Roosevelt Road Re, Ltd. et al v. Hajjar et al

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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ROOSEVELT ROAD RE, LTD., and
TRADESMAN PROGRAM MANAGERS, LLC,
Plaintiffs, 	OPINION AND ORDER
-against-
24-CV-1549 (NG)(CHK)
JOHN HAGGAR, M.D., et al.,
Defendants.
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GERSHON, United States District Judge:
Plaintiffs Roosevelt Road Re, Ltd. (“Roosevelt”) and Tradesman Program Managers, LLC
(“Tradesman”) (collectively, “Plaintiffs”) bring this action against legal and medical professionals
and corporations, alleging a violation of the Racketeering Influenced and Corrupt Organizations
Act (“RICO”), RICO conspiracy, two state law claims, and a claim for a declaratory judgment.
Plaintiffs allege that, since at least 2018, the defendants have engaged in a fraudulent scheme that
involves filing workers’ compensation claims and/or personal injury lawsuits on behalf of
construction workers who were not actually injured on the job and/or are fabricating or
exaggerating their injuries to inflate the settlement value of claims and lawsuits brought against
their employers and others insured by insurance companies that have reinsurance contracts with
Roosevelt. Now pending before the court are eight motions to dismiss Plaintiffs’ First Amended
Complaint (“FAC”): a “Joint Motion” filed by all defendants other than Surgicare of Westside,
LLC (collectively, “Defendants”) and seven “Supplemental Motions,” each filed by a separate
defendant or group of related defendants.1
1 Plaintiffs voluntarily dismissed Surgicare of Westside, LLC, in February 2025, about one month
before the Joint Motion was filed. An eighth Supplemental Motion, filed by defendant Andrew
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THE COMPLAINT
Unless otherwise stated, the following facts are drawn from the FAC and are assumed to
be true for purposes of adjudicating Defendants’ motions to dismiss. Roosevelt is a Bermudian
“reinsurer which underwrites policies and provides reinsurance.” (FAC, ¶ 170) The FAC does not
provide any details regarding the primary insurers who have reinsurance contracts with Roosevelt
or the risks that those reinsureds may have ceded to Roosevelt. Rather, the pleading alleges only
that Roosevelt, which is “authorized to conduct business in New York” (Id., ¶ 3), “underwrites
policies and provides reinsurance that covers the various workers’ compensation claims and
personal injury lawsuits filed and prosecuted by the … Defendants” in this action. (Id., ¶ 170)
Tradesman is “a management general agency that provides management services to various
insurers and reinsurers, including … Roosevelt.” (Id., ¶ 180) In this capacity, Tradesman provides
“services from underwriting through claims handling and subsequent administrative and legal
actions” with respect to both general liability and workers’ compensation insurance. 	(Id.) 	The
FAC alleges that “Tradesman made substantial payments and sustained significant damage in
connection with its management of the policies that cover the various claims and lawsuits filed
and prosecuted by the … Defendants.” (Id., ¶ 181)
The FAC names 19 defendants and divides them into two categories: the “Legal Services
Defendants” and the “Medical Provider Defendants.” 	There are six defendants in the former
category: Gorayeb & Associates, P.C. (“G&A”) and its principal, Christopher J. Gorayeb
(collectively, the “Gorayeb Defendants”) and Fogelgaren Forman & Bergman, LLP (“FF&B”),
and its named partners, Eric Fogelgaren, Jonathan Forman, and Robert Bergman (collectively, “the
Merola, M.D., was rendered moot in September 2025, when Plaintiffs voluntarily dismissed their
claims against Dr. Merola.
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Fogelgaren Defendants”).2 	The other 13 defendants are in the latter category; two of these have
already been dismissed from this action. 	See fn. 1, supra. The 11 remaining Medical Provider
Defendants are Siddhartha Sharma, DPM; Surgicore 5th Avenue LLC, a/k/a Fifth Avenue Surgery
Center, LLC (“Surgicore”); Lenox Hill Radiology and Medical Imaging Associates, P.C. (“Lenox
Hill”); Joseph Weinstein, D.O., and Joseph Weinstein, D.O., P.C. (collectively, the “Weinstein
Defendants”); Thomas M. Kolb, MD, and Kolb Radiology P.C. (collectively, the “Kolb
Defendants”); and NY Ortho, Sports Medicine & Trauma, P.C. (“NY Ortho”); Jeffrey Stone
Kaplan, MD; Matthew P. Grimm, MD; and Adrian Puia, RPT (collectively, the “NY Ortho
Defendants”).
The FAC alleges that, “[f]rom at least 2018 to the present, Defendants, together with others
known and unknown, for their financial benefit, orchestrated a widespread fraud scheme to defraud
Plaintiffs and others.” 	(FAC, ¶ 27). 	This “Fraud Scheme” allegedly worked as follows: first,
“Runners,” acting at the direction of the Gorayeb Defendants, recruited construction workers
(“Claimants”) to stage construction accidents at their workplaces. (Id., ¶ 30) The Runners told
Claimants to “fake and claim certain bodily injuries that purportedly resulted from such accidents
and to seek medical treatment.” (Id., ¶ 32) The Runners then referred and/or transported Claimants
to G&A, which “generally” paid the Runners a “referral fee” for their services. (Id., ¶¶ 33–34)
G&A represented the Claimants in personal injury lawsuits against parties involved in the
construction project on which the Claimant was allegedly injured. 	If New York Workers’
Compensation Law (“WCL”) precluded a lawsuit against some of those parties, G&A would refer
the Claimant to FF&B, which had an office on the same floor as G&A. The FAC alleges that the
2 By notice filed January 15, 2026, Plaintiffs voluntarily dismissed defendant Bergman from the
action.
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Gorayeb 	Defendants 	and 	the 	Fogelgaren 	Defendants 	had 	some 	sort 	of 	“agreement 	and
understanding that [FF&B] would represent Claimants in workers’ compensation claims and
[G&A] would represent Claimants in personal injury lawsuits, in furtherance of the Fraud
Scheme.” (Id., ¶ 37) But the FAC does not allege any facts relating to the alleged agreement or
understanding. The FAC states only that, “[f]or most Claimants, both personal injury lawsuits and
workers’ compensation claims were initiated and proceeded in parallel to maximize profit for the
Defendants.” (Id., ¶ 38)
During their representation of the Claimants, the Gorayeb Defendants and Fogelgaren
Defendants would direct the Claimants to seek medical services from various Medical Provider
Defendants, who allegedly “provided false diagnoses, use of their facilities and resources, and
unnecessary, excessive, unwarranted and costly medical services and/or medical services that were
not causally related to the alleged workplace accident.” (Id., ¶ 42) The Gorayeb Defendants then
used the false diagnoses and the record of extensive medical services to “fraudulently inflate the
settlement values of personal injury lawsuits in order to extract greater settlement from general
liability carriers, including from Plaintiff Roosevelt.” 	(Id., ¶ 44) 	Similarly, the Fogelgaren
Defendants used the diagnoses and records to “fraudulently inflate the settlement values of
workers’ compensation claims in order to extract greater settlement from workers’ compensation
carriers, for which Plaintiff Tradesman provides administrative, investigative and support
services.” (Id., ¶ 45)
While the FAC alleges that “the Medical Provider Defendants received compensation from
workers’ compensation insurance” for their services to the Claimants, (id., ¶ 42), it does not allege
that they received money from the Legal Services Defendants. Rather, the FAC states that “[t]he
Medical Provider Defendants understood and agreed that in turn for providing the false medical
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documentation needed for higher settlement values, the Gorayeb Defendants and the Fogelgaren
Defendants will continue to funnel patients to their offices.” (Id., ¶ 43) The FAC also does not
allege any relationship or agreements between the Medical Service Providers, other than ordinary
medical referrals.
