Opinion
No. 03 Civ. 3920 (RWS).
November 30, 2004
MOSHE D. FULD, P.C. New York, NY, DAVID KARP, ESQ., Attorneys for Plaintiffs.
PETER C. MERANI, ESQ., New York, NY, SAMUEL A. KAMARA, ESQ., Attorneys for Defendant.
OPINION
Defendant Allstate Insurance Company ("Allstate") has moved to sever the claims asserted in the complaint of Deajess Medical Imaging, P.C. ("Deajess"), as assignee of Jennifer Andino and the other injured persons listed in a rider attached to the complaint and Moshe D. Fuld, P.C., pursuant to Federal Rule of Civil Procedure 21. For the reasons set forth below, Allstate's motion is denied at this time with leave to renew.
Prior Proceedings
Deajess filed the verified complaint (the "Complaint") in this action on May 29, 2003. According to the Complaint, Deajess seeks to recover on sixty-four no-fault automobile insurance claims related to injuries allegedly sustained in a number of separate automobile accidents which occurred between March and September of 2002 and which arose out of the operation or use of vehicles purportedly insured by Allstate. (See Compl. at ¶¶ 6-7; Compl. Rider at 1-2.) Deajess allegedly rendered medical services to individuals involved in these accidents, accepted an assignment of benefits from each of the individuals as patient-assignors, and billed Allstate for payment of medical treatment. (See Compl. at ¶¶ 6, 9-11.) The values of the claims asserted range from $878.67 to $3,544.84. (See Compl. Rider at 1-2.)
Allstate filed its answer to the Complaint on August 29, 2003, discovery proceeded, and Allstate moved to dismiss the complaint pursuant to Rule 12(b)(1), Fed.R.Civ.P., and 28 U.S.C. § 1332 on the grounds that subject matter jurisdiction was lacking. The motion was denied. See Deajess Med. Imaging PD v. Allstate Ins. Co., No. 03 Civ. 3920 (RWS), 2004 WL 1632596 (S.D.N.Y. July 22, 2004) (concluding that the assignment of the claims at issue was not collusive nor aggregation of those claims improper).
Allstate filed the instant motion on October 8, 2004. Oral arguments were heard on November 3, 2004, at which time the motion was marked fully submitted.
Discussion
"Although a party may assert unrelated claims against a single defendant in the same lawsuit under Rule 18(a) of the Federal Rules of Civil Procedure, the Court may also sever those claims under Rule 21." Boston Post Rd. Med. Imaging, P.C. v. Geico Gen. Ins. Co., No. 03 Civ. 7390 (JCF), 2004 WL 1810572, at *4 (S.D.N.Y. Aug. 12, 2004) (footnote omitted); see also Preferred Med. Imaging P.C. v. Geico Gen. Ins. Co., No. 03 Civ. 8726 (NRB), 2004 WL 690735, at *1 (S.D.N.Y. Mar. 31, 2004) ("[W]hile it is true that, under Fed.R.Civ.P. 18(a), a single plaintiff is entitled to aggregate unrelated claims against a single defendant, the court has discretion to disaggregate such claims in the interests of administrative efficiency.").
Rule 21 provides, in pertinent part, that "[a]ny claim against a party may be severed and proceeded with separately." Fed.R.Civ.P. 21. In determining whether to sever claims in a civil suit pursuant to Rule 21, a number of factors are relevant, including:
(1) whether the claims arise out of the same transaction or occurrence, (2) whether the claims present common questions of fact or law, (3) whether severance would serve judicial economy, (4) prejudice to the parties caused by severance, and (5) whether the claims involve different witnesses and evidence.Boston Post Rd. Med. Imaging, P.C. v. Allstate Ins. Co., No. 03 Civ. 3923 (RCC), 2004 WL 1586429, at *1 (S.D.N.Y. July 15, 2004) (citing Preferred Med. Imaging, P.C. v. Allstate Ins. Co., 303 F. Supp. 2d 476, 477 (S.D.N.Y. 2004); In re Merrill Lynch Co., Inc. Research Reports Secs. Litig., 214 F.R.D. 152, 154-55 (S.D.N.Y. 2003)). "The power to sever claims is committed to the discretion of the district courts." Boston Post Rd. Med. Imaging, 2004 WL 1586429, at *1 (citing New York v. Hendrickson Bros., Inc., 840 F.2d 1065, 1082 (2d Cir. 1988)).
