State Farm Mut. Auto. Ins. Co. v. Performance Orthapaedics & Neurosurgery, LLC

• Decision Date: 09 May 2018
• Docket Number: Case No. 1–17–cv–20028–KMM
• Parties: STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Plaintiff, v. PERFORMANCE ORTHAPAEDICS & NEUROSURGERY, LLC, et al., Defendants.
• Court: U.S. District Court — Southern District of Florida

315 F.Supp.3d 1291

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Plaintiff,

v.PERFORMANCE ORTHAPAEDICS & NEUROSURGERY, LLC, et al., Defendants.

Case No. 1–17–cv–20028–KMM

United States District Court, S.D. Florida.

Signed May 9, 2018

Bradley Scott McPherson, Nicholas James Purvis, David Ira Spector, Stacey Cole Ibarra, Akerman LLP, West Palm Beach, FL, C. Matthew Detzel, Akerman LLP, Jacksonville, FL, for Plaintiff.

Peter Ronai Goldman, Christina P. Lehm, Lester Jerome Perling, Scott Douglas Knapp, Broad and Cassel, Fort Lauderdale, FL, Oliver Benton Curtis, III, Broad and Cassel, Miami, FL, for Defendants.

ORDER ON CROSS–MOTIONS FOR SUMMARY JUDGMENT

K. MICHAEL MOORE, CHIEF UNITED STATES DISTRICT JUDGE

This cause came before the Court upon Performance Orthopaedics & Neurosurgery, LLC d/b/a Calhoun Orthopaedics & Neurosurgery

("Calhoun"), Physicians Central Business Office, LLC ("CBO"), Mark Cereceda, D.C. ("Dr. Cereceda"), and Brian Mevorah, D.C.'s ("Dr. Mevorah") ("Defendants") Motion for Summary Judgment ("Defs.' Mot.") (ECF No. 216)¹ and Plaintiff State Farm Mutual Automobile Insurance Company's ("State Farm") Amended Motion for Partial Summary Judgment ("Pl.'s Mot.") (ECF No. 254). The Parties filed their respective Responses and Replies. ("Pl.'s Resp.") (ECF No. 235); ("Defs.' Reply Mot.") (ECF No. 246); ("Defs.' Resp.") (ECF No. 237); (Pl.'s Reply") (ECF No. 244). The Motions are ripe for review.²

I. BACKGROUND³

In 2011 Calhoun was formed by Dr. Cereceda, Dr. Mevorah, and non-parties Dr. Triana and Dr. Lewin. Bilateral Pretrial Stipulation ("Stipulation") (ECF No. 266) at 13; Pl.'s 56.1, ¶ 2. During the relevant time period, each owner was a licensed health care practitioner. Stipulation at 13.⁴ Calhoun provided various health care services to individuals who suffered injuries in automobile accidents based on letters of protection ("LOPs"). Id. LOPs allowed patients to defer payment of medical bills until they favorably settled or prevailed in their bodily injury ("BI") claims. Defs.' 56.1, ¶ 2. On occasion, Calhoun submitted bills for treatment to patients' personal injury protection ("PIP") insurers. Pl.'s 56.1, ¶ 9; Defs.' Reply 56.1, ¶ 60. ("Calhoun generally did not submit bills for any treatment to the patients' personal injury protection insurer for payment."). Dr. Mevorah was designated the managing member to run Calhoun. Deposition of Dr. Mevorah ("Mevorah Dep.") (ECF No. 214–10) at 75:12–14; Mevorah Interrogatory ("Mevorah Interrog.") (ECF No. 214–2) at 5.

CBO was formed in 2011 and provided billing and collection services for Calhoun. Stipulation at 13. Dr. Cereceda is the sole owner of CBO. Id.

Metropolitan was a community acute care hospital that opened in February 2007 and closed in April 2014. Id. In 2011, Calhoun and Metropolitan representatives met to discuss the use of Metropolitan's facility by Calhoun physicians to perform surgeries on Calhoun patients (hereinafter the Calhoun and Metropolitan Arrangement or the Arrangement). Id. at 14. Calhoun physicians obtained privileges at Metropolitan and Metropolitan provided Calhoun physicians with an operating room and all attendant services necessary to perform surgeries. Id. Metropolitan then issued a notice of sale and assignment of the Metropolitan bill to Calhoun. Pl.'s 56.1, ¶ 26; Defs.' Resp. 56.1, ¶ 26; Pl.'s Reply 56.1, ¶ 26. The amount Calhoun paid for the bill was generally arranged before surgery but some charges could not be determined until after the surgery was performed. Pl.'s 56.1, ¶¶ 26, 34; Defs.' Resp. 56.1, ¶¶ 26, 34; Pl.'s Reply 56.1, ¶ 34. When Calhoun paid Metropolitan for the bill, the amount they paid was less than the face amount of the bill. Stipulation at 13.

