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Government Employees Insurance Co. v. Barron Chiropractic & Rehabilitation, P.C.

United States District Court, D. Massachusetts

August 16, 2017

GOVERNMENT EMPLOYEES INSURANCE CO., et al. Plaintiffs,
v.
BARRON CHIROPRACTIC & REHABILITATION, P.C., et al., Defendants.

          MEMORANDUM AND ORDER ON MOTIONS TO DISMISS

          ALLISON D. BURROUGHS U.S. DISTRICT JUDGE

         On April 1, 2016, Plaintiffs Government Employees Insurance Company, GEICO General Insurance Company, and GEICO Indemnity Company (collectively, “GEICO”) initiated this medical provider fraud action against Defendants Barron Chiropractic & Rehabilitation, Phillip C. Barron, Gilbert Weiner, and Brian Farrell (collectively, “Barron”) under Massachusetts state law. [ECF No. 1]. The Court has jurisdiction over the case pursuant to 28 U.S.C. § 1332(a)(1). Currently pending before the Court are Barron's (1) special motion to dismiss under the Massachusetts Strategic Litigation Against Public Participation (“Anti-SLAPP”) statute, Mass. Gen. Laws ch. 231, § 59H [ECF No. 21] and (2) motion to dismiss for failure to state a claim [ECF No. 19]. GEICO opposes both motions [ECF Nos. 25, 26]. The parties also filed replies and sur-replies in connection with each motion. [ECF Nos. 31, 32, 35, 36]. For the reasons explained below, the special motion to dismiss pursuant to the Anti-SLAPP statute is DENIED, and the motion to dismiss for failure to state a claim is GRANTED IN PART AND DENIED IN PART.

         I. ALLEGATIONS IN THE COMPLAINT

         Given the length of the complaint (98 pages long, 500 pages with exhibits, and 626 paragraphs) [ECF No. 1 (hereinafter, “Compl.”)], the following is a summary of only the most salient facts. In essence, GEICO alleges that Barron engaged in an exploitative scheme to induce GEICO to pay or settle false and/or inflated medical insurance claims. Compl. ¶ 43. The individual defendants are each employed as chiropractors at Defendant Company Barron Chiropractic & Rehabilitation (“the Barron chiropractors”). Id. ¶¶ 23, 26, 31.

         Under the Massachusetts No-Fault Personal Injury Protection (“PIP”) statute, auto insurers in Massachusetts must provide PIP coverage to their insureds. Id. ¶¶ 41-43. This coverage ensures that persons involved in automobile accidents have their medical expenses covered, regardless of who is liable for the accident. Id. ¶¶ 41-43. As an insurance company providing this mandatory coverage to its insureds, GEICO pays these PIP benefits directly to healthcare providers, such as Barron. Id. ¶¶ 41-43.

         GEICO alleges that Barron took advantage of the PIP statutory framework by engaging in several different types of fraudulent behavior in an effort to obtain higher payments from GEICO. First, GEICO alleges that the Barron chiropractors consistently determined that every motor vehicle accident patient required chiropractic treatment, prescribed uniform treatments without regard to individual patients' needs, and used boilerplate protocols in order to maximize the amount of treatment rendered and the PIP benefits received from GEICO. Id. ¶¶ 64-67. These treatment protocols included certain types of in-office treatment (electrical stimulation and hot pack application) that GEICO asserts could and should have been prescribed as home treatment, which would not have been billable. Id. ¶¶ 72-77. The Barron chiropractors also purportedly only prescribed certain expensive treatments to patients with PIP benefits (like GEICO-insured patients), but not to patients who paid in cash or through regular healthcare insurance, even when those patients had substantially similar injuries. Id. ¶¶ 81, 84-86. GEICO submits that the sole determinant used by Barron for deciding the appropriate protocol for an individual patient was whether the invoice for their services would be submitted to an insurer or a federal entity like Medicare. Id. ¶ 88.

