Geico

24-1611 GEICO Indemnity, et al. v. Colin Clarke M.D., et al. UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT SUMMARY ORDER RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL. 1 At a stated term of the United States Court of Appeals for the Second Circuit, 2 held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the 3 City of New York, on the 29th day of October, two thousand twenty-six. 4 5 PRESENT: 6 ALISON J. NATHAN, 7 MARIA ARAÚJO KAHN, 8 Circuit Judges. 9 DIANE GUJARATI, 10 District Judge. 11 _____________________________________ 12 13 Government Employees Insurance Company, 14 15 Plaintiff-Counter-Defendant, 16 17 GEICO Indemnity Company, GEICO General 18 Insurance Company, GEICO Casualty 19 Company, 20 21 Plaintiffs-Counter-Defendants-Appellees,  Judge Diane Gujarati, of the United States District Court for the Eastern District of New York, sitting by designation.  1 2 v. No. 24-1611 3 4 Colin Clarke, M.D., Colin Clarke MD P.C., 5 6 Defendants-Cross-Claimants-Counter-Defendants-Appellants, 7 8 Svetlana Kovaleva, AKA Melana Kay, Medical 9 Evaluation Services & Billing, Inc., Medical Consultation 10 Services & Billing, Inc., John Doe Defendants 1-10, 11 12 Defendants-Cross-Defendants. 13 _____________________________________ 14 15 FOR PLAINTIFFS-COUNTER-DEFENDANTS-APPELLEES: 16 BARRY LEVY, Rivkin Radler LLP, 17 Uniondale, New York. 18 19 FOR DEFENDANTS-CROSS-CLAIMANTS-COUNTER-DEFENDANTS- 20 APPELLANTS: 21 WESLEY ROBERT MEAD, The Mead 22 Law Firm P.C., Milford, Connecticut. 23 24 Appeal from an order of the United States District Court for the Eastern 25 District of New York (Block, J.). 26 UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, 27 ADJUDGED, AND DECREED that the order of the district court is AFFIRMED 28 and the motion to dismiss is GRANTED. 29 Defendants-Appellants Colin Clarke, M.D. and Colin Clarke MD P.C. 2  1 appeal from orders of the district court (Block, J.) granting a preliminary injunction 2 motion and dismissing their counterclaims. Plaintiffs-Appellees GEICO 3 Indemnity Company, GEICO General Insurance Company, and GEICO Casualty 4 Company (collectively, GEICO), have moved to partially dismiss the appeal for 5 lack of jurisdiction. We assume the parties’ familiarity with the underlying facts, 6 procedural history, and issues on appeal, to which we refer only as necessary to 7 explain our decision. 8 I. Factual Background 9 This case arises from an alleged fraudulent scheme to exploit New York’s 10 no-fault automobile insurance laws. Those laws require automobile insurance 11 companies to cover insureds’ “[b]asic economic loss” (e.g., medical expenses) from 12 motor vehicle accidents, regardless of the insured’s culpability. N.Y. Ins. Law 13 § 5102(a). Insureds may assign their no-fault benefits to healthcare providers, 14 who then receive direct payment from insurers for treatment and services 15 rendered. See 11 N.Y. Comp. Codes R. & Regs. § 65-3.11. If an insurer fails to 16 pay, the healthcare provider may commence arbitration. N.Y. Ins. Law § 5106(b). 17 A healthcare provider “is not eligible for reimbursement . . . if the provider fails to 18 meet any applicable New York State or local licensing requirement necessary to 3  1 perform such service in New York[.]” 11 N.Y. Comp. Codes R. & Regs. § 65- 2 3.16(a)(12). 3 GEICO alleges that Appellants have been engaged in a multifaceted scheme 4 to profit from these laws. At the center of this alleged scheme are two healthcare 5 providers: Colin Clarke MD P.C. and the practice of Colin Clarke, M.D. 6 (collectively, the Clarke Providers). GEICO alleges that unlicensed laypersons 7 unlawfully own, operate, and control the Clarke Providers, which they use to bill 8 GEICO for healthcare services that were medically unnecessary or not actually 9 provided. GEICO further alleges that Appellants have commenced hundreds of 10 no-fault arbitration actions against GEICO to pursue collection of the fraudulent 11 charges. 12 In 2023, GEICO commenced this lawsuit. The Complaint alleges common 13 law fraud, unjust enrichment, and violations of the Racketeer Influenced and 14 Corrupt Organizations Act. It seeks monetary damages and a declaratory 15 judgment that Appellants have no right to receive payment for any pending bills 16 submitted to GEICO. On May 23, 2024, the district court granted GEICO’s motion 17 for a preliminary injunction to stay all pending no-fault insurance collection 18 arbitrations and enjoin Appellants from commencing further arbitration and 4  1 litigation proceedings pending disposition of this case. On June 20, 2024, the 2 district court granted GEICO’s motion to dismiss Appellants’ counterclaims. 3 Appellants have appealed both decisions. 4 II. Order Granting a Preliminary Injunction 5 Under 28 U.S.C. § 1292, we have jurisdiction over appeals from 6 “interlocutory orders of the district courts . . . granting, continuing, modifying, 7 refusing or dissolving injunctions[.]” 