The opinion of the court was delivered by: Dora L. Irizarry, United States District Judge
In this consolidated action, plaintiffs Perfect Dental Care, P.C.; Zodiac Dental, PLLC; and Smooth Dental PLLC (the "Dental PCs") seek to recover unpaid insurance claims from Allstate Insurance Company and State Farm Mutual Automobile Insurance Company (the "Insurers"). The Insurers have countersued, alleging, inter alia, insurance fraud, and have also initiated a third-party action against various third-party defendants, some of whom have since settled with the Insurers.
In the instant motion for partial summary judgment, the Insurers seek a declaratory judgment that the Dental PCs are not entitled to receive payment for certain dental and physical therapy services allegedly provided by present and former third-party dentists and non-party physical therapists. The Insurers also request summary judgment on their counterclaims of common law fraud and unjust enrichment.
For the reasons stated more fully below, summary judgment for the Insurers is denied in part and granted in part. Because the court cannot find as a matter of law that the dentists who allegedly provided services on behalf of the Dental PCs were "independent contractors" as opposed to "employees," the Insurers' request for a declaratory judgment concerning services provided by the dentists is denied. However, the Dental PCs concede that the physical therapists, for whose services they billed the Insurers, were not employees. This court, therefore, grants the Insurers' motion to the following extent: the court declares that the Dental PCs may not recover for services performed by the aforementioned physical therapists. Finally, because the question of whether the dentists were independent contractors or employees also bears on the fraud and unjust enrichment claims, summary judgment is denied with respect to those claims.
The following facts are undisputed or, where disputed, construed in favor of the non-moving Dental PCs. Third-party defendant Dmitry Volotsenko, D.D.S. ("Volotsenko"), who is licensed to practice dentistry in New York, formed the Dental PCs in New York as professional corporations that he owns and operates. The purpose of forming the Dental PCs was to create businesses focused on the treatment of motor vehicle accident victims suffering from temporomandibular joint disorder ("TMJ"). Volotsenko engaged various other individuals named as third-party defendants, Zinovy "Zack" Kerzhner, Victor Ushumirsky, and Pavel Markov (together with Volotsenko, the "Control Group"), to assist in the operation and management of the Dental PCs.
The Dental PCs established business relationships with various medical facilities in the New York metropolitan area (the "Clinics"), thereby enabling them to gain access to individuals recently involved in motor vehicle accidents. The Dental PCs hiredtwelvedentists (the "Dentists"),*fn1 also named as third-party defendants,*fn2 to evaluate motor vehicle accident victims at specified medical facilities, to diagnose whether they suffered from TMJ, and, for those with a TMJ diagnosis, to perform or recommend dental services, orthotic appliances, x-rays, and/or physical therapy.
The Dentists were paid on a 1099 basis*fn3 and, thus, were not subject to any withholding for tax purposes by the Dental PCs. They were not provided with benefits, and they paid for their own professional malpractice insurance. Furthermore, they were paid on a per diem basis for the days they worked, and were free to work for other dental practices when they were not otherwise engaged by the Dental PCs. Although the Dentists were not directly supervised by the Dental PCs onsite, the Dentists worked under the direction and general supervision of Dr. Volotsenko, who provided training for the Dentists and who determined their schedules and for whom they would work. The Dental PCs made arrangements with the Clinics to provide for the facilities at which the Dentists worked. Additionally, the Dental PCs provided the Dentists with various materials, tools, and support services necessary to performing the dental services, including a technician who brought an x-ray machine and camera, mouth guards, gloves, and the required paperwork.
From 2000 to 2003, the Dental PCs submitted bills to the Insurers seeking payment for dental services, orthotic appliances, x-rays, and physical therapy that were allegedly provided by the Dentists to patients with TMJ. Each bill submitted to the Insurers identified the Dentist who allegedly performed the service(s), as well as the Dentist's New York State dental license number. The bills further represented that the performing Dentist was an employee of the Dental PC submitting the bill.
In late 2002, the Insurers initiated an investigation into the billing and treatment activities of the Dental PCs. Based on the outcome of the investigation, the Insurers ceased rendering payment to the Dental PCs for some or all of the billed services. In February 2004, the Dental PCs named the Insurers as defendants in separate actions that were later consolidated into the instant action on April 22, 2004. The Insurers asserted a series of counterclaims and initiated a third-party action against the Control Group, the Dentists, and ADI Services, Inc., Levinton Management and Collection, Inc., and Medco Management, Inc., alleging, inter alia, insurance fraud. Five of the twelve Dentists named as third-party defendants settled with the Insurers.
The Insurers now seek partial summary judgment on their contract and unjust enrichment counterclaims, and further request a declaratory judgment that the Dental PCs are not entitled to recover for services performed by the Dentists or physical therapists, for whose services the Dental PCs billed the Insurers.
A. Summary Judgment Standard
Summary judgment is appropriate when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." FED. R. CIV. P. 56(c). The court must view all facts in the light most favorable to the nonmoving party, but "only if there is a 'genuine' dispute as to those facts." Scott v. Harris, - - -U.S. - - -, 127 S.Ct. 1769, 1776, 167 L.Ed. 2d 686 (2007). "When opposing parties tell two different stories, one of which is blatantly contradicted by the record, so ...