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Government Employees Ins. Co. v. KJ Chiropractic Center LLC

United States District Court, M.D. Florida, Orlando Division

November 2, 2017

GOVERNMENT EMPLOYEES INSURANCE COMPANY, GEICO GENERAL INSURANCE COMPANY, GEICO CASUALTY COMPANY and GEICO INDEMNITY COMPANY, Plaintiffs,
v.
KJ CHIROPRACTIC CENTER LLC, WELLNESS PAIN & REHAB, INC., SADAT SMITH, ARTHUR VITO, ESDRAS PIERRE LOUIS, JEAN CASSAMAJOR, ROBERT COHEN, ORLENE JOSEPH, EDNER DESIR, ELAINE FELIX, VLADIMIR JEAN PIERRE, ROBERT THELUSMA, SHENIKA RICHARDSON, SHAYLA GAINES, CHANEL AKINS, QUEENA MCRAE, JEAN DORESTANT and BELLE MANAGEMENT, LLC, Defendants.

          ORDER

          DANIEL C. IRICK, UNITED STATES MAGISTRATE JUDGE

         Report and Recommendation

          This cause comes before the Court for consideration on the following motions:

MOTION: MOTION FOR DEFAULT JUDGMENT (Doc. 632)

FILED: April 6, 2017

THEREON it is RECOMMENDED that the motion be GRANTED in part.

MOTION: JOINT MOTION FOR ENTRY OF SEPARATE AND FINAL JUDGMENT (Doc. 656)

FILED: October 4, 2017

THEREON it is RECOMMENDED that the motion be GRANTED.

          I. PROCEDURAL BACKGROUND

         On July 23, 2012, Plaintiffs filed a complaint against Defendants. Doc. 1. Plaintiffs filed an amended complaint on December 15, 2012. Doc. 112. On July 12, 2013, Plaintiffs filed a second amended complaint (the Operative Complaint) alleging ten causes of action against Defendants.[1] Doc. 187. Count 1 alleges a cause of action against Defendants Robert Cohen, Jean Cassamajor, Esdras Pierre Louis, Vladimir Jean Pierre for violations of 18 U.S.C. § 1962(c) resulting from their participation in the KJ Chiropractic Enterprise.[2] Id. at 113-15. Count 2 alleges a cause of action against Defendants Cohen, Cassamajor, Louis, Pierre, Shenika Richardson, Shayla Gaines, and Chanel Akins for violations of 18 U.S.C. § 1962(d) resulting from their participation in the KJ Chiropractic Enterprise. Id. at 116-17. Count 3 alleges a cause of action against Defendants Robert Thelusma, Elaine Felix, Edner Desir, Cassamajor, Louis, and Pierre for violations of 18 U.S.C. § 1962(c) resulting from their participation in the Wellness Enterprise.[3]Id. at 117-20. Count 4 alleges a cause of action against Defendants Thelusma, Felix, Desir, Cassamajor, Louis, and Pierre for violations of 18 U.S.C. § 1962(d) resulting from their participation in the Wellness Enterprise. Id. at 120-22. Count 5 alleges a cause of action against Defendants Cohen, Cassamajor, Louis, Pierre, Thelusma, Felix, and Desir for violations of 18 U.S.C. § 1962(c) resulting from their participation in an association-in-fact enterprise. Id. at 122- 26. Count 6 alleges a cause of action against all of the foregoing named Defendants (the Default Defendants) for violations of 18 U.S.C. § 1962(c) resulting from their participation in an association-in-fact enterprise. Id. at 126-27. Counts 7 and 8 allege causes of action against the Default Defendants for common law fraud and civil conspiracy, respectively. Id. at 127-33. Counts 9 and 10 allege causes of action against Defendants Cohen, Cassamajor, Louis, Pierre, Thelusma, Felix, and Desir for unfair and deceptive trade practices, and unjust enrichment, respectively. Id. at 133-38.

         Plaintiffs served the Default Defendants on the following dates:

. Robert Cohen - August 6, 2012 (Doc. 34)
. Jean Cassamajor - August 14, 2012 (Doc. 40)
. Esdras Pierre Louis - January 21, 2013 (Doc. 138)
. Vladimir Jean Pierre - August 13, 2012 (Doc. 31)
. Robert Thelusma[4]
. Elaine Felix - January 25, 2013 (Docs. 136; 143)
. Edner Desir - July 2, 2014 (Doc. 359)
. Shenika Richardson - August 13, 2012 (Doc. 30)
.Chanel Akins - August 13, 2012 (Doc. 32)
. Shayla Gaines - July 5, 2014 (Doc. 360)

         The Clerk subsequently entered default against the Default Defendants. See Docs. 51; 52; 53; 54; 60; 148; 153; 363; 364; 425.

