Blue Hill Chiropractic Group, Inc. v. Encompass Ins. Co., SUCV200502075

Blue Hill Chiropractic Group, Inc. v. Encompass Ins. Co. et al.

No. 116404

Nos. SUCV200502075, SUCV200502076, SUCV200502077, SUCV200605269

Superior Court of Massachusetts, Suffolk

May 5, 2011

Caption Date: April 22, 2011.

Judge with first initial, no space for Sullivan, Dorsey, and Walsh Cratsley, John C., J.

John C. Cratsley, Associate Justice of the Superior Court.

MEMORANDUM OF DECISION AND ORDER ON (1) INSURERS' RENEWED MOTION FOR SUMMARY JUDGMENT ON DAMAGES, (2) INSURERS' MOTION FOR ASSESSMENT OF DAMAGES AND ENTRY OF FINAL JUDGMENT, & (3) INSURERS' RENEWED MOTION FOR SANCTION OF JUDGMENT BY DEFAULT

INTRODUCTION

Plaintiff and Plaintiff-in-counterclaim Insurance Companies (Insurers) jointly filed this motion for summary judgment in four consolidated actions. The Insurers request that the Court award summary judgment to the Insurers against the Subject Counterclaim Defendants^[1] (members of the Cohens or Cohen Clinics) on damages, pursuant to this Court's (Cratsley J.) grants of summary judgment on the issue of liability, the Orders of September 10, 2010 ("Third Grant of Summary Judgment") and March 5, 2010 ("Second Grant of Summary Judgment"). In addition, the Insurers move for an Assessment of Damages and Entry of Final Judgment, as the Court requested in its Third Grant of Summary Judgment. Finally, the Insurers renew their Motion for Sanction of Judgment by Default, seeking a default judgment for all their claims, including those beyond the limited scope granted by this Court in its Second and Third Grants of Summary Judgment.

For the following reasons, the Insurers' Motion for Summary Judgment on Damages is ALLOWED, the Insurers' Motion for an Assessment of Damages and Entry of Final Judgment is ALLOWED, and the Insurers' Motion for Sanction of Judgment by Default is DENIED.

BACKGROUND

The record reveals the following facts, viewed in the light most favorable to the Cohens.

I. Procedural History

Originally plaintiff Blue Hill Chiropractic Group, Inc. (Blue Hill), part of the Cohen Clinics, initiated these actions in Municipal Court against Insurers Encompass, Commerce, and Premier. Blue Hill alleged breach of contract under G.L.c. 90, §34M, various violations of G.L.c. 93A for failure to pay personal injury protection ("PIP") benefits on claims Blue Hill submitted to the Insurers on behalf of patients who received chiropractic treatment, as well as violations of G.L.c. 93A, §§4 & 5 for conspiring together to monopolize trade and commerce in the Commonwealth. Blue Hill claimed that the Insurers fixed prices for chiropractic services and intentionally refused to pay certain claims. The cases were removed to Superior Court and consolidated on May 25, 2005.^[2]

On December 19, 2006, Norfolk and Dedham (fourth member of the Insurers), ^[3] filed a new complaint against the Cohens and several of their clinics and business associates.^[4] The Insurers then brought counterclaims against Blue Hill and third-party claims against the Cohens and several remaining Cohen employees in all four actions.^[5] The Insurers claimed that the Cohens and their employees had engaged in a coordinated practice of unreasonable and fraudulent billing. Moreover, the Insurers alleged that they suffered damages as a result of the money they paid to the Cohens in response to these fraudulent claims. Specifically, the Insurers alleged violations of Federal Racketeer and Corrupt Organizations ("RICO") Act, 18 U.S.C. §1962(c) et seq., violations of Massachusetts Consumer Protection Act, General Laws Ch. 93A, §2 & 11 ("Chapter 93A"), Civil Conspiracy, Fraud, and Abuse of Process.

In October 2008, this Court (Cratsley, J.) granted partial summary judgment to the Insurers ("First Grant of Summary Judgment"), resulting in all of Blue Hill's claims being dismissed. As a result, only the Insurers' claims remained a part of this litigation.

Then, in March 2010, this Court (Cratsley, J.) again granted partial summary judgment to the Insurers, in its Second Grant of Summary Judgment, holding the Cohens liable for the Insurers' Chapter 93A claims for all damages stemming from the fraudulent use of runners.^[6] The Order established Chapter 93A liability, leaving the issue of damages for trial.

