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

• Citation: 278 F.Supp.3d 1307
• Decision Date: 25 September 2017
• Docket Number: Case No. 1:17–CV–20028–KMM
• Parties: STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Plaintiff, v. PERFORMANCE ORTHOPAEDICS & NEUROSURGERY, LLC, et al., Defendants.
• Court: U.S. District Court — Southern District of Florida

278 F.Supp.3d 1307

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Plaintiff,
v.
PERFORMANCE ORTHOPAEDICS & NEUROSURGERY, LLC, et al., Defendants.

Case No. 1:17–CV–20028–KMM

United States District Court, S.D. Florida.

Signed September 25, 2017

278 F.Supp.3d 1311

Bradley Scott McPherson, Stacey Cole Ibarra, David Ira Spector, Akerman LLP, West Palm Beach, FL, for Plaintiff.

Peter Ronai Goldman, Christina P. Lehm, Lester Jerome Perling, Scott Douglas Knapp, Broad and Cassel LLP, Michael Patrick Hamaway, Jason Ari Smith, Mombach, Boyle, Hardin & Simmons, P.A., Fort Lauderdale, FL, Andrew Brian Albritton, Rhett Conlon Parker, Sharon Carlstedt Britton, Phelps Dunbar LLP, Jason Paul Stearns, Lawrence Phillip Ingram, Freeborn & Peters LLP, Tampa, FL, Lorelei Jane Van Wey, Martin B. Goldberg, Nicholas Andrew Ortiz, Lash & Goldberg, Ryan K. Stumphauzer, Christopher Ellis Gottfried, Jeffrey Henry Sloman, Stumphauzer & Sloman, PLLC, Kevin Patrick Jacobs, Homer Bonner Jacobs, P.A., Miami, FL, for Defendants.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTIONS TO DISMISS AMENDED COMPLAINT

K. MICHAEL MOORE, CHIEF UNITED STATES DISTRICT JUDGE

THIS CAUSE came before the Court upon the following motions: Defendant Metropolitan Health Community Services Corporation's Motion to Dismiss (ECF No. 60), and Defendants Performance Orthopaedics & Neurosurgery, LLC, Physicians Central Business Office, LLC, Mark Cereceda, and Brian Mevorah's Motion to Dismiss (ECF No. 61), to which Defendants, Omni Neurological, Orthopedic & Spine Center, Inc. and Sergio Triana filed a Notice of Joinder (ECF No. 63).¹ Both motions are fully briefed and now ripe for review. For the reasons that follow, both

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motions to dismiss are GRANTED IN PART AND DENIED IN PART.

I. BACKGROUND²

In its Amended Complaint, State Farm Mutual Automobile Insurance Company ("Plaintiff" or "State Farm") alleges a "scheme" involving Defendants Performance Orthopaedics & Neurosurgery, LLC d/b/a Calhoun Orthopaedics & Neurosurgery ("Calhoun"), Omni Neurological, Orthopedic & Spine Center, Inc. ("Omni"), Metropolitan Health Community Services Corporation d/b/a Metropolitan Hospital Of Miami ("Metropolitan"), Surgery Center Of Coral Gables, LLC d/b/a Coral Gables Surgery Center ("Coral Gables"), Physicians Central Business Office, LLC ("CBO"), Mark Cereceda, D.C. ("Cereceda"), Sergio Triana, D.C. ("Triana"), and Brian Mevorah, D.C. ("Mevorah") (collectively, "Defendants"). See Amended Complaint ("Am. Compl.") (ECF No. 56) ¶ 1.

This scheme consisted of two allegedly "unlawful referral arrangements," id. ¶ 121. The first such arrangement (the "Metropolitan Arrangement") took place from early 2012 through April 2014. Id. ¶ 6. During that time, Calhoun, a medical practice which specialized in orthopedic treatment and surgery, referred patients to Metropolitan, a surgical facility where Calhoun's physicians would perform surgery. Id. ¶ 6. Prior to treatment, Calhoun required each patient to execute a Letter of Promise (or "LOP"), which provided that Calhoun would be paid from any settlement, judgment, or verdict rendered in connection with the patient's personal injury claim. Id. ¶ 60; see also id. ¶¶ 39–40. For each referred surgical procedure performed on Calhoun's patients, Calhoun paid Metropolitan an all-inclusive pre-arranged price in full satisfaction of the patient's surgical facility charges. Id. ¶ 6. The amount Calhoun paid was typically pre-negotiated and based on a price list that assigned a specific dollar amount to particular procedures. Id.

Despite this pre-arranged price, however, Metropolitan prepared and sent invoices to Calhoun which reflected an amount for Metropolitan's services that "greatly exceeded" the amount Calhoun actually paid to Metropolitan. Id. These invoices purportedly reflected itemized charges for each of the supplies and services rendered. Id. ¶ 71. These invoices did not include any reference to, or deduction for, the amount that Calhoun actually paid Metropolitan. Id. ¶ 6. Rather, the "invoices" showed the total amount of Metropolitan's itemized charges as an unpaid "balance." Id. ¶ 71.

