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IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION

ALLSTATE INSURANCE COMPANY,
§
ALLSTATE INDEMNITY COMPANY,
§
ALLSTATE PROPERTY &
§
CASUALTY INSURANCE COMPANY,
§
BOSTON OLD COLONY INSURANCE
§
COMPANY, and THE GLENS FALL
 §
INSURANCE COMPANY, §
Plaintiffs/Petitioners
 §
  §
vs. § Civil Action No. 3-01-CV2247-N
  §
RECEIVABLE FINANCE COMPANY, §
L.L.C, ADVANCED MEDICAL SYSTEMS §
& SOLUTIONS, P.L.L.C., MARLON

§
D. PADILLA, M.D., P.A., ACCIDENT & §
INJURY PAIN CENTERS, INC., (d/b/a §
ACCIDENT & INJURY CHIROPRACTIC), §
ROBERT SMITH, LONE STAR §
RADIOLOGY MANAGMENT, L.L.C., §
WHITE ROCK OPEN AIR MRI, L.L.C. §
(d/b/a WHITE ROCK OPEN MRI), §
NORTH TEXAS OPEN AIR MRI, L.L.C. §
(d/b/a NORTH TEXAS OPEN MRI, §
HARRIS COUNTY MRI and BEXAR §
COUNTY M.R.I.), REHAB 2112, L.L.C., §
METROPLEX PAIN CENTER, INC. §
(d/b/a LONE STAR RADIOLOGY), §
LACIDEM MANAGEMENT, BS §
LIMOUSINE, L.L.C., STEVEN SMITH, §
TINA CHESHIRE, THOMAS RHUDY, §
D.C., LOUIS SAUCEDO, D.C., JEFFREY §
CROCOLL, D.C., KENNETH LUSTIK, §
D.C., MARK RAYSHELL, D.C., LARRY §
PARENT, D.C., CHRISTOPHER §
HOLOWISKI, D.C., CAREY FABACHER, §
D.C., PATRICIA JOHNSON, D.C., §
GHOLAMREZA ASSADOLAHI, D.C., §
KYLE CAMPBELL, D.C., TAYANA §
STEFANOVIC, D.C., CHAD BLACKMON, §
D.C., RAMESH SANGHANI, D.C., §
MARLON PADILLA, M.D., JAMES §
LAUGHLIN, D.O., DOUGLAS WOOD, §
D.O., DEE MARTINEZ, M.D., and §
MOHAMMAD BORGHEE (d/b/a FAMILY §
CARE PHARMACY), §
Defendants/Respondents §

FIRST AMENDED COMPLAINT

TO THE HONORABLE UNITED STATES DISTRICT COURT:

Come now ALLSTATE INSURANCE COMPANY, ALLSTATE INDEMNITY COMPANY, ALLSTATE PROPERTY & CASUALTY INSURANCE COMPANY (previously misidentified as Allstate Personal Property & Casualty Company), BOSTON OLD COLONY INSURANCE COMPANY, and THE GLENS FALL INSURANCE COMPANY, hereinafter referred to as "Plaintiffs" and complain of RECEIVABLE FINANCE COMPANY, L.L.C., ADVANCED MEDICAL SYSTEMS & SOLUTIONS, P.L.L.C., and MARLON D. PADILLA, M.D., P.A., ACCIDENT & INJURY PAIN CENTERS, INC. (d/b/a ACCIDENT & INJURY CHIROPRACTIC), ROBERT SMITH, LONE STAR RADIOLOGY MANAGEMENT, L.L.C., WHITE ROCK OPEN AIR MRI, L.L.C. (d/b/a WHITE ROCK OPEN MRI), NORTH TEXAS OPEN AIR MRI, L.L.C. (d/b/a NORTH TEXAS OPEN AIR MRI, HARRIS COUNTY MRI and BEXAR COUNTY MRI), REHAB 2112, L.L.C., METROPLEX PAIN CENTERS, INC. (d/b/a LONE STAR RADIOLOGY), LACIDEM MANAGEMENT, BS LIMOUSINE, L.L.C., STEVEN SMITH, TINA CHESHIRE, THOMAS RHUDY, D.C., LOUIS SAUCEDO, D.C., JEFFREY CROCOLL, D.C., KENNETH LUSTIK, DC, MARK RAYSHELL, D.C., LARRY PARENT, D.C., CHRISTOPHER HOLOWISKI, D.C., CAREY FABACHER, D.C., PATRICIA JOHNSON, D.C., GHOLAMREZA ASSADOLAHI, D.C., KYLE CAMPBELL, D.C., TAYANA STEFANOVIC, D.C., CHAD BLACKMON, D.C., RAMESH SANGHANI, D.C., MARLON PADILLA, M.D., JAMES LAUGHLIN, D.O., DOUGLAS WOOD, D.O., DEE MARTINEZ, M.D., and MOHAMMAD BORGHEE (d/b/a FAMILY CARE PHARMACY) hereinafter referred to collectively as "Defendants," and for such action would respectfully show the Court as follows:

I.
PREDICATE

  1. Plaintiffs seek to recover sums fraudulently procured by Defendants from Plaintiffs since at least 1998, by means of medical and chiropractic billings for unnecessary and unreasonable treatment, examinations, diagnostic tests, and other services in regard to persons involved in automobile collisions. Plaintiffs also request relief under the Federal Declaratory Judgment Act, 28 United States Code, Section 2201, to determine their duty to pay for purported medical and chiropractic treatment of certain insureds, and third parties making claim against insureds, and their right to recover such payments previously made to Defendants.

  2. Plaintiffs would show this Honorable Court that Defendants are co-owned or otherwise financially related. Patients were referred between various Defendants for a set course of chiropractic treatment, diagnostic tests and evaluation, medical consultation, and other services, regardless of medical/chiropractic need and necessity. Defendants would then generate narrative reports, itemized billing statements, and HCFA-1500 forms based on the unnecessary treatment and diagnostic testing, to substantiate the treatment and testing. These documents would be presented to automobile insurers, such as Plaintiffs, through personal injury attorneys.

  3. Plaintiffs would also show Receivable Finance Company, L.L.C., acts as a device for the lay employment of medical and osteopathic doctors, and that Receivable Finance acts as a conduit for the billing and collection of medical fees and the disbursement of the majority of these medical fees to unlicensed lay persons and entities. Plaintiffs would, therefore, show that Receivable Finance, in combination with other Defendants, is engaged in the unauthorized and corporate practice of medicine, in violation of the Texas Medical Practice Act and Texas common law. Therefore, the contracts between Receivable Finance and various medical and osteopathic doctors are illegal, void, against public policy, and unenforceable against any person. Plaintiffs would further show that they are under no obligation to pay the purported medical fees billed through Receivable Finance, and that they are entitled to reimbursement from Receivable Finance and other defendants for all such payments previously made.