As a collateral matter, throughout the discovery proceedings, Marc Cohen, Alan Cohen, and their secretary, Lucy Alsina (Alsina), repeatedly asserted their Fifth Amendment privileges and remained silent, specifically in response to all questions regarding ownership and management, treatment of patients, and payment of runner referral fees at the Cohen Clinics. This Court (Cratsley, J.), in March 2010, ruled on the Insurers' Motion in Limine to Compel the Witnesses Who Invoked Their Fifth Amendment Right Against Self Incrimination During Discovery to Declare Whether They Will Maintain Those Invocations ("Fifth Amendment Order"). The Fifth Amendment Order required the Cohens and Alsina to declare whether they intended to remain silent at trial. These three individuals indicated their intent to maintain the privilege and not to testify at trial. As a result, at an April 1, 2010 hearing, this Court (Cratsley, J.) precluded those individuals from testifying at trial. The Insurers have renewed a Motion for Order to Compel Discovery from Alan Cohen, Marc Cohen and the Cohen Clinics Pursuant to Mass.R.Civ.P. 37(b). That motion seeks responses from the Cohens to interrogatories and the production of documents with respect to the Insurers' claims that are not subject to the Court's Third Grant of Summary Judgment. The Cohens oppose that motion.^[7]

In September 2010, this Court (Cratsley, J.) granted partial summary judgment to the Insurers in its Third Grant of Summary Judgment. In pertinent part, the Order reads as follows:

For the foregoing reasons, it is therefore ORDERED that Insurers' [Renewed Motion for Partial Summary Judgment] is ALLOWED in part as to: (1) liability for all of Insurers' Fraud claims stemming from patients who were referred to a Subject Cohen Clinic by Carlos Pinales, Jose Anziani, as well as any other patients who were referred to a Subject Cohen clinic by runners if the participation of additional runners besides Pinales and Anziani can be shown as a matter of fact; (2) liability for all of Insurers' Fraud claims stemming from patients who were treated by former Cohen Chiropractors Craig Jakubiak, Kenneth Berthiaume, Ryan May, Kimberly Nappa Flaherty, Miguel Fernandez, Allison Simon-Robin, and/or Kevin Skowrenek at any Cohen Clinic except for West Lynn Chiropractic P.C.;^[8] (3) liability for all of Insurers' RICO claims in which the predicate offenses are comprised of Fraud for which liability has just been allowed pursuant to Sections (1) and (2); (4) joint liability against the Cohens for all of Insurers' Civil Conspiracy claims stemming from their individual Fraud liability. Third Grant of Summary Judgment, 30-31.

The Order established liability, leaving the issues of damages for trial.^[9] Pursuant to that Order, the Court requested that the Insurers submit a form of Final Judgment consistent with the opinion. They have done so now by filing a Motion for Assessment of Damages and Entry of Final Judgment. The Cohens oppose that motion.

In their present motion, the Motion for Summary Judgment on Damages, the Insurers assert that since liability has been established in their favor on all Counts of their Third Amended Counterclaim^[10] pursuant to the previous grants of summary judgment, summary judgment is appropriate as to its damages. The Cohens maintain that a jury trial is necessary on damages.

In addition, the Insurers renew a Motion for Sanction of Judgment by Default, seeking a default judgment on the issue of liability for all of their claims, including those going beyond the limited scope of the Third Grant of Summary Judgment. Specifically, that motion asserts that a sanction of judgment by default is appropriate against the Cohens for those claims stemming from patients treated by Cohen chiropractors Christian Kotulak, Sally Friar, Gregory Karamanian, Jennifer Downey, and those patients treated at West Lynn Chiropractic, P.C. The Cohens oppose the motion, request a hearing, and submit a Motion to Reconsider and a Motion to Strike (re: Damages).

II. Damage Assessments

The Insurers submitted evidence related to their claimed damages in this suit. The evidence includes medical reports and bills ("Records") and printed payment detail screens from electronic payment systems ("Screens"). These Records and Screens constitute the Primary Records ("Primary Records") which form the basis for the Insurers' claims for damages. The Insurers received the Primary Records from the Cohen Clinics, and they bear letterhead identifying the Cohen Clinics. These Screens indicate the amount paid to the Cohen Clinics, the payee, the date the check was created, and the date the check was cashed.

In its submission to the Court, the Insurers determined which claimants were treated by liable chiropractors. The relevant Primary Records were then synthesized into claim files, organized by claimant, and summarized in a spreadsheet prepared by Insurers' counsel.

The Insurers' PIP employees who produced the Primary Records verified their reliability. Furthermore, Dr. Mark A. Davini, D.C., D.A.B.C.N. (Davini) was retained by Encompass, Commerce, and Premier to assesses the fraudulent nature of the claim files.^[11] For a summary of Davini's assessment of the fraudulence of the individual claims, this Court incorporates by reference page twelve of its Third Grant of Summary Judgment.

Finally this Court has performed an exhaustive review of the claim files and supporting affidavits to ensure that the Insurers did not claim damages for the...