WILLIAM J. MARTINI, District Judge.
Plaintiff State Farm Indemnity Company ("State Farm") accuses Defendants of operating a fraudulent scheme in violation of the New Jersey Insurance Fraud Prevention Act ("NJIFPA"), N.J.S.A. 17:33 A-1 et seq.
This dispute centers on the operation of Defendant Garden State Anesthesia and Pain Management Associates, LLC ("Garden State"). As its name suggests, Garden State was formed as a New Jersey professional limited liability corporation for the purpose of providing anesthesia and pain management services to its patients. As an underwriter for automobile insurance in the State of New Jersey, State Farm provides Personal Injury Protection Benefits ("PIP Benefits") to insured individuals who have been injured in automobile accidents. Over the better part of a decade, Garden State submitted PIP Benefits claims to State Farm for services it has rendered to its patients. In its complaint, State Farm alleges that Garden State was owned and controlled by a lay person — specifically, Defendant Harshad Patel — in violation of regulations promulgated by the New Jersey Board of Medical Examiners. Consequently, State Farm contends, Defendants claims for PIP Benefits were in violation of the NJIFPA. Defendants deny those allegations and insist that Garden State has always been owned by Defendant Kishori Shah, who is a qualified licensed physician under the relevant regulations.
Defendants now move for summary judgment. Thus, the issue before the Court is whether no reasonable trier of fact could conclude that Dr. Patel owned and controlled Garden State. Unless otherwise noted, the facts below are undisputed.
Garden State Anesthesia Associates, LLC — which, according to Defendants, served as a predecessor to Garden State — was formed on August 17, 2007. The relevant Certificate of Formation identifies Dr. Shah as the company's sole member/manager. See Defs' Statement of Undisputed Material Facts ("Defs' Statement") at ¶ 7. Garden State fully came into the existence on May 1, 2008, when a Certificate of Amendment was filed with the State of New Jersey. The Certificate of Amendment identifies Dr. Natalio Damien as the sole member/manager of Garden State. See Plf's Response to Defs' Statement of Undisputed Material Facts ("Plf's Response") at ¶¶ 7-13. However, Defendants claim that this was a mistake—it was actually intended that Dr. Damien and Dr. Shah both be listed as managers on the Certificate of Amendment. See Defs' Statement at ¶ 9. According to testimony from Drs. Shah, Damien, and Patel, the plan was for Dr. Shah to own 95% percent of Garden State, while Dr. Damien would own the remaining 5%. See id. at ¶¶ 10-11. Both parties agree that under the applicable regulations promulgated by the Board of Medical Examiners, both Dr. Shah and Dr. Damien were duly licensed health care professionals who were legally permitted to own Garden State. See id. at 3. Dr. Patel, on the other hand, is not a medical provider,
Dr. Damien claims that he has not participated in Garden State's operations since either 2010 or 2011, but thinks that he may still legally be a member of the company. See Ex. F2 to Defs' Motion, at 353:13-25. In contrast, Dr. Shah has testified that she took full ownership of Garden State after receiving the remaining 5% stake from Dr. Damien in late 2010 or early 2011. See Ex. E1 to Defs' Motion, at 20:2-14. Dr. Shah's position is supported by the fact that in 2011, Garden State filed another Certificate of Amendment, which identified Dr. Shah as the sole owner. See Defs' Statement at ¶ 15. Despite this overlap of ownership, both Drs. Damien and Shah recall having little, if any, discussions with each other about Garden State. See Plf's Statement of Undisputed Material Facts ("Plf's Statement") at ¶ 3.
Dr. Damien believes that it was Dr. Patel's idea to create Garden State. See id. at ¶ 8. Further, Dr. Patel provided Garden State with its initial capital funding. See id. at ¶ 9. In addition to provided initial funding, Dr. Patel contributed other funds to Garden State in the form of interest-free loans. See Plf's Response at ¶¶ 29-32. Dr. Patel also had exclusive control over Garden State's bank account. See id. at ¶ 13. Specifically, Dr. Patel was the only individual authorized to open deposits, endorse checks, and borrow money on behalf of Garden State. See id. Moreover, the relevant bank authorization form lists only Dr. Damien as a member, and makes absolutely no mention of Dr. Shah. See id.
