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

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,
v.
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.

  I.

  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.

  II.

  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).

  III.

  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 interest.

  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 provides:

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 is denied.

  SO ORDERED.


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