         On April 6, 2017, Plaintiffs moved for default judgment (the Motion) against the Default Defendants as to Counts 1 through 10. Doc. 632. Defendant Thelusma filed a response in opposition to the Motion, but later withdrew his opposition. Docs. 639; 655. Then, on October 4, 2017, Plaintiffs and Defendant Thelusma filed a Joint Motion for Entry of Separate and Final Judgment (the Joint Motion). Doc. 656.

         II. ALLEGATIONS[5]

         Plaintiffs allege that Defendants were part of a comprehensive scheme that was comprised of numerous participants, including KJ Chiropractic and Wellness. Doc. 187. As the Court has previously explained, the scheme involved the recruitment of “‘runners' and other individuals to participate in staged automobile accidents, compensating participants who engaged in those staged automobile accidents, referring those participants to pre-selected clinics for treatment, submitting the automobile insurance claims to [Plaintiffs], and then receiving payment of the insurance benefits from [Plaintiffs].”[6] Doc. 495 at 1-2; see also Doc. 187 at 2-6. As part of the scheme, KJ Chiropractic and Wellness created false treatment records and bills for treatment allegedly rendered by KJ Chiropractic and Wellness. Doc. 187 at 2-6. KJ Chiropractic and Wellness then used the United States Mail to send these false documents to Plaintiffs. Id.; see also Doc. 187-1. As a result, between 2009 and 2012, Defendants fraudulently collected more than $1, 621, 225.43 from Plaintiffs. Docs. 187 at 2-6; 187-1; 187-2.

         With regard to the Default Defendants, Plaintiffs alleged the following: Defendant Cohen was a natural person residing in Florida. Doc. 187 at 8. Defendant Cohen worked as a chiropractor at KJ Chiropractic and assisted in controlling KJ Chiropractic's internal operations. Id. at 8, 12. Defendant Cohen agreed to enact a scheme to defraud Plaintiffs by soliciting chiropractic patients and staging accidents. Id. at 103. Defendant Cohen knew that KJ Chiropractic was rendering unnecessary and unlawful treatment, was allowing unlicensed individuals to administer treatment, and was causing false bills to be mailed to Plaintiffs, yet Defendant Cohen continued to work at KJ Chiropractic and allowed his name to be used on fraudulent medical records. Id. at 4, 15-16, 18-19, 103-04.

         Defendants Cassamajor, Louis, and Pierre were natural persons residing in Florida. Id. at 10. They were “runners” used to recruit third parties to participate in staged automobile accidents. Id. at 3, 51, 53-67, 103. They instructed the recruited claimants on how to obtain automobile insurance from Plaintiffs. Id. at 3. Once the recruited claimants had obtained automobile insurance, Defendants Cassamajor, Louis, and Pierre physically escorted the claimants to the location they had selected for the staged automobile accident and instructed the claimants on how to make the automobile accident appear real. Id. Defendants Cassamajor, Louis, and Pierre further instructed the claimants to “claim neck and/or back injuries so [that the claimants] could present, and profit from, false PIP, bodily injury and, in some cases, property damage claims.” Id. at 3, 52. Defendants Cassamajor, Louis, and Pierre then directed the Claimants to KJ Chiropractic and Wellness. Id. at 3, 14. KJ Chiropractic and Wellness paid money to Defendants Cassamajor, Louis, and Pierre for delivering the PIP claimants. Id. at 4, 14, 22. Defendants Cassamajor, Louis, and Pierre knew that KJ Chiropractic and Wellness were rendering unnecessary and unlawful treatment, was allowing unlicensed individuals to administer treatment, and was causing false bills to be mailed to Plaintiffs. Id. at 18-19, 29-30, 40, 53-67, 103-04. Defendant Louis confessed to his involvement in the scheme, and testified that Defendants Cassamajor and Pierre were also involved in the scheme. Id. at 56-67.

         Defendants Thelusma, Felix, and Desir were natural persons residing in Florida. Id. at 9. From 2010 through 2012, Defendants Thelusma, Felix, and Desir established, operated, and managed Wellness. Id. at 4, 9, 20-21. They worked together to defraud Plaintiffs by causing the creation of fraudulent medical records and bills. Id. at 22. Defendants Thelusma and Felix hired, trained, supervised, and paid the employees that worked at Wellness. Id. at 22-25. Defendants Thelusma, Felix, and Desir knew that the “runners” were staging automobile accidents in order to refer patients to Wellness, and caused money to be paid to the “runners.” Id. Defendants Thelusma, Felix, and Desir caused employees at Wellness to bill for treatments that patients had not received. Id. Defendants Thelusma, Felix, and Desir profited from Wellness' business operations. Id. Defendants Thelusma, Felix, and Desir knew that Wellness was rendering unnecessary and unlawful treatment, was allowing unlicensed individuals to administer treatment, and was causing false bills to be mailed to Plaintiffs. Id. at 29-30, 35, 103-04.

