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State Farm Mutual Automobile Insurance Co. v. Carefree Land Chiropractic, LLC

United States District Court, D. Maryland

September 25, 2019

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY., et al.
v.
CAREFREE LAND CHIROPRACTIC, LLC, et al.

          MEMORANDUM

          Catherine C. Blake United States District Judge

         Before this court is State Farm's motion for reconsideration of this court's order granting judgment of dismissal or, in the alternative, for leave to file an amended complaint.

         FACTS AND PROCEDURAL HISTORY

         State Farm Mutual Automobile Insurance Company and State Farm Fire and Casualty Company ("State Farm") allege that Carefree Land Chiropractic ("Carefree") has engaged in a scheme to defraud State Farm by providing medically unnecessary services and treatments to 550 patients and submitting the claims for reimbursement to State Farm.[1] State Farm alleges that Carefree's patient records submitted as part of its claims for reimbursement are suspiciously similar to each other, and that Carefree fabricated test results and diagnoses, and subjected patients to a predetermined treatment plan not uniquely tailored to each individual patient.

         On May 1, 2018, State Farm filed its complaint against Carefree alleging fraud and unjust enrichment, as well as requesting declaratory judgment. Carefree filed a motion to dismiss on June 28, 2018, which this court granted on December 11, 2018, holding that State Farm's complaint failed to satisfy Rule 8(a)(2) as well as Rule 9(b)'s heightened pleading requirements for fraud. ECF 50, at 4. In particular, the court noted that Carefree failed to state which treatments and specific documents it alleged were fraudulent, and which physicians it alleged acted fraudulently. Id. at 5. Rather, State Farm relied solely on its statistical analysis regarding the similarity of the records to demonstrate that they were fraudulent. Id. at 5-6.

         STANDARD OF REVIEW

         I. Motion for Reconsideration

         Under Rule 59(e), there are "three grounds for amending an earlier judgment: (1) to accommodate an intervening change in controlling law; (2) to account for new evidence not available at trial; or (3) to correct a clear error of law or prevent manifest injustice." Sloas v. CSX Tramp. Inc., 616 F.3d 380, 385 n.2 (4th Cir. 2010) (quoting Hutchinson v. Staton, 994 F.2d 1076, 1081 (4th Cir.1993)). "The district court has considerable discretion in deciding whether to modify or amend a judgment." Gagliano v. Reliance Standard Life Ins. Co., 547 F.3d 230, 241 n.8 (4th Cir. 2008). Generally, however, it is a remedy that should be used sparingly. Id (citing Pac. Ins. Co. v. Am. Nat'l Fire Ins. Co., 148 F.3d 396, 403 (4th Cir. 1998)).

         II. Motion for Leave to Amend

         Leave to amend should be freely granted under Rule 15(a), and amendments are generally accepted absent futility, undue prejudice, or bad faith. See Foman v. Davis, 371 U.S. 178, 182 (1962); Matrix Capital Mgmt. Fund, LP v. Bearing Point, Inc., 576 F.3d 172, 193 (4th Cir. 2009) (explaning that leave to amend, even post-judgment, "should be denied only when the amendment would be prejudicial to the opposing party, there has been bad faith on the part of the moving party, or amendment would be futile."). A court "may deny leave if amending the complaint would be futile - that is, 'if the proposed amended complaint fails to satisfy the requirements of the federal rules.'" U.S. ex rel. Wilson v. Kellog Brown and Root, Inc., 525 F.3d 370, 376 (4th Cir. 2008) (quoting United States ex rel. Fowler v. Caremark RX, LLC, 496 F.3d 730, 740 (7th Cir. 2007)).

         DISCUSSION

         I. Motion for Reconsideration

         State Farm argues that this court should grant reconsideration because (1) it committed an error of law in incorrectly applying Nathan v. Takeda Pharmaceuticals North America, Inc., 707 F.3d 451 (4th Cir. 2013), see ECF 52-1, at 7-10; ECF 54, at 3, and (2) a recent intervening Fourth Circuit decision, United States ex rel. Grant v. United Airlines Inc., 912 F.3d 190 (4th Cir. 2018) clarifies Nathan's limited holding. ECF 54, at 3. In support of its motion, State Farm also provides other examples of federal courts have rejecting motions to dismiss in cases with similar allegations to this case. ECF 52-1, at 12. Carefree responds that State Farm fails to show a clear error of law, an intervening change in controlling law, or new evidence, and instead is merely asking for the court to "change its mind." ECF 53-1, at 2. It also claims that the examples cited by State Farm all "included specific factual accusations" of fraud "over and above" the alleged statistical similarities, making them unlike this case. Id. at 6.[2]

         State Farm has failed to show that this court committed a clear error of law justifying reconsideration. Rather, State Farm disagrees with how this court applied Nathan and other Fourth Circuit precedent. This is not enough to justify the "extraordinary remedy" of reconsideration after judgment. Additionally, State Farm cites to examples of federal courts rejecting motions to dismiss fraud complaints; these opinions are from outside districts, are mostly unpublished, and many are several ...


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