  4. Plaintiffs would also show there has been a purported 2001 sale of some assets of Receivable Finance Company, L.L.C. (which were gained through the unauthorized practice of medicine) to Advanced Medical Systems & Solutions, P.L.L.C., and/or Marlon D. Padilla, M.D., P.A. Plaintiffs would further show that they are under no obligation to pay the purported medical fees billed through Receivable Finance, and later assigned, sold, or otherwise transferred to Advanced Medical Systems & Solutions, P.L.L.C., and/or Marlon D. Padilla, M.D., P.A., and that they are entitled to reimbursement for all such payments previously made.

II.
JURISDICTION AND VENUE

  1. Pursuant to Title 28, United States Code, Section 1332(a), this Court has subject matter jurisdiction because the amount in controversy in regard to each of the Plaintiffs in this civil action exceeds $75,000.00, exclusive of interest and costs (see paragraph 214 herein), Plaintiffs are citizens and residents of the States of Illinois, Massachusetts, and Delaware, and Defendants are citizens and residents of the State of Texas (see paragraphs 7 through 44 herein). Plaintiffs would specifically show that they are incorporated under the laws of the States of Illinois, Massachusetts, or Delaware, and their principal places of business are in the State of Illinois. Plaintiffs would specifically show that:

    1. Defendants Robert Smith, Thomas Rhudy, D.C., Louis Saucedo, D.C., Jeffrey Crocoll, D.C., Kenneth Lustik, D.C., Mark Rayshell, D.C., Larry Parent, D.C., Christopher Holowiski, D.C., Carey Fabacher, D.C., Patricia Johnson, D.C., Gholamreza Assadolahi, D.C., Kyle Campbell, D.C., Tayana Stefanovic, D.C., Chad Blackmon, D.C., Ramesh Sanghani, D.C., Marlon Padilla, M.D., James Laughlin, D.O., Douglas Wood, D.O., Dee Martinez, M.D., Steven Smith, Tina Cheshire, and Mohammad Borghee are citizens and residents of the State of Texas.

    2. Defendants Accident & Injury Pain Centers, Inc., and Metroplex Pain Center, Inc. are corporations incorporated under the laws of the State of Texas, and their principal places of business are in the State of Texas.

    3. Defendants Receivable Finance Company, L.L.C., Advanced Medical Systems, P.L.L.C., Lone Star Radiology, L.L.C., White Rock Open Air MRI, L.L.C., North Texas Open Air MRI, L.L.C., Rehab 2112, L.L.C., and BS Limousine, L.L.C. are limited liability companies established under the laws of the State of Texas.

    4. Defendant Marlon D. Padilla, M.D., P.A., is a professional association established under the laws of the State of Texas, whose only member is a citizen and resident of the State of Texas.

    5. Lacidem Management, L.P. is a limited partnership formed under the laws of the State of Texas, whose partners are residents of the State of Texas, with its principle place of business in the State of Texas.
    Plaintiffs would also show that all Defendants' principal places of business are in the State of Texas. There are no other parties to this civil suit other than those referenced above. Plaintiffs would show that there is complete diversity of citizenship between themselves and Defendants.
  1. Venue is proper in this District pursuant to Title 28, United States Code, Section 1391 (a) and (c) in that a substantial part of the events or omissions giving rise to the claims alleged herein occurred within this District, and Defendants' principal offices are within this District.

