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BOSTON POST ROAD MEDICAL IMAGING v. ALLSTATE INS. CO.

April 12, 2004.

BOSTON POST ROAD MEDICAL IMAGING, P.C., a/a/o MANUEL ACEVEDO and the other injured persons listed on the attached rider and MOSHE D. FULD, P.C., Plaintiffs, -against- ALLSTATE INSURANCE COMPANY, Defendant


The opinion of the court was delivered by: SHIRA SCHEINDLIN, District Judge

MEMORANDUM OPINION AND ORDER
Plaintiff Boston Post Road Medical Imaging, P.C. ("Boston Post") is suing in its capacity as assignee whereby forty-four patients (assignors) assigned their no-fault insurance benefits to Boston Post in exchange for medical services. Boston Post is a New York resident while defendant Allstate Insurance Company ("Allstate") is a foreign corporation duly licensed to conduct business in New York. Subject matter jurisdiction is predicated on diversity of citizenship. Allstate moves to dismiss the Complaint on the ground that subject matter jurisdiction is lacking because: (1) Boston Post is not the real party in interest; and (2) the assignments were collusive. For the following reasons, Allstate's motion is denied.

 I. FACTS

  Boston Post seeks payment for radiological services provided to forty-four patients who were injured in various motor vehicle accidents. In exchange for these medical services, these forty-four patient-assignors assigned the benefits they were entitled to under no-fault insurance policies issued by Allstate. Each assignment was executed at the time services were rendered. The assignments were executed so that each patient-assignor could receive medical treatment without having to pay for it out-of-pocket pursuant to the no-fault provisions of New York's Insurance Law. See N.Y. Comp. Codes R. & Regs. tit. 11, § 65-3.11 (2001). The assignments released the patient-assignors from any and all liability to Boston Post. Boston Post accepted the assignments and billed Allstate accordingly. Allstate denied payment on each submitted claim for separate and distinct reasons. This action followed.

 II. LEGAL STANDARD

  Federal subject matter jurisdiction exists where there is diversity of citizenship under 28 U.S.C. § 1332. "Failure of subject matter jurisdiction . . . is not waivable and may be raised at any time by a party of by the court sua sponte." Oscar Gruss & Son, Inc. v. Hollander, 337 F.3d 186 (2d Cir. 2003). The burden of proof in establishing federal jurisdiction falls on the party seeking to invoke that jurisdiction. See Linardos v. Fortuna, 157 F.3d 945,947 (2d Cir. 1998).

  "In considering motions to dismiss for want of subject matter jurisdiction, the Court must accept as true all material factual allegations in the Complaint and refrain from drawing inferences in favor of the party contesting jurisdiction." Serrano v. 900 5th Ave. Corp., 4 F. Supp.2d 315, 316(S.D.N.Y. 1998) (citing Atlantic Mut. Ins. Co. v. Balfor Machine Int'l Ltd., 968 F.2d 196, 198 (2d Cir. 1992)). The Court is not confined to the four corners of the Complaint, however, and may consider evidence outside the pleadings such as affidavits and other documents. See Kamen v. American Tel & Tel. Co., 791 F.2d 1006, 1011 (2d Cir. 1986).

 III. DISCUSSION

  A. Real Party in Interest

  Allstate argues that Boston Post is suing in a representative capacity and therefore not the real party in interest, relying primarily on Airlines Reporting Corp. v. S and N Travel Inc., 58 F.3d 857 (2d Cir. 1995). In Airlines, the plaintiff Airlines Reporting Corporation ("ARC") brought a diversity action in its capacity as representative of numerous air carriers seeking payment from travel agencies that owed money to the carriers for the purchase of airline tickets. See id. at 859. In its analysis of the real party in interest, the Second Circuit noted that the Supreme Court "has established that the `"citizens" upon whose diversity a plaintiff grounds jurisdiction must be real and substantial parties to the controversy.'" See id. at 861 (quoting Navarro Savings Ass'n v. Lee, 446 U.S. 458, 460 (1980)). The court refused to consider ARC's corporate citizenship as controlling for purposes of diversity where ARC merely acted as an agent for the interests of the air carriers. See id. at 862. Instead, the court held that the air carriers were the real parties in interest and it was their citizenship that was controlling. The court found it significant that ARC "did not seek to protect any corporate interests of its own," did not suffer "any corporate damages or pecuniary loss itself," nor did it "lay claim to any portion of the potential recovery." Id. In sum, the Second Circuit held that ARC was "a mere conduit for a remedy owing to others, advancing no specific interests of its own." Id.