         Defendants Richardson, Akins, and Gaines were natural persons residing in Florida. Id. at 10. In exchange for payment, they each participated in staged automobile accidents and caused false medical records and bills to be mailed to Plaintiffs. Id. at 41-49, 54-56; see also Doc. 187-11. Defendants Richardson, Akins, and Gaines confessed to their involvement in the scheme. Id. at 44-49, 54-56.

         III. STANDARD OF REVIEW.

         The Federal Rules of Civil Procedure establish a two-step process for obtaining default judgment. First, when a party against whom a judgment for affirmative relief is sought fails to plead or otherwise defend as provided by the Federal Rules of Civil Procedure, and that fact is made to appear by affidavit or otherwise, the Clerk enters default. Fed.R.Civ.P. 55(a). Second, after obtaining clerk's default, the plaintiff must move for default judgment. Fed.R.Civ.P. 55(b). Before entering default judgment, the court must ensure that it has jurisdiction over the claims and parties, and that the well-pled factual allegations of the complaint, which are assumed to be true, adequately state a claim for which relief may be granted. See Nishimatsu Constr. Co. v. Houston Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975).[7]

         A complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). This standard does not require detailed factual allegations, but does demand “more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). Thus, the “complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Id. (quoting Twombly, 550 U.S. at 570). To state a plausible claim for relief, a plaintiff must go beyond merely pleading the “sheer possibility” of unlawful activity by a defendant and offer “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556). If a plaintiff fails to meet this pleading standard, then the plaintiff will not be entitled to default judgment.

         If the plaintiff is entitled to default judgment, then the court must consider whether the plaintiff is entitled to the relief requested in their motion for default judgment. If the plaintiff seeks damages, the plaintiff bears the burden of demonstrating entitlement to recover the amount of damages sought in the motion for default judgment. Wallace v. The Kiwi Grp., Inc., 247 F.R.D. 679, 681 (M.D. Fla. 2008). Unlike well-pled allegations of fact, allegations relating to the amount of damages are not admitted by virtue of default; rather, the court must determine both the amount and character of damages. Id. (citing Miller v. Paradise of Port Richey, Inc., 75 F.Supp.2d 1342, 1346 (M.D. Fla. 1999)). Therefore, even in the default judgment context, “[a] court has an obligation to assure that there is a legitimate basis for any damage award it enters[.]” Anheuser Busch, Inc. v. Philpot, 317 F.3d 1264, 1266 (11th Cir. 2003); see Adolph Coors Co. v. Movement Against Racism and the Klan, 777 F.2d 1538, 1544 (11th Cir. 1985) (explaining that damages may be awarded on default judgment only if the record adequately reflects a basis for an award of damages).

         Ordinarily, unless a plaintiff's claim against a defaulting defendant is for a liquidated sum or one capable of mathematical calculation, the law requires the district court to hold an evidentiary hearing to fix the amount of damages. See Adolph Coors, 777 F.2d at 1543-44 (11th Cir. 1985). However, no hearing is needed “when the district court already has a wealth of evidence from the party requesting the hearing, such that any additional evidence would be truly unnecessary to a fully informed determination of damages.” See S.E.C. v. Smyth, 420 F.3d 1225, 1232 n.13 (11th Cir. 2005); see also Wallace, 247 F.R.D. at 681 (“a hearing is not necessary if sufficient evidence is submitted to support the request for damages”). A plaintiff may use affidavits in an effort to quantify their damages claim. Adolph Coors, 777 F.2d at 1544.

         IV. DISCUSSION.

         A. Subject Matter Jurisdiction.

         Plaintiffs alleged federal causes of action arising under the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §§ 1961-68. Docs. 1; 112; 187. Accordingly, the Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1331. The Court has supplemental jurisdiction over Plaintiffs' state law claims pursuant to 28 U.S.C. § 1367(a).

         B. Personal Jurisdiction.

         The Court has personal jurisdiction over the Default Defendants because the Default Defendants resided in the state of Florida and the majority of the wrongful acts were carried out within Orange County, Florida. Doc. 187 at 7-10.

         C. ...


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