Government Employees Insurance Company v. Innovation Anesthesia & Pain Services, P.C.

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

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GOVERNMENT EMPLOYEES INSURANCE

CO., GEICO INDEMNITY CO., GEICO

GENERAL INSURANCE COMPANY and GEICO

CASUALTY CO., MEMORANDUM & ORDER

24-CV-2220 (MKB)

Plaintiffs,

v.

INNOVATION ANESTHESIA & PAIN

SERVICES, P.C., DONGHUI CHEN, M.D., JPM

PHYSICAL THERAPY, P.C., SABINIANO

MANGGURAY, P.T., LIBERTY PARK

CHIROPRACTIC, P.C., JOSEPH CICCONE, D.C.,

HAO ACUPUNCTURE, P.C., and HONG ZHU

WU, L.Ac.,

Defendants.

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MARGO K. BRODIE, United States District Judge:

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

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

commenced the above-captioned action on March 26, 2024, against Defendants Innovation

Anesthesia & Pain Services, P.C. (“Innovation Anesthesia”); Donghui Chen, M.D. (“Chen”);

JPM Physical Therapy, P.C. (“JPM PT”); Sabiniano Mangguray, P.T. (“Mangguray”); Liberty

Park Chiropractic, P.C. (“Liberty Park Chiro”); Joseph Ciccone, D.C. (“Ciccone”); Hao

Acupuncture, P.C. (“Hao Acupuncture”); and Hong Zhu Wu, L.Ac (“Wu”). (Compl., Docket

Entry No. 1.) Plaintiffs allege, inter alia, that Defendants wrongfully obtained no-fault insurance

reimbursements for medically unnecessary healthcare services in violation of the Racketeer

Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1962(c)–(d) (“RICO”) and are liable for

common law fraud, aiding and abetting fraud, and unjust enrichment, (id. ¶¶ 1, 265–401), and

seek damages against all defendants, and a declaratory judgment against Innovation Anesthesia,

Liberty Park Chiro, Hao Acupuncture, and JPM PT, (id. ¶¶ 261–401).

On September 24, 2024, Plaintiffs moved to (1) stay, until resolution of litigation, all

pending no-fault insurance collection arbitrations and state court collections litigation

commenced against GEICO by or on behalf of Innovation Anesthesia, Chen, Liberty Park Chiro,

Mangguray, Ciccone, and JPM PT; and (2) enjoin all Defendants, until resolution of litigation,

from commencing any new no-fault insurance collection arbitrations or new no-fault collections

litigation against GEICO.1 Defendants opposed the motion.2 For the reasons set forth below, the

Court grants Plaintiffs’ motion to stay (1) all pending arbitrations, (2) all future arbitrations, (3)

all pending state court proceedings, and (4) all future state court proceedings.

I. Background

a. New York and New Jersey’s no-fault insurance scheme

Under New York’s no-fault law, automobile insurers provide mandatory coverage for

certain no-fault benefits, including necessary expenses for medical treatment up to $50,000.3

N.Y. Ins. Law §§ 5102(a)(1), 5102(b), 5103; see also State Farm Mut. Auto. Ins. Co. v. Tri-

Borough NY Med. Prac. P.C., 120 F.4th 59, 71 (2d Cir. 2024) (“The No-Fault Act provides

compensation for ‘basic economic loss,’ which covers, as relevant here, ‘necessary’ health

1 (Pls.’ Mot. to Stay (“Pls.’ Mot.”), Docket Entry No. 28-1; Pls.’ Mem. in Supp. of Pls.’

Mot. (“Pls.’ Mem.”), Docket Entry No. 28-2; Pls.’ Reply in Supp. of Pls.’ Mot. (“Pls.’ Reply”),

Docket Entry No. 28-19.)

2 (Defs.’ Response to Pls.’ Mot. (“Defs.’ Opp’n”), Docket Entry No. 28-4.)

3 Because it is helpful to understand the facts of the case, the Court provides a brief

overview of New York’s no-fault insurance scheme before discussing the relevant facts. See

generally Allstate Ins. Co. v. Elzanaty, 916 F. Supp. 2d 273, 281–83 (E.D.N.Y. 2013) (providing

a detailed overview of New York’s no-fault scheme).

expenses up to $50,000 per person.” (quoting N.Y. Ins. Law § 5102(a))). “The Act’s

implementing regulations allow covered individuals to assign their statutory benefits to licensed

health care providers in exchange for services, and the providers in turn can submit claims

directly to the insurance company for medically necessary expenses.” See id. (citing N.Y.

Comp. Codes R. & Regs. tit. 11, § 65-3.11(a)); United States v. Zemlyansky, 908 F.3d 1, 7 (2d

Cir. 2018) (“[I]ndividuals injured in car accidents assign their statutory benefits to licensed

medical professionals, who submit claims for medically ‘necessary’ treatments directly to the

injured party’s insurance carriers.” (first quoting N.Y. Ins. Law § 5102; and then citing N.Y.

Comp. Codes R. & Regs. tit. 11, § 65-3.11)). The regulation also states that “[i]n the event any

person making a claim for first-party benefits and the [insurance] [c]ompany do not agree

regarding any matter relating to the claim, such person shall have the option of submitting such

disagreement to arbitration.” N.Y. Comp. Codes R. & Regs. tit. 11, § 65-1.1(d); see State Farm,

120 F.4th at 87; Allstate Ins. Co. v. Mun, 751 F.3d 94, 87 (2d Cir. 2014) (quoting N.Y. Comp.

Codes R. & Regs. tit. 11, § 65-1.1).

“New Jersey also has a comprehensive no-fault regime.” Gov’t Emps. Ins. Co. v.

Mahmood, No. 23-CV-4388, 2024 WL 113958, at *2 (E.D.N.Y. Jan. 10, 2024); see, e.g., the

Compulsory Insurance Law (N.J. Stat. Ann. §§ 39:6B-1–39:6B-3; Citizens United Reciprocal

Exch. v. Perez, 121 A.3d 374, 379 (N.J. 2015)) and the New Jersey Automobile Reparation

Reform Act (N.J. Stat. Ann. §§ 36A-1–36A-35). Claimants may “assign[]” their no-fault claims

“to healthcare service providers.” Gov’t Emps. Ins. Co. v. Beynin, No. 19-CV-6118, 2021 WL

1146051, at *2 n.1 (E.D.N.Y. Mar. 25, 2021). New Jersey’s no-fault regime includes an

arbitration statute which allows for arbitration of disputes concerning “medical expense benefits”

including “whether the disputed medical treatment was actually performed,” the “necessity . . . of

consultations by other healthcare providers,” and “whether the treatment performed is

reasonable, necessary, and compatible with the protocols provided.” N.J. Stat. Ann. § 39:6A-5.1.

New Jersey’s no-fault laws also include the New Jersey Insurance Fraud Prevention Act

(“IFPA”) under which plaintiffs may instead bring an action relating to fraudulent insurance

claims in state or federal court. See N.J. Stat Ann. §§ 17:33A-1–17:33A-34. A person violates

the IFPA if he or she “[p]resents 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 . . . knowing that the statement contains any false or misleading information

concerning any fact or thing material to the claim.” Id. § 17:33A-4(a)(1). “Although New

Jersey generally requires arbitration for no-fault insurance claims, New Jersey courts have

repeatedly found that claims under the IFPA may be heard in state or federal courts.” Gov’t

Emps. Ins. Co. v. Gerling, 718 F. Supp. 3d 268, 271 (E.D.N.Y. 2024); see Gov’t Emps. Ins. Co.

v. Elkholy, No. 21-16255, 2022 WL 2373917, at *9–10 (D.N.J. June 30, 2022) (“[C]ourts

routinely uphold the IFPA’s absolute mandate for judicial resolution notwithstanding contractual

clauses that would otherwise require arbitration of IFPA claims.” (first citing Nationwide Mut.

Fire Ins. Co. v. Fiouris, 928 A.2d 154, 157 (N.J. Super. Ct. App. Div. 2007); and then citing

Fed. Ins. Co. v. von Windherburg-Cordeiro, No. 12-CV-2491, 2012 WL 6761877, at *4 (D.N.J.

Dec. 31, 2012))); Citizens United Reciprocal Exch. v. Meer, 321 F. Supp. 3d 479, 492 (D.N.J.

2018) (“The [IFPA] is not preempted by [no-fault] arbitration rules.”).

b. The parties

Government Employees Insurance Company, GEICO Indemnity Company, GEICO

General Insurance Company, and GEICO Casualty Company “are Nebraska corporations with

their principal places of business in Chevy Case, Maryland.” (Compl. ¶ 7.) “GEICO is

authorized to conduct business and to issue automobile insurance policies in New York and New

Jersey.” (Id.) “GEICO underwrites automobile insurance in New York and New Jersey.” (Id. ¶

22.)

Chen is a citizen of New York, and was licensed to practice medicine in New York on or

about May 6, 2004, and in New Jersey on or about June 7, 2004. (Id. ¶ 9.) Plaintiffs contend

that Chen “owned and controlled Innovation Anesthesia, purported to perform virtually all of the

[f]raudulent [s]ervices,” and “used Innovation Anesthesia as a vehicle to submit fraudulent and

unlawful no-fault insurance billing to GEICO. . . .” (Id.) “Innovation Anesthesia is a New York

medical professional corporation with its principal place of business in New York.” (Id. ¶ 8.)

Mangguray is a citizen of New York, and “was licensed to practice physical therapy in

New York on or about May 27, 2009.” (Id. ¶ 11.) Plaintiffs contend that Mangguray “owned

and controlled JPM PT, purported to perform many of the [f]raudulent [s]ervices,” and “used

JPM PT as a vehicle to submit fraudulent and unlawful no-fault insurance billing to GEICO. . . .”

(Id.) “JPM PT is a New York physical therapy professional corporation with its principal place

of business in New York.” (Id. ¶ 10.)

Ciccone is a citizen of New York, and “was licensed to practice chiropractic in New York

on or about August 6, 1999.” (Id. ¶ 13.) Plaintiffs contend that Ciccone “owned and controlled

Liberty Park Chiro, purported to perform many of the [f]raudulent [s]ervices,” and “used Liberty

Park Chiro as a vehicle to submit fraudulent and unlawful no-fault insurance billing to GEICO. .

. .” (Id.) “Liberty Park Chiro is a New York chiropractic professional corporation with its

principal place of business in New York.” (Id. ¶ 12.)

Wu is a citizen of New York, and “was licensed to practice acupuncture in New York on

or about February 14, 2001.” (Id. ¶ 15.) Plaintiffs contend that Wu “owned and controlled Hao

Acupuncture, purported to perform many of the [f]raudulent [s]ervices,” and “used Hao

Acupuncture as a vehicle to submit fraudulent and unlawful no-fault insurance billing to GEICO.

