ADDITIONAL CASES Taira Rx Corp. a/a/o Gengguan Chen, John Devito, Angie Flores, Damarys Fores, Michael Generoso, Jose Gomez, Deonarine Nauth, Armmeen Williams, Ke Xu, Hiba Zahmoul, Plaintiffs v. Government Employees Insurance Company, Defendant; CV-702201/17; CV-702185/17; CV-702233/17; CV-702213/17; CV-700042/18; CV-701984/17; CV-702243/17; CV-702247/17; CV-703115/17; CV-700208/18 CPLR 2219(a) Recitation (applicable to all actions) Notice/Affirmation/Affidavits/Exhibits 1 Opposition/Exhibits 2 Reply/Exhibits 3 DECISION AND ORDER ON MOTIONS These actions, addressed together here solely for the purposes of this decision, relate to assigned, unpaid no-fault claims submitted by Plaintiffs Taira RX Corp (“Taira”), a pharmacy, and HKP Physical Therapy, P.C. (“HKP,” collectively “Plaintiffs”), a medical clinic, to Defendant Geico. In every Taira action, Geico moves pursuant to CPLR 3212 for summary judgment, alleging that Plaintiffs filed these actions prematurely because verification requests remain outstanding, and that Geico had no obligation to deny the claims before receiving a complete verification response. In the HKP action, Geico argues that the denials were justified because HKP failed to respond to reasonable verification requests. Plaintiffs oppose each motion, arguing that the requests are inappropriate and/or unjustified, and that Plaintiffs have substantially complied. Plaintiffs also ask the Court to search the record and grant summary judgment in their favor. For the reasons below: (1) Geico’s motions in the Chen (702201/17), Devito (702185/17), Generoso (700042/18), Nauth (702243/17), Williams (702247/17), Xu (703115/17), Zahmoul (700208/18) actions are GRANTED and those complaints are dismissed without prejudice as premature; (2) Geico’s motion in the Hyppolite action (702191/16) is GRANTED, and the Complaint dismissed with prejudice; (3) Geico’s motion in the Gomez action (CV-701984/17) is GRANTED in part and DENIED in part; and (4) the Flores (CV-702233/17) and Fores (702213/17) motions are DENIED and summary judgment is granted in favor of Plaintiffs. BACKROUND FACTS AND PROCEDURAL HISTORY I. Taira A. Facts common to all Taira Actions In 2016, prior to any relevant claim submission, the owner of MSB Rx d/b/a “Forest Drugs” (“MSB”), Michael Bassanell, sold MSB to Taira, which continued to operate Forest Drugs.1 According to Geico, its investigation revealed “an alarming increase in the amount of prescription drug products prescribed to no-fault patients suffering from minor injuries sustained in fender-bender type automobile accidents” (Def/Sacks Affirm 11). Geico alleges that the prescriptions were “medically unnecessary,” prescribed at “no-fault clinics” operating as “medical mills…for the sole purpose of submitting inflated, fraudulent billing” (id.). In furtherance of Geico’s investigation, in addition to document requests including financial and prescription records, Geico sought an examination under oath (EUO) of Bassanell. After Bassanell’s EUO on April 27, 2017, Geico requested additional categories of documentation that it determined to be necessary and reasonable for its investigation (Def Reply Exh 2):2 (1) contracts/agreements between MSB Rx Corp./Bassanell and Taira/Mikhail Borukhov relating to the sale, transfer, and ongoing relationship between the two entities; (2) applications, registration forms, and accompanying documents submitted by or on behalf of Taira and/or MSB Rx Corp. to the NYS Board of Pharmacy in connection with its request for registration or licensing; (3) documents filed with NYS evidencing the sale, transfer, and/or change in ownership of MSP Rx Corp. from Bassanell to Taira and Mikhail Borukhov; (4) Tax forms, payroll tax returns, and employment agreements for all persons who have performed work for or on behalf of [Taira] as a pharmacist of pharmacy technician; (5) 2016 and 2017 federal, NYS, and NYC quarterly payroll tax returns prepared or filed by Taira and MSB Rx Corp.; (6) purchase invoices, wholesale receipts, or related documentation evidencing the purchase of all pharmaceutical products, including those used in any compounded drugs; (7) information regarding the prescriptions relating to diclofenac gel, diclofenac/lidocaine compound cream, lidocaine patches, and flector patches from June 2016 onward; and (8) the number of prescriptions that