Although the FAC alleges that the Fraud Scheme resulted “in a significant number of
fraudulent claims being filed,” (id., ¶ 46), it focuses on four Claimants to illustrate how the alleged
Fraud Scheme worked. These Claimants are not named as defendants and are identified only as
Claimant A, B, C, or D. Each of the four claimed injuries allegedly resulting from a workplace
accident; Claimants A and D claimed that they were struck by falling objects and Claimants B and
C alleged that they fell from heights. 	Each Claimant retained G&A, which “directed the
aggressive, unnecessary medical treatment” of the Claimant and filed a personal injury lawsuit on
the Claimant’s behalf. (Id., ¶¶ 48, 58, 69, 80) Each Claimant also hired FF&B to represent him
before the New York Workers’ Compensation Board (“WCB”).
The FAC alleges that, after hiring the Legal Services Defendants and visiting one or more
of the Medical Provider Defendants, Claimants had their relatively minor injuries transformed into
serious conditions that required costly diagnostic and remedial procedures. For example, Claimant
A was initially diagnosed with a contusion, which was treated with a shot for pain and over-the-
counter pain relievers. Later, however, he was diagnosed with a tear of the left shoulder rotator
cuff that required arthroscopic surgery and a disc herniation that required back fusion surgery. He
was also given a series of epidural steroid injections and 149 physical therapy sessions from,
among others, the NY Ortho Defendants.
With a few exceptions, the FAC does not specify which of the Medical Provider Defendants
treated the four Claimants, or the nature of the services they provided. However, those details are
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contained in six affidavits which are attached to the FAC as Exhibits 1–6 (the “Affidavits”). Each
of the Affidavits is from a medical expert who was retained by Plaintiffs’ counsel to review the
medical records of one or more of the four Claimants and to provide opinions regarding the
treatment they received. 	Two of the Affidavits are from orthopedic surgeons, one is from a
neurologist, and another is from a neuropsychologist and licensed clinical psychologist. A fifth
Affidavit is from a diagnostic radiologist and the sixth is from a physiatrist. None of the experts
personally examined any of the Claimants. 	Rather, they were provided with medical records
relating to one or more Claimant, which are listed in the expert’s Affidavit.
Read together, the list of medical records and the experts’ summaries of those records
provide a detailed chronology of each Claimant’s medical treatment. 	NY Ortho and Kolb
Radiology saw each of the four Claimants and Lenox Hill and Puia saw three of the four. Claimant
D was treated at Surgicore’s facility. But because the experts only reviewed medical records, the
Affidavits do not provide any information regarding the relationships between the Medical
Provider Defendants, other than to occasionally state or imply that one provider referred a
Claimant to another of the providers for radiological studies, physical therapy, or the like. The
Affidavits also contain no information regarding relationships or interactions between the Legal
Services Defendants and the Medical Provider Defendants.
The FAC describes the involvement of all Medical Provider Defendants in the Fraud
Scheme in nearly identical, general terms. 	It alleges that, since 2018, NY Ortho, the Kolb PC,
Lenox Hill, the Weinstein PC, Sharma, and Surgicore have “been involved in the medical treatment
of numerous Claimants … in furtherance of the Fraud Scheme.” 	(FAC, ¶¶ 106, 115, 122, 129,
151, 158) The FAC alleges that the two doctors employed by NY Ortho (Drs. Kaplan and Grimm)
and Drs. Weinstein and Sharma provided services that “were not medically necessary and/or not
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causally related” to the Claimants’ alleged accidents (id., ¶¶ 107, 108, 130, 152); that radiologists
Kolb and Lenox Hill provided “inaccurate findings of the Claimants’ conditions” and “radiological
and imaging diagnostics and MRI reports identifying purported positive findings without
correlation to degenerative conditions” (id., ¶¶ 116, 123); and that Surgicore permitted its
ambulatory surgical facilities to be used to perform procedures that were not medically necessary
(id., ¶ 160). The three defendants employed by NY Ortho (Kaplan, Grimm, and Puia), Kolb, Lenox
Hill, Weinstein, Sharma, and Surgicore then “caused the submission of fraudulent medical
documentation by mail, facsimile and/or email to Tradesman, the … WCB and others involved in
the Claimants’ workers’ compensation claims for authorization and to seek reimbursement for
medical services that were unnecessary, excessive, unwarranted and/or costly and were not
causally related to the alleged workplace accident.” (Id., ¶¶ 110, 117, 124, 131, 153, 161) The
FAC alleges that the Medical Provider Defendants profited from the Fraud Scheme both from
receiving reimbursements for the unnecessary, excessive, unwarranted and/or costly services and
from increasing the number of patients who were referred to them pursuant to the scheme.
The FAC’s allegations concerning direct interactions between Legal Services Defendants
and Medical Service Providers are conclusory. The FAC alleges that the Gorayeb Defendants and
Fogelgaren Defendants “directed … Claimants to seek medical treatment from the Medical
Provider Defendants, knowing and understanding that the Medical Provider Defendants would
provide fraudulent medical documentation needed for higher settlement values in exchange for
continuing to funnel patients to the Medical Provider Defendants.” (Id., ¶¶ 96, 102) And the FAC
alleges that the three defendants employed by NY Ortho (Kaplan, Grimm, and Puia), Kolb, Lenox
Hill, Weinstein, Sharma, and Surgicore “provided fraudulent medical documentation by mail,
facsimile and/or email to Gorayeb Defendants and/or Fogelgaren Defendants, knowing that the
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fraudulent medical documentation would be used to falsely bolster and add value to Claimants’
workers’ compensation claims and personal injury lawsuits, thereby inflating the settlement value
of such claims and lawsuits.” (Id., ¶¶ 112, 119, 126, 133, 155, 163) However, the pleading does
not allege facts to suggest that there were any express agreements between the parties.
Similarly, the FAC contains very few allegations of interactions between the individual
Medical Provider Defendants and no facts to suggest any agreements between them. It alleges that
Dr. Kaplan referred Claimants to his colleagues—defendants Grimm and Puia—“for unnecessary
injections and physical therapy” and to the Kolb Defendants for “unnecessary imaging services.”
(Id., ¶ 107). It also alleges that Dr. Grimm, a pain management specialist, referred Claimants to
his colleague, Puia, for “unnecessary physical therapy.” (Id., ¶108) In addition, the FAC alleges
that Kaplan, Grimm, Puia, Lenox Hill, Weinstein, Sharma, and Surgicore “provided fraudulent
medical documentation by mail, facsimile and/or email to other medical service providers knowing
that the fraudulent medical documentation would be used or relied upon to render additional
medical services that were unnecessary, excessive, unwarranted and/or costly and were not
causally related to the alleged workplace accident.” (Id., ¶¶ 111, 125, 132, 154, 162) However,
the FAC does not allege specific facts to support the allegations regarding the Medical Providers’
knowledge of what use would be made of the documentation they generated.
The FAC alleges only two federal claims: a RICO claim and a RICO conspiracy claim.
The RICO claim alleges that all 19 defendants “constituted an ‘enterprise’ as … defined in 18
U.S.C. § 1961(4) – that is, a group of individuals and legal entities associated in fact, which was
engaged in, and the activities of which affected, interstate commerce, and foreign commerce.”
(FAC, ¶ 185) It also alleges that each defendant “participated in the operation or management of
the enterprise,” but that “Gorayeb orchestrated, coordinated and led” it. (Id.)
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The RICO claim further alleges that “[e]ach of the Defendants knowingly and willfully
associated with the association-in-fact enterprise and conducted and participated in the conduct of
the enterprise’s affairs, directly and indirectly, through a pattern of racketeering activity in
violation of 18 U.S.C. § 1962(c).” (FAC, ¶ 187) The “pattern of racketeering activity” allegedly
involved 93 predicate acts, which are listed in Exhibit 7 to the FAC in a formulaic manner. These
acts allegedly occurred between February 8, 2018, and November 22, 2023, and purportedly
“involved the transmission and use of false and misleading documentation in furtherance of the
Defendants’ scheme to defraud Plaintiffs in connection with submitting, filing, prosecuting and
asserting workers’ compensation claims and personal injury lawsuits arising out of fraudulent
construction accidents.” (FAC, ¶ 189) All 93 predicate acts allege mail fraud in violation of 18
U.S.C. § 1341 and/or wire fraud in violation of 18 U.S.C. § 1343, although, in most cases, Plaintiffs
plead the mailing and wiring of the allegedly fraudulent documents on information and belief.
