MEMORANDUM & ORDER Plaintiffs State Farm Mutual Automobile Insurance Company and State Farm Fire and Casualty Company (collectively, “State Farm”) bring this action against Defendants Herschel Kotkes and Herschel Kotkes, M.D., P.C. (“Kotkes”), alleging that Dr. Kotkes defrauded State Farm by submitting hundreds of fraudulent bills for no-fault insurance charges on behalf of insured patients who were involved in automobile accidents. State Farm alleges common law fraud and unjust enrichment, seeking damages for benefits paid under no-fault insurance policies to Kotkes. Compl., ECF No. 1, 146, 152. State Farm also seeks a declaratory judgment establishing that, among other things, it is not obligated to pay unpaid, pending claims submitted by Kotkes. Compl. 137-40. Presently before the Court are (1) Kotkes’s motion to dismiss the complaint for failure to state a claim under Rule 12(b)(6), ECF No. 17, and (2) State Farm’s motion for a preliminary injunction to stay individual proceedings that have been commenced by Kotkes to collect no-fault benefits from State Farm, and to enjoin him from initiating such proceedings during the pendency of this litigation. ECF No. 19. For the reasons stated below, Kotkes’s motion to dismiss is DENIED and State Farm’s motion for a preliminary injunction is GRANTED in full. I. Background A. New York’s No-Fault Insurance Scheme Under New York Law, an automobile insurer must provide no-fault insurance benefits to the individuals they insure (“insureds”) for necessary healthcare expenses resulting from automobile injuries, for up to $50,000. See N.Y. Ins. Law §§5101 et seq; N.Y. Comp. Codes R. & Regs. tit. 11 §§65, et seq. This legislative scheme is designed to “ensure prompt compensation for losses incurred by accident victims without regard to fault or negligence, to reduce the burden on the courts and to provide substantial premium savings to New York motorists.” Med. Soc’y of State of N.Y. v. Serio, 100 N.Y.2d 854, 860 (2003) (citation omitted). Under these laws, no-fault insurers like State Farm “may reimburse patients without requiring proof of the other driver’s fault in an amount up to $50,000, including for necessary expenses incurred for medical or other professional health services.” Gov’t Emps. Ins. Co. v. Tolmasov, 602 F. Supp. 3d 380, 383 (E.D.N.Y. 2022) (citing N.Y. Ins. Law §5102(a)(1)). An insured may assign their claim to their provider, who then bills the insurers directly. State Farm Mut. Auto Ins. Co. v. Parisien, 352 F. Supp. 3d 215, 221 (E.D.N.Y. 2018). New York state law creates a “fair claims settlement” procedure for all nofault claims. No-fault benefits are considered overdue if they are not paid or denied within thirty calendar days from when proof of claim is submitted to the insurer. See N.Y. Ins. L. §5106(a); 11 N.Y.C.R.R. §65-3.8(c). “After receiving a claim, an insurance company must pay it in full within thirty days, or else incur interest charges at two percent per month.” Gov’t Emps. Ins. Co. v. Landow, No. 21-CV-1440 (NGG) (RER), 2022 WL 939717, at *1 (E.D.N.Y. Mar. 29, 2022). “If an insurer fails to comply with this timeframe, it will be precluded from asserting many (but not all) defenses to coverage, including most fraud-based defenses.” Parisien, 352 F. Supp. 3d at 221. B. Factual Allegations Defendants in this action are Dr. Herschel Kotkes (“Kotkes”) and his medical practice, Herschel Kotkes, M.D., P.C. Kotkes is a pain management specialist, whose practice includes treating insureds who have been involved in automobile accidents. Compl. Ex. 9, ECF No. 1-9, at 5. The insureds assign their policies to Kotkes, who bills State Farm for the treatment purportedly rendered. State Farm alleges that Kotkes, since at least 2017, has been systematically submitting fraudulent and misleading claims to State Farm. Compl. 2, 4. State Farm contends that this pervasive fraud is visible when collectively observing the claims that Kotkes submitted to State Farm since 2017. Compl. 4, 133. State Farm contends that, while individual claims may appear facially legitimate, when viewed in context of the hundreds of claims submitted since at least 2017, it is apparent that Kotkes has made identical diagnoses and prescribed nearly identical treatments for all of his patients, regardless of any individual characteristics such as age, medical history, physical condition and limitations, or responsiveness to conservative treatment. Compl. 23. In its complaint, State Farm cites frequently to a chart analyzing eighty-six patient records — randomly selected claims that constitute a little over 10 percent of the 745 claims Kotkes submitted to State Farm since 2017. Opp’n to Mot. to Dismiss, ECF No. 17-2 at 9; Compl. Ex. 1, 2, ECF Nos. 1-1, 1-2. This analysis reveals, according to State Farm, that, among other things, Kotkes almost always described patient complaints in the same way (as non-specific neck and/or low back pain), Compl. 36, diagnosed 99 percent of patients with radiculopathy in either the lumbar or cervical region, or both, along with “intervertebral disc displacement” in the corresponding region, Compl. 40, but without specifying the particular location on the spine. Compl.
42-44. State Farm contends, however, that “radiculopathies at one or more level are rare in motor vehicle accident victims” Compl. 41 (citing “a large-scale, peer-reviewed 2009 study…published in Muscle & Nerve, the official journal of the American Association of Neuromuscular & Electrodiagnostic Medicine”). The random sample of eighty-six patients also reveals that Kotkes provided the same prognosis for 98 percent of those he treated, Compl. 46, and recommended the same combination of treatment methods for nearly all patients. Compl. 53. Indeed, State Farm alleges Kotkes frequently billed for (and presumably performed) two procedures, IDETs (Intradiscal Electrothermoplasty) and percutaneous discectomies, that he performed at the same time. Compl. 94. In fact, 96 percent of patients who were recommended a percutaneous discectomy were also recommended an IDET. Compl. 96. However, State Farm avers that “the medical indications for percutaneous discectomies and IDETs render them mutually exclusive” — if a patient has a certain set of symptoms, he is a candidate for one procedure but not the other, and “cases where both procedures are indicated would be non-existent, or at least extraordinarily uncommon.” Compl. 95. State Farm also points to the individual medical records of several patients as examples of Kotkes’s allegedly fraudulent practices. In one of the several examples that State Farm provides, Kotkes immediately recommended that a patient, R.A., receive three invasive courses of treatment: an ESI, trigger point injection, and percutaneous discectomy. Compl. 55. A percutaneous discectomy and IDET were performed only eight days later, without beginning with more conservative treatment, such as injection therapy. Compl. 55. State Farm also points to examples from individual patient records where Kotkes billed for an IDET and a percutaneous discectomy, which were performed at the same time even though these two procedures are mutually exclusive. Compl.
