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Katz v. Travelers

United States District Court, E.D. New York

March 10, 2017

MICHAEL J. KATZ, M.D., MICHAEL J. KATZ, M.D., P.C., Plaintiffs,
TRAVELERS its relevant servants, agents or employees and relevant associated, affiliated or subsidiary corporations a/k/a Travelers Insurance Company a/k/a The Travelers Companies, Inc., EXAM WORKS, INC. and its relevant servants, agents or employees and relevant associated, affiliated or subsidiary corporations, Defendants.

          Zisholtz & Zisholtz, LLP Attorneys for the Plaintiffs, Gerald Zisholtz, Esq., Stuart S. Zisholtz, Esq., Meng Cheng, Esq., Of Counsel

          DLA Piper LLP Attorneys for the Defendant Travelers, Brett Ingerman, Esq., Colleen Michelle Gulliver, Esq., Of Counsel

          White & Williams LLP Attorneys for the Defendant Exam Works, Inc., Andrew I. Hamelsky, Esq., Jenifer Ann Scarcella, Esq., Of Counsel


          ARTHUR D. SPATT United States District Judge

         This diversity action was originally brought by the Plaintiffs Michael J. Katz, M.D. and Michael J. Katz, M.D., P.C. (the “Plaintiffs” or “Dr. Katz”) against the Defendants Travelers (“Travelers”) and Exam Works, Inc. (“Exam Works”) (collectively, the “Defendants”) in New York State Supreme Court, Nassau County, alleging various contract and tort claims under New York State common law. Travelers removed the case to the United States District Court for the Eastern District of New York (the “EDNY”) based on the diversity jurisdiction of the Court pursuant to 28 U.S.C. § 1332(a)(1).

         Presently before the Court are motions from the Defendants, brought pursuant to Federal Rule of Civil Procedure (“Fed. R. Civ. P.” or “Rule”) 12(b)(6), to dismiss the Plaintiffs' complaint for failure to state a claim. For the following reasons, Exam Works' motion is granted in its entirety, and Travelers motion is granted in part and denied in part.

         I. BACKGROUND

          A. Factual Background

         The following facts are drawn from the Plaintiff's complaint unless otherwise noted, and, for the purposes of the instant motion, are accepted as true.

         Dr. Katz is a medical doctor licensed to practice medicine in New York State, and is a resident of Nassau County. Michael J. Katz, M.D., P.C. is a professional corporation. Travelers is a corporation with its principal place of business in Connecticut, (Travelers' Notice of Removal at 2), that issues insurance policies. Exam Works is a corporation with a principal place of business in Georgia, (Id.), that is “in the business of providing physicians or names of physicians to conduct independent medical examinations (IME) in connection with claims for personal injury that were instituted against clients and customers of Travelers and other insurance companies.” (Complaint at ¶ 7). Exam Works allegedly keeps two lists of physicians: one of eligible physicians and another list called “Do Not Use.” For more than 20 years, Dr. Katz was on Exam Works' eligible list and Dr. Katz conducted IMEs for Travelers, and other insurance companies.

         This action stems from proceedings that occurred during a trial in New York State Supreme Court, Queens County in July 2013. The case, Bermejo v. Amsterdam & 76th Associates, LLC,, Index No. 23985/2009, was tried before the late Justice Duane Hart (“Justice Hart”). Travelers insured one of the Defendants in that case, Ibex Construction, and engaged Dr. Katz through Exam Works to conduct an IME of the Plaintiff in Bermejo. Dr. Katz conducted two IMEs-the first allegedly lasted 45 minutes, and the length of time of the second was a matter of great dispute at the trial.

         At the trial in Supreme Court, on direct examination, Dr. Katz testified that he performed seven tests during the second IME. On cross examination, Patrick Hackett (“Hackett”), the counsel for Bermejo asked Dr. Katz how long it took him to conduct the second IME. Dr. Katz replied several times, and in different ways, that he did not know how long the second IME lasted. Justice Hart told Dr. Katz that he could not “accept an [answer of] ‘I don't know.' You have been doing this for a while (sic). I will have to insist on what your custom and practice would be as to what type of, the length of exam of this type.” (Id. at ¶ 55). Dr. Katz stated that he thought “a range of between 10 and 20 minutes would be appropriate.” (Id.).

         After Dr. Katz testified, Hackett called a paralegal from his office, Yury Ramirez (“Ramirez”), who testified that Dr. Katz' evaluation of Bermejo lasted five minutes and his exam only lasted three minutes. On re-direct examination of Bermejo, Hackett brought the existence of a video of the second IME to the court and counsel's attention. The jury was dismissed for the day.

         Justice Hart reviewed the video and adopted Hackett's interpretation that the video showed that Dr. Katz's examination lasted only one minute and fifty-six seconds. The Plaintiffs maintain that the video did not show the entire physical examination, and that Dr. Katz's review of Bermejo's medical records was part of the IME.

