Government Employees Insurance Company et al v. Zaitsev et al

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UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
GOVERNMENT EMPLOYEES
INSURANCE COMPANY, et al.,
Plaintiffs,
-against-
ALEXANDR ZAITSEV, M.D., et al.,
Defendants.
MEMORANDUM AND ORDER
Case No. 1:20-cv-03495-FB-SJB
Appearances:
For the Plaintiffs:
MAX GERSHENOFF,
FRANK PETER TISCIONE JR.,
BARRY I. LEVY,
FRANK TISCIONE,
COLLEEN O’NEIL,
STEVEN HENESY,
Rivkin Radler LLP
926 Rexcorp Plaza
Uniondale, NY 11556
For the Defendants
MATTHEW J. CONROY,
ROBERT E. B. HEWITT III,
Schwartz, Conroy & Hack, P.C.
666 Old Country Road, Suite 900
Garden City, NY 11530
BLOCK, Senior District Judge:
Plaintiffs (collectively “GEICO”) bring this action against Alexandr Zaitsev, M.D.,
Metropolitan Interventional Medical Services, P.C., Anthony Benevenga, Charles G. Nicola,
D.C., Ridgewood Diagnostic Laboratory, L.L.C., Eugene Gorman, M.D., Bogdan Negrea, M.D.,
Antonio Ciccone, D.O., Stella Amanze, P.A., Frida Isakov, P.A., Lucknie Ovincy, P.A., Emily
Bakerman, N.P., Melissa Evans, N.P., Mini Mathew, N.P., Angela Pullock, N.P., Linda Santa
Maria, N.P., and Rivka Weiss, N.P. (collectively “Defendants”).
GEICO contends that Defendants—led by Zaitsev—carried out a large-scale no-fault
insurance fraud scheme whereby they defrauded GEICO into paying insurance benefits to which
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the Defendants were not entitled. In short, GEICO argues that Zaitsev’s 2018 attempt to sell his
two medical practices was a sham, that he retained control over both practices, and that when
those practices referred patients to Zaitsev’s laboratory business they were illegal self-referrals.
To this effect, GEICO alleges that Defendants committed civil RICO violations, common law
fraud, aiding and abetting fraud, unjust enrichment, and New Jersey Insurance Fraud Prevention
Act (NJIFPA) violations. Additionally, GEICO seeks a declaratory judgement that defendants
may not recover on any of the outstanding bills submitted to GEICO. The Court previously
issued a preliminary injunction staying all pending no-fault insurance arbitration proceedings
between GEICO and Defendants, and enjoining Defendants from initiating new proceedings
“until the resolution of the instant federal court action.” See Dkt. 134.
GEICO has now moved for Summary Judgement, pursuant to Fed. R. Civ. P. 56, on its
unjust enrichment and NJIFPA claims, as well as its request for declaratory judgement. See Dkt.
201. For the following reasons, the motion is GRANTED in part and DENIED in part.
Background
The facts presented here, as well as those in the Discussion section, are taken from the
pleadings, the parties’ Rule 56.1 statements, and the supporting documentation. The facts are
undisputed unless otherwise noted.
In 2013, Defendant Zaitsev incorporated a New Jersey medical practice named Interstate
Multi-Specialty Medical Services, P.C. (“Interstate”). Pl’s 56.1 ¶ 20, Dkt. 201-1. Defendant
Eugene Gorman, M.D. (“Gorman”) and former Defendant Allan Weissman, M.D. (“Weissman”)
worked for Interstate. Id. at ¶ 22. In or around 2016, Zaitsev incorporated Defendant
Metropolitan Interventional Medical Services, P.C. (“Metropolitan”) to provide medical services
in New York. Id. at ¶ 23. Interstate and Metropolitan performed similar pain management
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services in their respective states. Id. at ¶ 25. Both Interstate and Metropolitan were
headquartered at 126 State Street, Hackensack NJ (although billing and insurance verification for
Metropolitan was handled elsewhere). Zaitsev Dep. 253:22–254:24, Dkt. 201-6.
