Moshe, 2020 WL
3503176, at *2 (“Harvey does not preclude granting an injunction
to avoid inconsistent judgments”). Because defendants failed to
meaningfully confront and distinguish this court’s reasoning in
Wellmart, for the reasons explained in that case, this court
similarly rejects defendants’ argument that GEICO will not
suffer irreparable harm absent injunctive relief.

If Advanced Labs is permitted to prosecute the ongoing
collection proceedings, GEICO faces imminent and non-speculative
risks of inconsistent judgments and unnecessary expenditure of
time and resources on arbitrations that may be resolved by the
instant, pending declaratory judgment action. Accordingly, the
court concludes that GEICO has demonstrated irreparable harm
absent injunctive relief.
b. Serious Questions Going to the Merits
For a preliminary injunction to issue, there must be
either “a likelihood of success on the merits,” or “sufficiently

serious questions going to the merits to make them a fair ground
for litigation and a balance of hardships tipping decidedly” in
the movant's favor. Parisien, 352 F. Supp. 3d at 234 (E.D.N.Y.
2018) (citing Jackson Dairy, Inc. v. H. P. Hood & Sons, Inc.,
596 F.2d 70, 72 (2d Cir. 1979)). “Likelihood of success is not
the focus at the early stages of a case such as this, because
any likelihood of success inquiry would be premature. Instead,
the Court looks to whether there is a serious question going to
the merits to make them a fair ground for trial.” Id. (quoting
Elzanaty, 929 F.Supp.2d at 217); see also Citigroup Glob. Mkts.,
Inc. v. VCG Special Opportunities Master Fund Ltd., 598 F.3d 30,
35 (2d Cir. 2010) (“The ‘serious questions’ standard permits a

district court to grant a preliminary injunction in situations
where it cannot determine with certainty that the moving party
is more likely than not to prevail on the merits of the
underlying claims, but where the costs outweigh the benefits of
not granting the injunction. Because the moving party must not
only show that there are ‘serious questions’ going to the
merits, but must additionally establish that ‘the balance of
hardships tips decidedly’ in its favor, its overall burden is no
lighter than the one it bears under the ‘likelihood of success’
standard.”).
Here, as in Wellmart, GEICO meets the threshold of

showing a serious question going to the merits. 435 F. Supp. 3d
at 453. Plaintiffs seek a declaratory judgment that Advanced
Labs has no right to receive payment for over $8.8 million in
pending claims submitted to GEICO because, inter alia, the
billed-for services were “medically unnecessary and were
provided –- to the extent that they were provided at all –-
pursuant to pre-determined fraudulent protocols designed to
financially enrich the Defendants, rather than to treat or
otherwise benefit the Insureds.” (Compl. ¶ 124.) GEICO’s
complaint “detail[s] a complicated scheme of alleged fraudulent
activity,” Elzanaty, 929 F. Supp. 2d at 222, supported by
specific examples and exhibits. For example, the complaint

provides a detailed narrative of different instances, in which
the defendants performed urine drug screens that appear to be
unnecessary because they were generated after: “either (i) the
interventional pain management and anesthesia services had
already been performed; or (ii) the referring physician had
already issued a prescription for pain management medication.”
(Id. ¶¶ 80-82.) Moreover, these drug screens were provided and
billed through Advanced Labs, but allegedly “not incorporated
into the Insureds’ treatment plan, played no genuine role in the
treatment or care of the Insureds, and no one responded to the
irregularities on the urine drug tests even when illicit drugs
were reported.” (Id. ¶ 83.) Further, GEICO also alleges that

Advanced Labs billed for both “qualitative and quantitative
urine drug screens” to maximize profits from medically
unnecessary testing and provides ten patient narratives
describing the allegedly duplicative testing.2 (Id. ¶¶ 88-89.)
The complaint also appends documentation to support GEICO’s
claims of fraudulent and medically unnecessary treatment,
including “a representative sample of the fraudulent claims,”
(Id. ¶ 8), which shows 15,205 allegedly fraudulent claims
identified by GEICO as of the date the instant suit commenced.
Furthermore, in support of its motion for injunctive
relief, GEICO provided declarations and underlying treatment
records in support of its contentions that Advanced Labs

submitted claims to GEICO for medically unnecessary drug
screens. Christopher G. Gharibo, M.D., a New York-licensed
doctor specializing in the field of pain medicine and certified
by the American Board of Anesthesiology, submitted a declaration
on GEICO’s behalf. (ECF No. 18-4, Christopher G. Gharibo, M.D.

