The opinion of the court was delivered by: STANTON
Defendant Allstate Insurance Company ("Allstate") moves pursuant to Federal Rules of Civil Procedure 12(b)(6) and 9(b) for dismissal of the complaint.
The complaint alleges the following:
Under New York's no-fault insurance law (the New York Comprehensive Motor Vehicle Insurance Reparations Act, see N.Y. Ins. L. §§ 5101 et seq.), victims of motor vehicle accidents may be reimbursed by an insurance carrier for medical expenses, among other things. Typically, victims assign their right to receive no-fault benefits to their health care provider, who then seeks payment from the insurer. Plaintiffs are health care providers in New York State who submitted claims to Allstate between January 1, 1990 and February 9, 1996 under no-fault policies it had issued to persons plaintiffs had treated.
Plaintiffs claim that Allstate has engaged in a variety of practices designed to deny or delay reimbursement for properly submitted and documented claims for medically necessary services. According to the complaint, Allstate:
(1) falsely denies having received claims;
(2) mails claimants letters stating that payment will be delayed "pending further investigation" but refuses to estimate when the investigation will be completed;
(3) notifies claimants that additional information is needed to process a claim even though all necessary information and documentation has been provided;
(4) demands an excessive amount of documentation which is not required under the no-fault law;
(5) reduces reimbursement for office visits without explaining the basis for the reduction;
(6) to determine whether treatments are justified, uses computerized guidelines which are not supported by state law or regulations, or by any medical or health care professional society;
(7) denies claims on the ground that "concurrent care" has been rendered even though the treatment in question was necessary and different from other services provided to the patient;
(8) hires outside auditors who disallow valid claims;
(9) employs independent physicians who reduce the amount of claims without cause; and
(10) employs independent medical examiners who deny claims after performing perfunctory examinations of the patient or reduce claims without cause.
The complaint asserts claims for breach of contract, fraud, unjust enrichment and imposition of a constructive trust, and for violation of section 349 of New York's General Business Law. Plaintiffs seek injunctive relief and compensatory and punitive damages.
In considering a motion to dismiss under Fed. R. Civ. P. 12(b)(6), a court must accept the allegations contained in the complaint as true and draw all reasonable inferences in favor of the non-movant; it should not dismiss the complaint unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S. Ct. 99, 101-02, 2 L. Ed. 2d 80 (1957).
Under New York law, the elements of fraud are: a representation of a material fact, falsity, scienter, reliance and injury. New York University v. Continental Ins. Co., 87 N.Y.2d 308, 639 N.Y.S.2d 283, 289, 662 N.E.2d 763 (Ct. App. 1995). Allstate argues that the complaint does not allege reliance or an actionable misrepresentation.
The complaint alleges that Allstate misrepresented "to plaintiffs and members of the Class that it would conduct its business activities as a legitimate No-Fault insurer and would reimburse plaintiffs and other members of the Class in a timely fashion for rendering necessary medical treatment and other services to patients." (Complaint, P 31.) It also alleges that Allstate made misrepresentations to plaintiffs concerning nonreceipt of claims, the need for ...