In 2014, Ridgewood Diagnostic Laboratory, L.L.C. (“Ridgewood”) was incorporated in
New Jersey. See Ridgewood Certificate of Formation, Dkt. 201-27. Zaitsev held an 87%
ownership stake in Ridgewood through an LLC named Galuba International, L.L.C.. Pl’s 56.1 ¶¶
62, 65. Ridgewood performed laboratory services, including urine drug testing (“UDT”), from an
office located on the second floor of 126 State Street, Hackensack NJ. Id. at ¶ 67. Zaitsev never
referred patients from his health care practices (Interstate/Metropolitan) to Ridgewood because
he knew such referrals were prohibited by both New York and New Jersey law. Zaitsev Dep.
248:8–11. Mark Kaminar, Zaitesev’s personal accountant and good friend, served as the
accountant for Interstate, Metropolitan, and Ridgewood, as well as Zaitsev’s many other
companies. Pl’s 56.1 ¶¶ 54, 60.
In or around the spring of 2018, Zaitsev began talking with Weissman about his desire to
sell Interstate and Metropolitan so that he could focus on Ridgewood’s laboratory business. Pl’s
56.1 ¶ 74; Zaitsev Dep. 348:11–18. Zaitsev hired a forensic accounting firm to determine the two
companies’ collective valuation, which they set at $13,600,000.00. Pl’s 56.1 ¶¶ 76–77. Although
Weissman lacked the capital to purchase the companies outright, he and Zaitsev agreed that he
could buy the companies—without a down payment—and pay the purchase price over time with
the companies’ revenues. Zaitesev Dep. 345–347.
With a handshake, Weissman took over control of Interstate and Metropolitan. Id. at
346:6. Kaminar helped Weissman incorporate two new companies—Tri-State and Riverside—to
take over Interstate and Metropolitan’s operations, including leases, staff, and clients. Pl’s 56.1 ¶
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83. Kaminar served as accountant for the new companies, and the new companies retained the
law firm Abrams, Fensterman, Eisman, Formato, Wolf & Carone, L.L.P. (“Abrams Fensterman”)
to represent them in billing and collection activities. Id. at ¶ 109. Certain attorneys at Abrams
Fensterman had longstanding relationships with Zaitsev and the law firm also represented (and
continues to represent) Ridgewood. Zaitsev Dep. 55:6–9.
Despite Weissman taking over, Zaitsev retained control over the predecessor companies’
accounts receivable. Zaitsev Dep. 356:3–4. Weissman therefore needed funding to manage the
companies’ collective $200,000 monthly overhead until new revenues could be collected. Id. at
356:24–25. From the many ways to fund a new business, Zaitsev and Weissman appear to have
sought out the most suspicious. Tri-State initially borrowed $2.5 million, with seven percent
interest, from Octagon Partners L.L.C. (“Octagon”). Id. at ¶ 132. Zaitsev was Octagon’s sole
member. Id. at ¶ 8. This was enough money to cover Tri-State and Riverside’s overhead for more
than a year. Nonetheless, two months later, Tri-State entered into another loan Agreement, this
time with Financial Vision Group, L.L.C. (“Financial Vision”). Id. at ¶ 136. Pursuant to the
Financial Vision agreement, Tri-State was allowed to draw from a $2.6 million line of credit, any
loans were to be secured by Tri-State’s accounts receivable, and Financial Vision was entitled to
a fee of “150% of the amount of the advance, plus the principal.” Id. at ¶¶ 139, 141.1 Financial
Vision’s members included Zaitsev as well as three of the partners at Abrams Fensterman. Id. at ¶
¶ 116, 137. Weissman’s signature is affixed to a conflict waiver form addressing the conflict of
Abrams Fensterman’s involvement with the medical practices and the Financial Vision
1 Although Kaminar was Tri-State’s accountant, he claims he had no role in drafting the agreement. Nonetheless he
conceded that he would only agree to such terms “If I were desperate . . . [if] I had no choice to survive.” Kaminar
Dep. 164:23–24.
