Aetna Inc. v. Kraidy et al

First MOTION to Dismiss for Lack of Jurisdiction , First MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM

E.D. Pa.May 30, 2017

IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA AETNA INC. Plaintiff, v. ABDUL KRAIDY, M.D., KRAIDY & ALKAFFAF LLC, IBTISAM AL- KAFFAF, Defendants. Civil Action No. 17-2221 DEFENDANTS’ MOTION TO DISMISS THE COMPLAINT Defendants Abdul Kraidy, M.D., Kraidy & Alkaffaf LLC, and Ibtisam Al-Kaffaf, hereby move to dismiss Plaintiff’s Complaint pursuant to Federal Rule of Civil Procedure 12(b)(2) and Federal Rules of Civil Procedure 9(b) and 12(b)(6). As stated in the accompanying Memorandum of Law, the Complaint should be dismissed for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2). In addition, the Complaint should be dismissed for failure to state a claim pursuant to Federal Rules of Civil Procedure 9(b) and 12(b)(6). Defendants respectfully request oral argument. Dated: May 30, 2017 Respectfully submitted, /s/ Jesse Klaproth Jesse C. Klaproth (PA ID 312761) KLAPROTH LAW PLLC 1500 Walnut Street, Suite 816 Philadelphia, PA 19102 jklaproth@klaprothlaw.com 215.644.7463 Attorneys for Defendants Case 2:17-cv-02221-LDD Document 4 Filed 05/30/17 Page 1 of 2 CERTIFICATE OF SERVICE I hereby certify that on May 30, 2017, I served a true and correct copy of the foregoing document to all counsel of record by electronic court filing. /s/ Jesse Klaproth Jesse C. Klaproth Case 2:17-cv-02221-LDD Document 4 Filed 05/30/17 Page 2 of 2 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA AETNA INC. Plaintiff, v. ABDUL KRAIDY, M.D., KRAIDY & ALKAFFAF LLC, IBTISAM AL- KAFFAF, Defendants. Civil Action No. 17-2221 MEMORANDUM OF LAW IN SUPPORT OF DEFENDANTS’ MOTION TO DISMISS THE COMPLAINT Case 2:17-cv-02221-LDD Document 4-1 Filed 05/30/17 Page 1 of 19 i TABLE OF CONTENTS I. PRELIMINARY STATEMENT ................................................................................. 1 II. FACTUAL ALLEGATIONS IN THE COMPLAINT ............................................... 2 III. ARGUMENT .............................................................................................................. 3 A. The Court Lacks Personal Jurisdiction Over Defendants – Rule 12(b)(2) .......... 3 1. The Court Lacks General Jurisdiction Over Defendants ............................ 4 2. The Court Lacks Specific Jurisdiction Over Defendants ............................ 6 B. Aetna’s Claims Lack the Particularity Required under Rule 9(b) (Counts 1-4, 6-9) .................................................................................................. 9 C. Aetna Has Failed to State a Claim for Negligence Per Se Under Rule 12(b)(6) (Count 5) ..................................................................................... 11 IV. Conclusion ................................................................................................................. 14 Case 2:17-cv-02221-LDD Document 4-1 Filed 05/30/17 Page 2 of 19 ii TABLE OF AUTHORITIES Cases Allied Med. Assocs. v. State Farm Mut. Auto. Ins. Co., No. 08-2434, 2009 WL 1066932 (E.D. Pa. Apr. 16, 2009)....................................... 10,11 Ashcroft v. Iqbal, 556 U.S. 662 (2009) ....................................................................................................... 11 Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) .................................................................................................. 10,11 Boyanowski v. Capital Area Intermediate Unit, 215 F.3d 396 (3d Cir. 2000) .............................................................................................9 Daimler AG v. Bauman, 134 S.Ct. 746 (2014) .....................................................................................................5,6 Frederico v. Home Depot, 507 F.3d 188 (3d Cir. 2007) .............................................................................................9 Gen. Elec. Co. v. Deutz AG, 270 F.3d 144 (3d Cir. 2001) .............................................................................................4 Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011) ......................................................................................................4,6 