The opinion of the court was delivered by: Scheindlin, Judge.
Universal Acupuncture Pain Services P.C. ("Universal") is suing
defendant State Farm Mutual Automobile Insurance Company ("State Farm")
for payment of overdue claims.*fn1 State Farm has asserted counterclaims
against Universal and third-party defendants, Dipak Nandi (the founder of
Universal) and Dongxing Sun, a licensed acupuncturist. The counterclaims
allege (1) that State Farm is entitled to a judgment declaring that it
and its insureds are not obligated to pay for services rendered by
Universal, and enjoining Universal from submitting to State Farm any
request for payment for acupuncture services rendered before April 24,
2001 ("Counterclaim I"); (2) fraud in the corporate form ("Counterclaim
II"); (3) unjust enrichment premised on fraud in the corporate form
("Counterclaim III"); (4) fraud concerning acupuncture services never
rendered and not medically necessary ("Counterclaim IV"); and (5) unjust
enrichment premised on fraudulent billing for services never rendered
("Counterclaim V"); and seek compensatory and punitive damages. See
Second Amended Answer and Counterclaim ("Counterclaim"). Universal, Nandi
and Sun*fn2 (collectively, "plaintiff") now move to dismiss all
counterclaims pursuant to Rule 12(b)(6) for failure to state a cause of
action, and Rule 9(b) for failure to plead fraud with particularity.
For the reasons stated below, plaintiff's motion is granted in part and
denied in part.
The following facts, drawn from the Counterclaim, are assumed true for
the purposes of this motion.
A. Urban Medical and Other Professional Corporations Formed by Nandi
Between 1996 and 1998, Nandi, a physician licensed in the State of New
York, obtained certificates of authority from the
New York Department of
Education ("DOE") to form several professional services corporations:
Urban Medical Diagnostics ("Urban Medical"), Millennium Diagnostics
P.C., Sterling Medical Diagnostic P.C., and Triborough Medical
Diagnostics P.C. (collectively, "other PCs"). See Counterclaim ¶ 19.
Because New York law only allows a professional services organization to
incorporate if it possesses a certificate stating that it is owned and
operated by one or more licensed physicians who are either shareholders or
practice medicine or both, Nandi falsely represented to the licensing
authority that Dr. Robert Mallela, a licensed physician in New York,
would be the sole shareholder, director and officer of each of the
corporations. See id. Although Urban Medical and the other PCs were
controlled by Nandi, he told the DOE that Mallela would own, control and
practice medicine through the PCs. See id. Dr. Mallela has since admitted
the following facts: (1) he had no true ownership interest in or control
over Urban Medical, or any of the other three other PCs; (2) he never
paid for the shares in Urban Medical or the other PCs he was given, (3) he
was paid a fee to allow Nandi to use his name to obtain a certificate of
authority from the DOE; (4) he did not manage or supervise the medical
practice at Urban Medical or the other PCs, and (5) he never saw or
treated patients for Urban Medical or the other PCs. See id. ¶ 20
(citing Mallela Affidavit, Ex. C to Counterclaim).
Beginning in July 1999 and continuing through early 2000, State Farm
requested information from Urban Medical regarding the validity of its
charges and the identity of the individuals who State Farm believed
"truly owned and controlled the practice." Id. ¶ 23. Nandi never
responded to the requests. See id. Because Urban Medical refused to
provide such information, State Farm stopped paying the company's bills.
B. Formation of Universal
On January 27, 2000, Nandi formed Universal which was essentially the
same company as Urban Medical but with a different name. See id. ¶¶
24, 26.*fn3 Universal immediately began submitting bills to State Farm
for acupuncture services. See id. ¶¶ 24, 29. On February 9, 2000,
Universal obtained a certificate of authority from the DOE to incorporate
an acupuncture services corporation by falsely representing that Dongxing
Sun, a licensed acupuncturist in New York, was its sole shareholder,
director and officer. See id. ¶ 25. From January 2000 to April 24,
2001, Nandi ran Universal under Sun's name, all the while splitting fees
with Sun. See id. ¶¶ 6, 17. Because he had obtained a certificate of
authority for Universal, Nandi could use Univeral to employ licensed and
certified acupuncturists, control their practices, and submit bills to
State Farm. See id. ¶¶ 17, 31. Nandi did not receive his license to
practice acupuncture in New York until April 24, 2001; only then was he
licensed to own and operate an acupuncture professional services
corporation in New York. See id. ¶ 30.
C. Treatment, Assignment, and Billing
On various occasions from February 2000 to the present, Universal
provided acupuncture services to individuals who had sustained car-related
injuries (the "assignors" or "insureds"). See Plaintiff's Complaint
¶ 5. Universal also falsified records to indicate that it had provided
acupuncture treatment to many more patients than its staff had actually
treated. See Counterclaim ¶¶ 37-8. The services that Universal did
provide were performed by Universal's staff of acupuncturists, all of whom
are either licensed or certified. See id. ¶ 38.
The insureds treated by Universal purportedly assigned their right to
no fault benefits to Universal. See id. ¶ 31. Universal, as
assignee, submitted claims for acupuncture services to State Farm. See
id. ¶ 8. In fact, no patient who received acupuncture services from
Universal ever sought reimbursement directly from State Farm. See id.
¶ 34. State Farm has not paid many of the bills, although it has paid
Universal over $190,000 in no fault ...