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agreement. Pl’s 56.1 ¶ 117. He says he does not remember signing the waiver, but acknowledges
that Kaminar had him sign many documents, and it may have been one of them. Weissman Dep.,
219–221, Dkt. 201-10. He also claims he did not know Zaitsev was one of Financial Vision’s
owners. Id. at 269:13-23.
Weissman claims ignorance as to much of the business he was supposed to have
purchased. In addition to not remembering signing the conflict waiver, he does not remember
signing documents to incorporate a company called Riverside Management Group, Inc.
(“Riverside Management”), which was incorporated in his name and which received more than
$1,000,000.00 from Tri-State and Riverside during Weissman’s brief ownership of those
companies. Id. at 287:7–10; Andrew Ross Expert Report, p. 9, Dkt. 201-33. In his sworn
affirmation he asserts that “in practice, I continued to work for Dr. Zaitsev because he and Mr.
Kaminar controlled all of the financial and operational decision-making with respect to Tri-State
and Riverside. . . . I did not hire, fire, or set the salary of any of the professional or non-
professional staff at Tri-State and Riverside.” Weissman Aff. ¶ 26, Dkt. 201-11. This claim,
however, is contradicted by his deposition testimony, wherein he conceded that he alone
discussed the financial status of the companies with Kaminar, made the staffing, scheduling,
hiring, and firing decisions, and was a signatory on the accounts from which bills and payroll
were paid. Weissman Dep. 224–229. Most importantly, Weissman conceded that Zaitsev’s only
interaction with the companies was “peripheral” and that he did not report to Zaitsev. Id. at
225:6–17.
In summary, Zaitsev (through Octagon and Financial Vision) loaned money to
Weissman’s new medical practices. In the case of the Financial Vision agreement, the loan may
have been usurious. See e.g. NJ Rev Stat § 2C:21-19. GEICO claims that through these financial
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arrangements Zaitsev retained actual control over the companies, but Weissman’s own deposition
testimony suggests that, for all intents and purposes, he was the exclusive owner and controller
of Tri-State and Riverside.
In or around October 2018, less than six months after his handshake with Zaitsev,
Weissman changed his mind and decided he no longer wished to purchase the companies.
Zaitsev Dep., 444:13–445:2. As Weissman had never paid a cent for them, this was rather easy to
effectuate. Zaitsev just needed to find a different doctor to take over the practices. Enter Dr.
Kristappa Sangavaram, a New Jersey physician who had repeatedly been sanctioned by the New
Jersey State Board of Medical Examiners, and who was permitted to practice medicine only with
a practice monitor overseeing his medical practices and billing records. See April 19 2007
Consent Order, Dkt. 201-21; July 23, 2014 Consent Order, Dkt. 201-22. Unfortunately,
Sangavaram had over $4.5 million in open and unsatisfied money judgements entered against
him, so he could not pay for the medical practices either. See NJ Division of Taxation Judgement,
Dkt. 201-23; Prudential Judgement, Dkt. 201-24. But like Weissman he could use the businesses’
revenues to pay Zaitsev over time. The record indicates Zaitsev “sold” the businesses to
Sangavaram—a feat that would be difficult if Weissman had been the true owner—but that
Weissman also “assigned” Tri-State and Riverside to Sangavaram for free. See Asset Purchase
Agreement, Dkt. 201-42; Assignment and Assumption Agreement, Skt. 201-37.
The Court is unable to make much sense of the timeline of Dr. Sangavaram’s tenure as
owner of the two practices because he invoked his Fifth Amendment right against self-
incrimination in response to almost every question in his deposition. The only facts the Court can
determine for certain are that Sangavaram “purchased” the businesses in early 2019 and GEICO
initiated this action in 2020.