III.
PARTIES

  1. Plaintiff, ALLSTATE INSURANCE COMPANY, is a corporation incorporated under the laws of Illinois, with its principal place of business in Illinois.
  2. Plaintiff, ALLSTATE INDEMNITY COMPANY, is a corporation incorporated under the laws of Illinois, with its principal place of business in Illinois.
  3. Plaintiff, ALLSTATE PROPERTY & CASUALTY INSURANCE COMPANY (previously misidentified as Allstate Personal Property & Casualty Company), is a corporation incorporated under the laws of Illinois, with its principal place of business in Illinois.
  4. Plaintiff, BOSTON OLD COLONY INSURANCE COMPANY, is a corporation incorporated under the laws of Massachusetts, with its principal place of business in Illinois.
  5. Plaintiff, THE GLENS FALL INSURANCE COMPANY, is a corporation incorporated under the laws of Delaware, with its principal place of business in Illinois.
  6. Defendant, RECEIVABLE FINANCE COMPANY, L.L.C., (hereinafter "Receivable Finance") is a limited liability company organized under the laws of the State of Texas, with its principal place of business in Dallas, Texas. Receivable Finance may be served through its registered agent for service, Mr. Victor Zanetti, 1717 Main Street, Suite 4100, Dallas, Texas 75201, or through its sole manager, Robert Smith, 8080 Park Lane, Suite 500, Dallas, Texas 75231. Receivable Finance has answered in this cause of action.
  7. Defendant, ADVANCED MEDICAL SYSTEMS & SOLUTIONS, P.L.L.C., (hereinafter "Advanced Medical") is a professional limited liability company organized under the laws of the State of Texas, with its principal place of business in Dallas, Texas. Advanced Medical may be served through its registered agent for service, Dr. Marlon Padilla M.D., 381 Casa Linda Plaza, Suite 374, Dallas, Texas 75218-3423, or 7115 Lakeshore Drive, Dallas, Texas 75214. Respondent has answered in this cause of action.
  8. Defendant, MARLON D. PADILLA, M.D., P.A., (hereinafter "Padilla PA") is a professional association organized under the laws of the State of Texas, with its principal place of business in Dallas, Texas. Defendant's sole member, Marlon D. Padilla, is a citizen and resident of the State of Texas. Padilla PA may be served through its registered agent for service, Dr. Marlon Padilla, M.D., 381 Casa Linda Plaza, Suite 374, Dallas, Texas 75218-3423, or 7115 Lakeshore Drive, Dallas, Texas 75214. Padilla PA has answered in this cause of action.
  9. Defendant, ACCIDENT & INJURY PAIN CENTERS, INC., (hereinafter "Accident & Injury") is a corporation organized under the laws of the State of Texas, with its principal place of business in Dallas, Texas. Accident & Injury may be served through its registered agent for service, Robert Smith, 8080 Park Lane, Suite 500, Dallas, Texas 75231.
  10. Defendant, ROBERT SMITH (hereinafter "Robert Smith") is a resident of the State of Texas. Robert Smith may be served at his place of business, 8080 Park Lane, Suite 500, Dallas, Texas 75231.
  11. Defendant, LONE STAR RADIOLOGY MANAGEMENT, L.L.C., (hereinafter "Lone Star Radiology") is a limited liability company organized under the laws of the State of Texas, with its principal place of business in Dallas, Texas. Lone Star Radiology may be served through its sole manager and registered agent for service, Robert Smith, 8080 Park Lane, Suite 500, Dallas, Texas 75231.
  12. Defendant, WHITE ROCK OPEN AIR MRI, L.L.C., (hereinafter "White Rock Open Air MRI") is a limited liability company organized under the laws of the State of Texas, with its principal place of business in Dallas, Texas. White Rock MRI may be served through its sole manager and registered agent for service, Robert Smith, 8080 Park Lane, Suite 500, Dallas, Texas 75231.
  13. Defendant, NORTH TEXAS OPEN AIR MRI, L.L.C. (hereinafter "North Texas Open Air MRI") is a limited liability company organized under the laws of the State of Texas, with its principal place of business in Dallas, Texas. North Texas MRI may be served through its sole manager and registered agent for service, Robert Smith, 8080 Park Lane, Suite 500, Dallas, Texas 75231.
  14. Defendant, REHAB 2112, L.L.C., (hereinafter "Rehab 2112") is a limited liability company organized under the laws of the State of Texas, with its principal place of business in Dallas, Texas. Rehab 2112 may be served through its sole manager and registered agent for service, Robert Smith, 8080 Park Lane, Suite 500, Dallas, Texas 75231.
  15. Defendant, METROPLEX PAIN CENTER, INC., (hereinafter "Metroplex Pain") is a corporation organized under the laws of the State of Texas, with its principal place of business in Dallas, Texas. Accident & Injury may be served through its registered agent for service, Robert Smith, 8080 Park Lane, Suite 500, Dallas, Texas 75231.
  16. Defendant, LACIDEM MANAGMENT, (hereinafter "Lacidem Management") is a limited partnership organized under the laws of the State of Texas, with its principal place of business in Dallas, Texas. Lacidem Management may be served through its registered agent for service, Steven Smith, 8080 Park Lane, Suite 500, Dallas, Texas 75231.
  17. Defendant, BS LIMOUSINE, L.L.C., (hereinafter "BS Limousine") is a limited liability company organized under the laws of the State of Texas, with its principal place of business in Dallas, Texas. BS Limousine may be served through its sole manager and registered agent for service, Robert Smith, 8080 Park Lane, Suite 500, Dallas, Texas 75231.
  18. Defendant, STEVEN SMITH (hereinafter "Steven Smith") is a resident of the State of Texas. Steven Smith may be served at his place of business, 8080 Park Lane, Suite 500, Dallas, Texas 75231.
  19. Defendant, TINA CHESHIRE, (hereinafter "Tina Cheshire"), is a resident of the State of Texas. Tina Cheshire may be served at her place of business, 8080 Park Lane, Suite 500, Dallas, Texas 75231.
  20. Defendant, THOMAS RHUDY, D.C., (hereinafter "Dr. Rhudy"), is a resident of the State of Texas, and is licensed to practice chiropractic in the State of Texas. Dr. Rhudy may be served at his place of business, 8080 Park Lane, Suite 500, Dallas, Texas 75231.
  21. Defendant, LOUIS SAUCEDO, D.C., (hereinafter "Dr. Saucedo"), is a resident of the State of Texas, and is licensed to practice chiropractic in the State of Texas. Dr. Saucedo may be served at his place of business, 8080 Park Lane, Suite 500, Dallas, Texas 75231.
  22. Defendant, JEFFREY CROCOLL, D.C., (hereinafter "Dr. Crocoll"), is a resident of the State of Texas, and is licensed to practice chiropractic in the State of Texas. Dr. Crocoll may be served at his residence, 427 Newberry, Grand Prairie, Texas 75052.
  23. Defendant, KENNETH LUSTIK, D.C., (hereinafter "Dr. Lustik"), is a resident of the State of Texas, and is licensed to practice chiropractic in the State of Texas. Dr. Lustik may be served at his place of business, 8080 Park Lane, Suite 500, Dallas, Texas 75231.
  24. Defendant, MARK RAYSHELL, D.C., (hereinafter "Dr. Rayshell"), is a resident of the State of Texas, and is licensed to practice chiropractic in the State of Texas. Dr. Rayshell may be served at his place of business, 200 Wynnewood Village, Dallas, Texas 75208.
  25. Defendant, LARRY PARENT, D.C., (hereinafter "Dr. Parent"), is a resident of the State of Texas, and is licensed to practice chiropractic in the State of Texas. Dr. Parent may be served at his place of business, 718 N. Buckner, Dallas, Texas 75218.
  26. Defendant, CHRISTOPHER HOLOWISKI, D.C., (hereinafter "Dr. Holowiski"), is a resident of the State of Texas, and is licensed to practice chiropractic in the State of Texas. Dr. Holowiski may be served at his residence, 802 Rock Springs Drive, Richmond, Texas 77459.
  27. Defendant, CAREY FABACHER, D.C., (hereinafter "Dr. Fabacher"), is a resident of the State of Texas, and is licensed to practice chiropractic in the State of Texas. Dr. Fabacher may be served at his residence, 6201 Automnwood Drive, Frisco, Texas 75035.
  28. Defendant, PATRICIA JOHNSON, D.C., (hereinafter "Dr. Johnson"), is a resident of the State of Texas, and is licensed to practice chiropractic in the State of Texas. Dr. Johnson may be served at her residence, 4315 Falcon Perch Circle, Arlington, Texas 76001.
  29. Defendant, GHOLAMREZA ASSADOLAHI, D.C., (hereinafter "Dr. Assadolahi"), is a resident of the State of Texas, and is licensed to practice chiropractic in the State of Texas. Dr. Assadolahi may be served at his residence, 4339 S. Capistrano Drive, Dallas, Texas 75287.
  30. Defendant, KYLE CAMPBELL, D.C., (hereinafter "Dr. Campbell"), is a resident of the State of Texas, and is licensed to practice chiropractic in the State of Texas. Dr. Campbell may be served at his residence, 9107 Lasater Street, San Antonio, Texas 78254.
  31. Defendant, TAYANA STEFANOVIC, D.C., (hereinafter "Dr. Stefanovic"), is a resident of the State of Texas, and is licensed to practice chiropractic in the State of Texas. Dr. Stefanovic may be served at her place of business, 601 W. Parker Road, No. 103, Plano, Texas 75224.
  32. Defendant, CHAD BLACKMON, D.C., (hereinafter "Dr. Blackmon"), is a resident of the State of Texas, and is licensed to practice chiropractic in the State of Texas. Dr. Blackmon may be served at his residence, 3408 Ruidosa Lane, McKinney. Texas 75070.
  33. Defendant, RAMESH SANGHANI, D.C., (hereinafter "Dr. Sanghani"), is a resident of the State of Texas, and is licensed to practice chiropractic in the State of Texas. Dr. Sanghani may be served at his place of business, 2223 S. Buckner, No. 245, Dallas, Texas.
  34. Defendant, MARLON PADILLA, M.D., (hereinafter "Dr. Padilla"), is a resident of the State of Texas, and is licensed to practice medicine in the State of Texas. Dr. Padilla may be served at his residence, 7115 Lakeshore Drive, Dallas, Texas 75214.
  35. Defendant, JAMES LAUGHLIN, D.O., (hereinafter "Dr. Laughlin"), is a resident of the State of Texas, and is licensed to practice medicine in the State of Texas. Dr. Laughlin may be served at his residence, 12516 Indian Creek Blvd., Fort Worth, Texas 76116.
  36. Defendant, DOUGLAS WOOD, D.O., (hereinafter "Dr. Wood"), is a resident of the State of Texas, and is licensed to practice medicine in the State of Texas. Dr. Wood may be served at his residence, 677 E. Muirfield, Garland, Texas 75044.
  37. Defendant, DEE MARTINEZ, M.D., (hereinafter "Dr. Martinez"), is a resident of the State of Texas, and is licensed to practice medicine in the State of Texas. Dr. Martinez may be served at his residence, 3638 Cripple Creek Drive, Dallas, Texas 75224, or at his place of business, 904 N. Ewing, Dallas, Texas 75203.
  38. Defendant, MOHAMMAD BORGHEE (hereinafter "Mohammad Borghee"), is a resident of the State of Texas, and is a licensed pharmacist in the State of Texas. Mohammad Borghee may be served at his residence, 3504 Dripping Springs, Plano, Texas 75025.