Hanover Ins. Co. v. Ryan, 619 F. Supp. 2d 127 (E.D. Pa. 2007) ...............................................................................9 Helicopteros Nacionales v. Hall, 466 U.S. 408 (1984) .........................................................................................................5 Institutional Inv'rs Grp. v. Avaya, Inc., 564 F.3d 242 (3d Cir. 2009) .............................................................................................9 Int'l Shoe Co. v. State of Wash., Office of Unemployment Comp. & Placement, 326 U.S. 310 (1945) ......................................................................................................4,5 McLaughlin v. Bayer Corp., 172 F. Supp. 3d 804 (E.D. Pa. 2016) ...............................................................................9 Mest v. Cabot Corp., 449 F.3d 502 (3d Cir. 2006) ...........................................................................................12 Molnlycke Health Care AB v. Dumex Med. Surgical Prod. Ltd., 64 F. Supp. 2d 448 (E.D. Pa. 1999) .................................................................................5 Case 2:17-cv-02221-LDD Document 4-1 Filed 05/30/17 Page 3 of 19 iii Nace v. Pennridge Sch. Dist., 185 F. Supp. 3d 564 (E.D. Pa. 2016) .............................................................................13 Numeric Analytics, LLC v. McCabe, 161 F. Supp. 3d 348 (E.D. Pa. 2016) ...............................................................................7 O'Connor v. Sandy Lane Hotel Co., 496 F.3d 312 (3d Cir. 2007) .......................................................................................4,7,8 Pennzoil Products Co. v. Colelli & Associates, Inc., 149 F.3d 197 (3d Cir. 1998) .............................................................................................4 World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286 (1980) .........................................................................................................5 Zambelli Fireworks Mfg. Co. v. Wood, 592 F.3d 412 (3d Cir. 2010) .............................................................................................6 Statutes Va. Code Ann. §54.1-2962.01 ....................................................................................... 11,13 Va. Code Ann. §54.1-2929-2930........................................................................................13 42 Pa.C.S. § 5301(a)(1)........................................................................................................5 63 P.S. §426.1………………………………………………………………………...11,12 Rules Federal Rules of Civil Procedure 9(b) .................................................................... 1,9,10,11 Federal Rules of Civil Procedure 12(b)(2)........................................................................1,3 Federal Rules of Civil Procedure 12(b)(6)................................................................. 1,10,11 Case 2:17-cv-02221-LDD Document 4-1 Filed 05/30/17 Page 4 of 19 1 Defendants Abdul Kraidy, M.D. (“Dr. Kraidy”), Kraidy & Alkaffaf LLC (“K&A”), and Ibtisam Al-Kaffaf (“Mrs. Al-Kaffaf”) (collectively “Defendants”) respectfully submit this Memorandum of Law in Support of Their Motion to Dismiss Plaintiff Aetna Inc.’s (“Aetna”) Complaint pursuant to Federal Rule of Civil Procedure 12(b)(2) and Federal Rules of Civil Procedure 9(b) and 12(b)(6). I. PRELIMINARY STATEMENT Aetna’s lawsuit in Pennsylvania must be dismissed for lack of personal jurisdiction. Dr. Kraidy and his wife Mrs. Al-Kaffaf are citizens of Virginia, and Dr. Kraidy’s medical office (K&A) is a Virginia Limited Liability Company, which has two Virginia citizens for its members – Dr. Kraidy and Mrs. Al-Kaffaf. Aetna’s claims arise out medical treatment that occurred in Virginia by Virginia residents that were submitted for reimbursement outside of Pennsylvania. Defendants and this lawsuit lack the minimum contacts necessary to support jurisdiction in Pennsylvania or this District Court. Accordingly, the Complaint must be dismissed pursuant to Federal Rule of Civil Procedure 12(b)(2). In addition, should the Court find that it has personal jurisdiction over