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II
A court should grant summary judgment when there are no genuine issues of material
fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a); see
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986) (A
dispute as to a material fact is genuine “if the evidence is such that a reasonable jury could return
a verdict for the nonmoving party.”). The movant bears the burden of showing that it is entitled
to summary judgment. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2553, 91 L.
Ed. 2d 265 (1986).
GEICO seeks summary judgement on three of its claims: unjust enrichment, NJIFPA
violations, and its request for a declaratory judgement. GEICO’s motion hinges on the Court
determining that there are no genuine issues of dispute as to the following issues. First, Zaitsev
was the secret owner of Tri-State and Riverside and the businesses were not legally permitted to
refer patients to Ridgewood for laboratory services. Second, that Ridgewood conducted
medically unnecessary UDT services (specifically, testing for 6-MAM (a heroin metabolite) and
methylenedioxyethylamphetamine (“MDEA”)), and pursuant to New Jersey law, GEICO is not
required to pay for unnecessary diagnostic testing. See N.J.S.A. 39:6A–2(m). And third, Tri-State
and Riverside referred patients for UDT services without any doctors signing the requisition
forms, and accordingly the tests were unauthorized.
As there are serious lingering questions of material fact, the Court is unable to make any
summary judgement determinations as to the first issue. The second and third, however, are
essentially undisputed. GEICO is therefore entitled to summary judgement insofar as its claims
relate to the medically unnecessary and unauthorized UDTs. The Court will address the factual
disputes before applying the law to GEICO’s claims.
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Unlawful Self-Referrals
GEICO’s asks the Court to find that Defendants engaged in unlawful self-referrals. To
this end, GEICO repeatedly claims that Zaitsev was the secret owner of Tri-State and Riverside.
While the Court agrees with GEICO that the facts suggest that Zaitsev (and others) undertook
suspicious actions suggesting a coordinated attempt to sidestep New York and New Jersey’s self-
referral laws, the Court cannot conclude that there are no material questions of fact regarding
whether he was the secret owner of the two practices. The record contains sufficient evidence to
support a reasonable jury finding that Zaitsev was earnestly trying to sell the businesses and that
he did not retain control over them while they were owned by Weissman and Sangavaram. The
Court cannot grant summary judgement insofar as GEICO’s claims relate to this alleged self-
referral scheme.
This is a classic case where a jury is needed to decide which witnesses are credible and
which narrative is believable. GEICO claims Zaitsev was in control of everything. Defendants
say that Weissman, and later Sangavaram, was in control.2 GEICO claims Weissman knew
nothing about the companies’ finances. Pl’s 56.1 ¶ 149. Defendants say Weissman knew exactly
what was going on, as evidenced by actions like asking Kaminar to incorporate the companies,
reviewing the bank accounts on his phone, pre-signing checks for vendors, and speaking with the
accountant once a week. Def’s 56.1 ¶ 149 Response. GEICO claims Weissman had no role in
2 Dr. Sangavaram pled the fifth as to every question during his deposition, but district courts may not draw negative
inferences at summary judgement based on an individual’s invocation of Fifth Amendment protections. See 650
Fifth Ave. v. Alavi Found., 830 F.3d 66, 93 n.25 (2d Cir. 2016) (citing Stichting Ter Behartiging Van de Belangen v.
Schreiber, 407 F.3d 34, 55 (2d Cir. 2005)). The Court is therefore unable to make any substantive determinations
about who was in control of Tri-State and Riverside during Sangavaram’s ownership. At trial, however, the jury will
be free to draw any negative inferences they wish from Sangaravam’s reticence.