IV.
STATEMENT OF FACTS PERTINANT TO
ALL CAUSES HISTORY OF THE ENTERPRISE

A. Initial Business Formations

  1. Accident & Injury was incorporated in October 1990. Robert Smith is the president/CEO and sole shareholder of Accident & Injury.
  2. Robert Smith is a layman, and has never been licensed as a chiropractor, medical doctor, or other healthcare professional.
  3. Steven Smith is the vice president of Accident & Injury. Steven Smith is a layman, and has never been licensed as a chiropractor, medical doctor, or other healthcare professional.
  4. Tina Cheshire is the head of the Accident & Injury Collections Department.
  5. In September 1991, Accident & Injury filed an Assumed Name Certificate for an Unincorporated Business or Profession with the Texas Secretary of State, certifying it was to conduct business under the name "Accident & Injury Chiropractic." Robert Smith signed the certificate as President of Accident & Injury
  6. In January 1992, the Articles of Incorporation of Metroplex Pain were filed with the Texas Secretary of State. Robert Smith was listed as sole initial director. In an August 2001 deposition of Receivable Finance in a Texas state court proceeding, Receivable Finance's chief financial officer, Steven Lambert, (who testified he is also an officer of Accident & Injury) admitted Metroplex Pain is wholly owned by Accident & Injury.1

    7. B. Expansion of Facilities (1998 to Present)

  7. Beginning in approximately 1998, a number of new Accident & Injury chiropractic clinics have been opened in the Dallas/Fort Worth, Houston, and San Antonio areas. Since that time, the number of clinics has approximately doubled.
  8. In May 1998, Metroplex Pain filed an Assumed Name Certificate for an Unincorporated Business or Profession with the Texas Secretary of State and the Dallas County District Clerk, certifying it was to conduct business in Dallas County under the name "Lone Star Radiology." Robert Smith signed the certificates as President of Metroplex Pain. In December 2000, the Articles of Organization of Lone Star Radiology were filed with the Texas Secretary of State. Robert Smith is listed as sole manager of Lone Star Radiology.
  9. In August 1998, the Articles of Organization of White Rock Open Air MRI were filed with the Texas Secretary of State. Robert Smith is listed as the sole manager of White Rock Open Air MRI. White Rock Open Air MRI thereafter commenced operation of a MRI facility ("White Rock Open MRI") in Dallas, Texas.
  10. In November 1998, the Articles of Organization of North Texas Open Air MRI were filed with the Texas Secretary of State. Robert Smith is listed as the sole manager of North Texas Open Air MRI. North Texas Open Air MRI thereafter commenced operation of a MRI facility ("North Texas Open MRI") in Arlington, Texas.
  11. Also in November 1998, the Articles of Organization of Rehab 2112 were filed with the Texas Secretary of State. Robert Smith is listed as sole manager of Rehab 2112. Subsequently, Rehab 2112 facilities were opened in Dallas, Arlington, and San Antonio.
  12. In 1998, Robert Smith appointed Dr. Rhudy as chief of staff and "compliance officer" of Accident & Injury. Robert Smith also appointed Dr. Rhudy as compliance officer for North Texas MRI, White Rock MRI, and Rehab 2112.
  13. In 1999, Dr. Saucedo was appointed Accident & Injury's assistant chief of staff.
  14. In March 1999, the Articles of Organization for Receivable Finance were filed with the Texas Secretary of State. Robert Smith is listed as sole manager of Receivable Finance.
  15. Also in or around March 1999, Dr. Padilla and Dr. Laughlin began to see Accident & Injury patients for 'second opinion' medical consultations at the various chiropractic clinics, and "sell" their medical fees from these consultations to Receivable Finance. Subsequently, certain other medical doctors, including Dr. Wood, commenced similar arrangements.
  16. In July 1999, Robert Smith appointed Dr. Crocoll as Accident & Injury's "director of quality control" and head of the "production department." In October 1999, Dr. Crocoll's was redesignated Accident & Injury's Director of Operations.
  17. In March 2000, North Texas Open Air MRI filed two Assumed Name Certificates with the Texas Secretary of State, certifying that it was to conduct business under the name "Bexar County MRI" in Bexar County, Texas, and "Harris County MRI" in Harris County, Texas. Robert Smith signed both certificates as President of North Texas Open Air MRI. North Texas Open Air MRI thereafter commenced operation of MRI facilities in San Antonio and Houston, under those assumed names.
  18. In November 2000, the Articles of Organization for Metroplex Diagnostics, L.L.C., were filed with the Texas Secretary of State. Robert Smith is listed as sole manager of Metroplex Diagnostics.
  19. In January 2001, a Texas District Court ordered Receivable Finance to produce a representative for deposition and to produce certain documents, and Receivable Finance subsequently filed unsuccessful mandamus actions against the deposition order in the Texas Court of Appeals and Texas Supreme Court. In February 2001, Receivable Finance purportedly 'sold' medical billings it held to a professional entity owned by Dr. Padilla.
  20. Also in February 2001, the Articles of Organization for Advanced Medical were filed. The Articles show Dr. Padilla as sole manager and organizer.
  21. Subsequent to February 2001, on information and belief, Advanced Medical and/or Padilla PA have 'employed' medical doctors who conduct 'second opinion' medical consultations at Accident & Injury chiropractic clinics, and pay those medical doctors a percentage of their fee. Advanced Medical and/or Padilla PA transfer money to Accident & Injury through lease payments and possibly other 'service' fees.

