The opinion of the court was delivered by: Dora L. Irizarry, United States District Judge
Plaintiff Allstate Insurance Company and the remaining plaintiffs ("Allstate" or "Plaintiffs") are nationwide automobile insurers. Plaintiffs allege that defendants conspired to abuse New York's No-Fault laws, N.Y. Ins. Law §§ 5101-109, and the regulations promulgated under those laws, 11 N.Y.C.R.R. § 65.3-.1 to -.20 (collectively, "New York's No-Fault Laws"), to obtain payment for diagnostic tests that were medically unnecessary. The diagnostic tests at issue comprise current perception tests ("CPT Tests") and digital range of motion tests ("J-Tech Tests"). Plaintiffs seek damages under the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1964(c)-(d), and under state law claims of fraud and unjust enrichment. Additionally, Plaintiffs seek a declaration that they are not liable for any unpaid charges under the Declaratory Judgment Act, 28 U.S.C. § 2201.
The complaint groups Defendants into four categories: (i) the doctors and chiropractors at clinics who treat parties insured by Plaintiffs for injuries sustained in automobile accidents ("Prescribing Doctors"), (ii) Ahmed Halima, a doctor who purportedly reviews the CPT and JTech tests and interprets them for the Prescribing Doctors, (iii) Diagnostics Medical Testing, P.C. ("DMT"), a professional medical corporation that submits bills for the tests to Allstate, and (iv) several individuals who are nonphysicians and the corporate entities, which, collectively, own and operate DMT ("Management Defendants"). Defendants Jake Palter a/k/a Jake Palterovich and Health Care Data Processing, Inc. (the "Palter Defendants") fall into the Management Defendants category. While Plaintiffs have settled with several Defendants, the Palter Defendants remain in the action and have filed a motion to dismiss under Rules 12(b)(6) and 9(b) of the Federal Rules of Civil Procedure. Plaintiffs oppose this motion in its entirety. For the reasons set forth more fully below, the motion is denied.*fn1
The facts as described below are drawn from the complaint, which the court accepts as true solely for purposes of this motion to dismiss. In accordance with New York's No-Fault Laws, Plaintiffs must pay for medically necessary diagnostic tests. See N.Y Ins. Law §§ 5101-109. These benefits may also be assigned for payment of services rendered to qualified "providers of health care services." See 11 N.Y.C.R.R. § 65-3.11. A proper assignment requires that the health care provider submit either (1) "a properly executed Authorization to Pay Benefits" or (2) "a properly executed assignment on... the prescribed Verification of Treatment" using New York State Form NF-3. Id. The services performed must be "necessary for the treatment of the injuries sustained." Id. at § 65-3.16(6) (emphasis added). Within thirty days of receiving a valid claim, an insurance company must pay the claim in full or incur interest charges at two percent per month. Id. at §§ 65-3.8 to 3.9. Only properly licensed professional corporations-those owned and operated by medical professionals-are eligible for reimbursement under New York's No-Fault Laws. See N.Y. Bus. Corp. Law §§ 1507-108; State Farm Mut. Auto. Inc. Co. v. Mallela, 4 N.Y.3d 313, 321-22 (2005) (holding that medical professional services corporations must be owned and operated solely by licensed physicians). The purpose of this requirement is to discourage nonphysicians from fraudulently taking advantage of New York's No-Fault Laws. See Mallela, 4 N.Y.3d at 320 n.2 (accepting the finding by New York's Superintendent of Insurance that this requirement was "promulgated... to combat rapidly growing incidences of fraud in the no-fault regime... identified as correlative with the corporate practice of medicine by nonphysicians").
Plaintiffs allege that, on or around June 2001, Defendants began a scheme to defraud Plaintiffs of over one million dollars by submitting thousands of claims for medical services and diagnostic tests that were medically unnecessary. (Am. Compl. ¶¶ 29-33.) According to Plaintiffs, Management Defendants, including the Palter Defendants, were central to this fraudulent scheme. Because Management Defendants are nonphysicians but wanted the professional corporation to be eligible under New York's No-Fault Laws, Plaintiffs allege that Management Defendants used Dr. Halima as a figurehead for the professional corporation when, in fact, Management Defendants are the true owners, managers and operators of the professional corporation. (Id. ¶¶ 89-92.)