Defendants, Aetna’s claims arising out of Defendants’ purported fraud lack the required particularity under Federal Rule of Civil Procedure 9(b) and must be dismissed for that reason. The remaining claim for negligence per se also fails to state a claim for which relief can be granted and must therefore be dismissed under Federal Rule of Civil Procedure 12(b)(6). Case 2:17-cv-02221-LDD Document 4-1 Filed 05/30/17 Page 5 of 19 2 II. FACTUAL ALLEGATIONS IN THE COMPLAINT Aetna is a health insurer, incorporated in Pennsylvania with its principal place of business in Hartford, Connecticut. ¶5.1 Aetna provides health insurance through employer group plans and self-funded benefits plans. ¶11. Aetna provides health insurance benefits to both “participating” or “in-network” medical providers and to “out-of-network” medical providers. ¶¶12-14. In-network providers have “entered into contracts with Aetna to render medical care to members in exchange for fees paid at negotiated rates.” ¶12. Dr. Kraidy is a medical doctor, who resides in the Commonwealth of Virginia and runs K&A, a medical office also located in Virginia. ¶¶6-8. K&A is a limited liability company organized and existing under the laws of the Commonwealth of Virginia and is owned by two members – Dr. Kraidy and his wife Mrs. Al-Kaffaf. ¶¶6-8. Dr. Kraidy and K&A are not part of Aetna’s network, but provided out-of- network medical services to Aetna members. ¶¶15-16. K&A submitted claims for reimbursement to Aetna for such services, listing Dr. Kraidy as the medical provider for those services. ¶18. Defendants allegedly entered into a “secret agreement with a third party laboratory” to provide laboratory services to Aetna members. ¶23. As part of that purported “secret agreement,” Defendants paid the unnamed “Lab” directly for its services to Aetna members and then Defendants would submit claims for payment to Aetna at “drastically inflated rates that were many times higher than the rates it had paid 1 Unless otherwise defined herein: (i) all references to “¶ __” are to paragraphs in the Complaint (ECF No. 1-4); and (ii) all internal citations and quotation marks are omitted and all emphasis is added herein unless otherwise noted. Case 2:17-cv-02221-LDD Document 4-1 Filed 05/30/17 Page 6 of 19 3 to the Lab.” ¶¶25-27. Aetna claims that “it is believed, and therefore averred, that each had knowledge of and at least tacitly agreed to this secret agreement.” ¶24. At some point, “Aetna discovered this scheme and determined that Defendants had been paid over $1 million for laboratory services they did not actually provide to Aetna members.” ¶31. Aetna further alleges that Dr. Kraidy and his wife “transfer[ed], conceal[ed], or otherwise abscond[ed] with the fraudulent and illegally obtained funds…through improper and illusory loans, membership distributions and the like.” ¶36. The Complaint does not identify the third party laboratory, does not identify the dates, times, or amounts of the alleged fraudulent billings or the date on which Aetna became aware of the purported fraudulent billings. The Complaint fails to identify the value of the services performed by the third party laboratory or state the delta between the amounts purportedly paid by Defendants to the laboratory and the amounts billed by Defendants to Aetna. The Complaint does not allege that any of the services were performed in Pennsylvania or that the purportedly fraudulent billing statements were sent to or paid from Pennsylvania. III. ARGUMENT A. The Court Lacks Personal Jurisdiction Over Defendants – Rule 12(b)(2) Defendants are not residents of Pennsylvania. Dr. Kraidy and his wife, Mrs. Al- Kaffaf reside in the Commonwealth of Virginia. Likewise, K&A is a Virginia LLC with two members – Dr. Kraidy and his wife – both of whom are residents of the Commonwealth of Virginia. The only allegation in the Complaint that even attempts to tie this lawsuit to Pennsylvania is a single, conclusory statement that “some of the Case 2:17-cv-02221-LDD Document 4-1 Filed 05/30/17 Page 7 of 19 4 transactions and occurrences from which this cause of action arose took place in Montgomery County.” ¶10. There are no factual allegations to support that bare