28 U.S.C. § 1292(a)(1). “We review the 8 grant or denial of a preliminary injunction for abuse of discretion.” S.E.C. v. 9 Dorozhko, 574 F.3d 42, 45 (2d Cir. 2009). An abuse of discretion occurs when the 10 court’s decision “rests on an error of law or a clearly erroneous factual finding,” 11 or “cannot be located within the range of permissible decisions.” Id. (citation 12 modified). A plaintiff seeking a preliminary injunction must demonstrate “1) 13 irreparable harm absent injunctive relief; 2) either a likelihood of success on the 14 merits, or a serious question going to the merits to make them a fair ground for 15 trial, with a balance of hardships tipping decidedly in the plaintiff’s favor; and 3) 16 that the public’s interest weighs in favor of granting an injunction.” Metro. 17 Taxicab Bd. of Trade v. City of New York, 615 F.3d 152, 156 (2d Cir. 2010) (citation 18 modified). 5  1 Appellants challenge the district court’s decision to grant a preliminary 2 injunction on various grounds. None is availing. 3 First, Appellants argue that the district court erred by failing to hold a 4 hearing to resolve essential factual disputes. “[T]here is no hard and fast rule in 5 this circuit that oral testimony must be taken on a motion for a preliminary 6 injunction or that the court can in no circumstances dispose of the motion on the 7 papers before it.” Md. Cas. Co. v. Realty Advisory Bd. on Lab. Rels., 107 F.3d 979, 8 984 (2d Cir. 1997) (citation modified). Where relevant facts are not “in dispute,” 9 an evidentiary hearing is “not required.” Charette v. Town of Oyster Bay, 159 F.3d 10 749, 755 (2d Cir. 1998). And where, as here, the district court applies the “serious 11 questions” standard, it has “greater flexibility to resolve the motion on the 12 papers[.]” State Farm Mut. Auto. Ins. Co. v. Tri-Borough NY Med. Prac. P.C., 120 13 F.4th 59, 83 (2d Cir. 2024). 14 The district court did not abuse its discretion in resolving GEICO’s 15 preliminary injunction motion without a hearing. Appellants failed to identify 16 for the district court any factual disputes that necessitated such a hearing. In 17 support of their hearing request, they submitted a medical article about trigger 18 point injections and Clarke’s declaration that he would testify as to the medical 6  1 necessity of the treatments he provided and conformity with standards of care. 2 See App’x 418–29. But the article’s finding that trigger point injections effectively 3 reduce pain did not refute GEICO’s allegation that Appellants unnecessarily 4 administered such treatments. And Clarke’s proffered testimony related to only 5 one category of allegations made by GEICO; Clarke did not, for example, seek to 6 testify as to a lack of lay ownership or abdication of control to laypersons. 7 Accordingly, because Appellants have “not identified any factual dispute in the 8 record that was essential to the district court’s decision, . . . the district court did 9 not abuse its discretion in deciding that the record before it was sufficient to decide 10 the motion without a hearing.” St. Joseph’s Hosp. Health Ctr. v. Am. Anesthesiology 11 of Syracuse, P.C., 131 F.4th 102, 108 (2d Cir. 2025).1 12 Second, Appellants argue that the district court erred in denying a security 13 bond. We disagree. A court may issue a preliminary injunction “only if the 14 movant gives security in an amount that the court considers proper[.]” Fed. R. 1 Appellants also argue that a hearing was necessary based on Melana Kay’s deposition testimony, which they claim would have “demonstrated that Ms. Kay’s affidavit was false.” Appellants’ Br. at 11. But that deposition was taken more than one year after the district court’s decision. Further, the district court did not reference Kay’s affidavit in granting the preliminary injunction. 7  1 Civ. P. 65(c). “Courts have the discretion, however, to require no security at all 2 depending on the specific circumstances.” State Farm, 120 F.4th at 86. The 3 security requirement “is designed to assure the enjoined party that it may readily 4 collect damages from the funds posted in the event that it was wrongfully 5 enjoined[.]” Id. (citation modified). Because the district court determined that 6 GEICO “undoubtedly has the ability to pay if the Clarke [d]efendants prevail,” 7 App’x 726, it was not an abuse of discretion to waive that requirement. 8 Third, Appellants argue that the district court erred in holding that GEICO 9 raised a “serious question going to the merits[.]” Metro. Taxicab Bd. of Trade, 615 10 F.3d at 156. Appellants rely on Government Employees Insurance Co. v. Mayzenberg, 11 45 N.Y.3d 397, 401 (2025), where the New York Court of Appeals held that Section 12 65-3.16(a)(12) does not permit insurers to deny a healthcare provider’s 13 reimbursement claim based on allegations that the provider engaged in 14 professional misconduct. In light of that precedent, Appellants contend that 15 GEICO cannot prevail on its request for a declaratory judgment that Appellants 16 have no right to receive payment for pending bills. Appellants overstate the 17 import of that case for this one. Although Mayzenberg might prevent GEICO from 18 denying reimbursement to Appellants based on certain alleged professional 8  1 misconduct, it does not prevent GEICO from denying reimbursement where the 2 alleged professional misconduct “constitute[s] surrender of control to an 3 unlicensed party[.]” Id. That is what GEICO demonstrated in connection with 4 its preliminary injunction motion, with documentary evidence reflecting that 5 unlicensed laypersons were paid more than $1 million by the Clarke Providers for 6 billing services that took no more than one hour per day. See App’x 67–68. 