Four of the 93 predicate acts also allege bribing a witness in violation of New York Penal Code §
215 but do not include specific facts to support such allegations.
The RICO conspiracy claim alleges that from at least 2018 to the present, defendants “did
unlawfully, knowingly, and intentionally, combine, conspire, confederate, and agree together with
each other, and with others whose names are known or unknown, to conduct and participate,
directly and indirectly, in the conduct of the affairs of the enterprise through a pattern of
racketeering activity ….” (Id., ¶192) The “pattern of racketeering activity” and the predicate acts
are alleged to be the same as those underlying the RICO claim.
In addition to the RICO and RICO conspiracy claims, the FAC advances two state law
claims. Count III of the FAC alleges common law fraud, and Count IV alleges an equitable claim
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for unjust enrichment. The fifth and final claim contained in the FAC seeks declaratory relief
pursuant to 28 U.S.C. § 2201.
The “Joint Motion” and the seven pending “Supplemental Motions” raise many arguments,
almost all of which are addressed below.3 	As explained below, the court rejects Defendants’
arguments that it lacks Article III standing and should abstain from exercising jurisdiction pursuant
to Burford v. Sun Oil Co., 319 U.S. 315 (1943). 	The court also rejects the argument that the
McCarran-Ferguson Act, 15 U.S.C. §§ 1011–1015, preempts Plaintiffs’ RICO and RICO
conspiracy claims. 	But the court agrees with Defendants that there are three fundamental
deficiencies in the FAC’s RICO and RICO conspiracy claims: 1) the lack of allegations
establishing proximate causation under RICO, 2) the failure to allege facts to establish an
association-in-fact enterprise; and 3) the failure to allege facts from which one can infer that
Defendants agreed to engage in conduct constituting a RICO violation.4
DISCUSSION
A. Standing
The first argument raised in the Joint Memorandum of Law in Support of Defendants’
Motions to Dismiss (the “Joint Memo”) is that the FAC does not adequately allege “Article III
3 The seven pending Supplemental Motions have been filed on behalf of the Fogelgaren
Defendants, the Gorayeb Defendants, the NY Ortho Defendants, the Weinstein Defendants, the
Kolb Defendants, Lenox Hill, and Dr. Sharma. Surgicore is the only defendant which has not filed
a Supplemental Motion, but it is among the Defendants that signed the Joint Motion.
4 Since I conclude that these fundamental deficiencies mandate dismissal of the RICO
claims, this Opinion and Order does not address Defendants’ arguments that the racketeering
activity and predicate acts are insufficiently alleged. If Plaintiffs propose amendments to their
pleading that cure these deficiencies (see Subsection E, below), Defendants may renew these
arguments in a motion to dismiss that amended pleading without re-briefing.
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standing.”5 Article III of the Constitution “confines the federal judicial power to the resolution of
‘Cases’ and ‘Controversies.’” 	TransUnion LLC v. Ramirez, 594 U.S. 413, 423 (2021) (quoting
U.S. Const. art. III, § 2). “For there to be a case or controversy under Article III, [a] plaintiff must
have a ‘personal stake’ in the case—in other words, standing.” Id. (quoting Raines v. Byrd, 521
U.S. 811, 819 (1997)). Since “Article III standing … [is] a limitation on the authority of a federal
court to exercise jurisdiction,” All. for Env’t Renewal, Inc. v. Pyramid Crossgates Co., 436 F.3d
82, 88 n.6 (2d Cir. 2006), this issue, like any jurisdictional question, must be addressed before the
court evaluates the merits of any other claims. See Lugo v. City of Troy, N.Y., 114 F.4th 80, 86 n.1
(2d Cir. 2024).
“A plaintiff asserting subject matter jurisdiction has the burden of proving by a
preponderance of the evidence that it exists.” Makarova v. United States, 201 F.3d 110, 113 (2d
Cir. 2000). 	Given that standing may be challenged “at any stage in the litigation,” Carter v.
HealthPort Techs., LLC, 822 F.3d 47, 56 (2d Cir. 2016), “[a] plaintiff must demonstrate standing
‘with the manner and degree of evidence required at the successive stages of the litigation,’”
TransUnion LLC, 594 U.S. at 431 (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 561
(1992)). Where, as here, “a case is at the pleading stage, the plaintiff must clearly … allege facts
demonstrating each element” of Article III standing. 	Spokeo, Inc. v. Robins, 578 U.S. 330, 338
5 Defendants also argue that Plaintiffs have not alleged RICO or “statutory standing.”
However, as the Joint Memo itself acknowledges, the Supreme Court has “clarified that what has
been called ‘statutory standing’ in fact is not a standing issue,” but “a question of whether the
particular plaintiff ‘has a cause of action under the statute.’” Joint Memo at 4 n.3 (quoting Lexmark
Int’l, Inc. v. Static Control Components, Inc., 572 U.S. 118, 126–27 (2014)). 	“[B]ecause the
absence of a valid … cause of action does not implicate subject-matter jurisdiction, i.e., the court’s
statutory or constitutional power to adjudicate the case,” this argument “does not belong to the
family of standing inquiries ….” Am. Psychiatric Ass’n v. Anthem Health Plans, Inc., 821 F.3d
352, 359 (2d Cir. 2016) (internal quotation marks omitted).
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(2016) (internal quotation marks omitted). 	Those factual allegations must be “plausible” and
“nonconclusory.” Lugo, 114 F.4th at 87.
To establish Article III standing, the “plaintiff must have (1) suffered an injury in fact, (2)
that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be
redressed by a favorable judicial decision.” Spokeo, 578 U.S. at 338. The injury in fact must be
“(a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical.”
Lujan, 504 U.S. at 560 (internal quotation marks and citations omitted).
In this case, Plaintiffs have adequately alleged Article III standing. 	With respect to
Roosevelt, the FAC alleges that the Claimants’ fabricated and exaggerated claims caused the
reinsurer to incur unwarranted “expenses paid as reimbursement to primary insurers providing
coverage for the claims and lawsuits filed and/or prosecuted by the Legal [Services] Defendants
on behalf of Claimants.” 	(FAC, ¶ 171) 	The FAC further alleges that, “[b]ut for Defendants’
perpetration of the Fraud Scheme, Roosevelt’s expenses paid as reimbursement to primary insurers
would be less because the Claimants’ injuries, if any, would be less severe and the medical services
necessary to treat any accident-related injury, if any, would [be] less significant, resulting in lower
settlement value of such claims and lawsuits and thus, less litigation expenses.” (Id., ¶ 172) The
damages sought in this action would redress these injuries by compensating Roosevelt for the
inflated reimbursements.
With respect to Tradesman, the FAC alleges that this plaintiff “made substantial payments
and sustained significant damage in connection with its management of the policies that cover the
various claims and lawsuits filed and prosecuted by the Legal Service[s] Defendants as part of the
Fraud Scheme.” 	(Id., ¶ 181) 	The FAC alleges that, as a result of the Claimants’ falsified and
exaggerated claims, Tradesman incurred “expenses … for the administration of these claims and
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the retention of additional staff to perform investigative and support services ….” (Id., ¶ 183(b))
The damages sought in this action would redress these injuries by compensating Tradesman for
the additional expenses.
B. Burford Abstention
The Joint Memo argues that, even if the court has jurisdiction, it should abstain from
exercising it pursuant to Burford v. Sun Oil Co., supra. “Burford abstention is an extraordinary
and narrow exception … to a federal court’s duty to exercise jurisdiction.” 	Tribune Co. v. Abiola,
66 F.3d 12, 17 (2d Cir. 1995) (internal quotation marks omitted). The Supreme Court has “distilled
the principle” underlying this abstention doctrine as follows:
Where timely and adequate state-court review is available, a federal court
sitting in equity must decline to interfere with the proceedings or orders of
state administrative agencies: (1) when there are difficult questions of state
law 	bearing 	on 	policy 	problems 	of 	substantial 	public 	import 	whose
importance transcends the result in the case then at bar; or (2) where the
exercise of federal review of the question in a case and in similar cases would
be disruptive of state efforts to establish a coherent policy with respect to a
matter of substantial public concern.