With the professional corporation licensed to perform services under New York's No-Fault Laws, Management Defendants were able to perpetrate their scheme. First, Prescribing Doctors authorized the CPT and J-Tech tests using boilerplate letters of medical necessity that attested to the diagnostic value of these tests.*fn2 (Id. ¶ 29.) Management Defendants, through the professional corporation, then submitted these letters to Plaintiffs along with reports by Dr. Halima and bills for the performance and interpretation of these tests. (Id. ¶¶ 30-31.) Plaintiffs claim, however, that Defendants knew that the CPT and J-Tech tests had little-to-no diagnostic value and were ordered solely to take advantage of New York's No-Fault Laws.
According to Plaintiffs, the CPT and J-Tech were medically unnecessary for two reasons. First, Plaintiffs challenge the independent diagnostic value of these tests. (Id. ¶¶ 54-58, 70-72.) Second, even if these tests have minimal diagnostic value, Plaintiffs allege that nearly every insured customer that the Management Defendants' allegedly tested had received, at or around the same time, equally informative diagnostic tests-Nerve Conduction Velocity ("NCV"), Electromyography ("EMG"), and Magnetic Resonance Imaging ("MRI") tests and manual range of motion tests-thereby rendering the CPT and J-Tech tests superfluous. (Id. ¶¶ 43, 69.) Plaintiffs further allege that Defendants submitted forms using incorrect billing codes to "materially misrepresent the nature of the tests purportedly performed...." (Id. ¶ 3.) Moreover, with respect to the J-Tech tests, in addition to being medically unnecessary, Plaintiffs allege that Defendants submitted bills for fourteen separate tests when, under New York law, several of these tests should have been "bundled" into tests of individual "trunk section[s]." (Id. ¶¶ 78-80.) Plaintiffs have presented a representative sample of 916 allegedly fraudulent reimbursement claims submitted by the Palter Defendants to Plaintiffs. (Id. Ex. A, Ex. B.) Additionally, Plaintiffs have submitted affidavits of two physicians who Management Defendants represented to Plaintiffs as having prescribed CPT and J-Techs tests. (Id. ¶ 62, Ex. F, Ex. G.) In the affidavits, however, these physicians deny having prescribed, or having knowledge of, these tests. (Id. ¶ 62, Ex. F, Ex. G.)
Rule 12(b)(6) of the Federal Rules of Civil Procedure provides that a defendant may make a motion to dismiss a complaint for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). On a motion to dismiss under Rule 12(b)(6), the court accepts as true all well-pleaded factual allegations and draws all reasonable inferences in the plaintiff's favor. See Dangler v. New York City Off Track Betting Corp., 193 F.3d 130, 138 (2d Cir. 1999). In Bell Atlantic Corp. v. Twombly, the Supreme Court retired the standard set forth half a century ago in Conley v. Gibson, that a complaint should not be dismissed "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief," in favor of the requirement that plaintiff plead enough facts to "state a claim to relief that is plausible on its face." Bell Atlantic, 550 U.S. 544, 561 (2007) (quoting Conley, 355 U.S. 41, 45-46 (1957)). Under Bell Atlantic, in order to be facially plausible, a complaint cannot make merely "a formulaic recitation of the elements of a cause of action," but must allege facts that "raise a right of relief above the speculative level on the assumption that all allegations in the complaint are true (even if doubtful in fact)." Id. at 555 (citations omitted). The Second Circuit has interpreted the foregoing language to "requir[e] a flexible 'plausibility standard,' which obliges a pleader to amplify a claim with some factual allegations in those contexts where such amplification is needed to render the claim plausible," rather than to mandate a "universal standard of heightened fact pleading." Iqbal v. Hasty, 490 F.3d 143, 157-58 (2d Cir. 2007).
When material outside the complaint is "presented to and not excluded by the court, the motion must be treated as one for summary judgment... and all parties must be given a reasonable opportunity to present all the material that is pertinent to the motion." Fed. R. Civ. P. 12(d). For the purposes of this rule, however, the complaint is deemed to include writings and documents attached to the complaint, referenced in the complaint, or integral to the complaint. See Chambers v. Time Warner, Inc., 282 F.3d 147, 152-53 (2d Cir. 2002); Fed. R. Civ. P. 10(c). A document is "integral" to the complaint where "the complaint relies heavily upon its terms and effects." Chambers, 282 F.3d at 153 (citations omitted). "A plaintiff's reliance on the terms and effect of a document in drafting the complaint is a necessary prerequisite to the court's consideration of the document on a dismissal motion; mere notice or possession is not enough." Id. (emphasis in original).