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Buttaci Leardi & Werner Successfully Oppose GEICO’s Motion to Stay All PIP/No-Fault Collection Proceedings Filed by a Client Medical Practice

In a significant development in case law concerning healthcare providers’ right to continue to seek payment from automobile insurers for personal injury protection (“PIP) or “no-fault” insurance benefits when facing allegations of insurance fraud, Buttaci Leardi & Werner successfully opposed a motion to stay all pending and future PIP/No-Fault collection proceedings filed by a medical practice client of the firm (“One Oak Medical”).

The motion was filed in a lawsuit GEICO filed late last year alleging a “complex fraudulent scheme” dating back to 2017 by One Oak Medical and several co-defendants to obtain PIP benefits for medical services that GEICO claims were medically unnecessary, the product of unlawful referrals and “kickbacks,” or otherwise non-reimbursable under the PIP/no-fault laws of both New York and/or New Jersey.

In his January 10 decision, the Honorable Nicholas G. Garaufis, U.S.D.J. of the Eastern District of New York, denied GEICO’s motion to stay all of One Oak Medical’s pending and future PIP/No-Fault collection proceedings related to services rendered to GEICO insureds during the pendency of the lawsuit. In doing so, Judge Garaufis noted that GEICO failed to meet its burden of showing “irreparable harm” and failed to address the significance of New Jersey’s PIP statute and underlying regulations, particularly since this case involved healthcare providers who practiced primarily in New Jersey.

“Judge Garaufis’s decision in this case is certainly a departure from the majority of decisions on similar motions brought by GEICO and other automobile insurers in the Eastern District of New York,” said Paul D. Werner. “We were very pleased with his acknowledgement of the impact of New Jersey’s PIP laws on the case, as well as his understanding of the true nature of GEICO’s allegations in this case, which are demonstrably different from some of the fact patterns we’ve seen in cases where a stay of pending collection proceedings was determined to be appropriate.”

John W. Leardi added, “Judge Garaufis was very methodical in his assessment of GEICO’s motion, and its underlying allegations in the case. He acknowledged New Jersey’s clear legislative mandate that disputes of the payment of PIP/No-Fault benefits are to be resolved in arbitration, and not federal court. And he also recognized that unlike many of the other cases where stay motions were successfully brought, there is no allegation that the medical providers in question were not appropriately licensed or otherwise acting outside the scope of their license.”

As it relates to the primacy of the NJ PIP arbitration process, Judge Garaufis’s decision is consistent with the 2018 ruling of the United State Court of Appeals for Third Circuit in GEICO v. Tri County Neurology, No. 17-2113 (3d Cir. 2018), which held that GEICO could not pursue a declaratory judgment that it could withhold $2,211,000.00 in pending PIP claims due to an alleged fraud because such a dispute falls under New Jersey’s PIP arbitration statute, and the parties both had the statutory right to compel arbitration to resolve this disputes over unpaid PIP claims. Buttaci Leardi & Werner, and specifically Mr. Leardi and Mr. Werner, were also counsel to Tri County Neurology before both the Third Circuit, and in the underlying District Court case.

As to GEICO’s underlying allegations in the case, Judge Garaufis distinguished the One Oak case from other cases where a stay of collection proceedings was appropriate by noting that the claims here: (1) involve a relatively small number of active arbitrations; (2) do not involve allegations against insolvent defendants that would be unable to satisfy a damages judgment; (3) do not involve defendants that have been implicated in other cases showing past examples of criminal wrongdoing; and (4) do not involve claims by unlicensed defendants. So even setting aside the primary of compulsory arbitration of NJ PIP disputes, the factual allegations in the One Oak case were inapposite to other cases brought by GEICO and others seeking similar relief.

The case is Gov’t Emps. Ins. Co., et al. v. One Oak Medical, LLC, et al., No. 23-cv-04388 (NGG) (TAM) (Dkt. 31) (E.D.N.Y. Jan. 10, 2024).

If you feel you or your practice has been wrongfully accused of fraud in the submission of claims for insurance reimbursement, please contact John W. Leardi at jwleardi@buttacilaw.com or 609-799-5150.

  • Posted on: Jan 16 2024