7 Based on that evidence, the district court did not abuse its discretion in holding 8 that GEICO had “sufficiently allege[d] a complicated scheme of fraudulent activity 9 satisfying GEICO’s burden of establishing a serious question going to the merits.” 10 App’x 725. 11 Fourth, Appellants argue that the district court improperly weighed the 12 balance of the hardships and failed to consider policy exhaustion. We have 13 rejected these arguments in no-fault insurance fraud cases similar to this one. In 14 State Farm, we held that the district court, in granting an injunction, properly 15 weighed the hardship that the healthcare providers would face “as relatively small 16 companies” against the “thousands of arbitrations” that the insurer would face 17 absent an injunction. 120 F.4th at 85. And in Government Employees Insurance Co. 18 v. Patel, 166 F.4th 280, 297 (2d Cir. 2026), we were unpersuaded by the defendants’ 9  1 policy exhaustion argument because they “ma[d]e no effort to show that any 2 specific policies are at risk of exhaustion or specific claims at risk of becoming 3 uncollectable.” The same reasoning applies here. Those cases confirm that “the 4 balance reached by the district court f[ell] squarely within its discretion.” State 5 Farm, 120 F.4th at 85. 6 Fifth, Appellants argue that the district court failed to analyze the public 7 interest at stake. Regardless of the adequacy of the district court’s analysis, this 8 factor is satisfied. “Safeguarding the integrity of [the no-fault] system by 9 detecting and preventing insurance fraud is . . . strongly in the public interest.” 10 Patel, 166 F.4th at 297 (citation modified). Insurers are “uniquely positioned to 11 combat” such fraud, but their ability to do so is undermined when they must 12 defend hundreds of arbitrations for reimbursement of individual claims. Id. A 13 stay of all pending no-fault insurance collection arbitrations against GEICO is 14 therefore “indisputably in the public interest.” Id. at 298. 15 Accordingly, we conclude that the district court did not abuse its discretion 16 in granting GEICO’s motion for a preliminary injunction. 17 III. Order Dismissing Appellants’ Counterclaims 18 We lack jurisdiction over the district court’s order dismissing Appellants’ 10  1 counterclaims. We therefore decline to consider Appellants’ arguments with 2 respect to those claims. 3 With few narrowly defined exceptions, our jurisdiction is limited to 4 “appeals from . . . final decisions of the district courts[.]” 28 U.S.C. § 1291. “A 5 ‘final’ judgment or order is one that conclusively determines the pending claims 6 of all the parties to the litigation, leaving nothing for the court to do but execute 7 its decision.” Citizens Accord, Inc. v. Town of Rochester, 235 F.3d 126, 128 (2d Cir. 8 2000). Here, when the district court dismissed the Clarke Providers’ 9 counterclaims, all of GEICO’s claims remained. Because the order “dispos[ed] of 10 only a portion of [the] case,” it is “ordinarily not appealable absent a Rule 54(b) 11 certification” by the district court. Hanlin v. Mitchelson, 794 F.2d 834, 838 (2d Cir. 12 1986). No such certification was sought here. We therefore lack jurisdiction to 13 review the district court’s dismissal of Appellants’ counterclaims. 14 Appellants’ arguments to the contrary are without merit. First, the 15 counterclaims were not “inextricably bound up with the preliminary injunction,” 16 Amador v. Andrews, 655 F.3d 89, 95 (2d Cir. 2011) (quotation marks omitted); on the 17 contrary, they were premised on separate allegations and raised distinct legal 18 issues. Second, that one of the counterclaims sought injunctive relief does not 11  1 support jurisdiction. The district court’s order did not deny a motion 2 “specifically addressed to injunctive relief,” and Appellants have not shown that 3 the order “might have a serious, perhaps irreparable consequence,” and “can be 4 effectually challenged only by immediate appeal.” Sahu v. Union Carbide Corp., 5 475 F.3d 465, 467 (2d Cir. 2007) (citation modified). 6 Accordingly, we grant GEICO’s motion to dismiss the appeal of the district 7 court’s June 20, 2024 order dismissing Appellants’ counterclaims. 8 * * * 9 We have considered Appellants’ remaining arguments and conclude that 10 they are without merit. Accordingly, we AFFIRM the district court’s grant of a 11 preliminary injunction and DISMISS the appeal of the June 20, 2024 order for lack 12 of appellate jurisdiction. 13 FOR THE COURT: 14 Catherine O’Hagan Wolfe, Clerk of Court 12