United Healthcare Servs., Inc. v. Sanctuary Surgical Ctr., Inc.

• Decision Date: 06 March 2014
• Docket Number: Case No. 10–81589–CIV.
• Citation: 5 F.Supp.3d 1350
• Court: U.S. District Court — Southern District of Florida
• Parties: UNITED HEALTHCARE SERVICES, INC. and UnitedHealthcare Insurance Company, Plaintiffs, v. SANCTUARY SURGICAL CENTRE, INC., Gladiolus Surgery Center, LLC, Physicians Surgical Group, LLC, Naples Physicians Surgical Group, LLC, PSG of S. Florida, LLC, Edward Liva, Christopher Liva and Carolyn Liva a/k/a Carol Liva or Carol Via or Carolyn Via, Defendants.

5 F.Supp.3d 1350

UNITED HEALTHCARE SERVICES, INC. and UnitedHealthcare Insurance Company, Plaintiffs,

v.SANCTUARY SURGICAL CENTRE, INC., Gladiolus Surgery Center, LLC, Physicians Surgical Group, LLC, Naples Physicians Surgical Group, LLC, PSG of S. Florida, LLC, Edward Liva, Christopher Liva and Carolyn Liva a/k/a Carol Liva or Carol Via or Carolyn Via, Defendants.

Case No. 10–81589–CIV.

United States District Court, S.D. Florida.

Signed March 6, 2014.

Charles Chejfec, Elizabeth J. Kappakas, Patrick C. Harrigan, Katten Muchin Rosenman,LLP, Chicago, IL, Jeffrey T. Kuntz, Daniel Alter, Grayrobinson PA, Fort Lauderdale, FL, for Plaintiffs.

Stephen E. Lampf, Traci A. Zalinski, Lampf, Lipkind, Prupis & Petigrow, P.A., West Orange, NJ, Jane Serene Raskin, Martin Robert Raskin, Raskin & Raskin, Coral Gables, FL, for Defendants.

ORDER ON DEFENDANTS' MOTION TO DISMISS AMENDED COMPLAINT ¹ [151]

DANIEL T.K. HURLEY, District Judge.

This matter is before the court on the defendants' motion to dismiss the plaintiffs' amended complaint [ECF 151] on ground that all state law fraud-based claims are preempted by the Employee Retirement Income Security Act (“ERISA”), and alternatively, on ground that the plaintiffs' fraud-based claims fail to satisfy the specificity requirements of Rule 9(b) and fail to state a claim upon which relief may be granted. For reasons set forth below, the court shall deny the motion.

I. BACKGROUND AND PROCEDURAL HISTORY

Defendants Sanctuary Surgical Centre, Inc. (“Sanctuary”) and Gladiolus Surgery Centre, Inc. (“Gladiolus”) are ambulatory surgical centers. Defendants Physicians Surgical Group, LLC, Naples Physicians Surgical Group, LLC, and PSG of S. Florida, LLC (“the PSG Entities”) are billing companies owned by Edward Liva, Christopher Liva and Carolyn Liva (“the Livas”). Plaintiffs United Healthcare Services Inc. and UnitedHealthcare Insurance Company (cumulatively “United”) are health care benefits and health insurance providers to subscribers under a variety of individual and group health insurance plans. United also serves as a third-party administrator for several benefit plans which are self-funded by various employers, and in that role is responsible for making all coverage and payment determinations under the self-funded plans.

In its Amended Complaint, United alleges that between 2006 and 2009, the defendants perpetrated a massive scheme to defraud United of over $10 million by performing surgical procedures known as “manipulation under anesthesia” (“MUA”) on hundreds of chiropractic patients at defendants' out-of-network ambulatory surgical centers located in Boca Raton (Sanctuary) and Fort Meyers (Gladiolus). According to United, the MUA bills were fraudulent because each MUA procedure was the direct result of an illegal kickback and fee-splitting arrangement, and each MUA bill contained material misrepresentationsof fact regarding the identity of the medical provider who performed the MUA, the patient's diagnosis and condition, and the procedures actually performed. The Amended Complaint includes a detailed appendix itemizing 486 of such MUA procedures allegedly performed at Sanctuary and Gladiolus [Amended Complaint, Ex. 1] [ECF 144–2], and is supported by sworn declarations from an osteopathic physician and chiropractor allegedly involved in the scheme [Amended Complaint, Ex. 2, 3] [ECF 144–3, 144–4].

Specifically, United alleges that defendants engaged in an extensive advertising and marketing campaign, netting dozens of chiropractors who were paid between $4000 and $5000 per MUA patient referral, all in violation of Florida's Patient Brokering Act, Fla. Stat. § 817.505 and Anti–Kickback Statute, Fla. Stat. § 456.054, as well as the prohibition against physician fee-splitting, § Fla. Stat. 458.331(1)(i). In addition, United alleges that defendants violated the statutory prohibition against non-chiropractors engaging chiropractors as independent contractors and interfering with the chiropractors' clinical judgment, Fla. Stat. § 460.4167, as well as the prohibition against waiver of patient co-payments and deductibles, Fla. Stat. § 817.234(7)(a), and the Florida Deceptive and Unfair Trade Practices Act, Fla. Stat. § 501.201 et seq. (“FDUTPA”). Ultimately, United alleges that defendants fraudulently induced United to pay for spinal MUA procedures by creating false medical records and bills ² which misrepresented the patients' diagnoses and conditions, misrepresented the procedures performed, ³ and misrepresented that the MUAs were performed by licensed doctors of osteopathic medicine, when, in fact, the procedures were performed by chiropractors who were not licensed to perform surgery and who received illegal kickbacks for their role in delivering patients to the facility.