assertion. This Court may exercise personal jurisdiction over a non-resident defendant to the extent permitted under Pennsylvania law. Pennzoil Products Co. v. Colelli & Associates, Inc., 149 F.3d 197, 200 (3d Cir. 1998). The Third Circuit has recognized that Pennsylvania law, through its long-arm statute, “permits Pennsylvania courts to exercise personal jurisdiction over non-resident defendants to the constitutional limits of the Due Process Clause of the Fourteenth Amendment.” Id. As such, this Court can exercise personal jurisdiction over Defendants, only if it comports with the constitutional requirements of the Due Process Clause, which requires that Defendants have “certain minimum contact with Pennsylvania such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.” O'Connor v. Sandy Lane Hotel Co., 496 F.3d 312, 316 (3d Cir. 2007) (citing Int'l Shoe Co. v. State of Wash., Office of Unemployment Comp. & Placement, 326 U.S. 310, 316 (1945)). There are two methods to exercise personal jurisdiction over Defendants – general personal jurisdiction and specific personal jurisdiction. Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011); O’Connor, 496 F.3d at 317. Neither method applies to Defendants here. Once personal jurisdiction is challenged, the burden shifts to Aetna to establish personal jurisdiction. Gen. Elec. Co. v. Deutz AG, 270 F.3d 144, 150 (3d Cir. 2001). 1. The Court Lacks General Jurisdiction Over Defendants General jurisdiction is based “on a defendant’s relationship to the forum” – in this case Pennsylvania – rather than a defendant’s “particular contacts with the plaintiff.” Case 2:17-cv-02221-LDD Document 4-1 Filed 05/30/17 Page 8 of 19 5 Molnlycke Health Care AB v. Dumex Med. Surgical Prod. Ltd., 64 F. Supp. 2d 448, 450 (E.D. Pa. 1999). Under Pennsylvania law, an individual defendant, such as Dr. Kraidy and his wife, is only subject to general personal jurisdiction if they are (i) served in Pennsylvania; (ii) domiciled in Pennsylvania at the time process is served; or (iii) consent to jurisdiction in Pennsylvania. 42 Pa.C.S. § 5301(a)(1). Defendants were not served in Pennsylvania (they were served in Virginia by certified mail); they did not reside in Pennsylvania at the time of service; nor did they consent to jurisdiction in Pennsylvania. Thus, Pennsylvania law does not permit this Court to exercise general personal jurisdiction over Dr. Kraidy or Mrs. Al-Kaffaf. The same holds true for the Due Process Clause of the Constitution, which requires “continuous and substantial forum affiliations” such that a defendant “must reasonably anticipate being haled into court” and requires “more than mere minimum contacts to establish general jurisdiction.” Molnlycke Health Care, 64 F.Supp.2d at 450.2 “A court may assert general jurisdiction over [a non-resident defendant] to hear any and all claims against them when their affiliations with the State are so continuous and systematic as to render them essentially at home in the forum State.” Goodyear, 564 U.S. at 919. The focus of the inquiry “is whether that [non-resident defendant’s] affiliations with the State are so continuous and systematic as to render [it] essentially at home in the forum State.” Daimler AG v. Bauman, 134 S.Ct. 746, 761 (2014). The Complaint lacks any allegations that Dr. Kraidy or his wife had such continuous and substantial contacts with Pennsylvania that they could anticipate being 2 Citing, inter alia: International Shoe, Helicopteros Nacionales v. Hall, 466 U.S. 408, 414-16 (1984); World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980). Case 2:17-cv-02221-LDD Document 4-1 Filed 05/30/17 Page 9 of 19 6 haled into court here or that either individual has had such continuous and systematic contacts with Pennsylvania that they are essentially at home here. Indeed, there are no allegations connecting either of the individual defendants to Pennsylvania, so this Court cannot exercise general personal jurisdiction over either Dr. Kraidy or Mrs. Al-Kaffaf. For a limited liability company such as K&A, general personal jurisdiction may only be exercised under Pennsylvania law where it is (i) “incorporated under” or qualified “as a foreign corporation” in