The instant case is one of approximately thirty similar actions filed in this district by Deajess's counsel, Moshe D. Fuld, P.C., in which numerous assigned claims for no-fault insurance benefits are aggregated, no single claim being of sufficient magnitude to meet the jurisdictional threshold set by 28 U.S.C. § 1332 on its own. See Deajess Med. Imaging, 2004 WL 1632596, at *3. In a number of these cases, motions to sever the aggregated claims pursuant to Rule 21 have been granted. Thus, inPreferred Medical Imaging, P.C. v. Allstate Insurance Co., 303 F. Supp. 2d 476 (S.D.N.Y. 2004), the Honorable Victor Marrero deemed the complaint a "prime candidate for severance" as it involved numerous distinct automobile accidents and claims and contained no allegations suggesting that the claims involved similar facts. Preferred Med. Imaging, 303 F. Supp. 2d at 477 (dismissing the complaint sua sponte and without prejudice, "so as to allow Preferred to re-file a complaint which sets forth some theory under which the Court has jurisdiction"). Similarly, the Honorable Louis L. Stanton severed the underlying claims inDeajess Medical Imaging, P.C. v. Travelers Indemnity Co., 222 F.R.D. 563 (S.D.N.Y. 2004), and dismissed the complaint without prejudice, cataloguing the varying reasons for which coverage was denied for several of the underlying claims and observing that,
Establishing the propriety of each denial will require different witnesses and documentary proof on such issues as coverage, medical necessity, fraud, and cooperation on the part of the insured. Each individual claimant applied separately for no-fault benefits, and assigned the claim to Deajess. Thus, although facially presented as a single unit of similar claims, the trial would require a jury to hear evidence from the participants in thirty-three separate accidents, treatments, claims and investigations. Plaintiff argues that many of the claims may settle, but claims settle because courts are ready to try them, and under the complaint the court must consider the practicalities of thirty-three trials in one proceeding. That demands severance.Deajess Med. Imaging, 222 F.R.D. at 564.
In Boston Post Road Medical Imaging, P.C. v. Allstate Insurance Co., No. 03 Civ. 3923 (RCC), 2004 WL 1586429 (S.D.N.Y. July 15, 2004), the Honorable Richard C. Casey granted the defendant's motion for severance, as the underlying claims "arise out of distinct automobile accidents which led to different injuries to different individuals who underwent distinct medical services, payment for which was denied for varying reasons."Boston Post Rd. Med. Imaging, 2004 WL 1586429, at *1. Judge Casey rejected the plaintiff's argument that a common question of law was presented by the assignors' identical contracts for insurance coverage, explaining that,
Plaintiff does not allege anywhere in the complaint that the contracts are identical; it merely states that Defendant failed to comply with "automobile insurance policies" in force at the time of the accidents. Even if the assignors' insurance contracts are identical, the legal and factual issues involved in these claims are not. For example, Defendant in its answer pleaded different defenses that will apply to some claims and not to others. Those defenses include that some of the medical bills were not timely submitted, Plaintiff performed unnecessary or unreasonable services, the services were not related to the injuries sustained, the claims exceeded policy limits, and some of the assignors violated provisions of their policies. Thus, even if the insurance policies are identical, different provisions of the policies will be relevant to different claims in this action. Id. at *2 (internal citations omitted). Judge Casey also concluded that severance would promote judicial economy, as
A joint trial raises the prospect of a jury having to parse evidence regarding fifty-nine separate accidents, the medical services that Plaintiff provided to the assignors-patients, and the necessity and reasonableness of those services. As noted above, Defendant has alleged that some of the claimed benefits were denied because the medical services were unnecessary. Thus, the jury will need to ascertain which assignors suffered which injuries, what medical services Plaintiff provided to each assignor, and whether the services were necessary and reasonable in each case. Interests of efficiency suggest severance is the preferable option.Id. Finally, Judge Casey noted that the plaintiff would not be prejudiced by severance, since the case was being dismissed without prejudice and the plaintiff could "simply use the evidence obtained through discovery in separate state-court suits rather than in this one federal action." Id. (distinguishing a decision rendered by the New York State Appellate Division, Second Department, and relied upon by the plaintiff because the decision interpreted a New York statute, thus providing "little aid to this Court in addressing the concerns under the federal rules"); see also Boston Post Rd. Med. Imaging, P.C. v. Geico Gen. Ins. Co., No. 03 Civ. 7390 (JCF), 2004 WL 1810572, at *4-5 (S.D.N.Y. Aug. 12, 2004) (following a similar severance analysis to that adopted by Judge Casey and arrived at the same result).