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running the companies, including staffing decisions, and that Zaitsev was still involved in hiring
after the companies changed hands. Pl’s 56.1 ¶ ¶ 152–159. Defendants argue that Weissman
admitted that he made all the hiring and firing decisions, assigned someone to handle scheduling
decisions, discussed financial matters with Kaminar alone, and (most importantly) said that he
did not report to Zaitsev after the sale of the companies. Weissman Dep. 224–228. It is not clear
who was in control of Tri-State and Riverside in 2018 and 2019, and the Court is unable to settle
the issue today. A jury will need to decide whether Defendants engaged in unlawful self-referrals
and whether GEICO is entitled to judgement on its claims.
6-MAM and MDEA Testing
The Court encounters a very different credibility issue when it comes to the question of
whether Ridgewood billed GEICO for medically unnecessary UDT analysis. GEICO’s forensic
toxicology expert, Dr. Elizabeth Spratt, submitted a sworn report attesting to the fact that 6-
MAM and MDEA testing serve no medical purpose. Spratt Report, Dkt. 201-32. Dr. Spratt’s
report explains concisely why these two chemicals are not typically included in UDT and why
they would provide a doctor with no meaningful medical information. Id. at 13 (e.g., of 6-MAM,
“this is one of the active metabolites of heroin. There is no reason to test for 6-MAM as a matter
of course, especially when the opiate testing was negative. 6-MAM is only seen when heroin is
consumed. . . . There is also a screening test for this metabolite.”) In response to this report,
Defendants submitted an unsworn report from rebuttal expert Dr. James Murphy which does not
make any mention of 6-MAM or MDEA testing. Murphy Report, Dkt. 175-1.
While the Court previously denied GEICO’s motion to exclude Dr. Murphy’s testimony,
see ECF Entry June 3, 2024, that does not necessarily mean that the report is sufficient to
overcome summary judgement. See Est. of Detwiler v. Offenbecher, 728 F. Supp. 103, 140
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(S.D.N.Y. 1989) (Ruling on admissibility does not mean “summary judgment [is] impossible
whenever a party has produced an expert to support its position.”). First of all, “[c]ourts in this
Circuit have uniformly held that unsworn expert reports do not satisfy the admissibility
requirements of Fed. R. Civ. P. 56(e), and cannot be used [on] a motion for summary judgment
without additional affidavit support.” Condoleo v. Guangzhou Jindo Container Co., 427 F. Supp.
3d 316, 330 (E.D.N.Y. 2019) (collecting cases). However, even if the Court ignores this
threshold issue and considers Dr. Murphy’s report, it is entirely unresponsive to issue raised by
GEICO’s expert, and therefore unresponsive to the current motion.
As previously mentioned, Dr. Murphy’s report does not include any mention of 6-MAM
or MDEA. Instead, it consists largely of conclusory statements regarding the general
appropriateness of any testing done for a reasonable medical purpose, ultimately concluding:
“The urine drug screens ordered by the Defendants were medically necessary, for a legitimate
medical purpose, in the usual course of professional practice, and consistent with the applicable
standard of care.” Murphy Report at 14. While this sounds very nice, the report makes no
indication that Dr. Murphy reviewed any of Defendants’ medical records or even considered the
specific chemicals at issue. See Est. of Detwiler, 728 F. Supp. at 140 (“[S]ummary judgment is
appropriate where the nonmoving party relies solely on an expert opinion that is not based upon
specific facts.”). Without specifically explaining why 6-MAM or MDEA testing was necessary,
Murphy’s report is unresponsive to the issue currently before the court; as such, the issue is
essentially undisputed. See Zsa Zsa Jewels, Inc. v. BMW of N. Am., LLC, 419 F. Supp. 3d 490,
501, fn. 3 (E.D.N.Y. 2019) (“[S]tatements of fact by an expert may be deemed undisputed where
the non-movant has failed to counter them with specific evidence.”). The Court therefore
concludes that Ridgewood’s testing for 6-MAM and MDEA was medically unnecessary, and
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pursuant to both New York and New Jersey law GEICO is not required to reimburse unnecessary
medical expenses. See N.Y. Ins. Law § 5102(b); N.J.S.A. 39:6A–2(m).