. . .” (Id.) “Hao Acupuncture is a New York acupuncture professional corporation with its

principal place of business in New York.” (Id. ¶ 14.)

c. The alleged fraudulent scheme

Plaintiffs contend that “Defendants wrongfully obtained from GEICO by submitting, and

causing to be submitted, thousands of fraudulent and unlawful no-fault insurance charges”

through Innovation Anesthesia, JPM PT, Liberty Park Chiro, and Hao Acupuncture “for

purported examinations, pain management injections, radiofrequency nerve ablations,

epidurography, fluoroscopic guidance, acupuncture, chiropractic, physical therapy, and related

services.” (Id. ¶ 1.) In particular, Plaintiffs allege that “Defendants engaged in an unlawful

patient brokering scheme whereby they paid and received unlawful compensation in exchange

for patient referrals” in addition to “misrepresent[ing] the nature, extent, results, and medical

necessity of the healthcare services they purported to provide, and falsely represent[ing] that they

were in compliance with relevant law and eligible to receive no-fault insurance reimbursement in

the first place, when in fact they were not.” (Id. ¶ 2.)

“Beginning no later than 2018,” Defendants enacted an “unlawful scheme” in which they

caused “fraudulent . . . [statutory no-fault] billing to be submitted to GEICO for medically

unnecessary, illusory, unlawful, and otherwise non-reimbursable services in New York and New

Jersey.” (Id. ¶ 46.) Plaintiffs contend that Defendants’ unlawful scheme comprised four main

components: (1) Innovation Anesthesia’s unlawful provision of professional services in New

Jersey, (id. ¶¶ 47–53); (2) Defendants’ agreements among themselves to refer patients for

unnecessary medical services in exchange for unlawful compensation, (id. ¶¶ 54–78); (3)

Defendants’ provision of medically unnecessary treatments and submission of fraudulent charges

for those services, (id. ¶¶ 79–252); and (4) Defendants’ fraudulent concealment of their billing

practices, (id. ¶¶ 253–60).

i. Innovation Anesthesia’s New Jersey operations

Plaintiffs allege that because Innovation Anesthesia was only a New York corporation,

they “could not lawfully provide medical or other professional services in the state of New

Jersey.” (Id. ¶¶ 48–49.) However, Plaintiffs contend that Chen “routinely caused Innovation

Anesthesia to unlawfully provide purported medical services in New Jersey, which then were

billed to GEICO.” (Id. ¶ 50.) Plaintiffs allege that Innovation Anesthesia and Chen submitted

more than $100,000 in billing to GEICO “for services unlawfully provided — to the extent they

were provided at all — through Innovation Anesthesia in New Jersey.” (Id. ¶ 52.)

ii. Defendants’ referral and payment scheme

Plaintiffs allege that Defendants had “secret agreements” to refer insureds to Innovation

Anesthesia “for expensive and medically unnecessary interventional pain management services,

despite the [i]nsured’s lack of any genuine presenting problems that would warrant the

examinations and injections.” (Id. ¶ 59.) JPM PT, Mangguray, Liberty Park Chiro, Ciccone,

Hao Acupuncture, and Wu referred patients to Innovation Anesthesia and Chen

“for expensive and medically unnecessary/excessive examinations and interventional pain

management services, despite the [i]nsureds’ lack of any genuine presenting problems that would

warrant those services.” (collectively, the “Referring Defendants”). (Id. ¶¶ 55–58, 239.)

Plaintiffs contend that these initial referrals were not medically necessary. First, they argue that

Referring Defendants often referred patients who “had yet to fail a legitimate course of

conservative treatment.” (Id. ¶¶ 68–72.) Plaintiffs note that “[i]n a legitimate clinical setting,

referrals for pain management services generally will be improper unless the patient has failed” a

more conservative treatment. (Id. ¶ 69.) However, Innovation Anesthesia and Chen “pursuant to

their unlawful referral scheme, often received medically unnecessary pain management referrals

from the Referring Defendnats long before the patients failed a legitimate course of conservative

treatment.” (Id. ¶ 70.) Second, Plaintiffs contend that Defendants provided “differently

situated” patients, i.e., patients who “were different ages, in different physical conditions,” who

“suffered from different injuries, to the extent they suffered any injuries at all,” who “did not

require . . . referrals in the first instance,” with the same course of “[f]raudulent” treatment. (Id.

¶¶ 77–78.) For example, the Referring Defendants referred multiple insureds who had been

involved in the same underlying minor accident to Innovation Anesthesia and Chen for services

“on or about the same date, despite the fact that the [i]nsureds were differently situated.” (Id. ¶

73.) Plaintiffs allege that it is “highly improbable” that “any two or more [i]nsureds” involved in

minor accidents would “suffer substantially similar injuries” or “require a substantially similar

course of treatment,” and that it is nearly impossible that this pattern would occur “on many

occasions.” (Id. ¶¶ 74–76; see also ¶¶ 150–52.)

Innovation Anesthesia and Chen, in turn, unlawfully compensated the Referring

Defendants through (1) payments for initial referrals disguised as rent payments for Innovation

Anesthesia and Chen’s use of the Referring Defendants’ offices,4 and (2) “return referrals” to the

Referring Defendants from Innovation Anesthesia and Chen for additional medically

unnecessary services. (Id. ¶ 61.) Plaintiffs contend that the purported rent payments Innovation

Anesthesia and Chen made to the Referring Defendants “were not for fixed fees set in advance,

and did not cover any regular lease terms,” (id. ¶ 65). Plaintiffs contend that the Referring

Defendants’ offices “did not contain any external signage or other indicia of Innovation

4 The offices are located at 93-16 Liberty Avenue, Ozone Park, New York. (Compl. ¶

61.)

Anesthesia and Chen” operating from the offices, and further contend that Innovation Anesthesia

and Chen “did not maintain regular office hours” and instead appeared “sporadically” only to

treat “patients who were referred to them by the Referring Defendants” pursuant to the scheme.

(Id. ¶¶ 64–66.)

In addition, Plaintiffs allege that the Referring Defendants engaged in a return referral

scheme, where Innovation Anesthesia and Chen would refer the insureds back to the Referring

Defendants for additional treatment as “unlawful compensation to the Referring Defendants for

their initial referrals of [i]nsureds to Innovation Anesthesia and Chen. (Id. ¶ 67.) They allege

Innovation Anesthesia and Chen made “false contentions” through the return referrals “that

[i]nsureds continued to suffer from significant levels of pain, functional deficits, and

radiculopathies” to provide both a “false justification for the medically unnecessary [services]

that [Referring Defendants] already had provided” as well as a “false justification for the

Referring Defendants to continue to provide medically unnecessary chiropractic, physical

therapy, and acupuncture services.” (Id. ¶¶ 67, 239.)

iii. Defendants’ submission of fraudulent charges and provision of

medically unnecessary treatments

Plaintiffs allege that Defendants submitted fraudulent charges for a wide variety of

treatments. Plaintiffs allege that Innovation Anesthesia, Chen, Liberty Park Chiro, Ciccone, Hao

Acupuncture, and Wu submitted fraudulent charges for conducting “initial examinations” and

“follow-up examinations.” (Id. ¶¶ 79–86; 169–74.) Plaintiffs contend that “as a result of the

fraudulent and unlawful scheme,” Innovation Anesthesia, Chen, Liberty Park Chiro, Ciccone,

Hao Acupuncture, and Wu were not “in compliance with all significant laws and regulations or

licensing laws governing healthcare practice” and thus ineligible to submit claims for the initial

or follow-up examinations. (Id. ¶ 85.) In addition, Defendants also “misrepresented the extent,

nature, and results” of the examinations, (id. ¶¶ 86, 174), and, in extreme cases, whether “the

putative initial examinations were conducted in the first instance,” (id. ¶¶ 157–68). Plaintiffs

also allege Innovation Anesthesia and Chen falsely represented that they conducted

“consultations” rather than “examinations,” because “such consultations were reimbursable at a

higher rate than commensurate, ordinary patient examinations.” (Id. ¶ 91.) In addition, Plaintiffs

allege Defendants artificially inflated their claims for reimbursement by misrepresenting: (1) the

severity of insureds’ “presenting problems” at initial and follow-up examinations “in order to

create a false basis for the laundry list of other [f]raudulent [s]ervices that the Defendants

purported to provide to the [i]nsureds,” (id. ¶¶ 92–102, 175–86); (2) the time Defendants spent

with patients during examinations because examinations that require more time “are

reimbursable at a higher rate than examinations that require less time to perform,” (id. ¶¶ 103–

15); (3) the extent of physical examinations because more detailed physical examinations are

reimbursable at higher rates, (id. ¶¶ 116–28); (4) the complexity of the case or extent of medical

decision-making involved because examinations requiring “complex medical decision-making”

are reimbursable at higher rates, (id. ¶¶ 129–56); and (5) the results of follow-up examinations

where Defendants claimed “[i]nsureds continued to suffer pain and other symptoms” so that

Defendants could provide “a false basis for the laundry list of other [f]raudulent [s]ervices,” (id.

¶¶ 187–93).

Plaintiffs further allege that Defendants provided inappropriate and medically

unnecessary treatments to insureds. First, Plaintiffs argue Innovation Anesthesia and Chen

subjected “many [i]nsureds to a series of medically unnecessary pain management injections” as

part of the “false, boilerplate ‘diagnoses’” they provided during their “fraudulent examinations.”

(Id. ¶¶ 194–211.) For example, Plaintiffs describe that “in order to maximize the fraudulent

billing,” Innovation Anesthesia and Chen provided “multiple pain management injections — and

multiple varieties of pain management injections — to [i]nsureds within a span of weeks,”

placing insureds “at considerable risk.” (Id. ¶ 208.) Second, Plaintiffs contend that Defendants

“routinely and fraudulently unbundled separate charges for fluorosciopic guidance from the

underlying injection charges, in a calculated effort to increase their billing for the medically

unnecessary injections.” (Id. ¶¶ 212–26.) Plaintiffs note that “fluoroscopic guidance is a

component part of, and included in, charges for pain management injections,” and healthcare

services providers are thus “not entitled to be reimbursed separately for fluoroscopic guidance . .

. when billing for pain management injections.” (Id. ¶¶ 214–15.) In addition, Plaintiffs contend

that Innovation Anesthesia and Chen “frequently submitted separate charges for epiduorgraphy

that supposedly was necessary to perform the injections,” even though fluoroscopic guidance is

included in the epidurography charges, and healthcare services providers are not entitled to bill

separately for fluoroscopic guidance and epidurography. (Id. ¶¶ 219–24.) Third, Plaintiffs

allege that Innovation Anesthesia and Chen provided medically unnecessary radiofrequency

nerve ablation (“RFA”). (Id. ¶¶ 227–35.) Plaintiffs contend that Defendants’ treatment of

insureds’ injuries with RFA services, “months after the underlying accidents, [and therefore]

long after the [i]nsureds’ minor soft tissue injuries resolved,” served to “damage or destroy . . .

nerve endings” in the spines of insureds that are “responsible for transmitting pain signals to the

patient.” (Id. ¶¶ 233–35.) Fourth, Plaintiffs contend Defendants submitted claims for

chiropractic, physical therapy, and acupuncture services that were “medically unnecessary” and

performed, if at all, “pursuant to the Defendants’ pre-determined treatment protocol in order to

maximize the potential charges they could submit to [Plaintiffs].” (Id. ¶ 243.)