Comparable conclusions have been reached in several of the other actions brought by Deajess's counsel. See Deajess Med. Imaging, P.S. v. Allstate Ins. Co., No. 03 Civ. 3916 (LTS) (MHD), 2004 WL 1920803, at *5 (S.D.N.Y. Aug. 27, 2004) (severing the underlying claims sua sponte and dismissing the complaint for lack of subject matter jurisdiction) (Swain, J.); Preferred Med. Imaging, 2004 WL 690735, at *1 (concluding that "there is no efficiency to be gained by a joint adjudication," severing the underlying claims, and comparing the matter to an earlier case where it was held that "because there was virtually no overlap in the specific legal issues raised by and the witnesses associated with each claim, a joint adjudication of these claims would not be more efficient than separate adjudications, and, if anything, would be exceptionally unwieldy") (Buchwald, J.) (citing Deajess Med. Imaging v. Travelers Prop. Cas. Ins. Co., No. 03 Civ. 6635 (NRB)); see also Deajess Med. Imaging v. Travelers Prop. Cas. Ins. Co., No. 03 Civ. 6635 (NRB), summary order, at 1 (S.D.N.Y. Mar. 11, 2004) (Buchwald, J.) (granting a motion to sever the underlying claims and dismissing the complaint for lack of subject matter jurisdiction); Boston Post Rd. Med. Imaging v. State Farm Mut. Auto. Ins. Co., No. 03 Civ. 6643 (AKH), summary order, at 1 (S.D.N.Y. Mar. 9, 2004) (Hellerstein, J.) (same).
Most recently, in Deajess Medical Imaging, P.C. v. Allstate Insurance Company, ___ F. Supp. 2d ___, No. 03 Civ. 8779 (LAK), 2004 WL 2569492 (S.D.N.Y. Nov. 12, 2004), the Honorable Lewis A. Kaplan refrained from severing the plaintiff's claims sua sponte but invited the parties to brief the propriety of severance, explaining that
[T]he Court is inclined to sever the individual insurance claims. They involve unrelated accidents and do not appear to involve any common questions of law or fact. In addition, judicial economy favors severance because the actions involve small, local matters more appropriately raised in state courts. Moreover, plaintiff would not be prejudiced, as it can file these claims in state court.Deajess Med. Imaging, ___ F. Supp. 2d ___, 2004 WL 2569492, at *4-5; see also id. at *1 (noting that the plaintiff, the party seeking to avoid the New York state courts by commencing the action in the federal courts, is a New York resident and opining that the case "is another example of a plaintiff attempting to invoke diversity jurisdiction in a situation entirely inconsistent with the original purposes of the statute").
Not every case instituted by Deajess's counsel in this district which involves similar issues has met the fate of those just discussed. In Boston Post Road Medical Imaging, P.C. v. Travelers Property Casualty Insurance Co., No. 03 Civ. 6156 (HB), the Honorable Harold Baer, Jr. denied the defendant's motion to sever the underlying claims but adopted the defendant's court-directed proposal for a method by which the different claims could be grouped into several sub-categories, a proposal to which the plaintiffs had not objected. See Boston Post Rd. Med. Imaging, P.C. v. Travelers Prop. Cas. Ins. Co., No. 03 Civ. 6156 (HB), summary order, at 1 (S.D.N.Y. Feb. 4, 2004) (directing that "the 42 claims at issue in this case shall be grouped into the following categories: (1) Claims denied based on peer review; (2) Claims denied based on failure to cooperate or verify a claim; [and] (3) Claims subject to collateral estoppel").