2 According to the complaint, qualitative testing “determines whether the
drug is present in a test specimen” and is performed in the first instance.
(Compl. ¶¶ 65-68.) In contrast, quantitative testing “may be used to then
determine the amount of the drug in the specimen” and “may also be used to
detect a certain subset of drugs” not detectable by an initial qualitative
test. (Id. ¶¶ 70-71.) Quantitative drug testing is a “more complex and
costly testing process” and is “ordered markedly less frequently and is not
medically necessary in the first instance.” (Id. ¶¶ 72-73.)
(“Gharibo Decl.”), ¶¶ 1-2.) Based on his review of patient
records from 109 individuals insured by GEICO, each of whom
purported to provide urine drug screening tests to Advanced

Labs, Dr. Gharibo concluded that the urine drug screening tests
billed by Advanced Labs were:
(i) ordered and performed in large volumes in
a protocol fashion designed to exploit the
patients for financial gain without regard to
genuine patient care; (ii) the results of the
urine drug screens were routinely not useful,
reported or reviewed for their purported
intended purpose and not incorporated into the
patients’ treatment plans; and (iii) were not
medically necessary and were inconsistent with
the standard of care.

(Gharibo Decl. ¶¶ 4, 11.) Dr. Gharibo further concluded that
“Advanced Labs frequently billed for both qualitative and
quantitative urine drug screens ostensibly to confirm the
results of contemporaneous in-office qualitative urine drug
screens with negative results that were performed,” which was
both “not medically necessary” and “inconsistent with the
standard of care.” (Id. ¶ 15.)
In addition to Dr. Gharibo’s declaration, GEICO also
provided the underlying treatment records supporting the patient
narratives described in the complaint. (See ECF No. 18-6, Bills
and Laboratory Reports.) GEICO also provided a letter of
“medical necessity” submitted by Advanced Labs in connection
with a drug test in preparation for a surgery. (See ECF No. 18-
11, Letter from Advanced Comprehensive Laboratory.) In the
letter, Advanced Labs represents that “Routine Drug Screening
Tests are ordered before outpatient procedures to identify
potential problems that might complicate surgery.” (Id. at 4.)

Nonetheless, as detailed by GEICO’s submissions, the results
from this particular drug screening were generated and received
two days after the purported surgical procedure and
corresponding anesthesia services had been administered, thereby
supporting GEICO’s allegations that these drug urine screenings
were medically unnecessary. (See ECF No. 18-10, Laboratory
Report at 6.)
In response to Dr. Gharibo’s detailed declaration
supporting GEICO’s allegations, defendants attempt to impeach
Dr. Gharibo’s declaration as contradicted by a 2010 medical
article authored by, among others, Dr. Gharibo. (See Def. Mem.

at 9-11 (citing ECF No. 19-2, Exhibit A, “The Role of Urine Drug
Test for Patient on Opioid Therapy,” 2010 World Institute Pain,
Volume 10 Issue 6 (the “2010 article”)).) Specifically,
defendants point to several statements in the 2010 article that
purportedly support defendants’ use of qualitative and
quantitative urine testing, and purportedly contradict Dr.
Gharibo’s declaration: (1) “physicians can not reliably assess
potential drug abuse/misuse among a broad spectrum of pain
patients without some sort of test,” and (2) “two main types of
urine testing” may be used in combination on patients during
opioid therapy. (Def. Mem. at 10-11.) As explained in Dr.
Gharibo’s supplemental declaration, however, the 2010 article

“is explicitly limited to the legitimate use of urine drug
testing in the context of patients receiving opioid therapy for
chronic pain.” (ECF No. 18-18, Supplemental Declaration of
Christopher G. Gharibo, M.D. (“Gharibo Supp. Decl.”) ¶ 1.)
Accordingly, because the patient records Dr. Gharibo reviewed in
connection with his declaration “did not include any patients
who were receiving opioid therapy for chronic pain,” the alleged
contradictions highlighted by defendants are irrelevant and
misplaced. (Id.) Defendants’ second proffered article titled,
“Rational Urine Drug Monitoring in Patients Receiving Opioids
for Chronic Pain: Consensus Recommendations,” is similarly
irrelevant due to its emphasis on opioid treatment.3 (See ECF