On March 1, 2008, Garden State entered into a Management Services Agreement ("MSA") with A.P. Diagnostic Imaging, Inc. ("APDI"), which is owned by Dr. Patel. See Defs' Staement at ¶¶ 19-20. Under the MSA, APDI was required to undertake a variety of managerial functions, including preparing business reports. See Plf's Statement at ¶ 15. However, APDI did not prepare one business report in connection with Garden State. See id.
On June 1, 2009, Garden State entered into a Lease Agreement with ADHP Real Estate, LLC ("ADHP"). Defs' Statement at ¶ 33. Dr. Patel's wife, Devika Patel, is the registered owner of ADHP. See Plf's Response at ¶¶ 33-35. Thomas Merola, who has since passed away, appears to have signed the lease agreement on behalf of ADHP; however, Mr. Merola's widow has reviewed the signature and believes that it is a forgery. See id. According to Dr. Shah, Garden State initially intended to use the 9,000 square foot space for a surgical suite, but when those plans fell through, the space was used for storing medical records. See Defs' Statement at ¶ 34.
In connection with this litigation, State Farm hired an appraiser to inspect the property. After conducting his inspection, the appraiser concluded that the property was far less than 9,000 square feet. Moreover, photographs attached to the appraisal report show the space to be in dismal condition: one can observe collapsing ceilings, decaying walls, exposed insulation, and hanging wires. See Plf's Response at ¶¶ 34-36.
Because her name appeared on the corporate paperwork for ADHP, State Farm sought to depose Ms. Patel during the course of discovery. When asked about the lessor-lessee relationship between ADHP and Garden State, Ms. Patel repeatedly invoked her Fifth Amendment right against self-incrimination. See id. In total, Garden State paid approximately $800,000 to ADHP in connection with the lease. See id.
While Defendants insist that Dr. Shah had a 95% stake in Garden State, her role (and compensation) at the company was limited. From 2008 to 2012, Dr. Shah filled in as the anesthesia provider for Garden State approximately twenty-seven times. See Plf's Statement at ¶ 41. Dr. Shah's minimal involvement is unsurprising when one considers that she had a full-time job as an anesthesiologist for a different, unrelated company. See id. at ¶ 18. Accordingly, she received less than 2% of Garden State's revenues.
Garden State also hired other employees — both part-time and full-time — to perform medical services. Drs. Dyana Aldea and Erica David were hired on a part-time basis, while Dr. Madgy Girgis was employed full-time. While Dr. Shah testified that Dr. Damien hired Drs. Aldea and David, both of those part-time employees testified that they were hired by Dr. Patel. See Plf's Statement at ¶¶ 43-44. Drs. Aldea and David further testified that they had no dealings with Dr. Damien, and neither could remember ever meeting Dr. Shah. In fact, neither had any idea as to whether Dr. Shah or Dr. Damien had a relationship with Garden State. See id. at ¶¶ 45-46.
Federal Rule of Civil Procedure 56 provides for summary judgment "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A factual dispute is genuine if a reasonable jury could find for the non-moving party, and is material if it will affect the outcome of the trial under governing substantive law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A party must support its position by citing to "materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations[,] . . . admissions, interrogatory answers, or other materials. . . ." Fed. R. Civ. P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). The court considers the record in the light most favorable to the non-moving party while drawing all reasonable inferences in that party's favor. Bowers v. NCAA, 475 F.3d 524, 535 (3d Cir. 2007).
Designed to "confront aggressively the problem of insurance fraud in New Jersey," the NJIFPA makes it illegal to present "any written or oral statement"
As previously discussed, State Farm argues that Dr. Patel was the true owner of Garden State, while Drs. Shah and Damien were sham owners. Defendants take the opposite position, arguing that no reasonable trier of fact could conclude that Garden State was actually owned and controlled by Dr. Patel. For the reasons below, the Court rejects Defendants' position and concludes that summary judgment is not warranted.
After considering the record in a light most favorable to State Farm, the Court finds that a reasonable juror could conclude that Dr. Patel was the true owner of Garden State. Indeed, there are several pieces of evidence on the record that support State Farm's position. For the purposes of this opinion, the Court will highlight only the most salient pieces of such evidence.
As indicated by the discussion above, there is ample evidence that could allow a reasonable juror to conclude that Garden State was in fact owned and controlled by Dr. Patel. Consequently, Defendants are not entitled to summary judgment.
For the foregoing reasons, Defendants' motion for summary judgment is