On this background, United asserts the following claims against Sanctuary, Gladiolus, the PSG Entities, and the Livas:

(1) common law fraud and misrepresentation (Count 1), based on defendants' submission of fraudulent claims for reimbursement of MUA procedures, by using procedure codes that falsely represented the actual procedures performed; using false bills and template operative reports that falsely reflected that the patients were diagnosed by an osteopathic physician with conditions warranting MUA; forging the signatures of the osteopathic physician who purportedly performed the procedure on letters of medical necessity; falsely representing that the MUA procedures were performed by a licensed osteopathic physician, when in most instances the procedures were actually performed by chiropractors; falsely representing that the procedures were performed under general anesthesia when in reality the procedures were performed under conscious sedation; routinely waiving patient co-payments and deductibles to induce the patients to undergo the procedures in violation of Florida law, and failing to disclose the illegal incentives offered to the patients, including payment of travel and/or lodging expenses;

(2) common law fraud and misrepresentation (Count 2), based on defendants' routine waiver of patient co-payment and deductible obligations, followed by defendants' submission of insurance claims to the insurance carriers at full price, and acceptance of available insurance benefits as payment in full for their services, instead of reducing the billed charges by an amount equal to the waived deductible, co-payment or co-insurance requirement, a device which effectively misrepresented and overstated the applicable charges submitted to the insurance companies, in violation of § 817.234(7)(a) and § 817.234(11), Fla. Stat.;

(3) unjust enrichment (Count 3), based on defendants' submission of insurance claims that overstated applicable charges and sought payment for services that were misrepresented in the claim forms;

(4) violation of Florida's Unfair and Deceptive Trade Practice Act (“FDUPTA”) (Count 4), § 501.201(1), Fla. Stat., prohibiting “[u]nfair methods of competition, unconscionable acts or practices and unfair or deceptive acts or practices in the conduct of any trade or commerce,” based on defendants' violation of numerous laws and regulations designed to protect the public safety, including Florida's civil theft statute; patient brokering statute, anti-kickback statute, and insurance fraud statutes.

(5) civil theft (Count 5), in violation of § 772.11 and § 812.014, Fla. Stat., based on defendants' submission of fraudulent information on insurance claims, and concealment of fact that defendants were not collecting co-payments, deductibles or co-insurance from patients, and by falsely representing the patient's diagnoses and identities of providers who performed the services.

In their pending motion to dismiss, defendants contend that all of United's claims are preempted by the Employee Retirement Income Security Act (ERISA), either as claims which could have been brought under ERISA's exhaustive remedial measures (complete preemption), or as claims which relate to an ERISA-governed plan (defensive preemption). Additionally and in the alternative, defendants contend that United's common law fraud claim (Count 1) based on false claim submissions fails to satisfy the heightened pleading requirements under Rule 9(b); that the common law fraud claim (Count 2) based on violation of Florida's waiver of patient responsibility statute, § 817.234(7), Fla. Stat., fails to state a cognizable claim because it does not allege any criminal adjudication of fraud; that the civil theft claim (Count 5) fails to state a cognizable claim because the civil theft statute excepts the “provision of healthcare” from its penumbra; and finally, that all claims are in the nature of “recoupment” claims which are time-barred under § 627.6131(6)(b), Fla. Stat. These arguments are discussed, in turn, in the discussion which follows.

II. DISCUSSION

A. ERISA PREEMPTION

There are two strands of ERISA preemption: (1) express preemption under ERISA § 514(a), 29 U.S.C. § 1144(a), also known as “defensive” or “conflict” preemption and (2) complete or “super” preemption due to a conflict with ERISA's exclusive remedial scheme as set forth in ERISA § 502(a), 29 U.S.C. § 1132(a). Connecticut State Dental Ass'n v. Anthem Health Plans, Inc., 591 F.3d 1337 (11th Cir.2009); Fossen v. Blue Cross and Blue Shield of Montana, Inc., 660 F.3d 1102 (9th Cir.2011), cert. den., ––– U.S. ––––, 132 S.Ct. 2780, 183 L.Ed.2d 640 (2012). Complete preemption derives from ERISA's civil enforcement provision § 502(a), which is viewed as having such “extraordinary” preemptive power that it “converts an ordinary state common law complaint into one stating a federal claim for purposes of the well-pleaded complaint rule.” ⁴Anthem Health, at 1344. It is narrower, and differs from, defensive preemption because it is jurisdictional in nature, while defensive or conflict preemption functions as an affirmative defense. Id. In this case, defendants invoke both strands...