V.
PATTERN OF TREATMENT AND SELF REFERRALS

  1. Accident & Injury currently conducts business through nineteen (19) chiropractic clinics in the Dallas/Fort Worth area, San Antonio and Houston.
  2. Each of the Accident & Injury clinics is headed by a Clinic Director. Clinic Directors during the period relevant to this lawsuit include the following Defendants: Dr. Rayshell, Dr. Parent, Dr. Holowiski, Dr. Fabacher, Dr. Johnson, Dr. Assadolahi, Dr. Campbell, Dr. Stefanovic, Dr. Blackmon, and Dr. Sanghani (hereinafter, these defendants may be referred to collectively as "the Clinic Director Defendants"). Dr. Saucedo was a Clinic Director prior to his appointment as Accident & Injury's assistant chief of staff. The clinics also have varying numbers of "associate doctors," who report to the clinic directors.
  3. Accident & Injury's chief of staff, Dr. Rhudy, and assistant chief of staff, Dr. Saucedo, office in Accident & Injury's corporate headquarters, and 'oversee' the clinics. Dr. Rhudy and Dr. Saucedo report directly to Robert Smith and Steven Smith. In addition to being a Clinic Director, Dr. Rayshell also acts as an additional supervisor of the other Clinic Directors.
  4. Accident & Injury treats a large volume of patients making bodily injury claims as a result of automobile collisions. Claims made by these patients to automobile insurers, such as Plaintiffs, show a near universal pattern of patient treatment and referrals for diagnostic tests and medical consultations. The referrals are made to co-owned diagnostic entities, or to medical doctors employed by Accident & Injury or its affiliated entities.
  5. As noted in greater detail in Section IV above, Accident & Injury owner Robert Smith organized a number of diagnostic facilities and other entities in the period 1998-2000. In the same period, an expansion of the number of "Accident & Injury" chiropractic clinics commenced. An organized and contrived pattern of treatment has subsequently developed:

VI.
Solicitation of Patients

  1. Accident & Injury 'markets' itself to personal injury attorneys. Accident & Injury Clinic Directors2, as well as its chief of staff (Dr. Rhudy) and its assistant chief of staff (Dr. Saucedo), appear free of charge to testify as experts on behalf of plaintiffs. In recent (July 2002) trial testimony, Dr. Saucedo admitted he has testified in approximately ten trials since January 2001 alone.3 Lengthy narrative reports are provided to assist plaintiffs and their attorneys to settle or litigate their claims. (As noted more fully herein, the reports make standard findings of serious injuries, and that the injuries were caused by "the accident that occurred on the above-referenced date"). Large numbers of persons involved in automobile collisions are referred to Accident & Injury clinics by attorneys.
  2. Additionally, Accident & Injury aggressively markets itself to persons who have been involved in automobile collisions. During the relevant period, Accident & Injury advertisements advised such persons that automobile insurance would cover 100% of their treatment costs. Unrepresented persons who come to an Accident & Injury clinic are directed by Accident & Injury personnel to a limited number of personal injury attorneys.
    1. Attorneys or their representatives come to the chiropractic clinics to 'sign up' patients as clients.
    2. In 2001 state court testimony, a former law office employee affirmed that Accident & Injury chiropractors contacted the law office when they had an unrepresented patient and asked the law office to 'fax over a contract.' Accident & Injury personnel then had the patient sign the attorney employment contract and returned the signed contract to the attorney.4
    3. In July 2002 state court trial testimony, Dr. Saucedo testified that the Clinic Directors are in charge of referring Accident & Injury patients to attorneys.5
  3. Defendants also maintain undisclosed standing agreements with cooperative attorneys to 'rebate' or 'discount' medical and chiropractic costs. The costs to be paid by such attorneys to Accident & Injury, Receivable Finance and other Defendants upon settlement of a case is significantly less than the fee cited in itemized billing statements and HCFA-1500 forms generated by the Defendants, and which are presented to Plaintiffs and other automobile insurers in demands for settlement as necessary and reasonable charges.

VII.
Initial Narrative Reports

  1. An Initial Narrative Report is generated for all automobile accident patients. The initial narrative reports for all Accident & Injury clinics are generated at Accident & Injury's corporate office in Dallas. Dr. Crocoll and, subsequently, Dr. Saucedo head the "production department" that produces these reports. The reports are based on patient intake documents and pre-printed paragraphs in the computer, and not on dictation from a chiropractor seeing the patient.
  2. The initial narrative reports bear the name of the Clinic Director of the particular Accident & Injury clinic, although the Clinic Director may not have been the chiropractor who examined the patient. The initial narrative reports are not signed.
  3. The initial narrative reports contain a patient identification number. A new number is assigned for each accident, i.e., if a patient treated at Accident & Injury previously for another accident, the identification number would be different.
  4. The initial narrative report's "Past History" section almost always represents:

    "Past history is non-contributory. The patient denies any significant history of same or similar condition. Prior to this incident the patient states that she was enjoying a good state of health."

    The paragraph has been included in instances where available records refute it, and even in some cases where the patient has previously treated at an Accident & Injury clinic. In 2002 state court testimony, Accident & Injury's former director of operations, Dr. Crocoll admitted this history is a 'default' paragraph.6
  5. In other instances where the patient has previously treated at Accident & Injury, the "Past History" section is deleted, in order to deceive observers by concealing the fact of the prior treatment.
  6. The initial narrative reports' "Initial Impression" section, contains standard paragraphs opining the existence of:

    "Traumatic injury of the cervical [lumbar, or thoracic] spine with tearing of the regional connective tissues including muscles, tendons, ligaments, blood vessels, joint capsules, and nerves; with subsequent . . ."

    These paragraphs are followed by a string of short, standardized supposed conditions, such as "discitis," "myositis," "joint stiffness," muscle spasm," "nerve root irritation," and "segmental dysfunction." In most instances, these "impressions" cannot be supported by clinical documentation.
  7. The initial narrative reports' "Treatment Plan & Recommendations" section almost always call for electrical muscle stimulation, "cryotherapy," and "intersegmental traction," and represent the patient requires x-rays, MRIs, and medical doctor consultation.