         Second, GEICO alleges that Barron fabricated complaints from patients to substantiate the treatment and billing, as evidenced by the fact that, for example, the records for non-English-speaking patients listed specific, subjective complaints despite the fact that Barron does not have translators at its offices. Id. ¶¶ 101-04. Moreover, Barron submitted template billing forms, without corresponding or supporting medical records, which GEICO argues is in violation of chiropractic regulations. Id. ¶¶ 109-12.

         Third, GEICO alleges that Barron submitted invoices certifying that billed services were rendered by a treating chiropractor, despite the fact that many of the services were actually rendered by unlicensed persons with no formal training, sometimes in a separate physical therapy office also owned by Barron, id. ¶ 129-31, 138-41, and that Barron engaged in this misleading billing practice for the purpose of seeing more patients, billing for more services, and receiving increased payments, id. ¶¶ 148, 159, 164-66, 176-78.

         Fourth, GEICO claims that Barron charged GEICO-insured patients and billed GEICO for spinal decompression treatments that it publicly advertised as free for all new patients. Id. ¶¶ 151-54.

         Fifth, GEICO alleges that Barron made a myriad of false and misleading statements concerning the services they provided to GEICO-insured patients in both the medical records themselves and the billing invoices, including, inter alia, misidentifying which individual rendered each treatment, misusing Current Procedure Terminology or “CPT” codes created by the American Medical Association (“AMA”) to miscategorize the medical services rendered and invoiced for reimbursement, and submitting invoices and records using a Health Insurance Claim Form that falsely certified that the statements on the forms were accurate and not misleading. Id. ¶¶ 158, 160-76, 191-92.

         Sixth, GEICO submits that Barron engaged in deceptive “up-coding” techniques that allowed them to bill at a higher rate than that of the service actually performed, including, for example, by claiming that certain GEICO-insured patients were “new patients, ” even if they had previously been seen by Barron, in order to charge GEICO for the more expensive “new patient” visit. Id. ¶¶ 215-16, 221-27.

         GEICO also asserts that this is not the first time Barron has been disciplined for failing to accurately document services or billing for services that were never actually rendered, claiming that, in July 2009, the Massachusetts Board of Registered Chiropractors executed a Consent Agreement with Barron, disciplining them for the precise types of conduct documented in the complaint. Id. ¶¶ 200-02.

         Additionally, the complaint further alleges that Barron defrauded GEICO by engaging in an unlawful and improper referral scheme by exclusively referring GEICO-insured patients being treated at Dr. Barron's physical therapy clinic, Be Pain Free, to the chiropractic office also owned by Dr. Barron, including patients who did not necessarily need chiropractic care, for the purpose of deriving additional billing. Id. ¶¶ 243-44, 246, 254, 258.

         Finally, GEICO claims that Barron, in violation of Massage Therapy regulations, provided massage therapy services without proper licensure by advertising and providing massage therapy services, despite the fact that it did not have the license required by statute and did not fall into any licensure exception. Id. ¶¶ 262-67.

         In support of its general allegations, GEICO specifically identifies twelve “exemplar” claims, which it claims are illustrative of Barron's widespread deceitful and fraudulent conduct. Id. ¶¶ 270-580. GEICO also references transcripts of sworn statements by Barron's GEICO-insured patients, which corroborate many of the allegations made throughout the complaint, Compl. Exs. 20-23, 33, 35, 38, 42, 44, 46, including that unqualified personnel administered patients' treatment, see, eg., Compl. ¶ 282, that patients were left unsupervised while doing therapeutic exercises, see, eg., id. ¶ 290, and that, despite corresponding records which list specific medical complaints purportedly made by patients, non-English-speaking patients were seen without translators, see, e.g., id. ¶¶ 506-07. In addition to these “exemplar” claims, GEICO asserts that 169[1] additional insurance claims were submitted as part of Barron's fraudulent scheme. See Compl. Ex. 3.

         Based on these factual allegations, GEICO asserts the following state law causes of action: common law fraud (Count I); civil conspiracy (Count II); money had and received (Count III); violations of Massachusetts General Laws Chapter 93A (Count IV); breach of contract (Count V); and intentional interference with advantageous business relationships (Count VI). As relief, GEICO requests damages, costs and interest, reasonable attorneys' fees, and an injunction.