New Orleans Pub. Serv., Inc. v. Council of City of New Orleans, 491 U.S. 350, 361 (1989) (internal
quotation marks omitted). 	The Second Circuit has held that this language, which limits the
abstention requirement to federal courts “sitting in equity,” “leaves little doubt that Burford
abstention is generally appropriate only in cases where equitable relief is sought.” 	Tribune Co.,
66 F.3d at 16 (2d Cir. 1995).
The FAC’s first four claims principally seek “actual and consequential damages.” (FAC,
pp. 42, 44, 45, 47) The Second Circuit has “refused to abstain under Burford … where claims for
money damages were at issue.” Kirschner v. Klemons, 225 F.3d 227, 238 (2d Cir. 2000). As the
Second Circuit has made clear, “abstention and dismissal are inappropriate when damages are
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sought, even when … [the court] would dismiss otherwise identical claims for declaratory and
injunctive relief.” Id.
Even if this case presented the “highly unusual circumstances” in which “claims for money
damages…, if granted, might unduly interfere with a state proceeding or order, and thus make it
appropriate for a district court to abstain on Burford grounds,” Tribune Co., 66 F.3d at 17, I would
decline to abstain. 	As Plaintiffs correctly note, Tribune Co. is “virtually directly on point”
(Plaintiffs’ Memorandum of Law in Opposition to Defendants’ Joint Motion to Dismiss
(“Plaintiffs’ Opposition”) at 44); it, too, involved a RICO action alleging a conspiracy to file
fraudulent claims for workers’ compensation benefits. In that case, the Second Circuit held that,
although New York does have a mechanism permitting the re-opening of workers’ compensation
claims before the WCB on grounds of fraud, N.Y. Work. Comp. Law § 123, “timely and adequate
state-court review” of Tribune’s claims was unavailable. Tribune Co., 66 F.3d at 17. The Second
Circuit noted, among other things, that the WCB could not require a claimant to return money
already paid, that the plaintiffs’ RICO claims could not be adjudicated in proceedings before the
WCB, and that the WCB could not award the treble damages or attorneys’ fees that are available
under RICO. Since the Supreme Court’s distillation of the Burford doctrine predicated abstention
on the availability of “timely and adequate state-court review,” New Orleans Pub. Serv., 491 U.S.
at 361, the Second Circuit found abstention was inappropriate. For these same reasons, Burford
abstention is inappropriate in this case.
C. Preemption under the McCarran-Ferguson Act
Defendants argue that the McCarran-Ferguson Act (“MFA”), supra, preempts Plaintiffs’
RICO and RICO conspiracy claims. The MFA provides, in pertinent part, that “No Act of Congress
shall be construed to invalidate, impair, or supersede any law enacted by any State for the purpose
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of regulating the business of insurance … unless such Act specifically relates to the business of
insurance.” 15 U.S.C. § 1012(b). 	In other words, the MFA “precludes application of a federal
statute in face of state law ‘enacted … for the purpose of regulating the business of insurance,’ if
the federal measure does not ‘specifically relat[e] to the business of insurance,’ and would
‘invalidate, impair, or supersede’ the State’s law.” 	Humana Inc. v. Forsyth, 525 U.S. 299, 307
(1999).
The parties agree that the only element at issue in determining whether the MFA preempts
Plaintiffs’ RICO and RICO conspiracy claims is whether those federal laws would “invalidate,
impair, or supersede” New York law. A similar question was presented in Humana Inc. v. Forsyth,
supra, in which the Supreme Court addressed the question of whether RICO proscribed conduct
that the Nevada state insurance laws at issue in that case permitted. The Court held that RICO
could be “applied in … harmony with the State’s regulation” and enunciated the following rule:
“When federal law is applied in aid or enhancement of state regulation, and does not frustrate any
declared state policy or disturb the State’s administrative regime, the McCarran–Ferguson Act does
not bar the federal action.” 525 U.S. at 303.
In State Farm Mutual Automobile Insurance Co. v. Grafman, 655 F. Supp. 2d 212
(E.D.N.Y. 2009), I expressly relied on the rule enunciated in Humana in finding that State Farm’s
RICO claims were not preempted by New York’s No-Fault Law. 	I held that the RICO claims
“supplement[ed], rather than disturb[ed], New York’s insurance regime by providing another
vehicle by which to carry forth the substantive policies of the State of New York.” Id. (internal
quotation marks omitted). 	As Defendants themselves acknowledge, this case “stands directly
against [their] MFA arguments.” (Defendants’ Memo at 42)
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Although Defendants correctly note that Grafman involved New York’s No-Fault Law
rather than the WCL, (id.), Zenith Ins. Co. v. Eisenberg, 1996 WL 588467 (9th Cir. 1996), is nearly
identical to this case. In that case, Zenith alleged that a doctor, a lawyer, and others violated RICO
and 	California fraud 	laws 	by 	1) 	recruiting 	uninjured 	workers 	to 	file fictitious 	workers’
compensation claims against employers insured by Zenith, and (2) overbilling Zenith for medical
and legal services to workers whose employers were insured by Zenith. In arguing that the RICO
claims were preempted under the MFA, the defendants asserted that “application of RICO would
‘impair’ California law because Zenith’s action for damages would upset the delicate balance
established by the California Legislature when it created the workers’ compensation system.” Id.
at *2. The Ninth Circuit rejected this argument, citing to an earlier decision in which it had held
that “state and federal laws proscribing identical conduct do not conflict with or displace each
other, and may coexist under the McCarran-Ferguson Act.” Id. (citing Merchants Home Delivery
Serv., Inc. v. Frank B. Hall & Co., 50 F.3d 1486, 1492 (9th Cir. 1995)).
Although Zenith involved California’s workers’ compensation law and not the New York
WCL, the rationale in that case is applicable here. 	Defendants have not established that RICO
conflicts with, or displaces, provisions of the WCL. 	To the contrary, here, as in Grafman, the
RICO provisions supplement, rather than disturb, New York law by serving to prevent fraud.
The only case cited by Defendants in which a federal statute was held to be preempted by
the MFA—National Union Fire Insurance Company of Pittsburgh, PA v. Seneca Family of
Agencies, 255 F. Supp. 3d 480 (S.D.N.Y. 2017)—is inapposite. In that case, insurers petitioned to
compel the defendant to arbitrate a workers’ compensation dispute pursuant to the Federal
Arbitration Act (the “FAA”). In holding that the MFA required that he abstain from ruling on the
motion to compel, Judge Koeltl noted that there was a direct conflict between California Insurance
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Code § 11658.5, which required arbitration in California, and § 4 of the FAA, which required that
the arbitration be held in the district where the petition is filed. 	No such direct conflict exists in
this case.
In sum, Defendant’s preemption argument is rejected.
D. RICO and RICO Conspiracy
The Joint Memo seeks to dismiss the RICO and RICO conspiracy claims on the grounds
that the FAC “fails to state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(6)(6). To
survive a such a motion to dismiss, “a complaint must contain sufficient factual matter, accepted
as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim has facial
plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged.” Id.
When considering a Rule 12(b)(6) motion to dismiss, a court “accepts as true all well-
pleaded factual allegations in the complaint, [and] draws all reasonable inferences in favor of the
nonmoving party ….” Gamm v. Sanderson Farms, Inc., 944 F.3d 455, 462 (2d Cir. 2019) (internal
quotation marks omitted). However, “[l]egal conclusions, standing alone, are not entitled to the
assumption of truth unless supported by factual allegations that plausibly give rise to an entitlement
to relief ….” Sharikov v. Philips Med. Sys. MR, Inc., 103 F.4th 159, 166 (2d Cir. 2024) (internal
quotation marks omitted). “A plaintiff may satisfy the plausibility standard by pleading facts upon
information and belief,” Evergreen E. Coop. v. Whole Foods Mkt., Inc., 2023 WL 545075, at *2
(2d Cir. Jan. 27, 2023), but “[t]hose magic words will only make otherwise unsupported claims
plausible when ‘the facts are peculiarly within the possession and control of the defendant or where
the belief is based on factual information that makes the inference of culpability plausible.’”
