United States District Court, S.D. New York
December 14, 2004.
BOSTON POST ROAD MEDICAL IMAGING, INC., as assignee of JULIO ACOSTA and other injured persons listed in attached rider, and LAW OFFICE OF MOSHE D. FULD, P.C., Plaintiffs,
ALLSTATE INSURANCE COMPANY, Defendant.
The opinion of the court was delivered by: MICHAEL MUKASEY, Chief Judge, District
OPINION AND ORDER
Plaintiff Boston Post Road Medical Imaging, P.C. ("Boston
Post") sues Allstate Insurance Company ("Allstate") to recover
no-fault insurance benefits assigned to it by 42 individuals who
were involved in various automobile accidents.*fn1 Allstate
moves to dismiss the complaint for lack of subject matter
jurisdiction, pursuant to Fed.R.Civ.P. 12(b)(1). For the
reasons set forth below, the motion is denied.
According to the complaint, Boston Post seeks to recover on 42
no-fault automobile insurance claims related to injuries
allegedly sustained in various accidents involving automobiles
purportedly insured by Allstate.*fn2 (Compl. ¶¶ 3, 5) Boston
Post provided medical services to people involved in these
accidents, accepted an assignment of no-fault benefits from each of them, and submitted claims to Allstate for the medical
services. (Id. ¶¶ 9, 10; Pl.'s Mem. of Law in Opp'n to Def.'s
Mot. to Dismiss ("Pl.'s Opp.") at 4) Each assignment was executed
at the time treatment was rendered. (Pl.'s Opp. at 4) Allstate
did not honor Boston Post's claims. (Compl. ¶ 12; Pl.'s
Affirmation in Opp'n ¶ 6)
Boston Post commenced this action on September 3, 2003, seeking
a total of $102,688.74 for medical services to the 42 patients.
(Ex. to Compl.) A spreadsheet attached to the complaint appears
to identify, for each assignor, the assignor's name, the date of
the accident, the claim number, the date of service, and the cost
of medical services rendered. (Id.) The claims range in value
from $874.44 to $3,549.07 and the accidents occurred between June
29, 2000 and November 22, 2002. (Id.) There is no allegation
that any of the claims are related.
Allstate moves now to dismiss the complaint for lack of subject
matter jurisdiction on the ground that Boston Post is not the
real party in interest and that pursuant to 28 U.S.C. § 1359, the
individual claims are not properly aggregated for purposes of
establishing federal diversity jurisdiction.
A federal court has subject matter jurisdiction over cases
based on the diversity of citizenship between the plaintiff and
defendant, provided that the amount in controversy exceeds $75,000. 28 U.S.C. § 1332. Once subject matter jurisdiction is
challenged, the burden of establishing jurisdiction by a
preponderance of the evidence rests with the party asserting
it. See APWU, AFL-CIO v. Potter, 343 F.3d 69, 623 (2d Cir.
2003); Deajess Med. Imaging, P.C. v. Allstate Insurance Co.,
No. 03-3920, 2004 WL 1632596, at *2 (S.D.N.Y. July 22, 2004)
(citing Thomson v. Gaskill, 315 U.S. 442, 446 (1942)). On a
motion to dismiss for lack of subject matter jurisdiction, all
material factual allegations contained in the complaint are taken
as true. See Atlantic Mut. Ins. Co. v. Balfour Maclaine
Int'l Ltd., 968 F.2d 196, 198 (2d Cir. 1992).
This is one of a series of similar actions filed by the same
counsel in this District on behalf of the same plaintiff or other
entities against Allstate and other insurance companies. See
Boston Post Rd. Med. Imaging, P.C. v. Allstate Ins. Co., No.
03-3923, 2004 WL 1586429, at 1 n. 2 (S.D.N.Y. July 15, 2004)
(listing these cases). These cases raise the same issue of
whether the claims assigned to the plaintiff, which fail
individually to satisfy the $75,000 jurisdictional requirement
for federal diversity jurisdiction, have been properly aggregated
so as to meet that requirement.
Allstate argues first that Boston Post is not the real party in
interest because the assignments are invalid. According to Allstate, the assignments are "not absolute" because they are
"actually contingent upon the Assignor having First Party
Benefits" and are "somewhat controlled by the underlying claim of
the [assignor]." (Pl.'s Opp. at 8) In support of this contention,
Allstate alleges that "many of the underlying claims have denials
based upon the [assignor] failing to comply with a policy
provision, or some other matter that relieves the insurer of its
obligation under the policy." (Id.)
