HOUSTON (Legal Newsline) - Insurers who footed the bill for personal injury settlements shouldn't succeed in recouping their losses from health care providers they alleged conspired to inflate the cost of care, a federal magistrate judge says.
Andrew Edison, of the Houston federal court, recommended March 12 that the lawsuit brought by 13 affiliated insurance companies against 23 medical providers be dismissed.
Farmers Texas Mutual Insurance Company is among the insurers suing defendants like 1st Choice Accident & Injury, Houston Pain Relief & Wellness Clinic and Smart Choice Chiropractic.
They alleged fraudulent billing for services not needed led to more than $14 million in damages and filed a lawsuit under the Racketeer Influenced and Corrupt Organizations Act in 2022.
But Edison's recommendation, which will be subject to approval or rejection by the presiding district judge, says the insurers failed to sufficiently allege an enterprise among the defendants."
"(T)he amended complaint is devoid of any allegations that the chiropractic clinics, pain management companies, and medical professionals named as Defendants existed separate and apart from the alleged pattern of racketeering," Edison wrote.
"Although Plaintiffs assert in their response that Defendants acted 'in one common enterprise to provide their respective medical services AND engage in their racketeering activity,', the Amended Complaint contains no allegations that Defendants provided services to legitimate patients."
The insurers also failed to show a consensual decision-making structure among the defendants.
"Tellingly, Plaintiffs do not even bother to define the purported enterprise in the Amended Complaint. Only once in the Amended Complaint is the term 'enterprise' mentioned, and that solitary reference is nothing more than a rote recitation of the legal requirements for an enterprise," Edison wrote.
1st Choice Accident & Injury is a chiropractic firm that has 13 locations in the Houston area and is run by brothers Phuc Vinh “Charlie” Huynh and Phuc Kien “Andy” Huynh, the suit says. The alleged scheme involves treatment for drivers involved in car accidents.
That treatment includes fraudulent exam reports, fraudulent billing and medical reports and the supply of those reports to personal injury lawyers, the suit says.
“The Defendants’ scheme is designed to enrich Defendants by inducing Farmers to rely on their bills and supporting documentation that on their face purport to substantiate the need for medical treatment and (2) settle BI and UM Claims within policy limits, and often for all or most of the limits, to protect Farmers and their insureds from potential judgments exceeding policy limits and/or avoid potential liability for bad-faith claims,” the suit says.