Pennsylvania; (ii) consents to jurisdiction; or (iii) carries on “continuous and systematic part of its general business within” Pennsylvania. Id. at §5301(a)(3). An LLC’s citizenship is based upon the citizenship of its members, which in this case is Virginia. See Zambelli Fireworks Mfg. Co. v. Wood, 592 F.3d 412, 420 (3d Cir. 2010). So, the only avenue left is to analyze whether K&A conducts continuous and systematic part of its business in Pennsylvania to render it essentially at home in Pennsylvania. Id. at §5301(a)(3)(iii); Daimler, 134 S.Ct. at 761. Again, there are no factual allegations in the Complaint that would allow this Court to find or exercise general personal jurisdiction over K&A, such that it could be sued in Pennsylvania at any time for any reason. 2. The Court Lacks Specific Jurisdiction Over Defendants Specific personal jurisdiction is based upon “activity or an occurrence that takes place in the forum State and is therefore subject to the State's regulation.” Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. at 919. Where general personal jurisdiction allows a Court to exercise jurisdiction over a non-resident defendant regardless of the issues in the case, specific personal jurisdiction “deriv[es] from, or connected with, the very controversy that establishes jurisdiction.” Id. Case 2:17-cv-02221-LDD Document 4-1 Filed 05/30/17 Page 10 of 19 7 Specific personal jurisdiction requires that: (1) a non-resident defendant “purposefully direct its activities at the forum;” that the (2) litigation “arises out of or relates to at least one of those activities;” and (3) that “if the prior two requirements are met, a court may consider whether the exercise of jurisdiction otherwise comport[s] with fair play and substantial justice.” Numeric Analytics, LLC v. McCabe, 161 F. Supp. 3d 348, 354 (E.D. Pa. 2016). For the first two requirements, “what is necessary is a deliberate targeting of the forum.” O'Connor, 496 F.3d at 317. Importantly, “contacts with a state's citizens that take place outside the state are not purposeful contacts with the state itself.” Id. Here, there are no allegations in the Complaint establishing that any of the Defendants directly targeted Pennsylvania for the purported scheme. There are no allegations that the unnamed “third party laboratory” in the Complaint was based in Pennsylvania or that the patients sent to the Lab were Pennsylvania citizens or that Defendants sent claims for reimbursement to Pennsylvania. This Court cannot exercise jurisdiction simply because Aetna is incorporated in Pennsylvania; Defendants contact with Aetna outside of Pennsylvania cannot establish the requisite contacts for personal jurisdiction in this Court. Id. That would result in this Court being able to exercise personal jurisdiction over every out-of-network medical provider in the country who submits a claim for reimbursement to Aetna – even where the claim is submitted to a state other than Pennsylvania. In addition, even if this Court found that the first two requirements for specific personal jurisdiction were satisfied, the third requirement of fair play and substantial justice cannot be met. The third requirement is based on the reasonableness of the Case 2:17-cv-02221-LDD Document 4-1 Filed 05/30/17 Page 11 of 19 8 Court’s exercise of jurisdiction, even where there exists sufficient contacts with the forum. See id. at 324. The factors that this Court should consider are “the burden on the defendant, the forum State's interest in adjudicating the dispute, the plaintiff's interest in obtaining convenient and effective relief, the interstate [and international] judicial system's interest in obtaining the most efficient resolution of controversies.” Id. Here, those factors weigh heavily against this Court exercising personal jurisdiction. First, the burden on the individual Defendants, both of whom are Virginia residents is substantial. They will have to travel 318 miles roundtrip to attend depositions and court appearances or to meet with their counsel in this District. Second, the other potential witnesses, including the unnamed third-party laboratory and patients are all located in Virginia.3 Third, assuming arguendo that Aetna’s