Plaintiffs allege that Defendants’ submission of bills and treatments reports thus

contained “thousands of fraudulent charges, seeking payment for the [f]raudulent [s]ervices for

which they were not entitled to receive payment.” (Id. ¶ 251.) They contend that the “bills and

treatment reports were false and misleading” because they (1) “uniformly misrepresented to

GEICO that the Defendants were in compliance with all significant statutory and regulatory

requirements governing healthcare practice and/or licensing laws”; (2) “uniformly

misrepresented to GEICO that the [f]raudulent [s]ervices were provided in compliance with all

significant statutory and regulatory requirements”; (3) “uniformly misrepresented to GEICO that

the [f]raudulent [s]ervices were medically necessary, and, in many cases, misrepresented to

GEICO that the [f]raudulent [s]ervices actually were performed in the first instance”; and (4)

“misrepresented and exaggerated the level of the [f]raudulent [s]ervices, the nature of the

[f]raudulent [s]ervices that purportedly were provided, and the reimbursable amounts for the

[f]raudulent [s]ervices.” (Id. ¶ 252.)

iv. Defendants’ fraudulent concealment of their billing practices

Plaintiffs allege that Defendants “systemically concealed their fraud” to induce GEICO

“to promptly pay the fraudulent charges for the [f]raudulent [s]ervices.” (Id. ¶ 254.) They

contend that Defendants “knowingly misrepresented and concealed facts” to prevent GEICO

from discovering that Defendants either never performed services for which they sought

reimbursement or that services they did perform were conducted “pursuant to an illegal referral

scheme.” (Id. ¶¶ 256–57.) Plaintiffs allege that as a part of Defendants’ scheme, they “hired law

firms to pursue collection of the fraudulent charges from GEICO and other insurers.” (Id. ¶

258.) The law firms routinely filed “expensive and time-consuming arbitrations” against GEICO

if the charges were not paid in full. (Id.) Defendants currently have 760 arbitrations and more

than 200 individual lawsuits in New York state court pending against Plaintiffs. (Pls.’ Mem. 7.)

In the month following the filing of the Complaint in this case, Innovation Anesthesia, JPM PT,

and Liberty Park Chiro initiated over 500 suits and arbitrations against GEICO, and Defendants

are “actively pursuing collection” on fraudulent charges. (Id. at 4–5.) Plaintiffs note that

Defendants’ “facially-valid documents submitted to GEICO in support of the fraudulent charges”

were “designed to and did cause GEICO to rely upon them” in complying with their “statutory

and contractual obligations to promptly and fairly process claims.” (Compl. ¶¶ 253, 259.) They

allege that, as a result of Defendants’ “material misrepresentations, omissions, and other

affirmative acts to conceal their fraud,” GEICO has incurred damages of more than $6,300,000

and that they “could not reasonably have discovered that its damages were attributable to fraud

until shortly before” filing this case. (Id. ¶¶ 259–60.)

II. Discussion

a. Standard of review

“The preliminary injunction standard applies where . . . a party seeks to stay pending no-

fault insurance claims and to enjoin the filing of further claims during the pendency of a lawsuit

seeking to invalidate those claims.” Beynin, 2021 WL 1146051, at *4 (collecting cases); see also

Gov’t Emps. Ins. Co. v. Wellmart, Inc., 435 F. Supp. 3d 443, 449 (E.D.N.Y. 2020) (analyzing a

motion to stay and enjoin no-fault collection proceedings under the preliminary injunction

standard), appeal dismissed, No. 20-225 (2d Cir. May 11, 2020). “[A] preliminary injunction is

‘an extraordinary remedy never awarded as of right.’” Benisek v. Lamone, 585 U.S. 155, 158

(2018) (per curiam) (quoting Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 24 (2008)); see

also State Farm, 120 F.4th at 79 (“A preliminary injunction ‘is an extraordinary and drastic

remedy, one that should not be granted unless the movant, by a clear showing, carries the burden

of persuasion.’” (quoting Moore v. Consol. Edison Co. of N.Y., 409 F.3d 506, 510 (2d Cir.

2005))); Woodstock Ventures, LC v. Woodstock Roots LLC, 837 F. App’x 837, 838 (2d Cir.

2021) (same). The purpose of a preliminary injunction is to “preserve the relative positions of

the parties until a trial on the merits can be held.” Benisek, 585 U.S. at 161 (quoting Univ. of

Tex. v. Camenisch, 451 U.S. 390, 395 (1981)). A party seeking a preliminary injunction “must

establish (1) that it is likely to succeed on the merits, (2) that it is likely to suffer irreparable harm

if the injunction is not granted, (3) that the balance of the equities tips in its favor, and (4) that

the injunction serves the public interest.” SAM Party of N.Y. v. Kosinski, 987 F.3d 267, 273–74

(2d Cir. 2021); see also State Farm, 120 F.4th at 79 (noting that “to obtain a preliminary

injunction,” the movant “must show ‘(1) irreparable harm; (2) either a likelihood of success on

the merits or both serious questions on the merits and a balance of hardships decidedly favoring

the moving party; and (3) that a preliminary injunction is in the public interest.’” (quoting N.

Am. Soccer League, LLC v. U.S. Soccer Fed’n, 883 F.3d 32, 37 (2d Cir. 2018))).

b. The Anti-Injunction Act

As an initial matter the Court first determines whether the Anti-Injunction Act (“AIA”)

limits the Court’s authority to stay Defendants’ pending proceedings in state court.5 The parties

dispute whether any exceptions to the AIA apply to Plaintiffs’ request that the Court stay these

pending state court collections actions. Plaintiffs argue that the AIA “expressly allows a federal

court to stay such pending proceedings ‘where necessary in aid of its jurisdiction, or to protect or

effectuate its judgment.’”6 (Pls.’ Mem. 20 (quoting 28 U.S.C. § 2283).) Defendants argue that

5 Defendants do not argue that the Federal Arbitration Act applies to limit the Court’s

authority to enjoin pending or future arbitrations. (See generally Defs.’ Opp’n.) Therefore, the

Court’s analysis is limited to whether the Anti-Injunction Act bars the Court from enjoining

Defendants’ pending state-court actions.

6 Plaintiffs argue that several courts in the Eastern District “have routinely stayed . . . all

state court collections lawsuits pending against an insurer in virtually identical circumstances —

each citing to the ‘in aid of its jurisdiction’ exception of the AIA.’” (Pls.’ Mem. 20 (citing Gov’t

Emps. Ins. Co. v. Wallegood, Inc., No. 21-CV-1986 (E.D.N.Y. July 16, 2021) (order granting

preliminary injunction)); Pls.’ Reply 9 (citing Gov’t Emps. Ins. Co. v. Gerling, 718 F. Supp. 3d

268 (E.D.N.Y. 2024); Gov’t Emps. Ins. Co. v. Patel, No. 23-CV-2835, 2024 WL 84139

the “expressly-authorized exception” to the AIA “does not apply to Plaintiffs’ request for a

preliminary injunction,” (Defs.’ Mem. 14 (citation omitted)), and, even if the AIA did apply to

Plaintiffs’ request, Plaintiffs “cannot satisfy the ‘necessary in aid’ of the court’s jurisdiction

exception to the Act.” (Defs.’ Mem. 14 (citing Gov’t Emps. Ins. Co. v. Mayzenberg, No. 17-CV-

2802, 2018 WL 6031156, at *9 (E.D.N.Y. Nov. 16, 2018)).)

“Almost as old as the Constitution, the AIA today provides that ‘[a] court of the United

States may not grant an injunction to stay proceedings in a State court except as expressly

authorized by Act of Congress, or where necessary in aid of its jurisdiction, or to protect or

effectuate its judgments.’” State Farm, 120 F.4th at 92 (alteration in original) (quoting 28

U.S.C. § 2283); see also Pathways, Inc. v. Dunne, 329 F.3d 108, 113 (2d Cir. 2003) (“The Anti-

Injunction Act, subject to some exceptions, prohibits injunctive relief that would interfere,

directly or indirectly, with pending state proceedings.” (citing County of Imperial v. Munoz, 449

U.S. 54, 58–59 (1980))). “Application of the AIA is limited only by the ‘three specifically

defined exceptions’ in the statute that are ‘narrow,’ so ‘[a]ny doubts as to the propriety of a

federal injunction against state court proceedings should be resolved in favor of permitting the

state courts to proceed.’” State Farm, 120 F.4th at 92 (alteration in original) (quoting Smith v.

(E.D.N.Y. Jan. 8, 2024); State Farm Mut. Auto. Ins. Co. v. Herschel Kotkes, No. 22-CV-3611,

2023 WL 4532460 (E.D.N.Y. July 13, 2023); Gov’t Emps. Ins. Co. v. Landow, No. 21-CV-1440,

2022 WL 939717 (E.D.N.Y. Mar. 29, 2022); Gov’t Emps. Ins. Co. v. Big Apple Med., No. 20-

CV-5786 (E.D.N.Y. Mar. 25, 2021) (order granting motion to stay and enjoin); State Farm Mut.

Auto. Ins. Co. v. Parisien, 352 F. Supp. 3d 215, 229 (E.D.N.Y. 2018); State Farm Mut. Auto. Ins.

Co. v. Jamaica Wellness Med., P.C., No. 16-CV-4948 (E.D.N.Y. May 18, 2017) (Min. Entry

dated May 18, 2017).) Plaintiffs also argue that “an injunction staying [pending collections]

lawsuits until this action is resolved is absolutely necessary to aid the jurisdiction of this Court,

prevent fragmented results, and avoid a drain of resources for all parties involved.” (Pls.’ Reply

9.) In addition, Plaintiffs argue that “an injunction ‘enjoining the state actions in this case is

consistent with the purpose of the AIA, which is rooted in respect for the sovereignty of state

governments over matters within their jurisdiction.’” (Pls.’ Mem. 22 (quoting Parisien, 352 F.

Supp 3d at 231).)

Bayer Corp., 564 U.S. 299, 306 (2011)); see also Dr.’s Assocs., LLC v. Tripathi, 794 F. App’x

91, 93 (2d Cir. 2019) (explaining that the Anti-Injunction Act contains three exceptions: it “bars

a federal court from enjoining a proceeding in state court unless that action is ‘expressly

authorized by Act of Congress, or where necessary in aid of its jurisdiction, or to protect or

effectuate its judgments’”).7 “The AIA reflects our ‘dual system of federal and state courts,’ and

its ‘core message is one of respect for state courts.’” State Farm, 120 F.4th at 92 (quoting Smith,

564 U.S. at 306).

Because the statutory prohibition against such injunctions in part “rests on the

fundamental constitutional independence of the [s]tates and their courts, the exceptions should

not be enlarged by loose statutory construction.” United States v. Schurkman, 728 F.3d 129, 135

(2d Cir. 2013) (quoting Atl. Coast Line R.R. Co. v. Brotherhood of Locomotive Eng’rs, 398 U.S.