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Citizens United v. Schneiderman, 882 F.3d 374, 384–85 (2d Cir. 2018) (quoting Arista Records,
LLC v. Doe 3, 604 F.3d 110, 120 (2d Cir. 2010)).
In ruling on a Rule 12(b)(6) motion to dismiss, consideration is limited to “the facts alleged
in the complaint, documents attached to the complaint as exhibits, and documents incorporated by
reference in the complaint,” as well as any document “where the complaint relies heavily upon its
terms and effect, thereby rendering the document integral to the complaint.” DiFolco v. MSNBC
Cable L.L.C., 622 F.3d 104, 111 (2d Cir. 2010) (internal quotation marks omitted). I therefore will
consider the Affidavits attached as Exhibits 1–6 to the FAC on this motion to dismiss.6 I will not,
however, assume the truth of the medical opinions expressed in the Affidavits.7
1. 	Proximate Causation
The FAC’s first and second claims are brought pursuant to 18 U.S.C. § 1964(c), which
creates a private cause of action that allows “[a]ny person injured in his business or property by
reason of a violation of [18 U.S.C.] section 1962” to sue in federal district court and recover treble
damages, costs, and attorney’s fees. The Supreme Court has repeatedly instructed that “§ 1964(c)’s
‘by reason of’ language demands ‘some direct relation between the injury asserted and the
6 The Joint Memo argues that the court should not consider these Affidavits in deciding this motion
because they are not “written instruments” as contemplated by Rule 10(c) of the Federal Rules of
Civil Procedure. 	However, the Second Circuit “has permitted the consideration of other
documents, apart from written instruments under Rule 10(c), at the motion to dismiss stage, such
as ‘documents that the plaintiffs either possessed or knew about and upon which they relied in
bringing the suit.’” Smith v. Hogan, 794 F.3d 249, 254 (2d Cir. 2015) (quoting City of Pontiac
Policemen’s & Firemen’s Ret. Sys. v. UBS AG, 752 F.3d 173, 179 (2d Cir. 2014)). Since Plaintiffs
themselves characterize the Affidavits as “integral to the FAC” (Plaintiffs’ Opp. at 16), it is clear
Plaintiffs knew of, and relied upon, the Affidavits in bringing the lawsuit and in filing the FAC.
7 As the Second Circuit has noted, Rule 10(c) does not “require[ ] a plaintiff to adopt as true the
full contents of any document attached to a complaint or adopted by reference.” 	Gant v.
Wallingford Bd. of Educ., 69 F.3d 669, 674 (2d Cir. 1995). At oral argument, Plaintiffs made it
clear that they attached the Affidavits only to establish their basis for alleging that the Medical
Provider Defendants engaged in fraudulent conduct and are not asking the court to assume that the
medical opinions expressed therein are true.
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injurious conduct alleged.’” 	Med. Marijuana, Inc. v. Horn, 604 U.S. 593, 612 (2025) (quoting
Holmes v. Sec. Inv. Prot. Corp., 503 U.S. 258, 268 (1992)). To establish injury “by reason of” a
violation of section 1962, a plaintiff “is required to show that a RICO predicate offense not only
was a ‘but for’ cause of his injury, but was the proximate cause as well.” Hemi Grp., LLC v. City
of New York, N.Y., 559 U.S. 1, 9 (2010) (internal quotation marks omitted). In their Joint Memo,
Defendants argue that Defendants’ actions were not the proximate cause of Plaintiffs’ monetary
losses.
The proximate cause inquiry focuses “on the directness of the relationship between the
conduct and the harm.” Id. at 12. As the Supreme Court recently stated: “The key word is ‘direct’;
foreseeability does not cut it.” Med. Marijuana, 604 U.S. at 612. A “link that is too remote, purely
contingent, or indirec[t] is insufficient.” 	Hemi Grp., 559 U.S. at 9 (internal quotation marks
omitted). “Thus, a plaintiff who complain[s] of harm flowing merely from the misfortunes visited
upon a third person by the defendant’s acts” generally cannot recover under RICO. Holmes, 503
U.S. at 268–69.
In determining whether proximate cause exists, the Supreme Court has utilized the “first
step” rule—a rule “which limits liability to parties injured at the first step of the causal chain of
the defendants’ actions.” In re Am. Express Anti-Steering Rules Antitrust Litig., 19 F.4th 127, 135
(2d Cir. 2021). When a plaintiff’s causation theory requires the court “to move well beyond the
first step, that theory cannot meet RICO’s direct relationship requirement.” Hemi Grp., 559 U.S.
at 10. 	The rationale for this exacting “direct relationship” requirement was explained by the
Holmes Court as follows:
First, the less direct an injury is, the more difficult it becomes to ascertain the
amount of a plaintiff’s damages attributable to the violation, as distinct from
other, independent, factors. 	Second, quite apart from problems of proving
factual causation, recognizing claims of the indirectly injured would force
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courts to adopt complicated rules apportioning damages among plaintiffs
removed at different levels of injury from the violative acts, to obviate the
risk of multiple recoveries. 	And, finally, the need to grapple with these
problems is simply unjustified by the general interest in deterring injurious
conduct, since directly injured victims can generally be counted on to
vindicate the law as private attorneys general, without any of the problems
attendant upon suits by plaintiffs injured more remotely.
503 U.S. at 269–70 (internal quotation marks omitted). As the Second Circuit has noted, “the
potential for duplicative recoveries created by granting standing to attenuated and indirect parties
weighs against finding proximate causation.” In re Am. Express Co. S’holder Litig., 39 F.3d 395,
401 (2d Cir. 1994).
In their Joint Memo, Defendants argue that Plaintiffs’ injuries are too remote to sustain the
RICO claims. This argument assumes familiarity with indemnity reinsurance—“the insurance of
one insurer (the ‘reinsured’) by another insurer (the ‘reinsurer’) by means of which the reinsured
is indemnified for loss under insurance policies issued by the reinsured to the public.” 	Glob.
Reinsurance Corp. of Am. v. Century Indem. Co., 22 F.4th 83, 88 n.3 (2d Cir. 2021) (quoting In re
Liquidation of Union Indem. Ins. Co. of N.Y., 89 N.Y.2d 94, 105–06 (1996)). The reinsurer’s “only
obligation is to indemnify the primary insurer” with which it has a reinsurance contract. Unigard
Sec. Ins. Co. v. N. River Ins. Co., 79 N.Y.2d 576, 582 (1992). The reinsurer is not directly liable
to those insured by the primary insurer and “is not responsible for providing a defense, for
investigating the claim or for attempting to get control of the claim in order to effect an early
settlement.” Id. at 583.