allegations are true, Virginia has a stronger interest in resolving this controversy and applying its laws to the alleged conduct at issue. Pennsylvania has no interest in this case as the underlying alleged acts occurred in Virginia. In addition, because “it is not at all clear that Pennsylvania law will apply to the merits,” it is unreasonable for this Court to exercise personal jurisdiction even if minimum contacts can be found. O'Connor, 496 F.3d at 325 (finding the exercise of personal jurisdiction unreasonable, despite minimum contacts). The Court must dismiss this action with prejudice for lack of personal jurisdiction. 3 The unnamed Lab may also be an indispensable party over whom this Court will also likely lack personal jurisdiction. If that is the case, Defendants will be unable to join the Lab to this action, resulting in inefficient, piecemeal litigation in two separate jurisdictions. Case 2:17-cv-02221-LDD Document 4-1 Filed 05/30/17 Page 12 of 19 9 B. Aetna’s Claims Lack the Particularity Required under Rule 9(b) (Counts 1-4, 6-9) Aetna’s Complaint contains six counts based on fraud: Count One (common law fraud); Count Two (Pennsylvania Insurance Fraud), Count Three (aiding and abetting insurance fraud), Count Four (negligent misrepresentation);4 Count VII (civil conspiracy);5 and Count Nine (fraudulent transfer). To adequately state a claim for fraud under the Federal Rules of Civil Procedure, Aetna “must state with particularity the circumstances constituting fraud or mistake.” FED. R. CIV. P. 9(b). To satisfy the requirement of Rule 9(b), Aetna “must state the circumstances of the alleged fraud with sufficient particularity to place the defendant on notice of the “precise misconduct with which [it is] charged.” Frederico v. Home Depot, 507 F.3d 188, 200 (3d Cir. 2007). To do so, Aetna must “plead or allege the date, time and place of the alleged fraud or otherwise inject precision or some measure of substantiation into a fraud allegation.” Id. Rule 9(b) “requires plaintiffs to plead the who, what, when, where and how” of the fraudulent activity. Institutional Inv'rs Grp. v. Avaya, Inc., 564 F.3d 242, 253 (3d Cir. 2009). 4 Because Aetna’s common law fraud and negligent misrepresentation are based on the same purported fraudulent reimbursement claims, the Court should apply Rule 9(b) to Aetna’s negligent misrepresentation claim as well. Hanover Ins. Co. v. Ryan, 619 F. Supp. 2d 127, 142 (E.D. Pa. 2007) (“[T]he particularity requirement of Rule 9(b) applies to claims of negligent misrepresentation.”); but cf. McLaughlin v. Bayer Corp., 172 F. Supp. 3d 804, 829 (E.D. Pa. 2016) (recognizing disagreement within this District on the issue). 5 Where a claim for fraud is the “underpinning for [a] civil conspiracy claim”, the dismissal of the claim for fraud must result in the dismissal of the civil conspiracy claim. Boyanowski v. Capital Area Intermediate Unit, 215 F.3d 396, 406-07 (3d Cir. 2000). Case 2:17-cv-02221-LDD Document 4-1 Filed 05/30/17 Page 13 of 19 10 There is none of the precision required by Rule 9(b) in the Complaint. Aetna alleges that Defendants entered into a “secret agreement” with an unnamed “third party laboratory” designed to submit inflated claims to Aetna, which Aetna paid. What were the claims for? When were they submitted? For how much were they submitted? To whom (which Aetna location) were they submitted? How much were the claims inflated over the actual cost of the services? What were the terms of the secret agreement? What is the identity of the unnamed third party laboratory? When did Aetna uncover the fraud? None of these questions are answered or even inferred by the Complaint.6 Aetna’s complaint fails to put Defendants “on notice of the precise misconduct with which [they are] charged.” Id. at 201.7 In addition, although not considered “fraud claims”, Aetna’s claims for conversion (Count Six) and unjust enrichment (Count Eight) are also based on either the same purported fraudulent conduct supporting the fraud claims or are based on a mistake of fact. The Complaint alleges that Aetna should not have, but mistakenly did, pay Defendants for services that Defendants did not perform. Rule 9(b) applies to both allegations of fraud and allegations of mistake. Allied, No. CIV.A. 08-2434, 2009 WL 6 In a case involving similar claims, this Court held that the plaintiff’s averment must, at least, “identify both the reimbursement request at issue (i.e. the specific billing code) and the alleged fraudulent nature of that request” to satisfy the requirements of Rule 9(b). Allied Med. Assocs. v. State Farm Mut. Auto. Ins. Co., No. 08-2434, 2009 WL 1066932, at *4 (E.D. Pa. Apr. 16, 2009) (“Allied”). Aetna’s Complaint contains no such averments. 