281, 287 (1970)); In re Payment Card Interchange Fee & Merchant Discount Antitrust Litig.,

348 F.R.D. 151, 169 (E.D.N.Y. 2024) (same).

“[T]he first exception to the AIA allows federal courts to enjoin state-court proceedings

when ‘expressly authorized by Act of Congress.’” State Farm, 120 F.4th at 92 (quoting 28

U.S.C. § 2283). In order “for the exception to apply, ‘Congress must have created a specific and

uniquely federal right or remedy, enforceable in a federal court of equity, that could be frustrated

if the federal court were not empowered to enjoin a state court proceeding.’” Id. at 93 (quoting

Mitchum v. Foster, 407 U.S. 225, 237 (1972)). As the Second Circuit recently reiterated, “the

Supreme Court held in the seminal case of Mitchum v. Foster that ‘no prescribed formula is

7 28 U.S.C. § 2283 provides, in full, that “[a] court of the United States may not grant an

injunction to stay proceedings in a [s]tate court except as expressly authorized by Act of

Congress, or where necessary in aid of its jurisdiction, or to protect or effectuate its judgments.”

required’ for the exception to apply, and that the federal statute ‘need not expressly refer to

§ 2283’ nor ‘expressly authorize an injunction of a state court proceeding in order to qualify as

an exception.’” Id. (internal quotation marks omitted) (quoting Mitchum, 407 U.S. at 237).

“Mitchum accordingly created a two-part test providing that the ‘expressly-authorized’ exception

to the AIA applies if Congress [1] clearly creat[ed] a federal right or remedy enforceable in a

federal court of equity, [2] [that] could be given its intended scope only by the stay of a state

court proceeding.” Id. (internal quotation marks omitted and alterations in original) (quoting

Mitchum, 407 U.S. at 238). In Mitchum, the Supreme Court found that “a federal law need not

expressly authorize an injunction of a state court proceeding in order to qualify as an exception,”

but “an Act of Congress must have created a specific and uniquely federal right or remedy,

enforceable in a federal court of equity, that could be frustrated if the federal court were not

empowered to enjoin a state court proceeding.” 407 U.S. at 237; see Vendo Co. v. Lektro-Vend

Corp., 433 U.S. 623, 632 (1977) (explaining that for the “expressly authorized” exception to

apply, the statute (1) “must have created a specific and uniquely federal right or remedy,

enforceable in a federal court of equity” and (2) it must be an “Act of Congress” which “could be

given its intended scope only by the stay of a state court proceeding” (quoting Mitchum, 407

U.S. at 237–38)); Texaco, Inc. v. Pennzoil Co., 626 F. Supp. 250, 259 (S.D.N.Y. 1986) (same),

aff’d as modified and remanded, 784 F.2d 1133 (2d Cir. 1986), rev’d on other grounds, 481 U.S.

1 (1987). An Act of Congress is not required to be “totally incompatible with the prohibition of

the anti-injunction statute” to qualify under the exception. Mitchum, 407 U.S. at 237–38. “The

test, rather, is whether an Act of Congress, clearly creating a federal right or remedy enforceable

in a federal court of equity, could be given its intended scope only by the stay of a state court

proceeding.” Id. at 238; see Sierra v. City of New York, 528 F. Supp. 2d 465, 468 (S.D.N.Y.

2008) (same). In State Farm, the Second Circuit concluded that RICO satisfies the two-part test

the Supreme Court articulated in Mitchum and Vendo. 120 F.4th at 95. First, RICO is “a

specific and uniquely federal right or remedy, enforceable in a federal court of equity.” Id.

(quoting Mitchum, 407 U.S. at 237). The Second Circuit explained that “RICO was specifically

‘designed to remedy injury caused by a pattern of racketeering, and concepts such as RICO

“enterprise” and “pattern of racketeering activity” were simply unknown to common law.’” Id.

(quoting Agency Holding Corp. v. Malley-Duff & Assocs., Inc., 483 U.S. 143, 149–50 (1987)).

Thus, “RICO creates a uniquely innovative federal remedy that did not exist at common law.”

Id. at 96. In addition, the Second Circuit found that RICO is similar to statutes the Supreme

Court evaluated in Mitchum and Vendo and concluded were “specific and uniquely federal

right[s] or remed[ies].” Id. at 97 (“Importantly, RICO’s legislative history demonstrates that

Congress modeled civil RICO on the Clayton Act, which all the Justices in Vendo agreed was a

specific and uniquely federal right or remedy.” (citation omitted)); id. (“RICO’s legislative

history reveals that in adopting the RICO statute, Congress was animated by concerns similar to

those underlying 42 U.S.C. § 1983 that Mitchum found persuasive.”). Second, “RICO could be

given its intended scope only by a stay of the hundreds of pending state-court proceedings.” Id.

As the Supreme Court concluded in Vendo, “where multiple meritless proceedings are a part of a

scheme to violate the relevant federal law in order to give that law its intended scope, an

injunction of state-court proceedings could fall within the ‘expressly-authorized’ exception.” Id.

The Second Circuit explained that because the plaintiffs “allege[] that the hundreds of frivolous

state-court proceedings themselves help to further the RICO violation,” the “unusual

circumstances here fall squarely within Vendo.” Id. at 98. The Second Circuit further explained

that the state-court proceedings in State Farm “furthered the alleg[ed] RICO violation in two key

ways”: (1) “the proceedings help[ed to] finance the purported scheme,” and (2) the “piecemeal

nature” of the state-court proceedings, which often concerned the claims of a single individual,

obscured the defendants’ “overall complex scheme.” Id. The Second Circuit noted that “[i]f the

pending state-court proceedings are allowed to continue, [the plaintiff] faces the irreparable harm

of never having a forum to demonstrate the existence of Defendants’ alleged RICO scheme.” Id.

Accordingly, “the only way to give RICO its intended scope in the specific circumstances here is

by staying the pending state-court proceedings.” Id. The Second Circuit emphasized that its

decision was “narrow and limited to the unusual circumstances alleged [in State Farm], which

involve a massive scheme including hundreds of purportedly meritless state-court proceedings

that help further a RICO violation.” Id. at 98–99.

Plaintiffs’ claims implicate identical “unusual circumstance[s]” the Second Circuit

identified in State Farm. Id. at 99. First, Plaintiffs in this case allege RICO violations, which is

the exact statute the Second Circuit concluded was a “specific and uniquely federal right or

remedy.” Id. at 95 (quoting Mitchum, 407 U.S. at 237). Plaintiffs’ claims thus implicate

uniquely federal rights or remedies and therefore satisfy the first prong of the Mitchum test. See

id. at 95–96 (“RICO’s legislative history demonstrates that Congress modeled civil RICO on the

Clayton Act, which all the Justices in Vendo agreed was a specific and uniquely federal right or

remedy.” (citation omitted)); Vendo, 433 U.S. at 632 (“The private action for damages conferred

by the Clayton Act is a ‘uniquely federal right or remedy,’ in that actions based upon it may be

brought only in the federal courts. It thus meets the first part of the test laid down in the

language quoted from Mitchum.” (citation omitted)); Armstrong v. Real Est. Int’l, Ltd., No. 05-

CV-5383, 2006 WL 354983, at *3 (E.D.N.Y. Feb. 14, 2006) (“To qualify for the first exception

to the Anti-Injunction Act, the equitable remedy . . . must be a uniquely federal one that could

only be enforceable in federal court.”). Second, as in State Farm, Plaintiffs allege Defendants

“hired law firms to pursue collection of the fraudulent charges from GEICO and other insurers,”

amounting to over 1,000 combined state-court lawsuits and arbitrations against Plaintiffs. (Id. ¶

258; Pl.’s Mem. 4–7.) Defendants’ expensive and time-consuming lawsuits “themselves help to

further the RICO violation” because, as in State Farm, their lawsuits enable Defendants to use

the benefits obtained from those lawsuits “to continue financing their scheme, thereby

constituting a ‘pattern of baseless, repetitive claims.’” State Farm, 120 F.4th at 98 (quoting

Vendo, 433 U.S. at 644). Plaintiffs’ claims therefore satisfy the second prong of Mitchum

because the Defendants’ “meritless proceedings are a part of a scheme to violate the relevant

federal law.” State Farm, 120 F.4th at 97 (“RICO could be given its intended scope only by a

stay of the hundreds of pending state-court proceedings here” because “where multiple meritless

proceedings are a part of a scheme to violate the relevant federal law in order to give that law its

intended scope, an injunction of state court proceedings could fall within the ‘expressly-

authorized exception.’”)

Accordingly, the Court finds that the expressly-authorized exception to the AIA applies

to Plaintiffs’ request for a preliminary injunction of pending no-fault insurance state court

proceedings.

c. Preliminary injunction

Plaintiffs argue that the Court should enjoin pending and future state court litigation and

pending and future arbitrations, and argue in support that district courts within the Second

Circuit have “consistently” granted “substantially similar motions to stay a defendant healthcare

provider’s no-fault collection proceeding[s] during the pendency of a plaintiff-insurer’s fraud

and declaratory judgment action.” (Pls.’ Mem. 6 (citations omitted).) Plaintiffs argue that

GEICO satisfies the demands of the preliminary injunction standard. (Id. at 7–20.)

Defendants argue that Plaintiffs fail to establish the elements of a preliminary injunction.

(Defs.’ Opp’n 4–14.)

A party seeking a preliminary injunction “must establish (1) that it is likely to succeed on

the merits, (2) that it is likely to suffer irreparable harm if the injunction is not granted, (3) that

the balance of the equities tips in its favor, and (4) that the injunction serves the public interest.”

SAM Party, 987 F.3d at 273–74; see also Mendez v. Banks, 65 F.4th 56, 63–64 (2d Cir. 2023),

(explaining that the traditional preliminary injunction standard requires plaintiffs to show (1) “a

likelihood of success on the merits or sufficiently serious questions going to the merits . . . ,” (2)

“that [the plaintiffs] are likely to suffer irreparable injury in the absence of an injunction,” (3)

“that the balance of hardships tips in [the plaintiffs’] favor,” and (4) “that the public interest

would not be disserved by the issuance of a preliminary injunction” (internal quotation marks

and citations omitted) (quoting Salinger v. Colting, 607 F.3d 68, 79–80 (2d Cir. 2010))); cert.

denied, 144 S. Ct. 559 (2024); Ventura de Paulino v. N.Y.C. Dep’t of Educ., 959 F.3d 519, 529

(2d Cir. 2020) (noting that “to obtain a preliminary injunction, the movant has to ‘show (a)

irreparable harm and (b) either (1) likelihood of success on the merits or (2) sufficiently serious

questions going to the merits to make them a fair ground for litigation and a balance of hardships

tipping decidedly toward the party requesting the preliminary relief’” (quoting Citigroup Glob.