  This case is far different from the situation addressed in Airlines. Here, Boston Post is not suing in a representative capacity. None of the patient-assignors are liable to Boston Post for the services they received. Boston Post owns the claims in issue and if it is not successful in this action, it will not be compensated for the services it provided. Thus, it cannot be said that Boston Post is suing as an agent on behalf of the patient-assignors who clearly do not have a stake in this litigation. As an assignee, Boston Post is the only plaintiff that has an interest in recovering monies allegedly owed by Allstate. Therefore, Boston Post is the real party in interest for purposes of determining diversity jurisdiction.

  B. Collusiveness of Assignments

  Allstate argues that the assignments were made improperly and/or collusively in order to manufacture jurisdiction where none would otherwise exist.*fn1 According to Allstate, "the purpose of the assignment [is] to make it easier for the plaintiff to collect when the insurer does not pay by filing a claim for litigation or arbitration under the applicable statutes and regulations of the State of New York. The assignment authorizes the assign[ee] to sue for the alleged money owed." Defendant's Memorandum in Support ("Def. Mem.") at 13. Boston Post states that the reason for the assignments was to allow it "to directly bill the defendant for medical services and allowed each assignor to receive medical treatment without having to advance payment for the treatment, pending reimbursement for the defendant." Plaintiff's Memorandum of Law in Opposition to Defendant's Motion to Dismiss ("Pl. Mem.") at 8. Boston Post further states that "each assignment was executed at the time the treatment was rendered, before the plaintiff even had a cause of action against the defendant" and that "the consideration given for each assignment was the medical services that are in issue." Id. Allstate rejects this reason claiming that "plaintiff's rationale is in fact pretextual, and is nothing more than an attempt to mask the primary purpose of these assignments, namely the vesting of the courts [sic] jurisdiction it formerly did not have. The assignments are mad[e] in anticipation of collection and or litigation." Def. Mem. at 13.

  Here, again, Allstate relies principally on Airlines in support of its argument. In Airlines, the court stated that section 1359 is to be construed broadly "to bar any agreement whose `primary aim' is to concoct federal diversity jurisdiction." Airlines, 58 F.3d at 862. See also O'Brien v. AVCO Corp., 425 F.2d 1033, 1034 (2d Cir. 1969) (holding that section 1359 bars "agreements whose primary aim was to vest the court with jurisdiction it had not formerly enjoyed"). The court went on to state that "[c]ertain kinds of diversity-creating assignments warrant particularly close attention/' Airlines, 58 F.3d at 862.

 
[T]he burden falls on the party asserting diversity to demonstrate that the reason given for the assignment is legitimate, not pretextual. See Prudential Oil v. Phillips Petroleum Co., 546 F.2d [469] at 476 [(2d Cir. 1976)] (assignee must "provide a basis for the inference that a legitimate business reason, unconnected with [the] acquisition of diversity jurisdiction, existed for the assignment"); see also Nike, Inc. v. Comercial Iberica de Exclusivas Deportivas, S.A., 20 F.3d 987, 992 (9th Cir. 1994) (stating business reason asserted "must be sufficiently compelling that the assignment would have been made absent the purpose of gaining a federal forum") (quotation omitted). Several factors may be relevant in evaluating the reasons given for an assignment, although no single one will be dispositive. See generally 14 Charles A. Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice and Procedure § 3639 (detailing review of assignments under 28 U.S.C. § 1359).
Id. at 863. Among the relevant factors to consider are: "the assignee's lack of a previous connection with the claim assigned; the ...

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