No. 19-3.)
Viewing the record collectively, the complaint’s
detailed allegations and exhibits, along with Dr. Gharibo’s
declarations and the underlying treatment records, may satisfy

3 The court notes that defendants, in opposition to GEICO’s motion for
injunctive relief, failed to meaningfully reference the patient records
submitted by GEICO, failed to offer any expert affidavit, and failed to
submit an affidavit from a listed member of Advanced Labs, such as named
defendants Mark Gladstein, M.D. or Victoria Frenkel. Defendants failure to
submit such evidence bears no dispositive weight on their arguments against
GEICO’s motion, but does support the court’s conclusion that, based on
GEICO’s currently unrefuted evidence and detailed allegations, GEICO has, at
a minimum, demonstrated sufficiently serious questions going to the merits.
the heightened “likelihood of success” standard, and, at a
minimum, raise a serious question going to the merits as to
whether defendants were providing medically necessary drug
screenings.4 See Parisien, 352 F. Supp. 3d at 234 (finding

serious question going to the merits where the complaint and
exhibits alleged defendants provided unnecessary medical
services); Elzanaty, 929 F. Supp. 2d at 222 (finding serious
question going to the merits where complaint alleged
“complicated scheme” of fraud); see also State Farm Auto. Ins.
Co. v. Physicians Injury Care Ctr., Inc., 2010 WL 11475709, at
*6-*7, *14 (M.D. Fla. May 24, 2010) (holding that plaintiffs
proved fraud based on evidence that 957 patients were subjected
to an identical treatment protocol with little deviation).
Defendants contend that GEICO has not demonstrated
serious questions going to the merits because GEICO’s

allegations lack evidentiary support and Advanced Labs services
were provided “pursuant to valid orders from the Insureds’
physicians.” (Def. Mem. at 19.) As explained above, however,
GEICO provided detailed allegations in its complaint and further

4 Because this Court finds irreparable harm to plaintiff, sufficiently
serious questions going to the merits, and a balance of hardships tipping
decidedly in favor of granting the stay, the court need not and does not
address the likelihood of success. See Strutsovskiy, 2017 WL 4837584, at *8
(declining to address the likelihood of success where the court found
“sufficiently serious questions going to the merits and a balance of
hardships tipping decidedly in favor of granting the stay”); Parisien, 352 F.
Supp. 3d at 234 (declining to address likelihood of success where the court
found “that there are ‘serious questions going to the merits’ in lieu of a
‘likelihood of success on the merits’”).
supported those allegations with an expert declaration and the
underlying treatment records. Thus, this court concludes that
GEICO has presented evidence raising sufficiently serious

questions going to the merits of this action. Further, New York
law provides that defendants may be held liable for medically
unnecessary services under New York’s No-Fault insurance laws.
See Long Is. Radiology v. Allstate Ins. Co., 36 A.D.3d 763, 764
(2d Dept. 2007) (holding in case involving down-stream MRI
providers that “[s]ince the defense of lack of medical necessity
may indisputably be raised by the defendants [insurers] against
the injured party, it is available as against radiologists who
accept assignments of no-fault benefits”). Accordingly, it is
irrelevant whether Advanced Labs performed the drug screening
tests pursuant to orders by physicians.5 For these reasons,
defendants’ contention that GEICO failed to raise sufficiently

serious questions going to the merits of the litigation is
unavailing.
c. Balance of Hardships
Lastly, the court must balance the hardships of GEICO
and defendants. Given the court’s finding that there are
“serious questions going to the merits,” for a preliminary

5 Although it may be true, as defendants state, that drug urine tests may
be used in “continuing treatment” of each patient, (Def. Mem. at 20), the
dispute over whether these urine tests were medically necessary for a
particular surgery or for continuing treatment presents a question of fact,
i.e., a serious question going to the merits.
injunction to issue, the court must further determine if there
is a “balance of hardships tipping decidedly” in GEICO’s favor.
Parisien, 352 F. Supp. 3d at 234. Consistent with this court’s
decision in Wellmart, if the court grants plaintiffs’ motion to