Mkts., Inc. v. VCG Spec. Opportunities Master Fund Ltd., 598 F.3d 30, 35 (2d Cir. 2010))).

i. Likelihood of success on the merits or sufficiently serious questions

going to the merits

Plaintiffs argue that they have “[s]hown — at a [m]inimum — a [s]erious [q]uestion

[g]oing to the [m]erits” of their claim, and have documented “considerable evidence that

Defendants were not entitled to collect on the bills for the Fraudulent Service.” (Pls.’ Mem. 11.)

In support, Plaintiffs argue that they have provided detailed allegations of Defendants’ “scheme

of fraudulent activity,” and argue three “serious questions” as to Defendants’ behavior as part of

this scheme, including (1) Innovation Anesthesia’s unlawful operations in New Jersey, (id. at

14–15); (2) Defendants’ unlawful compensation in exchange for patient referrals, (id. at 15–16);

and (3) Defendants’ fraudulent treatment and billing protocol, including “misrepresent[ations of]

the nature, extent, and results of their putative examinations” that form “the fraudulent pattern,”

(id. 16–17).

Defendants argue that Plaintiffs fail to present “actual evidence” demonstrating a serious

question or a likelihood of success on the merits. (Defs.’ Opp’n 9.) In support, Defendants

argue that, although “GEICO seeks a stay of all collection proceedings for three separate

practices — Innovation Anesthesia . . . JPM [PT]. . . , and Liberty [Park Chiro]” Plaintiffs “fail[

] to clearly distinguish between these Defendants.” (Id.) Defendants also argue that Plaintiffs

fail to demonstrate that Chen could not provide medical services in New Jersey, (id. at 10), that

“GEICO failed to substantiate the referral and kickback claims with any substantive support

beyond allegations in the Complaint,” (id.), and in particular “GEICO failed to provide an expert

review as to the medical necessity issue in its moving papers,” (id. at 11).

“The ‘serious questions’ standard permits a district court to grant a preliminary

injunction . . . 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.” State Farm, 120 F.4th at 82–83 (quoting Citigroup, 598 F.3d at

35); Spanski Enters., Inc. v. Telewizja Polska S.A., 832 F. App’x 723, 724 (2d Cir. 2020)

(quoting same). “The ‘serious questions’ standard allows courts to ‘asses[] the merits of a claim

at the preliminary injunction stage’ by affording considerable ‘flexibility in the face of varying

factual scenarios and the greater uncertainties inherent at the outset of particularly complex

litigation.’” State Farm, 120 F.4th 83 (quoting Citigroup, 598 F.3d at 35); see also Beynin, 2021

WL 1146051, at *6 (“The value of an approach encompassing the serious questions standard

‘lies in its flexibility in the face of varying factual scenarios and the greater uncertainties inherent

at the outset of particularly complex litigation.’”). “District courts in [this] Circuit have

generally found that ‘[l]ikelihood of success is not the focus at the early stages of a case

[involving an alleged scheme to defraud an insurer of assigned no-fault benefits] because any

likelihood of success inquiry would be premature.” Gov’t Emps. Ins. Co. v. Relief Med., P.C.,

554 F. Supp. 3d 482, 498 (E.D.N.Y. 2021) (second and third alterations in original) (quoting

Gov’t Emps. Ins. Co. v. Zaitsev, No. 20-CV-3495, 2021 WL 3173171, at *1 (E.D.N.Y. July 27,

2021)); see Gov’t Emps. Ins. Co. v. Landow, No. 21-CV-1440, 2022 WL 939717, at *12

(E.D.N.Y. Mar. 29, 2022) (same); Gov’t Emps. Ins. Co. v. Advanced Comprehensive Lab’y, LLC,

No. 20-CV-2391, 2020 WL 7042648, at *5 (E.D.N.Y. Dec. 1, 2020) (same); Allstate Ins. Co. v.

Elzanaty, 929 F. Supp. 2d 199, 217 (E.D.N.Y. 2013) (same). “Instead, [district courts] look to

whether there is a serious question going to the merits to make them a fair ground for trial.”

Relief Med., 554 F. Supp. 3d at 498 (alteration in original) (quoting Zaitsev, 2021 WL 3173171,

at *1); see Gov. Emps. Ins. Co. v. Demesmin, No. 23-CV-6191, 2024 WL 4573698, at *2

(E.D.N.Y. Oct. 23, 2024) (quoting Wellmart, 435 F. Supp. 3d at 449) (same); see also Gov.

Emps. Ins. Co. v. Zilberman, No. 20-CV-209, 2021 WL 1146086, at *1–2 (E.D.N.Y. Mar. 25,

2021) (applying the “serious question” standard in no-fault proceeding); Advanced

Comprehensive Lab’y, 2020 WL 7042648, at *5–6 (same); Wellmart, 435 F. Supp. 3d at 453–55

(same); State Farm Mut. Auto. Ins. Co. v. Parisien, 352 F. Supp. 3d 215, 220, 234 (E.D.N.Y.

2018) (same).

A medical professional corporation is prohibited from “directly or indirectly offering [or]

giving . . . any fee or other consideration to or from a third party for the referral of a patient . . .

in connection with the performance of professional services.” N.Y. Comp. Codes R. & Regs. tit.

8, § 29.1(b)(3); see also Gov’t Emps. Ins. Co. v. Jacques, No. 14-CV-5299, 2017 WL 9487191,

at *2 (E.D.N.Y. Feb. 13, 2017) (“New York also prohibits paying kick-backs for patient

referrals.” (citing N.Y. Comp. Codes R. & Regs. tit. 8, § 29.1(b)(3))), report and

recommendation adopted, 2017 WL 1214460 (E.D.N.Y. Mar. 31, 2017); Arthur Ave. Med.

Servs., PC v. GEICO Ins. Co., 148 N.Y.S.3d 356, 361 (Civ. Ct. 2021) (“[A medical] corporation

may not share professional service fees with third parties, such as referral fees.” (citing N.Y.

Comp. Codes R. & Regs. tit. 8, § 29.1(B)(4))). “If a medical professional corporation engages in

. . . unprofessional conduct, it is rendered ineligible for a requested no-fault reimbursement by

virtue of [N.Y. Comp. Codes R. & Regs., tit. 11] § 65-3.16(a)(12).” Mayzenberg, 2018 WL

6031156, at *7 (quoting Gov’t Emps. Ins. Co. v. Badia, No. 13-CV-1720, 2015 WL 1258218, at

*9 (E.D.N.Y. Mar. 18, 2015)); see also Jacques, 2017 WL 9487191, at *2 (“To be eligible for

reimbursement payments under the no-fault law, a provider of healthcare services must comply

with applicable licensing requirements.” (citing N.Y. Comp. Codes R. & Regs. tit. 11, § 65-

3.16(a)(12))). “New York law [also] provides that defendants may be held liable for medically

unnecessary services under New York’s [no-fault] insurance laws.” Advanced Comprehensive

Lab’y, 2020 WL 7042648, at *7 (citing Long Is. Radiology v. Allstate Ins. Co., 830 N.Y.S.2d

192, 194 (App. Div. 2007)). “[A] complaint alone can be sufficient to grant an injunction, [and]

[t]his is particularly true where . . . the complaint comprehensively details regulatory violations,

unnecessary medical services, and unlawful referrals.” Gov. Emps. Ins. Co. v. Moshe, No. 20-

CV-1098, 2020 WL 3503176, at *2 (E.D.N.Y. June 29, 2020) (collecting cases).

Plaintiffs allege that Defendants (1) used a predetermined treatment protocol, with

Innovation Anesthesia and Chen acting as gatekeepers, and subjecting patients to “initial

examinations” the results of which were “routinely falsified,” (Pls.’ Mem. 4, 17); (2) based on

the findings of these examinations, Defendants diagnosed “substantially identical” deficiencies

and injuries to patients, (id. at 17 (emphasis omitted)); (3) referred patients to providers who paid

kickbacks for the referrals under the guise of “lease” agreements, and “return referrals back” to

the Referring Defendants “for continued provision of medically unnecessary chiropractic,

acupuncture, and physical therapy treatment,” (id. at 15); and (4) submitted “thousands of bills”

to Plaintiffs through Innovation Anesthesia, JPM PT, Liberty Park Chiro, and Hao Acupuncture

for the services detailed above while concealing the existence of the “secret agreements” to refer

patients for “expensive and medically unnecessary interventional pain management services” in

exchange for return referrals and illegitimate payments disguised as legitimate “lease” payments,

(id. at 15, 17). These allegations sufficiently demonstrate a serious question going to the merits.

See Demesmin, 2024 WL 4573698, at *4 (finding that the plaintiffs had “establish[ed] a serious

question going to the merits” where the amended complaint detailed “a complex scheme of

fraudulent billing and referrals among a network of chiropractic providers” and “numerous

examples of charges billed without proper documentation or under suspicious circumstances”);

Zaitsev, 2021 WL 3173171, at *2 (finding a serious question going to the merits where the

complaint “detailed allegations of a complex scheme of fraudulent activity,” including, inter

alia, that the defendants “submitted charges . . . for healthcare services that were medically

unnecessary,” “provided the alleged fraudulent healthcare services pursuant to illegal kickback

and self-referral arrangements,” and “misrepresented that they were in compliance with all

relevant laws and regulations”); Beynin, 2021 WL 1146051, at *6 (finding a serious question

going to the merits where the plaintiffs’ complaint “detail[ed] a complicated scheme of alleged

fraudulent activity” that “[gave] rise to an ‘inference . . . that the treatments [we]re . . . not being

provided on the basis of medical necessity’” (third and fourth alterations in original) (first

quoting Elzanaty, 929 F. Supp. 2d at 222; and then quoting Parisien, 352 F. Supp. 3d at 229));

Zilberman, 2021 WL 1146086, at *2 (finding a serious question going to the merits where the

“complaint provide[d] an extremely detailed overview of a complicated scheme” in which, inter

alia, the defendants were alleged to have “provided fraudulent healthcare services that were not

medically necessary” and “relied upon illegal kickback arrangements”); Advanced

Comprehensive Lab’y, 2020 WL 7042648, at *6 (finding a serious question going to the merits

where “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 [d]efendants’” (citation omitted)); Moshe, 2020 WL 3503176, at *2 (noting

that a “plethora of precedent demonstrates courts routinely find a ‘serious question going to the

merits’ under similar circumstances” (first citing Gov’t Emps. Ins. Co. v. Strut, No. 19-CV-728,

2020 WL 1820500 (W.D.N.Y. Apr. 10, 2020); then citing Parisien, 352 F. Supp. 3d at 234; and

then citing Elzanaty, 929 F. Supp. 2d at 222)); Gov’t Emps. Ins. Co. v. Cean, No. 19-CV-2363,

2019 WL 6253804, at *5 (E.D.N.Y. Nov. 22, 2019) (finding a serious question as to the merits

where the plaintiffs alleged “facts relating to [the defendants’] fraudulent activity in [their]

[c]omplaint, describing fraudulent medical treatment, deceitful billing protocols, and an illegal

kickback and referral scheme”).