Unauthorized UDTs
The record indicates that Ridgewood conducted UDT services for Tri-State and Riverside
after receiving unsigned requisition forms from those practices. Ridgewood then sought, and
received, reimbursement from GEICO for those UDT services. See Asmus Decl., Ex. 4, Dkt.
201-47. New York and New Jersey law requires that any and all clinical laboratory testing,
including UDTs, be ordered and authorized by a qualified medical professional. See 10
N.Y.C.R.R. § 58-1.7(b) (“a clinical laboratory shall examine specimens only at the request of
licensed physicians or other persons authorized by law”); N.J.A.C. 10:61-1.6(a) (“[a]ll orders for
clinical laboratory services shall be in the form of an explicit order personally signed by the
physician or other licensed practitioner”). Furthermore, both Dr. Gorman and Dr. Weissman
acknowledged that if a UDT requisition form did not bear their signatures, it was unauthorized.
See Gorman Dep., 42:14-22; Weissman Aff., ¶ 31, Dkt. 201-11. In both New York and New
Jersey, insurers are only required to reimburse authorized professional medical services. See
e.g.11 NYCRR 65-3.11 [a].
Defendants do not contest that Ridgewood submitted UDT reimbursements to GEICO for
unauthorized testing. Instead, they simply contend that “GEICO cannot prove the requisite
knowledge that any statement to GEICO contained any false or misleading information.” Def.
Mem. at 2, Dkt. 202. While this may relevant to some of GEICO’s claims—including the
NJIFPA claims—it is not a defense to the unjust enrichment or declaratory judgement claims at
issue in this motion for summary judgement. As the matter is undisputed, the Court concludes
that Ridgewood billed GEICO for unauthorized UDTs.
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Having resolved these factual issues, the Court will now turn to the three claims for
which GEICO seeks summary judgement.
III.
Unjust Enrichment
Recovery for unjust enrichment requires facts establishing that: (i) the Defendants were
enriched; (ii) at GEICO’s expense; and (iii) that equity and good conscience require restitution.
See Kaye v. Grossman, 202 F.3d 611, 616 (2d Cir. 2000). “The ‘essence’ of such a claim ‘is that
one party has received money or a benefit at the expense of another.’” Id. (quoting City of
Syracuse v. R.A.C. Holding, Inc., 258 A.D.2d 905, 685 N.Y.S.2d 381, 381 (4th Dep't 1999)).
GEICO reimbursed Defendants for medically unnecessary and unauthorized UDT
services, so there is no dispute that Defendants were enriched at GEICO’s expense. Therefore,
the only question is whether equity and good conscience require restitution.
Defendants argue GEICO’s unjust enrichment claim is duplicative of its fraud claim, and
as such that it should be dismissed, or at least left for trial. “Courts will routinely dismiss an
unjust enrichment claim that simply duplicates, or replaces, a conventional contract or tort
claim.” Warren v. Coca-Cola Co., 670 F. Supp. 3d 72, 89 (S.D.N.Y. 2023) (quotation omitted).
An unjust enrichment claim can survive alongside a fraud claim where the Court can conceive of
a set of facts upon which the fraud claim would fail but the unjust enrichment claim could
succeed. See Silva v. Smucker Nat. Foods, Inc., No. 14-cv-6154, 2015 WL 5360022, at *12
(E.D.N.Y. Sept. 14, 2015). Here it is conceivable that GEICO will fail to prove that Defendants
intended to defraud, while still succeeding in proving that they paid Defendants for medically
unnecessary or unauthorized UDT services. In such event, GEICO’s fraud claim would fail
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despite proving that Defendants’ were unjustly enriched. The claim is therefore not duplicative of
GEICO’s fraud claim.
However, this is an issue best left for trial. As GEICO’s
“unjust enrichment claims arise from the same factual predicates as [its] other
claims, it is unnecessary to explore the unjust enrichment claim at length. If one
of a number of integrally related causes of action must be tried, it makes little
sense to grant a motion for summary judgment as to one or more of them, as it
may prove necessary to hold yet another trial in the event that it is determined on
appeal that the motion for summary judgment was improperly granted.”
