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Illinois Farmers Insurance Co. v. Lake Street Chiropractic Clinic, P.A.

United States District Court, D. Minnesota

May 25, 2018

Illinois Farmers Insurance Company, et al., Plaintiffs,
v.
Lake Street Chiropractic Clinic, P.A., et al., Defendants.

          Richard S. Stempel and Gregory A. Maus, Stempel & Associates, PLC, Counsel for Plaintiffs.

          David W. Asp and Kristen G. Marttila, Lockridge Grindal Nauen P.L.L.P., Counsel for Defendants Lake Street Chiropractic Clinic, P.A., Restore Chiropractic Clinic, P.A., Renew Chiropractic Clinic P.A., Great Lakes MRI, P.A., Midwest Pain Relief, P.A., Excel MRI, P.A., Joshua Jason Anderson, D.C. and Scott Hollington, M.D.

          Martin A. Carlson, Law Offices of Martin A. Carlson, Ltd., Counsel for Defendants Anthony Nowezki, Medicus Massage, Inc., It's All About You, LLC, Back in Balance, LLC, and Inocencio Camacho Herrera.

          MEMORANDUM OPINION AND ORDER

          Michael J. Davis United States District Court

         This matter is before the Court on Defendants Lake Street Chiropractic Clinic, P.A., Restore Chiropractic Clinic, P.A., Renew Chiropractic Clinic P.A., Great Lakes MRI, P.A., Midwest Pain Relief, P.A., Excel MRI, P.A., Joshua Jason Anderson, D.C. and Scott Hollington, M.D.'s Motion to Dismiss [Doc. No. 60] and Defendants Anthony Nowezki, Medicus Massage, Inc., It's All About You, LLC, Back in Balance, LLC, and Inocencio Camacho Herrera's Motion to Dismiss. [Doc. No. 54]

         I. BACKGROUND

         Plaintiffs are insurance companies authorized to conduct business and to issue policies of automobile insurance in the State of Minnesota. (Am. Comp. ¶ 20.) Pursuant to Minnesota law, Plaintiffs are required to provide basic economic benefits for each policy of insurance they sell in Minnesota, and as of June 2017, Plaintiffs have paid $1, 880, 705.03 to Defendants, with an additional $47, 971.51 in bills pending for alleged necessary and reasonable chiropractic treatment during the relevant time period. (Id. ¶ 21.)

         Defendant Joshua Anderson is a chiropractor licensed in the State of Minnesota, and is the owner and CEO of Defendants Lake Street Chiropractic Clinic, P.A., Restore Chiropractic, P.A., Renew Chiropractic, P.A., Great Lakes MRI, P.A., Midwest Pain Relief, P.A., and Excel MRI, P.A (collectively the “Anderson Clinics”) and Defendant Clinica de Accidentes, LLC. (Id. ¶ 22.)

         Defendant Anthony Nowezki is the owner and CEO of Defendant It's All About You, LC, Medicus Massage, Inc. and Back in Balance, LLC (collectively the “Nowezki Clinics”). (Id. ¶ 30.) Defendant Scott Hollington is a medical doctor licensed to practice medicine in the State of Minnesota. (Id. ¶ 33.) Finally, Defendant Camacho is the chief clinic runner for Anderson and the Anderson and Nowezki Clinics. (Id. ¶ 34.) Camacho personally solicited motor vehicle accident victims, including but not limited to Plaintiffs' insureds. (Id.) Camacho further directed other runners and individuals to solicit motor vehicle accident victims, including but not limited to Plaintiffs' insureds, for treatment with the Anderson and Nowezki Clinics. (Id.)

         In this action, Plaintiffs have alleged that Defendants have conspired and acted to create a joint enterprise for purposes of defrauding Plaintiffs out of no-fault medical expense benefits payments. (Id. ¶ 37.) The enterprise consists of Anderson creating, controlling and directing the Anderson Clinics to provide a systematic pattern of predetermined diagnosis, predetermined treatment protocol and unnecessary and unreasonable treatment to Plaintiffs' insureds. (Id.) Anderson and the Anderson Clinics also refer Plaintiffs' insureds to Nowezki and the Nowezki Clinics to increase the amounts billed to Plaintiffs in furtherance of the joint enterprise. (Id.) Also as part of the scheme, Nowezki and the Nowezki Clinics refer patients back to Anderson and the Anderson Clinics for additional chiropractic treatment and/or endorse the treatment plan from Anderson for Plaintiffs' insured claimants. (Id.)

         Plaintiffs further allege that Defendants have formed an ongoing association for purposes of defrauding Plaintiffs and its insureds out of available no-fault medical expense benefits. (Id. ¶ 38.) To further the scheme, Defendants have used the mails and wire communications. (Id. ¶¶ 39, 40) The scheme involved creating multiple chiropractic clinics to initiate treatment to Plaintiffs' insureds and bill for template treatment. (Id. ¶ 42) Anderson then created a pain clinic to bill for unnecessary consultations and to associate with a medical doctor, Hollington, to prescribe unnecessary medications such as oxycodone. (Id.)

         Anderson allegedly directed the clinics to refer patients to Nowezki and the Nowezki Clinics for unnecessary massage therapy and that the Nowezki Defendants knowingly participated in the scheme to defraud Plaintiffs of no-fault medical expense benefits by conspiring with Anderson and the Anderson Clinics to utilize pattern and practice treatment, which was unreasonable and unnecessary and by templating patient treatment records in support of the scheme. (Id. ¶ 43.)

         Anderson further directed the Anderson Clinics and Hollington to refer Plaintiffs' insured claimants to Anderson's MRI facilities for MRI scans that were unnecessary for diagnosis and/or treatment. (Id. ¶ 45.)

         Plaintiffs allege that the scheme required motor vehicle accident victims in order for Defendants to fraudulently bill the Plaintiffs, and that Camacho supplied this need by identifying and soliciting such victims for Defendants. (Id. ¶ 46.) Camacho received $1, 500 cash for each person directed to Anderson, Nowezki and their clinics. (Id.) Defendants regularly used the mail and/or wire communications to bill the Plaintiffs for this unnecessary treatment. (Id. ¶ 47)

         Plaintiffs have brought a number of claims against Defendants: Count I -RICO, 18 U.S.C. §§ 1961(3) and 1964(c); Count II - Common Law Fraud; Count III - Negligent Misrepresentation; Count IV - Disgorgement and/or Recovery of Minnesota No-Fault Benefits under Minn. Sat. § 65B.54; and Count V - Unjust Enrichment.

         Defendants now move the Court to dismiss the Amended Complaint, claiming dismissal is warranted pursuant ...


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