         Justice Hart directed Dr. Katz to reappear in his part with counsel. During an extended colloquy wherein Justice Hart entertained motions for a mistrial, he encouraged the parties to settle, and said that Dr. Katz should contribute to the settlement. This was done off the record. Even though Dr. Katz was not a party to the suit, Justice Hart said that Dr. Katz lied; and that his career doing IME work was over. On the record, Justice Hart said that he would unseal the record so that other attorneys, insurance companies, the New York State Health Department, Dr. Katz' insurance carrier and the public could see what happened; and that he would send the transcript to the Queens County District Attorney to pursue perjury charges.

         Justice Hart repeatedly said on the record that Dr. Katz lied under oath. He said that Dr. Katz lied about the amount of time spent on the IME, and later said that the lie was actually that he did not perform or could not have possibly performed the tests that he said he performed during the second IME. Justice Hart further stated that he was going to sanction the attorneys who retained Dr. Katz $10, 000 because he could not sanction Dr. Katz. He did eventually sanction them, but quickly changed his mind and vacated the sanctions. Justice Hart also contemplated holding a contempt hearing against Dr. Katz, but did not do so. Justice Hart called Dr. Katz a liar no less than 25 times on the record. He encouraged the attorneys who retained Dr. Katz to sue him for causing what was eventually declared a mistrial.

         When Dr. Katz stated that he would not contribute to a settlement of the Bermejo case, Justice Hart encouraged him to instead retire, and said that he would hold a “special proceeding” to “determine whether Dr. Katz committed perjury; and that the penalty imposed would be the revocation of Dr. Katz's license to practice medicine.” (Id. at ¶ 116).

         Although Justice Hart never commenced such a special proceeding, he repeatedly said that Dr. Katz lied; that he committed perjury; and said that no insurance company would go near him after reading the transcript of the Bermejo proceedings. Justice Hart told Dr. Katz and his counsel that Bermejo's attorneys had all agreed with the court's view that Dr. Katz lied, but the record showed that they did not agree-it showed that they did not object to the court's findings. Dr. Katz said that he would not testify further in the proceedings, and Justice Hart would not allow Ibex Construction or Travelers to retain another medical expert for another IME. Justice Hart declared a mistrial.

         The Bermejo parties appealed various aspects of Justice Hart's ruling to the New York State Supreme Court Appellate Division, Second Department (the “Second Department”). The Plaintiffs attached to their complaint a copy of the Second Department's November 18, 2015 decision. The Plaintiffs state that the Second Department “totally exonerated” Dr. Katz. (Id. at ¶ 148). The Second Department stated that:

we dispel the premise that underlies the plaintiff's arguments on these appeals, and the actions taken by the Supreme Court after declaring the mistrial, namely, the notion that Dr. Katz lied. The record does not reflect that Dr. Katz committed perjury. Dr. Katz was asked how long the second IME took, and his answer was that he did not know. There is no evidence in this record that, at the time Dr. Katz gave that testimony, he actually did know how long the second IME took. Thus, that answer (or series of answers) has not been shown to be untruthful. When Dr. Katz was then asked, by the court, “what [his] custom and practice would be” as to the length of an examination of this type, as noted, Dr. Katz's answer was that he thought that “in the range of between 10 and 20 minutes would be appropriate.” There is no support in this record for the proposition that this answer was false. Moreover, even aside from the fact that the Supreme Court did not actually ask Dr. Katz about the length of the particular IME in question, it was improper to force him to specify an exact duration when his answer repeatedly was “I don't know.” Accordingly, the record does not reflect a lie that would support a declaration of perjury by the Supreme Court. The plaintiff's attorneys insist that Mr. Hackett's video recording shows that the examination lasted one minute and 56 seconds. However, the recording is approximately five minutes in length, and it cannot be determined, from a viewing of the recording, whether the recording captured the entire examination. In other words, it cannot be determined what happened before Mr. Hackett turned his recording device on, and what happened after he turned it off. Moreover, the recording does not account for the time Dr. Katz spent reviewing the plaintiffs fairly extensive medical records, which could arguably be considered part of the IME.

Bermejo v. N.Y.C. Health and Hosp. Corp., 135 A.D.3d 116, 148 (N.Y.App.Div. 2015) (annexed to Plaintiff's complaint as Ex. A). The Second Department found that Justice Hart had said on the record that Dr. Katz “lied” or “committed perjury” more than 60 times. The Court further recognized that several trial courts in the Second Department had been presented with requests for new IMEs where Dr. Katz had originally been retained to perform them.

         Travelers is allegedly Exam Works “most important and influential client, ” (Complaint at ¶ 134), and after the Bermejo mistrial, purportedly directed Exam Works to place Dr. Katz' name on the “Do Not Use” list. The Plaintiffs allege that “[t]he [D]efendants, jointly and severally, devised a plan and scheme to ruthlessly and aggressively disseminate throughout the negligence defense industry, the false and irresponsible allegations and accusations leveled against Dr. Katz by Justice Hart so that anyone and everyone in the industry knew that Dr. Katz was on ...

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