The FAC repeatedly alleges that Roosevelt sustained monetary damages in its capacity as
an indemnity reinsurer. 	It alleges that, as a result of the Fraud Scheme, Roosevelt “incurred
expenses paid as reimbursement to primary insurers providing coverage for the claims and lawsuits
filed and/or prosecuted by the Legal [Services] Defendants on behalf of Claimants.” (FAC, ¶ 171)
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The FAC also expressly alleges that, “[b]ut for Defendants’ perpetration of the Fraud Scheme,
Roosevelt’s expenses paid as reimbursement to primary insurers would be less because the
Claimants’ injuries, if any, would be less severe and the medical services necessary to treat any
accident-related injury, if any, would [be] less significant, resulting in lower settlement value of
such claims and lawsuits ….” (Id., ¶ 172)8
These factual allegations do not make out a direct relationship between Defendants’ actions
and Plaintiffs’ alleged monetary damages. Under Plaintiffs’ own theory of causation, Roosevelt’s
losses result from its obligations to reimburse primary insurers for the inflated amounts that they
paid in connection with workers’ compensation and general liability claims brought by the Legal
Services Defendants as part of the Fraud Scheme. The FAC describes Roosevelt’s alleged injuries
as “[a]ctual and consequential damages for the payments [Roosevelt] … made as reimbursement
for payments made directly to the Defendants or to others due to Defendants’ pattern of fraudulent
conduct in connection with claims made under New York’s Workers’ Compensation Laws and
New York’s Labor Laws.” (FAC, ¶ 183(a))
Under this theory of liability, Roosevelt was not injured at the first step of the causal chain
resulting from Defendants’ alleged actions. Indeed, one could argue—as Defendants do in their
Joint Memo—that “Plaintiffs’ asserted injuries are several steps removed from any of the
Defendants’ allegedly fraudulent conduct.” (Joint Memo at 6) Under this argument, the allegedly
8 Although the FAC alleges that the Gorayeb Defendants used the Medical Provider Defendants’
false diagnoses and the record of extensive medical services to “fraudulently inflate the
settlement values of personal injury lawsuits in order to extract greater settlement from general
liability carriers, including from … Roosevelt,” (FAC, ¶ 44), it does not allege facts to suggest
that Roosevelt was operating as a general liability carrier at any times relevant. Rather, as
described in the text, the FAC explicitly alleges that Roosevelt’s monetary losses resulted from
its reinsureds’ payment of inflated claims, which triggered Roosevelt’s obligation to reimburse
the reinsureds.
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fraudulent conduct first resulted in workers’ compensation claims against the Claimants’
employers and/or personal injury lawsuits pursuant to New York’s Labor Law against contractors
or property owners (the first step). The employers and/or contractors and/or property owners then
filed insurance claims with their workers’ compensation or general liability carriers (the second
step), which paid the claims and sought reimbursement from their reinsurer, Roosevelt (the third
step). However, even if one were to combine the first and second steps in recognition of the fact
that insurance companies usually have a contractual duty to defend claims against their insureds,
Roosevelt’s losses would still be two steps removed from Defendants’ alleged misconduct. The
relationship between the Defendants’ actions and Roosevelt’s financial injury would still be
insufficiently direct under the “first step rule.”
With 	respect 	to 	Tradesman, 	the 	allegations 	concerning 	the 	relationship 	between
Defendants’ actions and Tradesman’s injuries are too conclusory and vague to permit proximate
causation to be inferred. The FAC alleges that Tradesman is “a management general agency that
provides management services to various insurers and reinsurers, including … Roosevelt.” (FAC,
¶ 180) 	These services allegedly include “general liability and workers’ compensation services
from underwriting through claims handling and subsequent administrative and legal actions”
arising from general liability and workers’ compensation claims. (Id.) The FAC alleges that, in
this role, Tradesman “made substantial payments and sustained significant damage in connection
with its management of the policies that cover the various claims and lawsuits filed and prosecuted
by the Legal Service[s] Defendants as part of the Fraud Scheme.” (Id., ¶ 181)
The FAC does not allege who the recipients of the “substantial payments” are. However,
even assuming that the “substantial payments” were made to Claimants, there is nothing to suggest
that Tradesman made such payment of its own volition and from its own accounts. To the contrary,
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Plaintiffs’ Opposition states that Tradesman investigates claims “in cooperation with its insurers
and reinsurers” and only “makes recommendations regarding the payment of claims and settlement
of lawsuits to insurers and reinsurers.” (Plaintiffs’ Opp. at 6) This suggests that, even if Tradesman
played a role in processing payments to Claimants, insurers and reinsurers authorized and covered
those payments. If so, there is no basis to infer that Defendants’ conduct was the proximate cause
of Tradesman’s injury.
Indeed, the FAC does not allege the specific cause of the injuries Tradesman sustained. To
be sure, the FAC alludes to “expenses incurred for the administration of these claims and the
retention of additional staff to perform investigative and support services for claims” submitted by
Legal Services Defendants. 	(FAC, ¶ 183(b)) 	But there is nothing in the FAC to suggest that
Tradesman was not compensated for these expenses by the insurers and reinsurers for which it
worked, or that the additional staff was necessitated by Defendants’ alleged misconduct rather than
Tradesman’s contractual duty to scrutinize every claim.
The FAC also alleges that, “[d]ue to Defendants’ perpetration of the Fraud Scheme,
numerous insurance carriers have ceased to write Workers’ Compensation and/or general liability
policies in the State of New York, which has resulted in damage to Tradesman’s business.” (FAC,
¶ 182). These allegations are reminiscent of those that the Securities Investor Protection
Corporation (“SIPC”) made in Holmes. In that case, SIPC brought a RICO claim against Holmes,
alleging that his participation in a stock manipulation scheme had resulted in the bankruptcy of
two broker-dealers insured by SIPC. The Supreme Court held that SIPC’s reimbursement of the
broker-dealers’ customers was not proximately caused by Holmes’s action, stating “the link is too
remote between the stock manipulation alleged and the customers’ harm, being purely contingent
on the harm suffered by the broker-dealers.” Holmes, 503 U.S. at 271. 	Here, the link between
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Defendants’ actions and Tradesman’s injuries is contingent on the harm allegedly suffered by the
insurers who abandoned the New York market. As in Holmes, this link is too remote to support
proximate causation.
For the reasons set forth above, I conclude that Plaintiffs have not alleged the direct
relationship between Defendants’ allegedly fraudulent acts and Plaintiffs’ alleged injuries that is
required to state a RICO or RICO conspiracy claim.9 Judge Gonzalez recently reached a similar
conclusion in Roosevelt Road Re, Ltd. v. Subin, 2025 WL 1713109 (E.D.N.Y. June 19, 2025), a
RICO action brought by Plaintiffs against different defendants. The complaint in that case was
very similar to the FAC, alleging a fraudulent scheme that is nearly identical to the Fraud Scheme
alleged in this case. 	Judge Gonzalez persuasively concluded that Roosevelt’s injuries were
“[m]ultiple steps away from the alleged fraud,” being “derivative of an injury to a third party.”
Subin, 2025 WL 1713109, at *6 (internal quotation marks omitted). 	He also concluded that
Tradesman’s alleged injury was “the derivative result of a fraudulent scheme targeting construction
employers or perhaps the Workers’ Compensation Board” and that, even assuming that Tradesman
suffered a cognizable injury as a result of defendants’ actions, the court would have to “look well
beyond the first step to locate it.” Id. at *5 (internal quotation marks omitted).
In contrast, in the cases relied upon in Plaintiffs’ Opposition, there is a much more direct
relationship between the defendants’ actions and the plaintiffs’ injuries than exists in this case. In
State Farm Mutual Automobile Insurance Co. v. Tri-Borough NY Medical Practice P.C., 120 F.4th
9 In an effort to stave off dismissal for lack of proximate causation, Plaintiffs asserted facts at
oral argument that were markedly different from those pled in the FAC. These facts cannot be
inferred from the FAC itself.
Plaintiffs have requested leave to amend their pleading. Defendants oppose that request
for various reasons. As explained in section E below, Plaintiffs are granted leave to move to amend
their pleading to address the deficiencies addressed in this subsection (and elsewhere in this
opinion).
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59 (2d Cir. 2024), State Farm brought a RICO action alleging that the defendants—health care
providers and related individuals and entities that treat automobile accident victims—directly
defrauded the insurance company by providing medically unnecessary treatment and services, then
bringing baseless arbitrations and state court proceedings when State Farm refused to pay the
defendants’ claims. Similarly, in Allstate Insurance Co. v. Seigel, 312 F. Supp. 2d 260 (D. Conn.
2004), Allstate’s RICO claim was based on allegations that the defendants—a doctor, his medical
practice, and an employee/shareholder of the practice—had “created false and fraudulent invoices
and medical reports on patients who had been involved in automobile accidents for the purpose of
causing insurers such as Allstate to pay for medical treatments that were either never performed or
were incompletely performed and/or to pay inflated amounts for the personal injury claims of those
patients.” Id. at 261–62. In both of these cases, the plaintiff insurance companies were the direct
victims of the defendants’ predicate acts.