Contrary to Defendants’ claims that Plaintiffs fail to allege sufficiently specific instances

of treatments and payments to meet their evidentiary burden, (Defs.’ Opp’n 2, 9), Plaintiffs

allege in the 121-page Complaint detailed allegations of Defendants’ fraudulent treatment and

kickback scheme, including specific details related to: (1) the operational history of 93-16

Liberty Avenue, in addition to the shifting nature of the “lease” kickback fees paid for patient

referrals that “were not for fixed fees set in advance, and did not cover any regular lease terms,”

(Compl. ¶¶ 61–66); (2) the relationship among Defendants with respect to business dealings,

ownership of corporate entities, employment, and financial arrangements, (id. ¶¶ 3–4, 8–15); (3)

the operations of the overall scheme granting access to patients in exchange for referrals and

payments for medically unnecessary services, (id. ¶¶ 47–250); and (4) the medically unnecessary

services allegedly provided, including specific allegations about the nature of each type of

treatment or test provided, (id.).

Because Plaintiffs allege in the Complaint extensive detail as to the alleged fraudulent

practices, the Court finds that Plaintiffs have satisfied their evidentiary burden. See State Farm,

120 F.4th at 84 (concluding that plaintiff insurance companies “demonstrated sufficiently serious

questions going to the merits” where plaintiffs “describe[d] a web of interconnected relationships

among the various [d]efendants, illegal financial arrangements tying many of the [d]efendants

together, medically unnecessary treatment and services provided to patients, and unauthorized

ownership or operation of medical facilities by some [d]efendants”); Gerling, 718 F. Supp. 3d at

276–77 (finding plaintiffs described the scheme in sufficient detail by alleging that “medically

unnecessary procedures were performed pursuant to an illegal patient-brokering scheme . . .

where bills for reimbursement were submitted with misrepresentations in order to maximize . . .

financial gain” and the complaint “recite[d] dozens of specific examples”); Zaitsev, 2021 WL

3173171, at *2 (holding that the allegations supporting the preliminary injunction “are not

conclusory since they are supported by detailed examples throughout the complaint,” including

“specific patients and treatment dates”); Advanced Comprehensive Lab’y, 2020 WL 7042648, at

*4–5 (rejecting the defendants’ argument that “the evidence proffered by [the plaintiff] [wa]s

insufficient to satisfy the elements for injunctive relief” because the plaintiffs alleged that the

defendants “perpetrated a fraudulent medical billing scheme where [the] defendants submitted

medically unnecessary claims for reimbursement to [the plaintiffs] in furtherance of [the]

defendants’ financial gain” and “provide[d] specific factual examples of [the] defendants’

allegedly fraudulent scheme and exploitation of the New York [no-fault] insurance system”);

Moshe, 2020 WL 3503176, at *2 (“While many courts have granted injunctions after considering

a more developed record, a complaint alone can be sufficient to grant an injunction. This is

particularly true where, as here, the complaint comprehensively details regulatory violations,

unnecessary medical services, and unlawful referrals.” (first citing Strut, 2020 WL 1820500, at

*2; and then citing Liberty Mut. Ins. Co. v. Excel Imaging, 879 F. Supp. 2d 243, 254–64

(E.D.N.Y. 2012))); Strut, 2020 WL 1820500, at *2 (rejecting implausibility argument where the

complaint provided “numerous examples to support each of [the plaintiff’s] fraud theories, citing

specific patients, accident dates, and treatment dates”); Cean, 2019 WL 6253804, at *5 (finding a

serious question going to the merits where plaintiffs “alleged, in significant detail, facts relating

to [the] [d]efendants’ fraudulent activity in [their] [c]omplaint, describing fraudulent medical

treatment, deceitful billing protocols, and an illegal kickback and referral scheme”); Parisien,

352 F. Supp. 3d at 234 (holding that, in light of the plaintiffs’ allegations and exhibits, “it cannot

be said that [the plaintiffs’] request for injunctive relief ‘rest[ed] on mere hypotheticals’”

(quoting Hancock v. Essential Res., Inc., 792 F. Supp. 924, 928 (S.D.N.Y. 1992))).

Although the question of whether under New York law improper payments for patient

referrals alone is sufficient to justify an insurer denying payment for no-fault benefits is pending,

see Gov. Emps. Ins. Co. v. Mayzenberg, 121 F.4th 404, 421 (2d Cir. 2024), certified question

accepted, 42 N.Y.3d 1045 (2024); 42 N.Y.3d at 1045, in addition to alleging a scheme of hidden

“lease” payments among Defendants for referrals, Plaintiffs also allege that the scheme depends

on systemic illegitimate “return referrals,” (Compl. ¶ 67), Innovation Anesthesia’s unlawful

provision of professional services in New Jersey, (id. ¶¶ 47–53), and submitting fraudulent

billing, (id. ¶¶ 34–53, 252).

Accordingly, Plaintiffs have shown a serious question as to whether Defendants are

eligible to receive reimbursement for no-fault benefits.

ii. Irreparable harm

Plaintiffs argue that “GEICO will suffer irreparable harm absent a stay and injunction . . .

. ” (Pls.’ Mem. 7.) In support, Plaintiffs argue that they are “faced with 760 individual no-fault

arbitration proceedings and more than 200 individual lawsuits” such that “potentially dozens of

inconsistent awards . . . will frustrate GEICO’s attempt to obtain declaratory relief in this

action.” (Id.) Plaintiffs also argue that “in analogous no-fault insurance fraud cases, the risk of

inconsistencies between arbitrations and collection lawsuits and a court’s ruling establishes

irreparable harm.” (Id.)

Defendants argue that Plaintiffs have failed to prove irreparable harm because “‘mere

injuries . . . in terms of money, time and energy necessarily expended’ absent a stay of ongoing

state court and arbitration proceedings ‘are not enough’ to establish irreparable harm” where

Plaintiffs could be “fully compensated through money damages.” (Defs.’ Opp’n 4–6 (quoting

Allstate Ins. Co. v. Harvey Fam. Chiropractic, 677 F. App’x 716, 718 (2d Cir. 2017)).)

Irreparable harm is “the single most important prerequisite for the issuance of a

preliminary injunction.” State Farm, 120 F.4th at 80 (quoting Faiveley Transp. Malmo AB v.

Wabtec Corp., 559 F.3d 110, 118 (2d Cir. 2009)); Gov’t Emps. Ins. Co. v. Barakat, 709 F. Supp.

3d 93, 100 (E.D.N.Y. 2024) (“The showing of irreparable harm is perhaps the single most

important prerequisite for the issuance of a preliminary injunction . . . .” (quoting Elzanaty, 929

F. Supp. 2d at 221)). To establish irreparable harm, “the moving party ‘must demonstrate that

absent a preliminary injunction [it] will suffer an injury that is neither remote nor speculative, but

actual and imminent, and one that cannot be remedied if a court waits until the end of trial to

resolve the harm.’” State Farm, 120 F.4th at 80 (alteration in original) (quoting Faiveley

Transp., 559 F.3d at 118). “Thus, irreparable harm exists ‘where, but for the grant of equitable

relief, there is a substantial chance that upon final resolution of the action the parties cannot be

returned to the positions they previously occupied.’” Id. at 80 (quoting Brenntag Int’l Chems.,

Inc. v. Bank of India, 175 F.3d 245, 249 (2d Cir. 1999)). Absent “extraordinary circumstances,”

injunctions are also unavailable “[w]here there is an adequate remedy at law, such as an award of

money damages.” Id. (quoting Moore, 409 F.3d at 510). “[T]he moving party 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.’” Id. (quoting Kamerling

v. Massanari, 295 F.3d 206, 214 (2d Cir. 2002)). “Courts have readily held that 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.” Parisien, 352 F. Supp. 3d at 233 (first citing Gov’t Emps. Ins. Co. v. Strutsovskiy, No.

12-CV-330, 2017 WL 4837584, at *6 (W.D.N.Y. Oct. 26, 2017); and then citing Elzanaty, 929

F. Supp. 2d at 222); see, e.g., Gerling, 718 F. Supp. 3d at 274 (finding the plaintiffs

demonstrated irreparable harm because “if [the defendants were] permitted to continue pursuing

collection arbitrations during the pendency of th[e] lawsuit,” the “arbitration actions ‘might

eventually be, at best, inconsistent with th[e] [c]ourt’s ruling, and at worst, essentially

ineffective’” (quoting Elzanaty, 929 F. Supp. 2d at 222)); see also Zaitsev, 2021 WL 3173171, at

*2 (“Courts in this Circuit have found . . . that ‘[i]rreparable harm occur[ed] 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.”’” (second and third

alterations in original) (quoting Moshe, 2020 WL 3503176, at *1) (collecting cases)).

Plaintiffs have sufficiently demonstrated that they will suffer irreparable harm absent a

stay and injunction. Plaintiffs’ assertions that, absent the requested injunctive relief, the “760

individual no-fault arbitration proceedings and more than 200 individual lawsuits pending” will

risk “inconsistent awards before multiple arbitrators” and “frustrate [Plaintiffs’] attempt to obtain

declaratory relief in this action,” are sufficient to demonstrate irreparable harm. (Pls.’ Mem. 7.)

See Gerling, 718 F. Supp. 3d at 276, 276 n.3, 279 (finding that the fact there were just four

pending arbitrations was not “dispositive,” but nonetheless was sufficient to demonstrate

irreparable harm absent a stay due to the risk of inconsistent judgments, the potential

unavailability of money damages, and the risk that “fragmenting” the dispute into the

approximately fifty or more pending lawsuits “would nullify [plaintiffs’] efforts to prove fraud at

a systemic level” and “deprive [plaintiffs] of an avenue toward complete relief in any court”);

Zaitsev, 2021 WL 3173171, at *2 n.3 (noting that although Harvey concluded that “wasted time

and resources do not constitute irreparable harm,” “Harvey does not preclude granting an

injunction to avoid inconsistent judgments” (quoting Moshe, 2020 WL 3503176, at *2)); Beynin,

2021 WL 1146051, at *4–6 (concluding that “the likely inconsistencies amongst the prospective

arbitral rulings themselves, and between the prospective arbitral rulings and th[e] [c]ourt’s

ultimate disposition of the declaratory judgment and fraud-based claims” constituted irreparable

harm (citation omitted) (collecting cases)); Advanced Comprehensive Lab’y, 2020 WL 7042648,

at *5 (rejecting the defendants’ argument based on Harvey that the plaintiff will not suffer

irreparable harm and noting that if the defendants were “permitted to prosecute the ongoing

collection proceedings, [the plaintiff] faces imminent and non-speculative risks of inconsistent

judgments and unnecessary expenditure of time and resources on arbitration,” which shows

irreparable harm); Cean, 2019 WL 6253804, at *5 (concluding “that wasting time and resources

in arbitrations with awards that might eventually be, at best, inconsistent with judicial rulings

and, at worst, essentially ineffective, constitutes irreparable harm”); Mayzenberg, 2018 WL