         II. MOTION TO DISMISS PURSUANT TO THE ANTI-SLAPP STATUTE

         A. Legal Standard

         The Massachusetts Anti-SLAPP statute permits a party to bring a special motion to dismiss when the allegations against it “are based on said party's exercise of its right of petition under the constitution of the United States or of the commonwealth.” Mass. Gen. Laws ch. 231, § 59H. The statute further provides that:

The court shall grant such special motion, unless the party against whom such special motion is made shows that: (1) the moving party's exercise of its right to petition was devoid of any reasonable factual support or any arguable basis in law and (2) the moving party's acts caused actual injury to the responding party. In making its determination, the court shall consider the pleadings and supporting and opposing affidavits stating the facts upon which the liability or defense is based.

Id.

         The Massachusetts Supreme Judicial Court has laid out a two-step burden-shifting procedure for such special motions to dismiss:

At the first stage, a special movant must demonstrate that the nonmoving party's claims are solely based on its own petitioning activities . . . At the second stage, if the special movant meets this initial burden, the burden will shift . . . to the nonmoving party. The nonmoving party may still prevail . . . by demonstrating that the special movant's petitioning activities upon which the challenged claim is based lack a reasonable basis in fact or law, i.e. constitute sham petitioning, and that the petitioning activities at issue caused it injury. If it cannot make this showing, however, the nonmoving party may . . . [also] meet its second-stage burden and defeat the special motion to dismiss by demonstrating in the alternative that each challenged claim . . . was not primarily brought to chill the special movant's legitimate petitioning activities.

Blanchard v. Steward Carney Hosp., Inc., 75 N.E.3d 21, 38 (Mass. 2017). “In this inquiry, courts consider pleadings and affidavits without indulging inferences in favor of the non-moving party.” Bargantine v. Mechs. Co-op. Bank, No. 13-11132-NMG, 2013 WL 6211845, at *2 (D. Mass. Nov. 26, 2013). The standard of review under the anti-SLAPP framework is “fundamentally different from a Rule 12 motion” because it “incorporates additional fact-finding beyond the facts alleged in the pleadings.” S. Middlesex Opportunity Council, Inc. v. Town of Framingham, No. 07-12018-DPW, 2008 WL 4595369, at *10 (D. Mass. Sept. 30, 2008).

         B. Discussion

         Prior to GEICO filing the instant lawsuit, Barron Chiropractic initiated at least four lawsuits in state court against GEICO in an effort to recover unpaid PIP benefits.[2] Barron argues that the instant complaint must be dismissed because it is based on these state court suits, which are considered protected petitioning activity within the meaning of the Anti-SLAPP statute. The “employment of legal mechanisms, ” including filing a claim with a judicial body, “plainly constitute[s] petitioning activity under the anti-SLAPP statute.” SMS Fin. V, LLC v. Conti, 865 N.E.2d 1142, 1149 (Mass. App. Ct. 2007). To prevail on this special motion to dismiss, however, Barron “must make a threshold showing through pleadings and affidavits that the claims against it are based on the petitioning activities alone and have no substantial basis other than or in addition to the petitioning activities.” Blanchard, 75 N.E.3d at 29 (quoting Fustolo v. Hollander, 920 N.E.2d 837, 840 (Mass. 2010)) (further internal quotations omitted).[3]

         Barron has failed to meet its burden. In determining whether GEICO's claims have any substantial basis other than the petitioning activity, “the focus solely is on the conduct complained of” in the complaint. See Demoulas Super Mts., Inc. v. Ryan, 873 N.E.2d 1168, 1172 (Mass. App. Ct. 2007) (quoting One Office, Inc. v. Lopez, 769 N.E.2d 749, 757 (Mass. 2002)). Here, the complaint is largely based on allegations of Barron's widespread fraudulent billing scheme, and not on Barron's petitioning activity in state court. See Keystone Freight Corp. v. Bartlett Consol., Inc., 930 N.E.2d 744, 752-53 (Mass. App. Ct. 2010) (holding that plaintiff's “counts for deceit, negligent misrepresentation, and violation of G.L. c. 93A are grounded in [plaintiff's] alleged billing misconduct and not in the fact that [the defendant] sued for payment”). The fact that some of the bills in the state court litigation are at issue in the instant litigation does not turn this into a SLAPP suit, as GEICO is complaining about the allegedly fraudulent activity underlying those bills, not the fact that Barron engaged in PIP litigation.