CBO, a company which performed billing and collections for Calhoun, transmitted the Metropolitan invoices to Calhoun's patients' personal injury attorneys on Calhoun's behalf for inclusion in settlement demands to State Farm. Id. ¶ 6. In its transmittals, Calhoun did not make any reference to, or deduction for, the amount that Calhoun actually paid to Metropolitan. Id. State Farm alleges that it was unaware of this payment arrangement, and was therefore deceived and injured because it made settlement payments based on the "inflated" invoices resulting from this arrangement. Id. ¶ 7; see generally id. ¶¶ 2, 4, 5, 26, 27, 106–08.³

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The second allegedly unlawful referral arrangement (the "Coral Gables Arrangement") began in April 2014, when Metropolitan closed. Id. Omni referred patients to Coral Gables, where Omni's physicians performed ophthalmic and spine surgeries. Id. ¶ 6, 25, 3–5, 104–105. Omni continued to require its patients to execute LOPs before rendering any treatment. Id. ¶ 60. Under the LOPs, Omni's patients did not have to pay Omni for medical services and agreed to later pay Omni from any settlement, judgment, or verdict in connection with the patient's personal injury claim. Id. In exchange for referrals, Coral Gables allegedly provided Omni with invoices reflecting Coral Gable's "usual and customary" surgical facility charges, which "never accounted for the fact that Coral Gables agreed to a pre-arranged price from Omni" for the services it provided. Id. ¶¶ 70, 107. Omni did not pay the "usual and customary" charges and instead negotiated with Coral Gables to pay fixed, all-inclusive prices for the various types of surgical procedures performed by Omni's physicians. Id. ¶¶ 2, 4, 5, 107. These fixed prices were substantially less than the "usual and customary" charges reflected on Coral Gables' invoices. Id.

Omni submitted the following materials directly to its patients' personal injury attorneys for the inclusion in settlement demands against State Farm: a cover letter on Omni's letterhead, Omni's account ledger reflecting Omni's charges for the professional component of rendered services, and a line item for the surgical charges incurred at Coral Gables, and the operative report. Id. ¶¶ 5, 109–111. The line item on Omni's account ledger for Coral Gables surgery charges reflected the full "usual and customary" amount, but did not disclose the lower, all-inclusive fixed price that the parties allegedly negotiated. Id. ¶¶ 105–107. This resulted in an "enormous difference" between what Omni paid to Coral Gables and "the surgical facility ‘charges from Coral Gables listed on Omni's ledger.’ " Id. ¶ 108

Under both the Metropolitan Arrangement and the Coral Gables Arrangement, the patients' personal injury attorneys utilized the packages from Omni and CBO to create demand packages, and sent those packages to State Farm. Id. ¶¶ 85, 112. The demand packages included a letter allegedly crafted to exert pressure on State Farm to settle the claims within a short time by threatening bad faith claims.⁴ Id. ¶¶ 86–90, 113. Thereafter, State Farm evaluated the settlement demands, as well as the medical records, invoices and the other documentation supplied to substantiate the claims. Id. ¶ 91, 114–121, 130. State Farm alleges it was unaware of the payment arrangements between the Medical Practices⁵ and the Surgical Facilities.⁶ Id. ¶ 5, 118. As a result, State Farm alleges it was deceived because it based its settlement offers and payments on the higher "usual and customary" rate. Id. ¶¶ 2, 4, 5, 26, 27, 92 106–08.

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As a result of both arrangements, State Farm alleges damages in excess of $3.8 million. Id. ¶ 167. State Farm settled claims totaling more than $3.6 million pursuant to the Metropolitan Scheme and $300,000 pursuant to the Coral Gables Scheme. Id. ¶ 10. Under both of these referral arrangements the Medical Practices benefitted by receiving payment from their patients' settlements with State Farm based on the amounts listed in the Surgical Facilities invoices—which were "significantly higher" than the amount that the Medical Practices actually paid the Surgical Facilities. Id. ¶ 5. The Surgical Facilities, in exchange for providing "inflated" invoices to the Medical Practice, benefitted by receiving a steady flow of patients and guaranteed cash flow from the Medical Practices. Id. ¶¶ 5–7. As a result of their ownership interests,⁷ Triana, Mevorah, and Cereceda (the "Individual Defendants") benefited from the allegedly unlawful referral arrangements. Id. ¶¶ 21–23.

Against this backdrop, State Farm seeks damages under the Florida Deceptive and Unfair Trade Practices Act ("FDUTPA"), Fla. Stat. §§ 501.201 – 501.213 (Counts I and II) and under the common law theories of fraud and unjust enrichment (Counts III and IV, respectively). Additionally, State Farm seeks a declaration that it is not liable for payment on any as-yet unpaid claims generated by the scheme under the Declaratory Judgment Act, 28 U.S.C. § 2201 (Count V).

The defendants moved to...