Taira dispensed from June 2016 onward pursuant to prescriptions from Mani Ushyarov, Solomon Halioua, Oleg Fuzaylov, Terry-Jan Blackett-Bonnett, and Danny Fuzaylov.3 B. Specific Taira actions4 1. Gengguan Chen (702201/17) a. Bills 1-3 ($357.32, $7.07, $13.16 for March 6, 2017 prescriptions) On June 22, 2017, Geico received the first bill (Geico Exh A [Chen Action]).5 Due to the concerns raised in its investigation, including those raised by the Bassanell EUO, Geico sought verification on July 1, 2017, then again on August 11, 2017 (id.). Geico has not yet issued a denial. b. Bills 4-5 ($56.90, $313.28 for June 14, 2017 prescriptions) On July 14, 2017, Geico received the subject bills (Geico Exh B [Chen Action]). Due to the concerns raised in its investigation, including those raised by the Bassanell EUO, Geico sought verification on July 31, 2017, then again on August 31, 2017 (id.). Geico has not yet issued a denial. 2. John Devito (702185/17) a. Bills 1-2 ($2,364.00, $232.19 for June 1, 2017 prescriptions) On July 6, 2017, Geico received the subject bills (Geico Exh A [Devito Action]). Due to the concerns raised in its investigation, including those raised by the Bassanell EUO, Geico sought verification on July 26, 2017, then again on August 28, 2017 (id.). After a January 3, 2018 exam by Dr. Russ, on January 10, 2018, Geico issued a denial of all future benefits, but this claim remains pending (Taira Exh G [Devito Action]). 3. Angie Flores (702233/17) a. Bills 1-3 ($399.00, $2,364.00, $125.02 for May 15, 2017 prescriptions) On June 7 and 8, 2017, Geico received the subject bills (Geico Exh A [Flores Action]). Due to the concerns raised in its investigation, including those raised by the Bassanell EUO, Geico sought verification on June 26, 2017, then again on August 10, 2017 (id.).6 After a January 3, 2018 exam by Dr. Yang, on October 27, 2017, Geico issued a denial of all future benefits, but this claim remains pending (Taira Exh G [Flores Action]). 4. Damarys Fores (702213/17) a. Bill 1 ($1,432.05 for May 15, 2017 prescription) On June 8, 2017, Geico received the subject bill (Geico Exh A [Fores Action]). Due to the concerns raised in its investigation, including those raised by the Bassanell EUO, Geico sought verification on June 26, 2017, then again on August 10, 2017 (id.).7 After receiving some of the requested items, Geico sent a subsequent letter on October 31, 2017 outlining which items Geico considered to be outstanding (id.). Geico has not yet issued a denial. 5. Michael Generoso (700042/18) a. Bill 1 ($1528.80 for June 26, 2017 prescription) On August 7, 2017, Geico received the subject bill (Geico Exh A [Generoso Action]). Due to the concerns raised in its investigation, including those raised by the Bassanell EUO, Geico sought verification on August 18, 2017, then again on September 19, 2017 (id.). After receiving some of the requested items, Geico sent a subsequent letter on November 1, 2017 outlining which items Geico considered to be outstanding (id.). After a July 17, 2017 exam by Drs. Silverman and Lyons, Geico issued a denial of all future benefits on October 27, 2017, but this claim remains pending (Taira Exh G [Flores Action]). 6. Jose Gomez (701984/17) a. Bill 1 ($891.50 for May 3, 2017 prescription) On June 21, 2017, Geico received the subject bill (Geico Exh A [Gomez Action]). Due to the concerns raised in its investigation, including those raised by the Bassanell EUO, Geico sought verification on July 10, 2017, then again on August 11, 2017 (id.). Geico has not yet issued a denial. b. Bill 2 ($703.00 for May 3, 2017 prescription) On June 21, 2017, Geico received the subject bill (Geico Exh A [Gomez Action]). Due to the concerns raised in its investigation, including those raised by the Bassanell EUO, Geico sought verification on July 10, 2017, then again on August 11, 2017 (id.). On July 12, 2017, Geico denied the claim for lack of medical necessity based on a November 8, 2016 exam by Dr. Hershon (Geico Exh B [Gomez Action]). 7. Deonarine Nauth (702243/17) a. Bill 1 ($313.28 for May 16, 2017 prescriptions) On June 22, 2017, Geico received the subject bill (Geico Exh A [Nauth Action]). Due to the concerns raised in its investigation, including those raised by the Bassanell EUO, Geico sought verification on July 11, 2017, then again on August 14, 2017 (id.).8 After receiving some of the requested items, Geico sent a subsequent letter on November 1, 2017 outlining which items Geico considered to be outstanding (id.). After a September 12, 2017 exam by Dr. Krishnan, Geico issued a denial of all future benefits on September 21, 2017, but this claim remains pending (Taira Exh G [Flores Action]). 