Eviner v. Eng, 2015 WL 4600541, at *13 (E.D.N.Y Jul. 29, 2015). Indeed, in Corsello v. Verizon
New York, Inc., the New York Court of Appeals explained that unjust enrichment “is available
only in unusual situations when, though the defendant has not breached a contract nor committed
a recognized tort, circumstances create an equitable obligation running from the defendant to the
plaintiff.” 18 N.Y.3d 777, 790–91 (2012). As GEICO has not moved for summary judgement on
its fraud claims, the Court cannot say that there is no other cause of action available to remedy
the alleged injury. Therefore summary judgement on the unjust enrichment claim is
inappropriate; equity and good conscience do not require restitution at this stage.
NJIFPA
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.” N.J. Stat Ann. § 17:33A-4(a)(1).
The elements of such a claim are therefore: (1) knowingly, (2) submitting an insurance claim, (3)
containing false or misleading information (4) material to the claim.
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GEICO has presented no evidence that Defendants knowingly requested medically
unnecessary or unauthorized reimbursements for UDT services. They therefore cannot prove that
there is no material dispute as to this element of the claim. They will need to convince a jury that
the alleged actions were undertaken knowingly in order to prevail at trial. The motion is denied as
to the NJIFPA claim.
Declaratory Judgement
“Declaratory relief is proper” whenever “the judgment will serve a useful purpose in
clarifying and settling the legal relations in issue” or “when it will terminate and afford relief
from the uncertainty, insecurity and controversy giving rise to the proceedings.” Maryland Cas.
Co. v. Rosen, 445 F.2d 1012, 1014 (2d Cir. 1971). Furthermore, a party seeking a declaratory
judgment must allege that there is a “substantial controversy, between parties with adverse legal
interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.”
Niagara Mohawk Power Corp. v. Tonawanda Band of Seneca Indians, 94 F.3d 747, 752 (2d Cir.
1996).
There is an actual controversy here because the Ridgewood Defendants have maintained
throughout this litigation that they are entitled to payment for certain categories of billing that
they submitted to GEICO. GEICO seeks a declaratory judgement stating that “GEICO is not
obligated to remit payment on any of the Ridgewood Defendants’ pending and outstanding UDT
billing to GEICO.” Pl’s Mem., 25. As the Court has determined that Ridgewood submitted
billing to GEICO for unauthorized and medically unnecessary UDT services—and that both
categories of claims were not authorized by law—GEICO is entitled to a limited declaratory
judgment as to these two categories of claims.
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The motion is denied, however, insofar as it seeks a declaratory judgement with regard to
Defendants’ alleged self-referral scheme. As the Court explained previously, there are too many
unanswered questions of material fact to warrant the issuance of a declaratory judgement as to
the self-referral scheme. Whether or not GEICO is required to pay the rest of Ridgewood’s no-
fault insurance claims is a question best settled at trial where a jury will be able to review all the
evidence and develop a full picture of this complicated situation. In the meantime, the Court’s
preliminary injunction will protect GEICO’s rights and maintain the status quo until the jury can
resolve the factual disputes.
CONCLUSION
GEICO’s motion for summary judgement is GRANTED IN PART and DENIED IN
PART. The Clerk of the Court will issue a declaratory judgement clarifying that GEICO is not
obligated to remit payment for Ridgewood’s billing for unauthorized or medically unnecessary
UDT services. The motion is denied in all other regards. A jury must decide whether or not the
Defendants engaged in an unlawful self-referral scheme, whether they were unjustly enriched,
and whether they violated the NJIFPA.
SO ORDERED.
_/S/ Frederic Block_________
FREDERIC BLOCK
Senior United States District Judge
Brooklyn, New York
February 3, 2026
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