6031156, at *5 (noting that unlike the injuries noted in Harvey, “it is the inconsistency to which

hundreds of arbitrations will inevitably give rise, the frustration of the declaratory judgment

relief for which [the plaintiff] is likely to succeed on the merits, and the resources spent vacating

hundreds of arbitration awards that satisfies the irreparable harm prong”); Strutsovskiy, 2017 WL

4837584, at *7 (staying no-fault collection arbitrations pending the resolution of the plaintiff’s

declaratory judgment action and rejecting the notion that Harvey barred a preliminary

injunction); Elzanaty, 929 F. Supp. 2d at 222 (finding that “allowing a large number of

proceedings to be heard by a mix of arbitrators, each of whom will likely come to their own

independent and potentially contradictory conclusions, will result in harm to [the plaintiff] from

which it cannot recover”). In addition, in the month following Plaintiffs’ filing of their

complaint Innovation Anesthesia, JPM PT, and Liberty Park Chiro initiated over 500 suits and

arbitrations seeking to collect on the same bills at issue in the Complaint, (Pls.’ Mem. 5), all of

which supports Plaintiffs’ demonstration of irreparable harm from the real risk of future

proceedings. See Gerling, 718 F. Supp. 3d at 277 (explaining that plaintiffs would be irreparably

harmed if “future collection proceedings are not enjoined”); Advanced Comprehensive Lab’y,

2020 WL 7042648, at *4 (“Moreover, under these circumstances, the court agrees that [the

plaintiff] will suffer irreparable injury that ‘is neither remote nor speculative’ without injunctive

relief because [the defendant] continues to commence arbitrations before the AAA.” (quoting

Grand River Enter. Six Nations, Ltd. v. Pryor, 481 F.3d 60, 66 (2d Cir. 2007))).

The Court is not persuaded by Defendants’ arguments as to why Plaintiffs have allegedly

not shown irreparable harm. First, Defendants argue that the “risk of inconsistent outcomes

between [the federal action] and the no-fault arbitrations that will frustrate [Plaintiffs’] attempt

for declaratory relief” is insufficient to demonstrate irreparable harm, (Defs.’ Mem. 5), but

Defendants’ reliance on Harvey is misplaced. The Second Circuit has distinguished Harvey —

where the defendant was an “illegally owned and improperly licensed” business, Allstate Ins. Co.

v. Harvey Fam. Chiropractic, Physical Therapy & Acupuncture, PLLC, No. 15-CV-7149, 2018

WL 8544440, at *1 (E.D.N.Y. Sept. 21, 2018), and was not operating a complicated scheme that

would be difficult to establish in arbitrations and state-court proceedings — from cases where

defendants engage in a “massive and highly complex scheme” which can be “obscured in . . .

piecemeal proceedings” and where the “potential preclusive effects of the arbitrations and state-

court proceedings” are a significant harm. 8 State Farm, 120 F.4th at 81–82. As other courts in

this Circuit have noted, Harvey “does not address the risk of inconsistent judgments.” Strut,

2020 WL 1820500, at *3 (citing Harvey, 677 F. App’x at 718); see also Moshe, 2020 WL

3503176, at *2 (“Harvey does not preclude granting an injunction to avoid inconsistent

8 In Allstate Ins. Co. v. Harvey Family Chiropractic, the Second Circuit summarily

affirmed the district court’s denial of a preliminary injunction of no-fault proceedings and noted

(1) that there was “no evidence in the record that” the plaintiffs could not “be fully compensated

through money damages for the alleged harm suffered from the defendants’ fraudulent claims”

and (2) that “[e]ven if the defendants obtain[ed] other [no-fault] reimbursements in state court

and arbitrations while th[e] case [was] pending, the plaintiffs [were] free to recover those

payments [if] they prevail[ed] on their RICO claim.” 677 F. App’x 716, 718 (2d Cir. 2017).

judgments.” (citing Wellmart, 435 F. Supp. 3d at 451)); Wellmart, 435 F. Supp. 3d at 451

(“[T]he Second Circuit [in Harvey] said nothing of the risk of inconsistent judgments.”).

Second, Defendants argue that Plaintiffs can resolve their disputes in the “no-fault

arbitration system,” because “[t]he no-fault statute was passed by the legislature so that medical

providers would have an expedited forum to obtain reimbursement from insurers for automobile

injury claims without having to spend time and resources in protracted litigation.” (Defs.’ Opp’n

7–8.) However, the arbitration system does not provide sufficient guarantees of procedural

safeguards to address concerns regarding the complexity of the scheme at issue before the Court.

See Mun, 751 F.3d at 99 (“New York’s 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 RICO claims . . . cannot be shoehorned into this system.”

(citation omitted)); Advanced Comprehensive Lab’y, 2020 WL 7042648, at *2 (same);

Mayzenberg, 2018 WL 6031156, at *6 (same); see Beynin, 2021 WL 1146051, at *6 (“In brief,

the [arbitration] process is ‘meant to work as quickly and efficiently as possible,’” such that “the

claims brought in this action cannot be meaningfully pursued in no-fault insurance proceedings.”

(quoting Mun, 751 F.3d at 99)); Parisien, 352 F. Supp. 3d at 229 (“Because it is only through

this tapestry of facts that the alleged fraud comes into focus, [the plaintiffs] may not as a

practical matter have a fair opportunity to present [their] claims unless [they are] permitted to

direct the trier of fact to all of the claims at issue.”); cf. State Farm, 120 F.4th at 92 (explaining

that the Federal Arbitration Act did not bar the Court from enjoining arbitrations proceeding

under New York’s process for no-fault coverage because “the thousands of allegedly baseless

arbitrations . . . [would] help to further the massive and complex RICO scheme alleged”).

Accordingly, the Court finds that Plaintiffs have shown irreparable harm.

iii. Balance of hardships

Plaintiffs argue that “[t]he [b]alance of [h]ardship [w]eighs in [f]avor of a [s]tay.” (Pls.’

Mem. 17.) In support, Plaintiffs argue that, absent a stay, they “will face a multitude of

individual arbitrations,” and risk “fragmented results” in no small part because “[Plaintiffs’]

evidence of fraud consists of information from multiple claims . . . [and their] ability to take

discovery and present evidence of this level of complexity is practically impossible in the context

of a single state court collection lawsuit. (Id. at 18, 22 (internal quotation marks and citations

omitted).) Plaintiffs also argue that “Defendants will suffer no hardship if their right to collect

on their pending billing is adjudicated in a single, efficient, declaratory judgment action, rather

than on a piecemeal basis in multiple collection proceedings with the prospect of significantly

varying outcomes.” (Id. at 17–18 (citations omitted).)

Defendants argue that “[t]he [b]alance of [h]ardships [t]ips [d]ecidedly” in their favor,

because “a preliminary injunction would force Defendants to work for free, while [Plaintiffs]

den[y] claims and avoid[ ] the statutory arbitration process . . . . [which] causes an extreme

imbalance [because] Defendants [do] not have the same money and resources as [Plaintiffs].”

(Defs.’ Opp’n 12.)

Under the third prong of the preliminary injunction analysis, a court must “balance the

competing claims of injury and must consider the effect on each party of the granting or

withholding of the requested relief.” State Farm, 120 F. 4th at 84 (quoting Yang v. Kosinski, 960

F.3d 119, 135 (2d Cir. 2020)). If there are “sufficiently serious questions going to the merits of

its claims to make them fair ground for litigation,” courts inquire into whether there is “a balance

of the hardships tipping decidedly in favor of the moving party.” Really Good Stuff, LLC v. BAP

Invs., L.C., 813 F. App’x 39, 42–43 (2d Cir. 2020) (quoting Oneida Nation of N.Y. v. Cuomo,

645 F.3d 154, 164 (2d Cir. 2011)); State Farm, 120 F.4th at 79–80 (“Because under the ‘serious

questions’ standard a party would have to demonstrate both serious questions on the merits and a

balance of hardships decidedly favoring the moving party, the ‘overall burden is no lighter than

the one [the party] bears under the “likelihood of success” standard.’” (quoting Citigroup, 598

F.3d at 35)); see also TushBaby, Inc. v. Jinjang Kangbersi Trade Co. Ltd., No. 24-CV-6150,

2024 WL 4627452, at *2 (S.D.N.Y. Oct. 30, 2024) (same); Parisien, 352 F. Supp. 3d at 234

(“Because the [c]ourt finds that there are ‘serious questions going to the merits’ in lieu of a

‘likelihood of success on the merits,’ it must further inquire as to whether . . . there is a ‘balance

of hardships tipping decidedly’ in [the plaintiff’s] favor.” (quoting Jackson Dairy, Inc. v. H. P.

Hood & Sons, Inc., 596 F.2d 70, 72 (2d Cir. 1979))).

Absent a preliminary injunction, Plaintiffs face 750 pending arbitrations and 200

individual pending lawsuits, and likely hundreds or thousands of additional arbitrations and

state-court proceedings to resolve the over $3 million of Defendants’ total submitted bills

currently unpaid and not yet subject to arbitration or court proceedings. (Pls.’ Mem. 7, 5.)

Defendants do not appear to face a similar level of uncertainty in their competing concern of

policy exhaustion, as they speak generally of exhaustion risk without identifying any specific set

of policies nearing exhaustion. (Defs.’ Opp’n 13 (“Each of the underlying insureds who received

treatment from Defendants have policies that contain a no-fault insurance limit . . . Given that

many policy limits are quite low in comparison to the treatment required, the policies can be

exhausted very quickly.”).) See State Farm, 120 F.4th at 85 (affirming the Court’s conclusion

that plaintiff insurance companies’ allegations of a fraudulent conspiracy “raise[d] serious and

substantial allegations that demonstrate actual and imminent irreparable harm absent and

injunction, whereas [d]efendants’ alleged hardships of economic impact can be remedied by

monetary damages should they later prevail”); Moshe, 2020 WL 3503176, at *3 (finding that the

balance of hardships weighed in favor of the insurer where the insurer “will face thousands of

different proceedings” and defendants’ policy exhaustion argument “[was] speculative at best

considering defendants [did] not identify any policies nearing exhaustion”).

Moreover, Defendants are entitled to interest if they prevail. See Demesmin, 2024 WL

4573698, at *4 (noting that “[b]ecause the defendants will presumably be entitled to collect

interest on their pending claims if they prevail, the delay [did] not outweigh the risk of

inconsistent outcomes faced by [the plaintiff]” (citation omitted)); Elzanaty, 929 F. Supp. 2d at

222 (noting that the defendants will “benefit from the stay if [they] ultimately prevail[] in th[e]

matter, because [they] will be entitled to the collection of interest”); Zaitsev, 2021 WL 3173171,

at *3 (noting that the “defendants will not be disadvantaged if the stay is granted since they will

be entitled to statutory interest on their unpaid claims should they ultimately prevail” (first citing

Elzanaty, 929 F. Supp. 2d at 222; and then citing Mayzenberg, 2018 WL 6031156, at *7));

Mayzenberg, 2018 WL 6031156, at *7 (“[I]f [the defendants] prevail in this action, they are

entitled to statutory interest on their unpaid claims.”); Parisien, 352 F. Supp. 3d at 234–35 (“If

the preliminary injunction is granted and [the plaintiffs] fail[] to prove [their] claims, then, at

worst, [the defendants’] recovery of the no-fault benefits to which they are entitled will be

delayed; all [the 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.”).