2. 	Association-in-Fact Enterprise
Even if the FAC adequately alleged that Plaintiffs’ injuries were proximately caused by the
alleged RICO violation, the RICO claim would be dismissed for failure to adequately allege an
association-in-fact enterprise. “To sufficiently allege that the defendant violated RICO, a plaintiff
must plead four elements: (1) conduct, (2) of an enterprise, (3) through a pattern (4) of racketeering
activity.” Entretelas Americanas S.A. v. Soler, 840 F. App’x 601, 603 (2d Cir. 2021) as amended
(Jan. 7, 2021) (internal quotation marks omitted). The RICO statute defines the term “enterprise”
to include “any individual, partnership, corporation, association, or other legal entity, and any
union or group of individuals associated in fact although not a legal entity.” 18 U.S.C. § 1961(4).
Thus, there are “two categories of associations that come within the purview of the ‘enterprise’
definition”: 1) “organizations such as corporations and partnerships, and other ‘legal entities’” and
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2) “any union or group of individuals associated in fact although not a legal entity.” United States
v. Turkette, 452 U.S. 576, 581–82 (1981). The FAC alleges that the enterprise at issue in this case
fits within the latter category, stating that Defendants are “a group of individuals and legal entities
associated in fact ….” (FAC, ¶ 185)
Since the RICO statute is to be “liberally construed,” the Supreme Court has given a broad
and flexible reach to the term “association-in-fact.” 	Boyle v. United States, 556 U.S. 938, 944
(2009). However, RICO associations-in-fact must exhibit “three structural features: (1) a shared
purpose; (2) relationships among the associates; and (3) ‘longevity sufficient to permit these
associates to pursue the enterprise’s purpose.’” D’Addario v. D’Addario, 901 F.3d 80, 100 (2d Cir.
2018) (quoting Boyle, 556 U.S. at 946).
Defendants argue that the FAC does not adequately allege the first two of these features.
First, the Gorayeb Defendants argue that they do not share a common purpose with the other
defendants. 	Second, the Joint Memo argues that Defendants lack the requisite interpersonal
relationships necessary to establish an association-in-fact. I agree with Defendants on both points.
First, “[f]or an association of individuals to constitute an enterprise, the individuals must
share a common purpose to engage in a particular fraudulent course of conduct and work together
to achieve such purpose[ ].” First Cap. Asset Mgmt., Inc. v. Satinwood, Inc., 385 F.3d 159, 174
(2d Cir. 2004). Proof that “several individuals, independently and without coordination, engaged
in a pattern of crimes listed as RICO predicates, … [is] not … enough to show that the individuals
were members of an enterprise.” Boyle, 556 U.S. at 947 n.4. 	“Nor does [an] allegation that …
various [d]efendants and subgroups agreed at different times to engage in various fraudulent
schemes plausibly support the inference, essential to a RICO association-in-fact enterprise, that
they acted with a sufficiently common purpose.” D’Addario, 901 F.3d at 101–02.
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As the Gorayeb Defendants correctly note, the “FAC pleads no facts indicating that the
disparate defendants functioned as a unit or supporting an inference that they had a common
interest in the success of the so-called enterprise.” 	(Gorayeb Defendants’ Supplemental
Memorandum of Law at 13) Indeed, the allegations in the FAC make it clear that Defendants were
pursuing their own individual aims, not a common objective. The Gorayeb Defendants represented
Claimants in personal injury lawsuits and allegedly sought to inflate the settlement value of those
lawsuits for their own financial gain. 	Similarly, the Fogelgaren Defendants filed workers’
compensation claims and sought to maximize the value of those claims. Although these Legal
Services Defendants may have referred Claimants to one another and to various Medical Provider
Defendants, the FAC does not allege that they shared their profits from the Fraud Scheme with
each other or with other Defendants. 	To the contrary, the FAC states that Legal Services
Defendants rewarded the Medical Provider Defendants only by continuing to “funnel patients to
their offices.” (FAC, ¶ 43)
Medical Service Providers may have benefitted financially from the Fraud Scheme, but
only 	because 	they 	billed 	workers’ 	compensation 	insurance 	for 	“unnecessary, 	excessive,
unwarranted and costly medical services and/or medical services that were not causally related to
the alleged workplace accident ….” (FAC, ¶ 42) 	In this regard, the Medical Service Providers
were acting independently, for their own purposes, and without coordination with the other
Defendants. To be sure, one Medical Service Provider’s allegedly fraudulent behavior may have
benefitted other Defendants. For example, exaggerated radiological findings may have been used
to justify unnecessary physical therapy or surgery, which was then performed by another defendant
or at another defendants’ facility. But the FAC does not allege facts suggesting that one defendant
intended to benefit any other defendant.
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Second, I agree with Defendants that the FAC does not allege the sort of “interpersonal
relationships” between them that is necessary to establish an association-in-fact enterprise. Boyle,
556 U.S. at 946. As the Second Circuit has noted, a number of district courts in this Circuit “have
found that a group of individuals related by a structure that mimics so-called ‘rimless hub-and-
spoke’ conspiracies cannot be considered a RICO association-in-fact.” 	D’Addario, 901 F.3d at
101 (citing cases). “In other words, when each defendant is alleged to have a relationship with a
central figure, but the defendants are not all alleged to be connected in some overarching way
(such as by an agreement to further a single design or purpose), these courts have found no RICO
association-in-fact.” Id. (internal quotation marks omitted). “Without such a limitation, … one
malefactor’s series of independent frauds could … sweep[ ] numerous other individuals into a net
of heightened liability under RICO, … even if each fraud was perpetrated quite independently of
the others.” Id.
The Second Circuit applied this limitation in D’Addario, in which the plaintiff alleged that
her brother and other executors of her father’s estate violated RICO by engaging in fraudulent
schemes designed to deplete the estate and deprive the plaintiff of her inheritance. The Second
Circuit found that the allegations of the complaint, if true, would establish that the brother engaged
in a series of frauds involving different sets of individuals. 	However, those allegations did not
support an inference that the defendants agreed to join forces with each other to pursue a goal of
defrauding the estate. At most, the allegations suggested that the “[d]efendants (and in a few cases,
perhaps, a small subgroup of [d]efendants) each agreed with [the brother] to engage in individual
schemes.” Id. at 101. The Second Circuit concluded that these allegations did not “plausibly make
out [an] association-in-fact enterprise.” Id. at 102.
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The FAC resembles the complaint in D’Addario. It casts Gorayeb as the central figure in
the Fraud Scheme, alleging that he “orchestrated, coordinated and led” it. 	(FAC, ¶ 185) 	If the
case involved workers’ compensation claims, the Gorayeb Defendants referred those claims to the
Fogelgaren Defendants, who then either joined or replaced the Gorayeb Defendants as central
figures in the Scheme. The FAC implies that the Legal Services Defendants referred Claimants to
each other with the expectation of reciprocity, but the pleading does not suggest that there was
anything illegal or improper about this referral arrangement.
These Legal Services Defendants then allegedly engaged in a series of frauds with the
Medical Provider Defendants to whom they referred the Claimants. 	The FAC implies that the
Legal Services Defendants referred Claimants to Medical Provider Defendants who had shown a
propensity to exaggerate the nature and severity of alleged injuries in the hopes of obtaining future
referrals. 	However, the FAC does not allege coordination among the Medical Provider
Defendants. Indeed, the only indication of any interaction between these defendants is contained
in the Affidavits attached to the FAC, which suggest nothing more than routine medical referrals
from one provider to another. There are no facts suggesting the sort of interpersonal interactions
necessary to make out a RICO enterprise.
Because I conclude that Plaintiff’s RICO claim must be dismissed for the reasons set
forth above, there is no need to address Defendants’ arguments that the racketeering activity and
predicate acts are insufficiently pleaded. However, I have reviewed the 93 predicate acts alleged
in Exhibit 7 to the FAC and find that none of the allegations in Exhibit 7 rectify the proximate
causation and association-in-fact deficiencies.