         Given that Barron cannot meet its threshold burden of showing that this lawsuit is based solely on Barron's protected petitioning activity, the analysis ends here. See Keystone, 930 N.E.2d at 753 n.12; see also Steinmetz v. Coyle & Caron, Inc., No. 15-cv-13594-DJC, 2016 WL 4074135, at *5 (D. Mass. July 29, 2016) (denying anti-SLAPP motion before analyzing alternative 12(b)(6) grounds for dismissal).

         III. MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM

         A. Legal Standard

         On a motion to dismiss for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6), the Court must accept as true all well-pleaded facts, analyze those facts in the light most hospitable to the plaintiff's theory, and draw all reasonable inferences from those facts in favor of the plaintiff. U.S. ex rel. Hutcheson v. Blackstone Med. Inc., 647 F.3d 377, 383 (1st Cir. 2011). In ruling on a motion under Rule 12(b)(6), the Court “must consider the complaint, documents annexed to it, and other materials fairly incorporated within it, ” which “sometimes includes documents referred to in the complaint but not annexed to it” and “matters that are susceptible to judicial notice.” Rodi v. S. New Eng. Sch. of L., 389 F.3d 5, 12 (1st Cir. 2004).

         Although detailed factual allegations are not required, a complaint must set forth “more than labels and conclusions.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). A “formulaic recitation of the elements of a cause of action” is not enough. Id. To avoid dismissal, a complaint must set forth “factual allegations, either direct or inferential, respecting each material element necessary to sustain recovery under some actionable legal theory.” Gagliardi v. Sullivan, 513 F.3d 301, 305 (1st Cir. 2008) (internal quotations and citation omitted).

         Further, the facts alleged, when taken together, must be sufficient to “state a claim to relief that is plausible on its face.” A.G. ex rel. Maddox v. Elsevier, Inc., 732 F.3d 77, 80 (1st Cir. 2013) (quoting Twombly, 550 U.S. at 570). “The plausibility standard invites a two-step pavane.” Id. (quoting Grajales v. P.R. Ports Auth., 682 F.3d 40, 45 (1st Cir. 2012)). “At the first step, the court ‘must separate the complaint's factual allegations (which must be accepted as true) from its conclusory legal allegations (which need not be credited).'” Id. (quoting Morales-Cruz v. Univ. of P.R., 676 F.3d 220, 224 (1st Cir. 2012)). “At the second step, the court must determine whether the remaining factual content allows a ‘reasonable inference that the defendant is liable for the misconduct alleged.'” Id. (quoting Morales-Cruz, 676 F.3d at 224). “Although not equivalent to a probability requirement, the plausibility standard asks for more than a sheer possibility that a defendant has acted unlawfully.” Boroian v. Mueller, 616 F.3d 60, 65 (1st Cir. 2010) (internal citations and quotations omitted). “The make-or-break standard . . . is that the combined allegations, taken as true, must state a plausible, not a merely conceivable, case for relief.” Sepulveda-Villarini v. Dep't of Educ. of P.R., 628 F.3d 25, 29 (1st Cir. 2010) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).

         B. Discussion

         i. Massachusetts' No-Fault Automobile Insurance and Mandatory PIP Coverage

         Massachusetts created a no-fault automobile insurance scheme in an effort “to reduce the number of small motor vehicle tort cases being entered in the courts of the Commonwealth, to provide a prompt, inexpensive means of reimbursing claimants for out-of-pocket expenses, and to address the high cost of motor vehicle insurance in the Commonwealth.” Estrada v. Progressive Direct Ins. Co., 53 F.Supp.3d 484, 486 (D. Mass. 2014) (quoting Flanagan v. Liberty Mut. Ins. Co., 417 N.E.2d 1216, 1219 (Mass. 1981)). As part of the no-fault statutory scheme, Massachusetts requires that automobile insurers provide personal injury ...


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