In the instant action, Allstate argues that there is no relation or similarity among the sixty-four claims at issue other than the fact that no-fault benefits were not paid on each of the claims. Allstate further contends that the failure to sever these claims would be prejudicial to Allstate, insofar as "the issues sought to be tried by [P]laintiff in this lawsuit are significantly different from one another, and the separable issues require the testimony of different witnesses and different documentary proof." (Def. Mem. at 1.) According to Allstate, Deajess would not be prejudiced if the underlying claims were severed.
In opposition, Deajess has argued that the sixty-four claims arose out of the same series of transactions and that Allstate's liability is based upon its alleged failure to comply with a contract that, according to Deajess, is uniform in each claim. Deajess further suggests that the "subject accidents are not at issue in this lawsuit" (Pl. Opp. Mem. at 3) and that both the legal and factual bases for each claim are identical, as each claim relates to the uniform contract for insurance and the no-fault regulations set forth in New York State Insurance Law.
In opposition to Allstate's motion, Deajess cites and relies on several decisions issued by the New York State courts relating to the propriety of joinder under N.Y.C.P.L.R. § 1002, and argues that it "has met the burden of joinder as set forth under the CPLR. . . ." (Pl. Opp. Mem. at 4.) As "federal courts sitting in diversity apply state substantive law and federal procedural law," Gasperini v. Center for Humanities, Inc., 518 U.S. 415, 427 n. 7 (1996), and Deajess has offered no basis to conclude that N.Y.C.P.L.R. § 1002 trumps the procedural prescript of Rule 21, Fed.R.Civ.P., or is otherwise relevant here, the cases cited by Deajess are inapposite.
Although, as Allstate observes and Deajess does not deny, the sixty-four different claims arise from separate motor vehicle accidents, the present record is too sparse to support severance of these claims. The record does not establish, for instance, whether the underlying claims relate to a uniform contract, as Deajess contends, or whether, instead, each claim relates to a different insurance policy, as is suggested by an affidavit submitted in support of Allstate's motion. (See Affidavit of Maureen Privetello, dated Sept. 27, 2004 ("Privetello Aff."), at 4). Even if the contract involved in each of the sixty-four claims were the same, there is presently no information from which to glean whether the claims involve identical provisions of that contract.
The affidavit submitted by Allstate also illustrates the various "issue[s]" because of which each claim has not been paid. (Id. at 1-4.) Far from demonstrating the distinctive nature of each claim, however, the list shows that the majority of claims were denied based on the same "issue": peer review. As there is no information in the record suggesting whether the concerns considered on peer review are the same for each of the approximately forty-five claims for which peer review is identified as the "issue" it is uncertain the degree to which each peer review claim may raise a different factual issue. Moreover, apart from Allstate's conclusory suggestion that different witnesses and different proof would be implicated by each of the sixty-four claims, there is no basis upon which to conclude that the "peer review" claims would involve testimony from the same or different witnesses. While the remaining claims for which "peer review" is not listed as the "issue" associated with the claim appear facially diverse, it is unclear whether each of the different "issue" codes offered by Allstate signals a distinct set of relevant facts.
In sum, the grounds offered for severance are, in the main, abstract and unsupported by evidence, and certain of the key facts are disputed. Accordingly, Allstate's motion is denied at this time. As facts may develop through discovery that demonstrate in a more concrete manner the propriety of severance as to some or all of the sixty-four claims, however, Allstate is granted leave to renew its motion. Conclusion
For the reasons set forth above, Allstate's motion to sever the claims in the Complaint is denied at this time with leave to renew. Discovery will be completed in sixty days from entry of this opinion and order and the pretrial order submitted on February 9, 2005.
It is so ordered.