VIII.
X-rays/Lone Star Radiology

  1. Virtually all motor vehicle accident patients receive x-rays at the Accident & Injury clinic during their initial visit. This includes cases where the patient was already x-rayed at another facility. The x-rays are purportedly evaluated by an Accident & Injury chiropractor, and Accident & Injury bills for the entire procedure — both for the technical and professional components. Often, there is no documentation at all that the charged professional component was performed; for example, there is no x-ray report completed by the Accident & Injury chiropractor. At other times, a cursory one-page form "report," using circles and checkmarks, is made.
  2. In virtually all cases, Accident & Injury represents the x-ray films require a second review by a chiropractic radiologist. The x-ray films are then referred to Lone Star Radiology. In June 2002 state court deposition testimony, Dr. Rayshell admitted all x-ray films sent for review went to Lone Star Radiology.7 The referral is typically made the same day as the patient's initial visit to the Accident & Injury clinic.
  3. While on its face it would appear Lone Star Radiology is an independent facility, as noted above, it is in fact a related entity to Accident & Injury and owned by Robert Smith. From May 1998 to December 2000, "Lone Star Radiology" was merely a "dba" of Metroplex Pain. In December 2000, Lone Star Radiology Management, L.L.C., was formed, with Robert Smith as sole manager.
  4. Dr. Lustik interprets the vast majority of these x-rays. Lone Star Radiology/Dr. Lustik's office is located within Accident & Injury's corporate headquarters, at 8080 Park Lane, Dallas. In 2002 state court deposition testimony,8 Dr. Lustik admitted:
    1. He is an Accident & Injury employee.

    2. Lone Star Radiology had no clerical staff of its own, and the only employees were himself and Dr. Tamara Uptigrove, D.C. The only other employee Lone Star Radiology ever had was Dr. Kenneth Hanson, D.C.

    3. Accident & Injury provides him with the x-ray films to read.

    4. Lone Star Radiology's business was limited to reading films from Accident & Injury clinics.

    5. Accident & Injury generates Lone Star Radiology's billings and reports, and maintains Lone Star Radiology's records.

    6. Accident & Injury's billing department collects Lone Star Radiology's fees.
  5. A report is subsequently issued under Lone Star Radiology's name, which also represents that Dr. Lustik is the proprietor or chief executive of the company. As noted above, the report is in fact generated by Accident & Injury, and Dr. Lustik is an employee of Accident & Injury.
  6. The Lone Star Radiology charge for interpretation of the x-ray films is in addition to the billing for the same professional component function billed by Accident & Injury, in its own name. Therefore, there is a routine duplication of service and billing.

IX.
MRI Referral and Interpretation

  1. Accident & Injury almost always refers an automobile accident patient for a MRI or MRIs, regardless of the patient's purported symptoms. The MRI referral is almost always made during the patient's initial visit to Accident & Injury. Therefore, no opportunity is given for conservative treatment to succeed or fail. Additionally, there is no opportunity for return and review of the 'second opinion' radiology report from Lone Star Radiology.
  2. In most cases, multiple MRIs are ordered.
  3. Standing agreements exist between Accident & Injury and some cooperative personal injury attorneys in regard to the number of MRIs that may automatically be conducted on those attorneys' clients, and when further permission of the law office must be obtained. Thus, MRI determinations are based on claims presentation, and not medical necessity.
    1. In a deposition conducted in the present case, former Accident & Injury 'collections department' employee L. Caprice Garcia testified of the existence of such agreements. For example, she testified certain law offices had agreements with Accident & Injury that two MRIs could be conducted of their clients without seeking approval of the law office. When authorization was needed, lay Accident & Injury corporate office personnel, such as Steve Smith and George Villaponda, would contact the law office.
    2. Ms. Garcia also testified that, on some occasions where Accident & Injury sought attorney permission to conduct MRIs, the attorney's office would determine (based on the low impact of a collision) that the MRIs would hinder their ability to negotiate the claim, and would disallow further MRIs. In cases where permission for MRIs was sought, lay Accident & Injury corporate office personnel, such as Steve Smith, would advise the clinic of how many MRIs could be performed for a particular patient.
  4. Patients in the Dallas/Fort Worth area are referred to either White Rock Open MRI or North Texas Open MRI. Houston area patients are referred to Harris County MRI, and San Antonio area patients are referred to Bexar County MRI.
  5. As noted herein, all four of these facilities are owned by Robert Smith.
  6. A single physician, Dr. Martinez, interprets the vast majority of the MRI scans from these four facilities (which in turn conduct the MRIs for all nineteen Accident & Injury clinics).
  7. From 1999 through at least January 2001, Dr. Martinez transferred his professional medical fee for his evaluation of MRIs conducted at White Rock Open MRI, North Texas Open MRI, Harris County MRI, and Bexar County MRI, to Receivable Finance. Receivable Finance collected Dr. Martinez's fee. Receivable Finance (pursuant to the 2001 state court testimony of its CFO) paid Dr. Martinez seven percent (7%) of his medical fee, which equated to $20 for a $300 charge.9