7 This failure is even more apparent in Count Nine, which claims “upon information and belief” that Defendants made fraudulent transfers of funds. Pleading “upon information and belief” cannot satisfy Rule 9(b) or the requirements under FED. R. CIV. P. 12(b)(6), that requires a complaint to assert enough or sufficient facts to raise a right to relief above the speculative level. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007). Case 2:17-cv-02221-LDD Document 4-1 Filed 05/30/17 Page 14 of 19 11 1066932, at *7 (holding that Rule 9(b) applies to insurer’s unjust enrichment claim based on a fraudulent claim for reimbursement). As in Allied, Aetna’s claims for unjust enrichment and conversion are based on the purported fraudulent misrepresentations by Defendants and Aetna’s mistake in paying claims based on those purported misrepresentations. Thus, this Court should dismiss Counts Six and Eight as well for failing to meet the heightened pleading standard of Rule 9(b). C. Aetna Has Failed to State a Claim for Negligence Per Se Under Rule 12(b)(6) (Count 5) To survive a motion to dismiss under FED. R. CIV. P. 12(b)(6), a complaint must state enough facts to state a claim for relief that is plausible on its face. Twombly, 550 U.S. at 570. A complaint “that offers labels and conclusion or a formulaic recitation of the elements of a cause of action will not do.” Ashcroft v. Iqbal, 556 U.S. 662, 678, (2009). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. The legal conclusions contained in a complaint “must be supported by factual allegations.” And, those factual allegations cannot be mere “naked assertions devoid of further factual enhancement.” Id. Rather, a plaintiff must “alleged more by way of factual content to nudg[e] his claim of unlawful action across the line from conceivable to plausible.” Id. at 683. Aetna’s negligence per se claim fails to state a claim upon which relief can be granted. In Count V of its Complaint, Aetna alleges that Defendants’ claims for reimbursement violated Pennsylvania law under 63 P.S. §426.1, et seq. and Virginia law under Va. Code Ann. §54.1-2962.01. ¶¶73-74. To state a claim for negligence per se, Aetna must demonstrate that: Case 2:17-cv-02221-LDD Document 4-1 Filed 05/30/17 Page 15 of 19 12 1) the statute or regulation clearly applies to the conduct of the defendant; 2) the defendant violated the statute or regulation; 3) the violation of the statute proximately caused the plaintiff's injuries; and 4) the statute's purpose is, at least in part, to protect the interest of the plaintiff individually, as opposed to the public. Mest v. Cabot Corp., 449 F.3d 502, 518 (3d Cir. 2006). The Pennsylvania statute cited by Aetna requires that: A physician, or any physician group practice, who orders but who does not supervise or perform a component of an anatomic pathology service shall disclose in a bill for the service presented to a patient, insurer or other third-party payor: (1) The name and address of the health care provider or laboratory that provided the anatomic pathology service. (2) The amount paid or to be paid for each anatomic pathology service provided to the patient by the health care provider or laboratory that performed the service. 