A stay of pending and future arbitrations and lawsuits addressing similar claims will save

the parties time and resources and promote judicial efficiency. See Gerling, 718 F. Supp. 3d at

278 (concluding that “granting the stay and injunction will actually save all parties time and

resources[,] because all claims can be efficiently and effectively dealt with in a single declaratory

judgment action rather than in piecemeal fashion” (internal quotation marks and citation

omitted)); Beynin, 2021 WL 1146051, at *8 (holding that “consolidation promotes efficiency in

cases like this . . . notwithstanding [the defendants’] claim that they will suffer financially,”

especially where “they have not specified the extent of that hardship — e.g., how much of their

income the outstanding and pending claims constitute” (first citing Cean, 2019 WL 6253804, at

*5; and then citing Advanced Comprehensive Lab’y, 2020 WL 7042648, at *8)); Zilberman,

2021 WL 1146086, at *2 (“[G]ranting 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.”

(first quoting Cean, 2019 WL 6253804, at *5; and then citing Elzanaty, 929 F. Supp. 2d at 222));

Strut, 2019 WL 6338023, at *8 (stating that “[j]udicial economy tips the balance of those

equities decidedly in [the plaintiffs’] favor” where the plaintiffs would otherwise “have to make

payments on claims with serious questions about consistency” (citing Strutsovskiy, 2017 WL

4837584, at *7)); Mayzenberg, 2018 WL 6031156, at *7 (“[I]t is obviously more efficient and

beneficial for [the defendants] if all of their claims are resolved in one action, rather than in

hundreds of different proceedings.”).

Accordingly, the Court finds that the balance of hardships tips decidedly in Plaintiffs’

favor.

iv. Public interest

Plaintiffs argue that “[f]ar from creating friction between the state and federal courts, an

injunction in this case will serve the public policy of New York in combatting insurance fraud in

the no-fault sector.” (Pls.’ Mem. 23 (quoting Gov’t Emps. Ins. Co. v. Wallegood, Inc., No. 21-

CV-1986, slip op. at 18 (E.D.N.Y. July 16, 2021) (order granting preliminary injunction)))

(internal quotation marks omitted).) Plaintiffs also argue that in a dispute between private

parties, “it is not required to demonstrate that the proposed injunction will not harm the public

interest . . . [but] it is well within the public interest to stay No-Fault collection proceedings

during the pendency of a plaintiff-insurers declaratory judgment action involving claims of

fraud.” (Id. at 19 n.20 (citing In re Soundview Elite Ltd., 543 B.R. 78, 118 n.210 (Bankr.

S.D.N.Y. 2016) (“Normally the public interest is not a factor on preliminary injunction

applications involving private disputes.”).) Defendants make no argument as to the public

interest factor.

In analyzing the public interest prong, a court must consider “the public consequences in

employing the extraordinary remedy of injunction,” Yang, 960 F.3d at 135–36 (quoting Winter,

555 U.S. at 24), and ensure that the proposed injunction “does not cause harm to the public

interest,” SEC v. Citigroup Glob. Mkts. Inc., 673 F.3d 158, 163 n.1 (2d Cir. 2012) (per curiam);

see also State Farm, 120 F.4th at 85 (explaining that courts “consider whether the preliminary

injunction is in the public interest, which concerns the ‘public consequences in employing the

extraordinary remedy of injunction’” (quoting Yang, 960 F.3d at 135–36)).

There is no indication that granting an injunction would harm the public interest. See

State Farm, 120 F.4th at 85 (“Preventing fraud, especially the kind of elaborate and complex

RICO scheme alleged here, is plainly in the public interest.” (quoting Mun, 751 F.3d at 100));

Beynin, 2021 WL 1146051, at *10 (noting that “preventing fraud of the sort alleged [under New

York’s no-fault laws] is in the public interest” (citing Wellmart, 435 F. Supp. 3d at 456)); Strut,

2020 WL 1820500, at *3 n.8 (finding that the public interest factor in a preliminary injunction

and stay as to no-fault proceedings was neutral); Mayzenberg, 2018 WL 6031156, at *10 (noting

that “[p]reventing fraud on our health care system is also in the public’s interest” where

“allegations of fraud on our health care system generally, and even the specific civil RICO

scheme alleged here, have become too common”).

Because there are serious questions going to the merits of the case, Plaintiffs would suffer

irreparable harm absent a stay, the balance of hardships weighs in Plaintiffs’ favor, and there is

no indication that the public interest would be harmed as a result of a stay, the Court grants

Plaintiffs’ motion to stay all pending arbitrations and state court proceedings and to enjoin all

future arbitrations and state court proceedings.

d. Security for the injunction

Plaintiffs argue that no bond should be required because they have provided “detailed and

plausible fraud claims,” they have “already paid the Defendants over $6,300,000 on their

allegedly-fraudulent claims,” they contend there is no “plausible claim that GEICO ultimately

might be unable to compensate any wrongfully-enjoined Defendants,” and that “Defendants’

arguments regarding insurance policy exhaustion are . . . speculative and without factual

support.” (Pls.’ Reply 10.) Plaintiffs also argue that most courts do not require it to post bond.

(Id. (citations omitted).)

Defendants argue that Plaintiffs should be required to post bond because “if any

injunction is issued, a bond is needed to cover Defendants’ outstanding claims plus interest, an

amount which continues to grow.” (Defs.’ Opp’n 14–15 (citing Strut, 2020 WL 1820500, at

*3).)

Rule 65(c) of the Federal Rules of Civil Procedure states that “the court may issue a

preliminary injunction . . . 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); see also State Farm, 120 F.4th at 86 (quoting

same). “The phrase in such sum as the court deems proper[] indicates that the [d]istrict [c]ourt is

vested with wide discretion in the matter of security[,] and it has been held proper for the court to

require no bond where there has been no proof of likelihood of harm . . . .” Dr.’s Assocs., Inc. v.

Stuart, 85 F.3d 975, 985 (2d Cir. 1996) (internal quotation marks omitted) (first quoting

Ferguson v. Tabah, 288 F.2d 665, 675 (2d Cir. 1961); and then citing Clarkson Co. v. Shaheen,

544 F.2d 624, 632 (2d Cir. 1976)); see also State Farm, 120 F.4th at 86 (“Courts have the

discretion, however, to require no security at all depending on the specific circumstances.”

(quoting Corning Inc. v. PicVue Elecs., Ltd., 365 F.3d 156, 158 (2d Cir. 2004))); Gerling, 718 F.

Supp. 3d at 280 (“Courts in this district have repeatedly reasoned that the enforcement of no-

fault insurance statutes is in the public interest, as is the prevention of fraud on the healthcare

system, and, accordingly, have waived the security requirement upon identifying the ‘systemic

nature of the fraud alleged in the complaint and the lack of prejudice to defendants resulting from

a preliminary injunction.’” (quoting Wellmart, 435 F. Supp. 3d at 456)); Dr.’s Assocs. LLC v.

Hai, No. 19-CV-1968, 2019 WL 2385597, at *5 (E.D.N.Y. June 6, 2019) (“[A] district court in

its discretion may deny a bond altogether if there is ‘no proof of likelihood of harm’ to the non-

movant.” (alteration in original) (quoting Golden Krust Patties, Inc. v. Bullock, 957 F. Supp. 2d

186, 202 (E.D.N.Y. 2013))). “Rule 65(c)’s security requirement is designed to ‘assure[] the

enjoined party that it may readily collect damages from the funds posted in the event that it was

wrongfully enjoined, and that it may do so without further litigation and without regard to the

possible insolvency of the plaintiff.’” State Farm, 120 F.4th at 86 (alteration in original)

(quoting Nokia Corp. v. InterDigital, Inc., 645 F.3d 553, 557 (2d Cir. 2011)); U.S. D.I.D. Corp.

v. Windstream Commcns, Inc., 775 F.3d 128, 135 (2d Cir. 2014) (quoting same).

Because Plaintiffs have established a likelihood of harm, a stay is unlikely to prejudice

Defendants, and Defendants may readily collect damages from Plaintiffs, the Court declines to

require Plaintiffs to post a bond. See Demesmin, 2024 WL 4573698, at *5 (waiving security

under Rule 65(c) because “there is no question that [plaintiffs] will be able to pay if the

defendants prevail”); Zaitsev, 2021 WL 3173171, at *3 (waiving Rule 65(c) requirement where

“the requested injunction will not cause [the defendants] any prejudice at all” and “[the insurer]

undoubtedly has the ability to pay if defendants prevail” (first quoting Moshe, 2020 WL

3503176, at *4; then citing Wellmart, 435 F. Supp. 3d at 456; and then citing Mayzenberg, 2018

WL 6031156, at *10)); Beynin, 2021 WL 1146051, at *10 (waiving the security requirement of

Rule 65(c) where the parties “may well benefit from consolidation and interest” (first citing

Cean, 2019 WL 6253804, at *5; and then citing Elzanaty, 929 F. Supp. 2d at 222)); Advanced

Comprehensive Lab’y, 2020 WL 7042648, at *8 (waiving 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

[the] defendants resulting from a preliminary injunction” (citing Mayzenberg, 2018 WL

6031156, at *10))); Moshe, 2020 WL 3503176, at *4 (“[The insurer] undoubtedly has the ability

to pay if [the] defendants prevail. As such, [the] defendants will suffer no harm from the

injunction and the bond requirement is waived.” (citing Wellmart, 435 F. Supp. 3d at 456));

Wellmart, 435 F. Supp. 3d at 456 (waiving security requirement “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”); Mayzenberg, 2018 WL 6031156, at *10 (waiving the security

requirement of Rule 65(c) where the court “concluded that a preliminary injunction will not

result in any prejudice to [the defendants] and would actually benefit them if all of their claims

are decided in one proceeding”).

III. Conclusion

For the foregoing reasons, the Court grants Plaintiffs’ motion. The Court stays all pending

no-fault insurance collection arbitrations and state court collections litigation commenced against

GEICO by or on behalf of Innovation Anesthesia, Chen, Liberty Park Chiro, Mangguray, Ciccone,

and JPM PT. The Court also enjoins all Defendants from commencing any new no-fault

insurance collection arbitrations or new no-fault insurance collections litigation against GEICO,

pending the resolution of GEICO’s claims in this action. The Court declines to require Plaintiffs

to post a bond.

Dated: March 25, 2025

Brooklyn, New York

SO ORDERED:

/s MKB

MARGO K. BRODIE

United States District Judge