Opinion
1:21-cv-5717-FB-VMS
06-27-2024
GOVERNMENT EMPLOYEES INSURANCE COMPANY, GEICO INDEMNITY COMPANY, GEICO GENERAL INSURANCE COMPANY and GEICO CASUALTY COMPANY, Plaintiffs, v. DOMINIC EMEKA ONYEMA, M.D. DEO MEDICAL SERVICES, P.C. HEALTHWISE MEDICAL ASSOCIATES, P.C., and JOHN DOE DEFENDANTS “1” - “10”, Defendants.
For the Plaintiffs: SEAN GORTON Rivkin Radler LLP For the Defendants: BRETTY GALLAWAY McLaughlin & Stern, LLP
For the Plaintiffs:
SEAN GORTON
Rivkin Radler LLP
For the Defendants:
BRETTY GALLAWAY
McLaughlin & Stern, LLP
MEMORANDUM AND ORDER
FREDERIC BLOCK, SENIOR UNITED STATES DISTRICT JUDGE
Plaintiffs Government Employees Insurance Co., GEICO Indemnity Co., GEICO General Insurance Company, and GEICO Casualty Co. (collectively “Plaintiffs” or “GEICO”) seek enforcement of the April 27, 2023, Confidential Settlement and Release Agreement (“Settlement”) executed by Defendants Dominic Emeka Onyema, M.D., DEO Medical Services, P.C., and Healthwise Medical Associates, P.C. (collectively, “Defendants”). For the following reasons, Plaintiffs' motion is denied.
For background, Plaintiffs commenced this action against Defendants in 2021, alleging that Defendants wrongfully obtained hundreds of thousands of dollars from GEICO by submitting hundreds of insurances charges relating to medically unnecessary, illusory, and otherwise unreimbursable healthcare services. On May 5, 2023, Plaintiffs informed the Court that the parties agreed to the terms of the Settlement Agreement. On May 19, 2023, Plaintiffs provided the Court with a stipulation of dismissal without prejudice against Defendants and requested the Court order the stipulation and notice. That same day, the Court issued an order dismissing the case. Significantly, neither party requested, and the Court's order did not include, language authorizing the Court to retain jurisdiction to enforce the settlement agreement.
Almost a year after the Court dismissed the case, in May 2024, Plaintiffs filed a letter seeking to enforce the terms of the Settlement Agreement, citing Defendants' failure to comply with the agreed-upon terms.
However, the Court cannot enforce the Settlement Agreement because the case is not properly before the Court. Because actions to enforce settlement agreements are contract actions governed by state law, a federal district court has jurisdiction to enforce settlements either through (1) ancillary jurisdiction or (2) an independent basis for federal jurisdiction. See Hendrickson v. United States, 791 F.3d 354, 358 (2d Cir. 2015).
There is no basis for ancillary jurisdiction, which exists if the court's order of dismissal either (a) expressly retains jurisdiction over the settlement agreement or (b) incorporates the terms of the settlement agreement in that order. Id. A “judge's mere awareness and approval of the terms of the settlement agreement do not suffice to make them part of his order.” Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 381 (1994). Here, the Court plainly did not retain jurisdiction or incorporate the Settlement Agreement in its order of dismissal.
Moreover, “[e]ven if there were an independent basis of jurisdiction - diversity, for example - the plaintiff could not simply file a motion for enforcement in this closed case but would be required to commence a new action.” Shanghai China Garments J & Y Imp. & Exp. Corp. v. Brooks Fitch Apparel Grp., No. 11 CIV. 2363 JCF, 2013 WL 1499378, at *3 (S.D.N.Y. Apr. 11, 2013). While diversity jurisdiction may provide “the requisite basis for a federal court, as opposed to a state court, to enforce the settlement agreement . . . [a] crucial distinction [] exists between a dispute that can be brought in federal court and a dispute that can be brought directly to the previously assigned judge in a closed case, effectively reopening it.” Ralph Lauren Corp. v. CSR Grp., Inc., No. 16-CV-3387 (RJS), 2017 WL 1861779, at *1 (S.D.N.Y. Apr. 27, 2017). Accordingly, the “dispute must be brought as a new, independent lawsuit, [and] Plaintiff must file a new complaint to enforce this settlement.” Id.
Assuming diversity jurisdiction exists, Plaintiffs can either file their motion as a new action in federal court or move to enforce the Settlement Agreement in state court. While courts in the Second Circuit have recognized that there is “a degree of formalism in requiring Plaintiff to file a new complaint in federal court in order to enforce the settlement agreement,” the Second Circuit has adopted a “precise” construction of the requirements of ancillary jurisdiction. Id. at * 2 (citing Hendrickson, 791 F.3d at 354). And parties remain free to negotiate and include the Hendrickson/Kokkonen language in their stipulation of dismissals. The Court thus advises litigants to familiarize themselves with the necessary conditions for the Court's retaining ancillary jurisdiction to avoid having to commence new litigation.
SO ORDERED.