Calhoun or CBO sent the Metropolitan bill to patients' attorneys and the bill included a notice of sale and assignment reflecting that Calhoun owned the Metropolitan bill. Defs.' Reply 56.1, ¶¶ 70, 73. The patients' attorneys provided the bills in a demand package to the insurance carriers. Defs.' 56.1, ¶ 3. Calhoun and CBO knew the bills were delivered to patients' attorneys and were to be included in a demand package for the insurance carriers. Pl.'s Resp. 56.1, ¶ 69.⁵

State Farm is a domestic insurer. Stipulation at 13. State Farm settled claims with patients who were provided health care services by Calhoun and Metropolitan. TAC Exs. 1, 10.⁶ Upon receipt of the demand package from a patients' attorneys, State Farm adjusters evaluated several factors in determining whether to settle individual claims, including but not limited to, policy limits, all the facts and circumstances surrounding the injury and accident, including percentage fault, whether there's a permanent impairment, past and future medical bills and past and future pain and suffering. Stipulation at 14; Defs.' 56.1, ¶¶ 8, 23. State Farm's claims handlers prepared a claim file containing information about the injury, damages, strengths and weaknesses for negotiation, and any unusual or aggravating circumstances. Defs.' 56.1, ¶ 10. When evaluating medical bills, State Farm's adjusters considered the reasonableness of the charges. Id. at ¶ 16. Sometimes Calhoun's bills were reduced. Id. at ¶ 20.

After the claims were evaluated, State Farm negotiated a lump sum settlement payment with patients' attorneys. Stipulation at 14. State Farm did not allocate how the settlement should be distributed between the patient, the attorney, and the medical providers. Defs.' 56.1, ¶ 29; Pl.'s Resp. 56.1, ¶ 29. Defendants were not involved in the settlement negotiations between the patients' attorneys and State Farm. Defs.' 56.1, ¶ 30. Calhoun received payments only after a settlement. Id. at ¶ 4. The patients' attorneys made the checks payable to Calhoun and the checks were deposited directly into Calhoun's bank account. Id. at ¶ 4. Calhoun negotiated with the patients' attorneys on a case-by-case basis regarding what it would accept from the settlement as payment for the Calhoun and Metropolitan bills. Id. at ¶ 31.

On March 12, 2013, State Farm's Multi-Claim Investigative Unit ("MCIU") learned that Calhoun was listed as the guarantor on the Metropolitan account ledger for a claim. Id. at ¶ 36; Pl.'s Resp. 56.1, ¶ 36. In July 2013, MCIU began "Project Calhoun" to investigate the Arrangement. Defs.' 56.1, ¶¶ 32, 37. In November 2013, an initial Alert was distributed within State Farm regarding Project Calhoun. Id. at ¶ 45. State Farm learned of the price list that set the amounts Calhoun paid Metropolitan for specific procedures and in March 2014, State Farm obtained a copy. Defs.' 56.1, ¶ 48; Pl.'s Resp. 56.1, ¶ 48. State Farm transitioned all of the claim files involving Calhoun and Metropolitan to MCIU for review. Defs.' 56.1, ¶ 50.

In the TAC, State Farm alleges three counts against Defendants: (1) violations of the FDUTPA, (2) common law fraud, and (3) unjust enrichment.⁷

II. LEGAL STANDARD

Summary judgment is appropriate where there is "no genuine issue as to any material fact [such] that the moving party is entitled to judgment as a matter of law." Celotex Corp. v. Catrett , 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ; Fed R. Civ. P. 56. A genuine issue of material fact exists when "a reasonable jury could return a verdict for the non-moving party." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). "For factual issues to be considered genuine, they must have a real basis in the record." Mann v. Taser Int'l, Inc. , 588 F.3d 1291, 1303 (11th Cir. 2009) (citation omitted). Speculation or conjecture cannot create a genuine issue of material fact sufficient to defeat a well-supported motion for summary judgment. Cordoba v. Dillard's, Inc. , 419 F.3d 1169, 1181 (11th Cir. 2005).

The moving party has the initial burden of showing the absence of a genuine issue as to any material fact. Clark v. Coats & Clark, Inc. , 929 F.2d 604, 608 (11th Cir. 1991). In assessing whether the moving party has met this burden, the court must view the movant's evidence and all factual inferences arising from it in the light most favorable to the non-moving party. Denney v. City of Albany , 247 F.3d 1172, 1181 (11th Cir. 2001). Once the moving party satisfies its initial burden, the burden shifts to the non-moving party to come forward with evidence showing a genuine issue of material fact that precludes summary judgment. Bailey v. Allgas, Inc. , 284 F.3d 1237, 1243 (11th Cir. 2002) ; see also Fed. R. Civ. P. 56(e). "If reasonable minds could differ on the inferences arising from undisputed facts, then a court should deny summary judgment." Miranda v. B & B Cash Grocery Store, Inc. , 975 F.2d 1518, 1534 (11th Cir. 1992). But if the record, taken as a whole, cannot lead a rational trier of fact to find for the non-moving party, there is no genuine issue for trial, and summary judgment is proper. Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).

III. APPLICABLE LAW

A. Patient Brokering Statute, Fla. Stat. § 817.505 (2012)

The Patient Brokering Statute prohibits offering or paying any "commission, bonus, rebate, kickback, or bribe, directly or indirectly in cash or in kind" or engaging "in any split-fee arrangement, in any form whatsoever, to induce the referral of patients or patronage to or from a health care provider or health care facility." Fla. Stat. § 817.505(1)(a). It is also unlawful for any person to "[s]olicit or receive any commission, bonus, rebate, kickback, bribe, directly or indirectly, in cash or in kind" or engage in any "fee-split arrangement" in return for referring patients to or from a health care provider. Id. § 817.505(1)(b). It is also unlawful to aid, abet, advise, or otherwise participate in the conduct prohibited by the statute. Id. § 817.5050(1)(d).

B. Anti-Kickback Statute, Fla. Stat. § 456.054 (2012)

The Anti-Kickback Statute makes it "unlawful for any health care provider ... to offer, pay, solicit,...