The assignment is permitted by 11 N.Y. Comp. Codes R. & Regs.
tit. 11, § 65.15(j), which states that for first-party no-fault
insurance claims, "[a]n insurer shall pay benefits for any
element of loss, . . . directly to the applicant or, . . ., upon
assignment by the applicant . . . shall pay the providers of
services . . . directly." Boston Post used the "Assignment of
Benefits" form approved and issued by the New York State
Department of Insurance for motor vehicle no-fault insurance
claims. (Exs. A and C to Pl.'s Opp.)
Whether any of the claims fail for non-compliance with a policy
provision, or for any of the other reasons listed by Allstate, is
not clear from the evidence at this stage. Put another way,
whether an assignor was entitled to first-party benefits and
hence whether Boston Post as assignee is now entitled to those
same benefits is an issue for the parties to litigate. As the
assignee, Boston Post is now "the only plaintiff that has an
interest in monies allegedly owed by Allstate." Boston Post Rd. Med. Imaging, P.C. v. Allstate Ins.
Co., No. 03-6150, 2004 WL 830154, at *2 (S.D.N.Y. Apr. 13,
2004). Judge Scheindlin found in a virtually identical case
involving the same parties that "Boston Post is not suing in a
representative capacity" for the assignors and "none of the
patient-assignors are liable to Boston Post for the services they
received." Id. It follows that the assignors no longer have a
stake in this litigation and Boston Post is the real party in
Allstate argues also that the assignments were made improperly
or collusively in order to concoct jurisdiction where none would
exist otherwise, in violation of 28 U.S.C. § 1359. That statute
A district court shall not have jurisdiction of a
civil action in which any party, by assignment or
otherwise, has been improperly or collusively made or
joined to invoke the jurisdiction of such court.
28 U.S.C. § 1359. Numerous courts have considered and rejected
Allstate's argument after applying Second Circuit criteria to
determine whether an assignment passes muster under Section 1359.
Those criteria are: (i) whether the assignee had any previous
connection with the claim assigned; (ii) whether the assignee
will remit any recovery to the assignor; (iii) whether the
assignor will control the conduct of the litigation; (iv) when
the assignment was made; (v) whether there was meaningful
consideration for the assignment; and (vi) the underlying purpose of the assignment. Airlines Reporting Corp. v. S and N Travel,
Inc., 58 F.3d 857, 863 (2d Cir. 1995). I agree with these
decisions in that there is no indication that Boston Post and the
assignors had any prior dealings that would suggest collusion.
Also, the litigation arising from these claims is being
controlled by Boston Post, not the assignors, and any recovery
will not be remitted to the assignors. The assignments were made
at the time the services were rendered, which was before Allstate
denied coverage. By receiving medical services without becoming
personally liable for their cost, the assignors received valid
consideration for their assignments. Finally, the underlying
purpose offered by Boston Post that the assignments allowed the
assignors to receive medical services without having to pay
out-of-pocket is reasonable and does not suggest that the
assignments were made for the purpose of invoking federal
jurisdiction. See, e.g., Deajess Med. Imaging, P.C. v.
Allstate Ins. Co., No. 03-8779, 2004 WL 2569492, at *2-3
(S.D.N.Y. Nov. 12, 2004); Deajess Med. Imaging, P.C. v. Geico
Gen. Ins. Co., No. 03-7388, 2004 WL 1576536, at *3-4 (S.D.N.Y.
July 15, 2004); Boston Post Rd., 2004 WL 830154, at *2-4.
Several of the above courts have dismissed complaints upon
granting the defendants' motions to sever pursuant to
Fed.R.Civ.P. 21 and finding that none of the severed claims meet the
$75,000 threshold. See, e.g., Boston Post Rd. Med. Imaging,
P.C. v. Geico Gen. Ins. Co., No. 03-7390, 2004 WL 1810572, at
*4-5 (S.D.N.Y. Aug. 12, 2004); Boston Post Rd. Med. Imaging, P.C. v.
Allstate Ins. Co., No. 03-3923, 2004 WL 1586429, at *2-3
(S.D.N.Y. July 15, 2004). Here, Allstate suggests briefly a
severance argument in its reply brief. (Def.'s Reply Aff. at 4-5)
However, its grounds for severance at this stage are "abstract
and unsupported by evidence, and certain of the key facts are
disputed." Deajess, 2004 WL 1632596, at *6. Hence, to the
extent that Allstate has made a motion to sever, the motion is
denied at this time with leave to renew.
* * *
For the reasons set forth above, Allstate's motion to dismiss