63 P.S. § 426.3. “Physician” is defined under the statute as “An individual licensed under the laws of this Commonwealth to practice medicine and surgery.” Id. at §426.2. Dr. Kraidy is the only physician named as a defendant and he does not meet the definition of “physician” under the Pennsylvania statute. Accordingly, Aetna cannot meet the first two requirements for a claim of negligence per se, as the Pennsylvania statute does not apply to the conduct of Defendants, thus Defendants could not have violated that statute. The Virginia statute cited by Aetna provides: A. No practitioner licensed in accordance with the provisions of this chapter shall charge a fee for anatomic pathology services that is greater than the amount billed to the practitioner for the actual performance of such anatomic Case 2:17-cv-02221-LDD Document 4-1 Filed 05/30/17 Page 16 of 19 13 pathology services when such services are (i) performed by a person other than the practitioner or (ii) performed by a person not under the supervision of the practitioner. B. A practitioner may charge a fee for specimen collection and transportation, provided the fee conforms to the current procedural terminology codes for procedures and services of the American Medical Association and the patient is made aware of the fee in writing prior to collection. For the purposes of this section, “anatomic pathology services” include the gross or microscopic examination and histological processing of human organ tissue; the examination of human cells from fluids, aspirates, washings, brushings, or smears; or other subcellular or molecular pathology services. Va. Code Ann. § 54.1-2962.01. Again, the only Defendant here who could be considered a “practitioner” under this statute is Dr. Kraidy. Va. Code Ann. §54.1-2929-2930. The Complaint lacks any allegation that the services performed by the unnamed third party laboratory were not performed “under the supervision of” Dr. Kraidy, which is an exception to the general prohibition of the statute. Moreover, while the Complaint generally alleges that the claims submitted by Defendants were inflated above the costs charged by the unnamed third party laboratory, the Complaint fails to allege how those claims were inflated. Further, Aetna’s claim does not satisfy the fourth element for a claim of negligence per se because the Virginia statute was designed to protect patients and insurers generally from inflated costs for laboratory services. A statutory violation can only support a claim for negligence per se when “the intent of the statute was, at least in part, to protect the interest of the plaintiff individually, as opposed to the public.” Nace v. Pennridge Sch. Dist., 185 F. Supp. 3d 564, 582 (E.D. Pa. 2016), app. dis.(Aug. 4, 2016). The Virginia statute is not designed to create a private cause of action for a single Case 2:17-cv-02221-LDD Document 4-1 Filed 05/30/17 Page 17 of 19 14 insurer, such as Aetna. It is designed to protect patients and insurers generally from inflated costs by regulating and overseeing the conduct of medical practitioners. Thus, Aetna fails to state a claim for negligence per se for the purported violation of Va. Code Ann. § 54.1-2962.01. IV. CONCLUSION For the foregoing reasons, Defendants Abdul Kraidy, M.D. Kraidy & Alkaffaf LLC, and Ibtisam Al-Kaffaf, respectfully request that the Court grant their motion to dismiss the Complaint with prejudice. Dated: May 30, 2017 Respectfully submitted, /s/ Jesse Klaproth Jesse C. Klaproth (PA ID 312761) KLAPROTH LAW PLLC 1500 Walnut Street, Suite 816 Philadelphia, PA 19102 jklaproth@klaprothlaw.com 215.644.7463 Attorneys for Defendants Case 2:17-cv-02221-LDD Document 4-1 Filed 05/30/17 Page 18 of 19 CERTIFICATE OF SERVICE I hereby certify that on May 30, 2017, I served a true and correct copy of the foregoing document to all counsel of record by electronic court filing. /s/ Jesse Klaproth Jesse C. Klaproth Case 2:17-cv-02221-LDD Document 4-1 Filed 05/30/17 Page 19 of 19 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA AETNA INC. Plaintiff, v. ABDUL KRAIDY, M.D., KRAIDY & ALKAFFAF LLC, IBTISAM AL- KAFFAF, Defendants. Civil Action No. 17-2221 ORDER AND NOW, this __________ day of ______________________, 2017, upon consideration of the Motion to Dismiss the Complaint by Defendants Abdul Kraidy, M.D., Kraidy & Alkaffaf LLC, and Ibtisam Al-Kaffaf, it is hereby ORDERED that the Motion is GRANTED. The Complaint is therefore dismissed with prejudice as of the date of this Order. ________________________________ THE HONORABLE LEGROME D. DAVIS UNITED STATES DISTRICT JUDGE Case 2:17-cv-02221-LDD Document 4-2 Filed 05/30/17 Page 1 of 1