Government Employees Insurance Company v. Armengol
1:20-cv-06052
E.D.N.YJan 19, 2022Background
- GEICO sued Dr. Sonia Armengol and four related provider entities alleging they submitted thousands of fraudulent no-fault insurance claims for medically unnecessary services and misrepresented who performed services and entities' eligibility to be reimbursed.
- Defendants include Armengol (licensed in NY), an unincorporated sole practice, Armengol Medical, P.C. (NY), and two New Jersey professional corporations (Best Empire and Armen Medical) alleged not authorized to collect NY no-fault benefits.
- All four Defaulting Defendants were properly served but did not appear; the Clerk entered defaults and GEICO moved for default judgment on claims for common-law fraud, unjust enrichment, and declaratory relief.
- GEICO produced detailed claim charts and payment records showing it paid $625,196.38 to the defendants and sought a declaratory judgment barring payment on about $1.428M in pending claims.
- The magistrate judge recommended: liability on GEICO's common-law fraud claim; award of $625,196.38 in compensatory damages allocated to each defendant (with Armengol jointly and severally liable with each entity she owned); prejudgment interest at 9% calculated from the first day of the year after payments; denial of unjust enrichment (duplicative) and denial of declaratory relief for insufficient information.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Entry of default judgment | Defendants wilfully failed to appear despite proper service; Rule 55 permits default judgment | No response or defense from defendants | Default judgment appropriate; all three Enron/Pecarsky factors met (willfulness, no meritorious defense, prejudice to GEICO) |
| Sufficiency of fraud claim / Rule 9(b) | Detailed claims charts identify specific fraudulent claim submissions, dates, speakers, amounts; alleged scienter, reliance, and damages | No response | Fraud pleadings satisfy Rule 9(b); liability entered on common-law fraud claim |
| Unjust enrichment claim viability | GEICO seeks recovery as unjustly enriched from same transactions | No response | Unjust enrichment dismissed as duplicative of established tort (Corsello principle) |
| Joint and several liability among defendants | GEICO seeks joint and several liability across defendants | No response | Armengol is jointly and severally liable with each entity she operated; provider entities only liable for the specific payments they received; no broader joint and several liability among providers absent indivisible harm |
| Damages and prejudgment interest | GEICO seeks $625,196.38 (payments made) plus prejudgment interest (9%) calculated by grouping claims by year | No response | Award of $625,196.38; prejudgment interest at 9% per year awarded, computed from first day of year following payment per tables; declaratory relief denied for lack of detailed evidence about pending collection suits |
Key Cases Cited
- State Farm Mut. Auto. Ins. Co. v. Mallela, 4 N.Y.3d 313 (N.Y. 2005) (providers noncompliant with licensing rules ineligible for no-fault benefits)
- Corsello v. Verizon N.Y., Inc., 18 N.Y.3d 777 (N.Y. 2012) (unjust enrichment unavailable where it duplicates tort or contract claims)
- Au Bon Pain Corp. v. Artect, Inc., 653 F.2d 61 (2d Cir. 1981) (court must determine sufficiency of complaint even after default)
- Enron Oil Corp. v. Diakuhara, 10 F.3d 90 (2d Cir. 1993) (factors for setting aside default inform entry of default judgment)
- Pecarsky v. Galaxiworld.com, Ltd., 249 F.3d 167 (2d Cir. 2001) (application of default-judgment standards)
- Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155 (2d Cir. 1992) (default admits liability but not damages)
- Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105 (2d Cir. 1997) (court must ascertain damages with reasonable certainty)
- Fustok v. ContiCommodity Servs., Inc., 873 F.2d 38 (2d Cir. 1989) (damages hearing not required if record supports award)
- Action S.A. v. Marc Rich & Co., Inc., 951 F.2d 504 (2d Cir. 1991) (court may rely on affidavits and documentary evidence to fix damages)
- Allstate Ins. Co. v. Lyons, 843 F. Supp. 2d 358 (E.D.N.Y. 2012) (detailed claim charts can satisfy Rule 9(b) for billing fraud claims)