Allstate Insurance Company v. A & F Medical P.C.
1:14-cv-06756
E.D.N.YMay 30, 2017Background
- Allstate sued numerous medical providers, including Art of Healing Medicine, P.C. and Drs. Alexander and Svetlana Pinkusovich (AOH defendants), alleging a RICO-based scheme submitting fraudulent no-fault insurance claims for VsNCT testing billed under CPT 95904.
- The AOH defendants filed a separate RICO action against Allstate alleging Allstate fraudulently induced payment of VsNCT claims and later sued providers to recover payments; that action is stayed pending resolution of Allstate’s suit.
- AOH moved to disqualify Allstate’s counsel (formerly Stern & Montana and successor counsel) on four grounds: (1) counsel sought to alter a deposition transcript (Trump -> tramp), (2) Stern & Montana previously represented Allstate in collections (advice-of-counsel conflict), (3) the firm served as advisor/originator of Allstate’s fraud-prevention plan (material witness), and (4) counsel’s statements about when Allstate discovered the fraud created an appearance of impropriety.
- The record includes a hearsay affidavit from Dr. Pinkusovich reporting his former counsel told him of a recorded conversation; Allstate agreed to change the disputed transcript wording and Stern & Montana ceased operations in Dec. 2016; successor firms now represent Allstate.
- Magistrate Judge Roanne L. Mann denied the disqualification motion, concluding AOH failed to meet the heavy burdens for disqualification under the witness-advocate rule, imputation doctrine, or based on appearance of impropriety.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether counsel should be disqualified as witness-advocate for allegedly directing a transcript change | Stern & Montana’s participation is not as trial advocate likely to testify; any testimony not necessary and plaintiffs consented to transcript change | Ms. Pass tried to alter transcript (Trump → tramp); her testimony is necessary and prejudicial, warranting disqualification | Denied — AOH failed to show counsel’s testimony is necessary or would be prejudicial; remedy lies with disciplinary process; transcript change consented. |
| Whether imputation disqualifies firm due to prior collections representation (advice-of-counsel conflict) | No advice-of-counsel defense is at issue in the pending Allstate suit; Stern & Montana no longer represents Allstate | Prior collections representation creates a conflict and possible adverse testimony in AOH’s suit | Denied — speculative conflict; Stern & Montana ceased practicing for Allstate and no clear present advice-of-counsel issue. |
| Whether Stern & Montana are material witnesses as originators/advisors of Allstate’s fraud-prevention plan | Plaintiffs deny firm advised on fraud-prevention; even if so, testimony from those lawyers is speculative and not shown necessary | The firm advertised fraud-prevention services and thus likely to be called as witnesses about Allstate’s scheme | Denied — AOH produced no concrete evidence the firm advised Allstate or that testimony would be necessary at trial. |
| Whether counsel’s statements about discovery date create appearance of impropriety warranting disqualification | Plaintiffs’ discovery-date statements were accurate: they learned of misconduct in March 2011; appearance alone insufficient | Counsel’s inconsistent statements contradict AOH’s timeline and create impropriety warranting disqualification | Denied — statements consistent with record; appearance of impropriety alone does not warrant disqualification in Second Circuit. |
Key Cases Cited
- Murray v. Metropolitan Life Ins. Co., 583 F.3d 173 (2d Cir. 2009) (motions to disqualify under witness-advocate rule require strict scrutiny and clear showing of prejudice)
- Lamborn v. Dittmer, 873 F.2d 522 (2d Cir. 1989) (movant bears burden to demonstrate how and on what issues prejudice may occur)
- Purgess v. Sharrock, 33 F.3d 134 (2d Cir. 1994) (disqualification required only when testimony by counsel is necessary)
- Evans v. Artek Sys. Corp., 715 F.2d 788 (2d Cir. 1983) (disqualification motions disfavored because they impinge on client's right to choose counsel)
- Bottaro v. Hatton Assocs., 680 F.2d 895 (2d Cir. 1982) (when trial taint is absent, unethical conduct is addressed by disciplinary authorities rather than disqualification)
- Bobal v. Rensselaer Polytechnic Institute, 916 F.2d 759 (2d Cir. 1990) (disqualification appropriate where conflict undermines confidence in client representation)