8. Armmeen Williams (702247/17) a. Bill 1 ($1,700.11 for May 8, 2017 prescriptions) On June 22, 2017, Geico received the subject bill (Geico Exh A [Williams Action]). Due to the concerns raised in its investigation, including those raised by the Bassanell EUO, Geico sought verification on July 12, 2017, then again on August 15, 2017 (id.). After receiving some of the requested items, Geico sent a subsequent letter on November 1, 2017 outlining which items Geico considered to be outstanding (id.). After a July 25, 2017 exam by Dr. Littman, Geico issued a denial of all future benefits on July 31, 2017, but this claim remains pending (Taira Exh G [Williams Action]). b. Bill 2 ($1,700.11 for May 31, 2017 prescriptions) On June 22, 2017, Geico received the subject bill (Geico Exh A [Williams Action]). Due to the concerns raised in its investigation, including those raised by the Bassanell EUO, Geico sought verification on July 26, 2017, then again on August 28, 2017 (id.). After receiving some of the requested items, Geico sent a subsequent letter on November 1, 2017 outlining which items Geico considered to be outstanding (id.). After a July 25, 2017 exam by Dr. Littman, Geico issued a denial of all future benefits on July 31, 2017, but this claim remains pending (Taira Exh G [Williams Action]). 9. Ke Xu (703115/17) a. Bill 1 ($1,442.61 for July 19, 2017 prescriptions) On August 11, 2017, Geico received the subject bill (Geico Exh A [Xu Action]). Due to the concerns raised in its investigation, including those raised by the Bassanell EUO, Geico sought verification on August 23, 2017 (id.). Geico sent a follow-up verification request letter on September 27, 2017 (id.). After Taira responded with some of the documents and objections to the other categories, Geico sent another follow-up letter on November 3, 2017 outlining which items remained outstanding (id.). Geico has not yet issued a denial. b. Bill 2 ($1,184.50 for August 3, 2017 prescriptions) On September 1, 2017, Geico received the first bill (Geico Exh B [Xu Action]). Due to the concerns raised in its investigation, including those raised by the Bassanell EUO, Geico sought verification on September 12, 2017 (id.). Geico sent a follow-up verification request letter on October 16, 2017 (id.). After Taira responded with some of the documents and objections to the other categories, Geico sent another follow-up letter on November 7, 2017 outlining which items remained outstanding (id.). Geico has not yet issued a denial. 10. Hiba Zahmoul (700208/18) a. Bills 1-2 ($703.00 and $1,432.05 for July 14, 2017 prescriptions) On September 7, 2017, Geico received the subject bill (Geico Exh A [Zahmoul Action]). Due to the concerns raised in its investigation, including those raised by the Bassanell EUO, Geico sought verification on September 22, 2017, then again on October 24, 2017 (id.). After receiving some of the requested items, Geico sent a subsequent letter on November 1, 2017 outlining which items Geico considered to be outstanding (id.). Geico has not yet issued a denial. b. Bill 3 ($1,432.05 for July 29, 2017 prescriptions) On September 25, 2017, Geico received the subject bill (Geico Exh A [Zahmoul Action]). Due to the concerns raised in its investigation, including those raised by the Bassanell EUO, Geico sought verification on October 3, 2017, then again on November 1 and 6, 2017, one of which explicitly outlined which items Geico considered to be outstanding (id.). Geico has not yet issued a denial. C. Requests and responses common to all Taira actions Taira’s responses to the verification requests, as reflected in all of its submissions here, are identical. Taira’s first response dated August 8, 2017 contains a litany of objections including, as relevant here, that no “good faith basis” existed for Geico’s verification requests (Taira Exh A). On August 28, 2017, Geico objected to Taira’s “voluminous boilerplate objections” and characterized Taira’s response as “minimal” (Geico Exh C). Geico justified its request by noting that