X.
Medical Doctor Consultation

A. Referral for 'Second Opinion' Consultation

  1. Accident & Injury virtually always refers an automobile accident patient to a medical doctor (M.D. or D.O.) for "second opinion" medical examination. The medical doctor referral is almost always made during the patient's initial visit to Accident & Injury.
  2. There are a limited number of medical doctors to whom the patients are referred, including (during the relevant period) Dr. Padilla, Dr. Laughlin, and Dr. Wood. Dr. Padilla's entire practice consists of seeing Accident & Injury referrals.
  3. Robert Smith and Steven Smith are personally involved in the recruitment and selection of these medical doctors.
  4. The "second opinion" medical examinations are typically conducted at the various Accident & Injury chiropractic clinics, rather than the medical doctor's own office. In state court deposition testimony, Dr. Padilla admitted that he did not maintain an examination office of his own. Accident & Injury provides one of its employees to assist the medical doctor in these examinations.
  5. Medical doctors from the Dallas/Fort Worth area, including Dr. Padilla, Dr. Laughlin, and Dr. Wood, have traveled to San Antonio and Houston to perform 'second opinion' examinations at the Accident & Injury clinics in those cities.
  6. The 'second opinion' examinations are cursory. The number of patients these medical doctors purportedly "examine" is ridiculous. For example:
    1. In late 2000 state court depositions, Dr. Padilla testified 98-100% of his patients were Accident & Injury referrals, he sees 150 to 200 patients per week at Accident & Injury chiropractic clinics in Dallas, Fort Worth, Arlington, Houston, and San Antonio.10 Dr. Padilla testified that he usually went to two Accident & Injury clinics a day.
    2. Dr. Padilla also testified that he introduced Dr. Douglas Wood to Robert Smith, and that Dr. Wood probably saw about the same number of patients he (Padilla) sees.11
    3. In recent state court trial testimony (December 2001), Dr. Padilla testified that 99% of his professional association's patients were Accident & Injury referrals. Dr. Padilla personally saw 6,000 to 7,200 Accident & Injury referral patients over the prior year; his professional association as a whole had seen 12,000 to 14,000 Accident & Injury patients over the past year.12
    4. In a 2001 state court deposition, Dr. Laughlin testified he examined 40-60 patients a day at an Accident & Injury clinic; sometimes he saw up to eighty patients.13 He also testified he saw patients at San Antonio and Houston clinics.
    5. In a September 2001 state court deposition, Dr. Wood testified he examined up to thirty or forty Accident & Injury patients a day. Dr. Wood testified that he went to all the Accident & Injury clinics, including the ones in Houston and San Antonio, to conduct the examinations.14
  7. The 'second opinion' examinations referenced above are typically billed from $210 to $425, under CPT code 99243, although the medical doctor could not possibly expend the time required for such an examination, given the enormous volume of patients "examined."
  8. Often, subsequent to the initial 'second opinion' medical consult, Accident & Injury will refer the patient to another one of the involved medical doctors for a further consultation examination.
  9. Accident & Injury generates the medical doctor reports for these examinations, and maintains the medical records.
    1. In state court deposition, Dr. Padilla testified Accident & Injury generates his narrative reports and his patient files are maintained at 8080 Park Lane (which is the corporate headquarters of Accident & Injury).15
    2. Dr. Padilla testified he developed a "template" system for use during the medical examinations, in which preprinted items are circled or lined through. He developed the system after Robert Smith expressed concern that medical narrative reports were not being generated quickly enough.16
    3. Dr. Padilla testified that circling or lining through an item on the template led to a transcriptions entering a macro that entered an entire sentence in the narrative report. In an October 2000 deposition, Dr. Padilla testified that "each word that's circled is a sentence."17 In a 2002 deposition, Dr. Padilla testified "neck pain" on the template was translated as "the patient was complaining of neck pain and spasm" in the medical narrative report.18
    4. In 2002 state deposition testimony, Dr. Padilla admitted that the assistant actually made many of the template entries.19
    5. The 'template' contains numerous entries for MRI recommendations, but not for other diagnostic tests, such as CAT scans — Dr. Padilla admitted this was so because Accident & Injury 'preferred' MRIs; he also admitted Accident & Injury 'preferred' White Rock and North Texas MRI.20
    6. In a state court deposition, Dr. Padilla also testified he signs as many as fifty of the Accident & Injury generated narratives at a time, and that he only 'spot checked' ten percent of the reports.21
    7. In a 2001 state court deposition, Dr. Laughlin testified Dr. Rhudy gave him a template he was to use for patient examinations. He was pressured to include standard 'causation' findings in his reports, attributing injuries to the particular accident at issue. Reports generated by Accident & Injury often contained additions not included in his templates or dictation; particularly concerning causation and future medical needs.22
  10. Dr. Laughlin has testified that Robert Smith and Accident & Injury personnel requested him to make fraudulent medical findings, going as far as to request him to make bogus surgical recommendations. More specifically, Dr. Laughlin testified:
    1. Dr. Padilla approached him and advised he was relaying a message from Robert Smith — Robert Smith's message to Dr. Laughlin was that he was to recommend at least ten percent of the Accident & Injury patients he saw for surgery, if he wished to continue seeing Accident & Injury patients.23
    2. Dr. Rhudy requested he make standard 'causation' findings in regard to all Accident & Injury patients, attributing their supposed injuries to the particular accident at issue.24
    3. In one instance, one of Dr. Laughlin's medical reports was critical of Accident & Injury's referral of a patient to Dr. Martinez for an epideral steroid injection. An Accident & Injury Clinic Director contacted Dr. Laughlin, complained 'you just killed the attorney's case,' and demanded Dr. Laughlin withdraw the report. Later, Dr. Rhudy also contacted Dr. Laughlin to request he withdraw the report.25
  11. In the vast majority of the cases, the patient did not see the medical doctor after the one time "consultation examination." Despite the fact that the patient is generally prescribed medication, there is usually no follow-up with the prescribing physician.
  12. The medical narrative report generally states the patient is not recommended for continuing medical care, but is returned for chiropractic treatment. This occurs even where there is purportedly a suspected disc herniation.
  13. The medical doctor will generally prescribe medications for the patient. The prescriptions are filled at a limited number of 'captive' pharmacies, particularly Family Care Pharmacy. The prescriptions are delivered to the patients by the mail or Federal Express, and the patients never speak with a pharmacist. The charges billed by Family Care Pharmacy for the prescriptions greatly exceed the charges that would be billed by an average pharmacy where patients could go in person to fill the prescription. Dr. Padilla has admitted he negotiated the relationship between Accident & Injury and Family Care Pharmacy.26
  14. The involved medical doctors split their professional medical fees with other lay Defendants.
    1. From 1999 through at least mid 2001, the involved medical doctors transferred their professional medical fees for these 'second opinion' consultations to Receivable Finance. Receivable Finance collected the medical fees, and paid the medical doctors a small percentage (11-18%) or flat fee.
    2. On information and belief, subsequent to February 2001, the involved medical doctors have transferred their professional medical fees for these 'second opinion' consultations to other lay Defendants through Advanced Medical and/or Padilla PA, under the guise of lease fees and possibly other service fees. In a recent (April 2002) state court deposition, Dr. Padilla testified that Dr. Wood and other physicians work for him, and that he (Padilla) 'leased' space from all the Accident & Injury chiropractic clinics.27

XI.
Chiropractic Treatment and Therapy Modalities

  1. Automobile accident patients almost always receive a set course of office visits and three therapy modalities at the Accident & Injury clinic, described in Accident & Injury reports as "Cyrotherapy" (which consists of the application of hot/cold packs), "electrical muscle stimulation," and "intersegmental traction" (which consists of lying on a 'roller table'). These are billed as "hot/cold packs," "manual therapy," and ""EMS (Unattended)" in itemized billing statements.
  2. Chiropractic adjustments by Accident & Injury chiropractors are routinely characterized as a combination of "problem focused" and "manual therapy" in itemized billing statements, under CPT Codes 99212 and 97140, and billed for a total charge of $77.00. On the other hand, CPT codes specifically relating to chiropractic manipulation, such as 98940, 98941, 98942, and 98943, are not used in Accident & Injury billings.
  3. Patients are treated in a large common room, and timers are used to advise Accident & Injury personnel when to move patients among the various treating tables. Generally, each modality lasts about 10 minutes. At the sound of the bell, the patients move from one treatment modality to the next.
  4. This course of treatment and modalities generally last two to three months.

XII.
Possible Further Referrals

  1. On occasion, Accident & Injury refers automobile accident patients to Metroplex Diagnostics or Rehab 2112. As noted herein, both entities are also owned by Robert Smith.
  2. On information and belief, Accident & Injury routinely refers its workers compensation patients to Metroplex Diagnostics and Rehab 2112.