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3. 	RICO Conspiracy
“[T]he existence of a RICO enterprise is not a required element of a RICO conspiracy
claim.” City of New York v. Bello, 579 F. App’x 15, 17 (2d Cir. 2014). However, Plaintiffs’ RICO
conspiracy claim fails because, although the FAC contains conclusory allegations of an agreement
between Defendants, it does not allege facts that plausibly support such allegations.
“Because the core of a RICO civil conspiracy is an agreement to commit predicate acts, a
RICO civil conspiracy complaint, at the very least, must allege specifically such an agreement.”
Hecht v. Com. Clearing House, Inc., 897 F.2d 21, 25 (2d Cir. 1990). A RICO conspiracy claim
“should state with specificity what the agreement was, who entered into the agreement, when the
agreement commenced, and what actions were taken in furtherance of it.” FD Prop. Holding, Inc.
v. U.S. Traffic Corp., 206 F. Supp. 2d 362, 373 (E.D.N.Y. 2002) (quoting 1 Arthur F. Mathews, et
al., Civil Rico Litigation § 9.07 (2d ed.1992)). “Bare or conclusory allegations of participation in
a conspiracy … will not avail on a motion to dismiss”; plaintiffs “must plead allegations that each
defendant knowingly agreed to participate in the conspiracy, particularly when the predicate acts
alleged are fraud.” Com-Tech Assocs. v. Computer Assocs. Int’l, 753 F.Supp. 1078, 1092 (E.D.N.Y.
1990).
Plaintiffs’ RICO conspiracy claim relies on bare and conclusory allegations, without any
specificity whatsoever. 	It principally alleges that “Defendants did unlawfully, knowingly, and
intentionally, combine, conspire, confederate, and agree together with each other, and with others
whose names are known or unknown, to conduct and participate, directly and indirectly, in the
conduct of the affairs of the enterprise through a pattern of racketeering activity set forth herein in
violation of 18 U.S.C. § 1962(d).” (FAC, ¶ 192) But the FAC does not allege facts suggesting
that there was an agreement between the Defendants. 	Indeed, some of the Medical Provider
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Defendants were competitors, and there is nothing to suggest that the Medical Provider Defendants
knew any Defendants other than those who referred business to them or those to whom they
referred business. Accordingly, the FAC does not state a claim for RICO conspiracy.
E. Leave to Amend
Plaintiffs’ Opposition conclusorily states that Plaintiffs can amend the FAC if “the pleading
of additional facts [is] necessary to correct any deficiencies in the FAC.” (Plaintiffs’ Opp. at 45)
Following oral argument, Plaintiffs filed a letter dated December 31, 2025, in which they expressly
request leave to amend their pleading to correct any deficiencies with respect to the proximate
causation issue. In Defendants’ letter of December 31, 2025, they oppose granting leave to amend
the FAC, arguing that Plaintiffs’ proposed amendments contradict allegations in their previous
filings; would be futile; and would occasion undue delay, resulting in prejudice to Defendants.
Having considered the parties’ positions, I will dismiss the RICO and RICO conspiracy
claims without prejudice to Plaintiffs moving pursuant to Fed. R. Civ. P. 15(a) for leave to amend
the complaint to address the deficiencies here identified in those two claims. That motion must
include a copy of the proposed amended pleading, see Local Civil Rule 15.1(a), and shall also
include a redlined version comparing the proposed amended pleading to the FAC. The proposed
amended complaint shall address only the deficiencies identified in this Opinion and Order and
shall be served on Defendants within 30 days of the date of this Opinion and Order. Defendants
shall have 30 days from service of that motion in which to serve a response on Plaintiffs, and
Plaintiffs shall have 15 days from service of the opposition papers in which to serve a reply and
file the fully briefed motion.
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F. Declaratory Judgment
Count V of the FAC requests declaratory relief pursuant to the Declaratory Judgment Act
(“DJA”), 28 U.S.C. § 2201.10 That Act does not “provide an independent cause of action.” In re
Joint E. & S. Dist. Asbestos Litig., 14 F.3d 726, 731 (2d Cir. 1993). It “only provides courts with
discretion to fashion a remedy,” Sunvestment Energy Grp. NY 64 LLC v. Nat’l Grid USA Servs.
Co., 116 F.4th 106, 113–14 (2d Cir. 2024), by authorizing a court to “enter a declaratory judgment
in favor of a party who has a substantive claim of right to such relief.” In re Joint E. & S. Dist.
Asbestos Litig., 14 F.3d at 731. Since Count V does not state a federal claim upon which relief
may be granted, it is dismissed with prejudice.
G. Supplemental Jurisdiction and Motions to Dismiss the State Law Claims
Counts III and IV allege claims for common law fraud and unjust enrichment, respectively.
Defendants argue that, if the court dismisses Plaintiffs’ federal claims, it should decline to exercise
supplemental jurisdiction over these two state law claims. Defendants also advance substantive
arguments for dismissing these two claims if the court decides to exercise supplemental
jurisdiction.
The court has subject matter jurisdiction over these claims only pursuant to the
supplemental jurisdiction statute, 28 U.S.C. § 1367. That statute provides, among other things,
that “in any civil action of which the district courts have original jurisdiction, the district courts
shall have supplemental jurisdiction over all other claims that are so related to claims in the action
within such original jurisdiction that they form part of the same case or controversy under Article
10 The DJA provides, in pertinent part, that, “[i]n a case of actual controversy within its
jurisdiction, … any court of the United States, upon the filing of an appropriate pleading, may
declare the rights and other legal relations of any interested party seeking such declaration,
whether or not further relief is or could be sought.” 28 U.S.C. § 2201.
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III of the United States Constitution.” 28 U.S.C. § 1367(a). However, the statute also provides
that a district court “may decline to exercise supplemental jurisdiction over a claim under
subsection (a) if … (3) the district court has dismissed all claims over which it has original
jurisdiction ….” Id., § 1367(c).
“In deciding whether to exercise jurisdiction over supplemental state-law claims, district
courts should balance the values of judicial economy, convenience, fairness, and comity—the
‘Cohill factors.’” Klein & Co. Futures, Inc. v. Bd. of Trade of City of N.Y., 464 F.3d 255, 262 (2d
Cir. 2006) (citing Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 350 (1988)). “[I]n the usual case
in which all federal-law claims are eliminated before trial, the balance of factors … will point
toward declining to exercise jurisdiction over the remaining state-law claims.” Cohill, 484 U.S. at
350 n.7; see also Klein & Co. Futures, 464 F.3d at 262 (“It is well settled that where, as here, the
federal claims are eliminated in the early stages of litigation, courts should generally decline to
exercise pendent jurisdiction over remaining state law claims.”)
After considering the Cohill factors, I find that this is a “usual case” in which the factors
point toward declining to exercise jurisdiction over the remaining state law claims. Accordingly, I
decline to exercise supplemental jurisdiction over the two state law claims. However, if Plaintiffs
elect to move for leave to amend the FAC and that motion is granted, I may reassess this decision.
CONCLUSION
For the reasons set forth above, Defendants’ motions to dismiss the FAC’s RICO and RICO
conspiracy claims are granted without prejudice to Plaintiffs moving for leave to amend these two
claims in an attempt to cure the deficiencies identified here. Such a motion must be filed within
30 days of the date of this Opinion and Order, attach a proposed amended complaint that cures the
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deficiencies identified here, and include a redlined version comparing the proposed amended
complaint to the FAC.
Defendants’ motion to dismiss Count V of the FAC is granted, although the proposed
amended pleading may seek declaratory relief in connection with other claims. The court declines
to exercise supplemental jurisdiction over the state law claims set forth in Counts III and IV of the
FAC, but may reassess this decision if Plaintiffs move for leave to amend the FAC and the proposed
amended pleading states a RICO and/or RICO conspiracy claim.
SO ORDERED.
____/S/_____________________
NINA GERSHON
United States District Judge
March 11, 2026
Brooklyn, New York
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