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State Farm Mut. Auto. Ins. Co. v. Mobile Diagnostic Imagine, Inc.

United States District Court, D. Minnesota

March 25, 2014

State Farm Mutual Automobile Insurance Company, an Illinois corporation, and State Farm Fire and Casualty Company, an Illinois corporation, Plaintiffs,
v.
Mobile Diagnostic Imagine, Inc., a Minnesota limited liability company and Michael Appleman, individually, Defendants

Page 935

William L. Moran, Esq. and Murnane Brandt, PA, St. Paul, MN, counsel for plaintiffs.

Eric C. Tostrud, Esq. and Lockridge, Grindal & Nauen, PLLP, Minneapolis, MN, counsel for defendants.

OPINION

David S. Doty, United States District Judge.

Page 936

ORDER

This matter is before the court upon the motions for declaratory judgment and partial summary judgment by plaintiffs State Farm Mutual Automobile Insurance Company and State Farm Fire and Casualty Company (collectively, State Farm) and the motion for summary judgment by defendants Mobile Diagnostic Imaging, Inc. (MDI) and Michael Appleman (collectively, defendants). Based on a review of the file, record and proceedings herein, and for the following reasons, the court grants the motion by defendants.

BACKGROUND

This insurance dispute arises out of an arrangement between State Farm and MDI involving magnetic resonance imaging (MRI) scans. State Farm reimburses insureds for medical expenses, including MRI scans, as part of its provision of no-fault benefits. Compl. ¶ 14.

MDI employs technologists who take MRI scans of patients referred by medical providers. MDI then submits the scans and other relevant information to independently-contracted physicians and radiologists who interpret them and produce reports containing their findings. Answer ¶ 11; Pomeranz Dep. 31:12-22. The independent-contractor physicians and radiologists are employed by non-party ProScan Reading Service (ProScan). Pomeranz Dep. 18:14-17. Thereafter, MDI forwards the scans and reports to patients' referring medical providers. Ball Dep. 81:5-9. In order to be reimbursed, MDI submits documentation to State Farm and bills for both the taking and interpretation of scans. Compl. ¶ ¶ 14, 18. MDI often practices " global billing," which encompasses both the taking and interpretation of scans. See Appleman Dep. 117:2-6.

On April 24, 2012, State Farm notified MDI that State Farm would no longer honor bills submitted by MDI. See Carter Aff. Ex. E, ECF No. 52. State Farm thereafter offered to indemnify policyholders

Page 937

against any claims for unpaid services that MDI might bring against them. See, e.g., id. Ex. G.

On April 27, 2012, State Farm filed suit under the Declaratory Judgment Act, seeking a declaration (1) that MDI's services constitute the practice of medicine in violation of the corporate practice of medicine doctrine (CPMD); (2) that MDI's practice of engaging independent contractors violates the CPMD; [1] (3) that the violations of the CPMD were knowing and intentional and (4) that State Farm is excused from payment of outstanding bills for MDI's ...


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