XIII.
Narrative Report Generation

  1. Accident & Injury issues a Final Narrative Report for virtually all automobile accident patients. The final narrative reports for all Accident & Injury clinics are also generated at Accident & Injury's corporate office in Dallas. A charge of $150 is assessed for the report.
  2. The final narrative reports are repetitive of the initial narrative reports. The history, past history, and complaints portions are 'block and copies' of the same sections of the initial narrative report. Likewise, the "Initial Impression" and "Treatment Plan and Recommendations" sections of the initial narrative report are repeated as the "Final Diagnosis" and "Treatment" sections of the final narrative report.
    1. As noted above, the "Initial Impression" section of the initial narrative report contains standard findings of: "Traumatic injury of the cervical [lumbar, or thoracic] spine with tearing of the regional connective tissues including muscles, tendons, ligaments, blood vessels, joint capsules, and nerves; with subsequent . . ."
    2. The verbatim language is repeated as a "final diagnosis," even in cases where all MRI findings are normal and show no tearing of such connective tissues.
  3. The final narrative reports contain standard "Discussion," "Prognosis," and "Future Medical" sections. These sections are drawn from preprinted paragraphs at Accident & Injury's corporate office. Accident & Injury Clinic Directors complete a one-page interdepartmental memo (which is not retained in the patient's record), and write in code selections such as "4C" or "3L" for the discussion section, and a number such as "2" or "3" for the prognosis and future medical sections. Accident & Injury corporate office employees generating the reports enter these codes to obtain the pre-printed selection.
  4. These sections contain apparent specific references to the patient's supposed condition, and often contain citation to medical and chiropractic authority, in order to give the appearance that a treating chiropractor conducted an extensive evaluation of the patient and dictated the report. In reality, as noted above, the sections are drawn from a limited number of selections.
  5. As with the initial narrative report, the final narrative report contains the signature block of the Clinic Director. The Clinic Director's stamped signature is placed on the report. However, the Clinic Director may have seen the particular patient sporadically, or not at all. Often, the identity of chiropractors who purportedly treated the patient cannot be ascertained from Accident & Injury treatment records. In some instances, the Clinic Directors themselves have been unable to determine what chiropractors purportedly treated the patient, although the same Clinic Director will attest in HCFA-1500 forms that the chiropractic services were performed.
  6. The final narrative reports generally relate that the patient's injuries are of a long term or permanent nature and/or that the patient will henceforth be predisposed to other injury. The final narrative reports generally represent the patient will require continuing care over eight to twelve months, and represent the patient will incur several thousand dollars in cost for care during that period.
  7. Virtually all Accident & Injury final narrative reports for automobile accident patients conclude with an "Opinion" section that reads:
    "It is my opinion, based upon the history as presented by the patient, the above noted examination and test findings, that the injuries sustained by the patient were within a reasonable medical probability sustained as a result of the accident that occurred on the above-referenced date."
    Dr. Crocoll, the former head of the Accident & Injury production department that generates these reports, has admitted the Opinion section was a 'default' paragraph, and there were no alternative selections.28

XIV.
ASSUMPTION OF INTEREST IN CLAIMS AND LAWSUITS

  1. Accident & Injury purportedly takes an "irrevocable" assignment and transfer of an undivided interest in any claim or cause of action made by automobile collision patients. In 2001 state court testimony, Dr. Holowiski testified that Accident & Injury requires its patients to sign these purported assignments.29
  2. In 2001 and 2002 state court trials, Accident & Injury chiropractors, including chief of staff Dr. Rhudy30 and Clinic Directors Dr. Parent31 and Dr. Fabacher32, have admitted that Accident & Injury has a financial interest in the plaintiff's lawsuit.

XV.
THEORIES OF LIABILITY AND CAUSES OF ACTION SINGLE BUSINESS ENTERPRISE DOCTRINE

  1. Plaintiffs incorporate, as though fully set forth herein, each and every allegation contained in paragraphs 1 through 123 above.
  2. Plaintiffs would show that the following entities constitute a "single business enterprise" as defined by Texas law: Accident & Injury, Receivable Finance, Lone Star Radiology, Metroplex Pain, White Rock Open Air MRI, North Texas Open Air MRI, Rehab 2112, Lacidem Management, and BS Limousine.
  3. Plaintiffs would show that Robert Smith owns all these entities.
  4. The entities share common offices. For example:
    1. Receivable Finance is located within Accident & Injury's corporate office at 8080 Park Lane, Dallas, Texas.
    2. Lone Star Radiology is located within the same corporate office (although in some documents, Lone Star Radiology also uses the physical address of White Rock Open MRI).
    3. Receivable Finance, Lone Star Radiology, White Rock Open Air MRI, and North Texas Open Air MRI share the same PO Box for billing purposes.
  5. The entities share common officers and employees. For example:
    1. Documents filed with the State of Texas, and past state court testimony, establish that Robert Smith is the president/CEO of at least the following: Accident & Injury, Metroplex Pain, Receivable Finance, and North Texas Open Air MRI.
    2. Steven Lambert is chief operations officer of Accident & Injury, and chief financial officer of Accident & Injury, Receivable Finance, Lone Star Radiology, Metroplex Pain, White Rock Open Air MRI, and North Texas Open Air MRI.
    3. Receivable Finance's sole employee, Brigitta Naughton, is also employed by Accident & Injury as its office manager.
    4. Dr. Thomas Rhudy, D.C., is compliance officer for Accident & Injury, White Rock Open Air MRI, North Texas Open Air MRI, Metroplex Diagnostics, and Rehab 2112. In December 2001 state court trial testimony, Dr. Rhudy testified that his position as compliance officer of North Texas Open Air MRI is "part of my job through Accident & Injury."33
  6. Employees and officers of one entity are paid by another. For example, Mr. Lambert testified that he was only paid by Accident & Injury; however, he also testified he was an officer of Receivable Finance, Lone Star Radiology, North Texas Open Air MRI, and White Rock Open Air MRI.34
  7. Services are rendered by one entity on behalf of another. For example:
    1. Receivable Finance has only one employee (who it shares with Accident & Injury), and other Accident & Injury officers and employees, such as Steven Smith and Tina Cheshire, performed billing and collection services on behalf of Receivable Finance.
    2. Lone Star Radiology has no clerical employees of its own, and Accident & Injury employees perform billing and collections services, report generation, and document maintenance, for Lone Star Radiology.
    3. Accident & Injury's records department maintains the records of entities such as Lone Star Radiology, Receivable Finance, and North Texas Open Air MRI.
  8. Discovery in this case to date reflects that Receivable Finance has transferred and/or received large sums of funds from and/or to the following entities: Accident & Injury, Lone Star Radiology, Metroplex Pain, White Rock Open Air MRI, North Texas Open Air MRI, Rehab 2112, Lacidem Management, and BS Limousine.
  9. The Accident & Injury collections department, headed by Tina Cheshire, also collects billings for related entities such as Receivable Finance, Lone Star Radiology, White Rock Open Air MRI, and North Texas Open Air MRI. Tina Cheshire arbitrarily assigns funds arriving to the collections department to the various entities' accounts, and thereby commingles the funds.
  10. Pursuant to the Single Business Enterprise doctri