Dr. Ushyarov had been sued multiple times in connection with no-fault fraud, that “New York State has numerous laws and regulations governing the licensing of pharmacies…,” and numerous deficiencies in Bassanell’s testimony (id.). Taira also sent a further “comprehensive reply” on August 17, 2017 (Taira Exh B). Taira’s August 17 reply again argued that there was no good faith, case-specific basis for the verification request and asserted numerous objections, but provided a limited response (Taira Exh C). In a response on September 7, 2017 Geico argued that its requests were reasonable by invoking various concerns including the nature and frequency of the pharmaceutical products prescribed and dispensed, arrangements between Taira and physicians and clinic locations, compounding formulations and practices, billing and coding practices, and compliance with licensing laws (Geico/McCarthy Aff 4; Geico Exh C). Part of the alleged scheme involved a transfer by Michael Bassanell, Pharm.D., of an entity known as MSB Rx, doing business as Forest Drugs, to Taira Rx, owned by Mikhail Borukhov, Bassanell’s former assistant (Geico/McCarthy Aff 6). According to Geico, the investigation ultimately revealed practices, including inaccurate billing, meant to maximize profits rather than meet medical necessity, as well as potential non-compliance with licensing laws (Geico/McCarthy Aff
5, 8, 9). The Bassanell EUO raised additional questions, including Bassanell’s continuing role with Taira as a supervising pharmacist and the practice of continuing to pay the salary of all employees — including Taira’s employees — from MSB Rx’s bank account, even after the transfer of MSB Rx to Taira (Geico/McCarthy Aff 10). Similarly, one doctor associated with Taira, Mani Ushyarov, has twice been sued by insurance carriers (Geico/McCarthy Aff 11). According to Geico’s September 7, 2017 letter, “multiple claimants have indicated…that they did not actually receive the prescriptions that were purportedly written by Dr. Ushyarov and Dr. Sudberg and then billed to [Geico]” (Geico Reply, Exh 2). Taira’s subsequent objection on October 17, 2017 summarized its prior compliance, again asserting that Geico had not justified its request, and arguing among other things that Geico had not asserted which pharmaceutical laws or regulations had allegedly been violated (Taira Exh C). Geico replied again on October 17, 2017, this time identifying several specific deficiencies: (1) complete records of the number of Dr. Ushyarov’s prescriptions submitted by Taira to Geico; (2) wholesale invoices which “would have a direct bearing on the fees that [Taira] can charge to…Geico”; (3) “documents concerning the number of prescriptions originating from certain high-volume prescribing physicians, and certain federal and state documents” (id.). Geico’s subsequent replies, dated November 22, 2017 and August 8, 2018, supplemented its responses to Taira’s objections and provided further justification for Geico’s requests, including citation to provisions of New York laws and regulations pertaining to pharmacies and kickbacks (see Geico Reply, Exh 2, citing Education Law §§6530[38]; 6811; 6530[18]; 6509-a; 8 NYCRR 29.1[b][3]). Taira’s final response is dated July 19, 2018, essentially reiterating its objections (Taira Exh E). II. HKP (CV-702191/16) On February 15, 2016, Geico conducted EUOs of Hitenkumar Patel, P.T. and Chin Yeung Chan, LAc (Geico/Scollan Affirm 2, Exh 4). Those depositions, as well as other Geico investigations, raised suspicions that HKP could, among other things, “be engaged in unlawful fee-splitting arrangements and illegal kickback schemes with non-physicians” and billing improperly with “pre-determined treatment protocols” to maximize profits (Geico/Scollan Affirm 6; Geico/Simmons Aff 4). According to Geico, several factors contributed to this suspicion: (1) one of HKP’s locations in Brooklyn having been implicated in layperson control, unlawful referral relationships, and predetermined treatment protocols; (2) bills regularly exceeding the actual care that patients received; (3) “anonymous calls” advising patients to treat at the Brooklyn location and that they would be represented by a Mandel Law Firm downstairs from HKP’s Lynbrook location; (4) the use of employees or independent contractors essentially conceded in Patel’s EUO (Geico/Simmons Aff