enjoin the underlying collection proceedings and GEICO fails to
prove its claims, “then, at worst, [defendants’] recovery of the
no-fault benefits to which they are entitled will be delayed;
all [defendants] can hope for in pursuing their parallel state
lawsuits and arbitrations is to accelerate their receipt of
benefits to which they are already entitled.” Parisien, 352 F.
Supp. 3d at 234–35. If defendants’ pending arbitration and
civil collection proceedings are not stayed, then, as discussed
above, GEICO will suffer irreparable harm. Accordingly, the
balance of hardships tips decidedly in favor of GEICO.
Furthermore, in balancing the hardships experienced by

defendants, this court also concludes that defendants will
suffer no prejudice if their right to collect the pending
billing is adjudicated in a single declaratory judgment action.
“Indeed, granting the stay and injunction will actually save all
parties time and resources. Rather than adjudicating hundreds of
individual claims in a piecemeal fashion, all claims can be
efficiently and effectively dealt with in a single declaratory
judgment action.” Cean, 2019 WL 6253804, at *5 (citing
Elzanaty, 929 F. Supp. 2d at 222 (finding that “all parties will
benefit from having the issue of fraudulent incorporation
determined in one action”)). Furthermore, like defendants in
other similar actions, here, defendants “will benefit from the

stay if [they] ultimately prevail[ ] in this matter because
[they] will be entitled to the collection of interest at a rate
of two percent every month that the No-Fault payments are
overdue.” Strutsovskiy, 2017 WL 4837584, at *8 (quoting
Elzanaty, 929 F. Supp. 2d at 222); see 11 NYCRR § 65-
3.9(1)(a) (“All overdue mandatory and additional personal injury
protection benefits due an applicant or assignee shall bear
interest at a rate of two percent per month, calculated on a
pro-rata basis using a 30-day month.”). For the reasons set
forth above, because GEICO has made the requisite showing for a
stay and preliminary injunction to issue, and because defendants
will not be prejudiced, GEICO’s motion is granted.
d. Undertaking

Federal Rules of Civil Procedure Rule 65(c) provides
that “[t]he court may issue a preliminary injunction or a
temporary restraining order only if the movant gives security in
an amount that the court considers proper to pay the costs and
damages sustained by any party found to have been wrongfully
enjoined or restrained.” Fed. R. Civ. P. 65(c). Though the
Rule appears mandatory, an exception to the bond requirement has
been crafted for cases involving the enforcement of “public
interests” arising out of “comprehensive federal health and
welfare statutes.” Pharm. Soc. of State of N.Y., Inc. v. N.Y.
State Dept. of Soc. Servs., 50 F.3d 1168, 1174 (2d Cir. 1995).

In determining if claims involve the enforcement of public
interest, “the nature of the rights being enforced, rather than
the nature of the entity enforcing them, is the central
consideration in determining whether the bond requirement should
be waived under this exception.” Id. at 1175. Further, a
district court has a wide discretion to dispense with the bond
requirement “where there has been no proof of likelihood of
harm.” Donohue v. Mangano, 886 F. Supp. 2d 126, 163 (E.D.N.Y.
2012).
Although there is no federal health and welfare
statute involved in this action, New York’s No-Fault insurance
statutes are laws “designed to protect accident victims

regardless of fault by enabling them to obtain necessary medical
attention without concern of the ability to pay.” Mayzenberg,
2018 WL 6031156, at *10. In Mayzenberg, the court waived the
security requirement of Rule 65(c) in light of the systemic
nature of the fraud alleged in the complaint and the lack of
prejudice to defendants resulting from a preliminary injunction.
Id. The same considerations justify waiving the bond
requirement here.
CONCLUSION
For the reasons set forth above, GEICO’s motion,
pending resolution of the instant federal action, to stay all

pending No-Fault collection arbitrations between Advanced Labs
and GEICO pending before the AAA, and to enjoin Defendants from
commencing any new No-Fault insurance collection arbitrations or
collection lawsuits against GEICO on behalf of Advanced Labs
is GRANTED.
The parties shall proceed to discovery and are hereby
referred to Magistrate Judge Vera M. Scanlon for all pre-trial
matters. Because the court is temporarily staying defendants’
rights to commence further No-Fault insurance arbitrations and
collection lawsuits against GEICO on behalf of Advanced Labs,
all procedures in this matter should proceed on an expedited
basis.

SO ORDERED.

/s/
KIYO A. MATSUMOTO
United States District Judge
Eastern District of New York

Dated: Brooklyn, New York
December 1, 2020

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10305480. Public record. Not legal advice.