Category Archives: Case Law

State Farm Granted Summary Judgment in Lake Worth Chiropractic PIP Benefits Case

On July 14, 2014, the 15th Judicial Circuit for Palm Beach County affirmed a lower court decision granting summary judgment to State Farm in a claim for PIP benefits brought by Lake Worth Emergency Chiropractic Center.

In the underlying case, Judge Bosso-Pardo granted defendant’s Motion for Final Summary Judgment, entering final judgment for the defendant, State Farm, upon finding that the pre-suit demand letter, required by Florida Statute 627.736(10) (2010), was insufficient in that it demanded payment for services that were never billed to State Farm.

Judge Bosso-Pardo found that the Plaintiff’s “withdrawing” the unbilled service after suit had commenced was insufficient to cure the defect and that the demand letter requirements under Florida Statute 627.736(10) must be strictly construed and adhered to by those seeking to initiate litigation against a Florida PIP insurer.

The Circuit Court affirmed this decision, concluding that section 627.736(10) requires strict compliance and that, in this case, the demand letter did not strictly comply with the PIP statute requirements. As such, Lake Worth Emergency Chiropractic Center failed to satisfy the condition precedent to filing its law suit, and the trial court was correct in awarding final summary judgment in favor of State Farm.

The case is Lake Worth Emergency Chiropractic Center v. State Farm, in the Fifteenth Judicial Court for Palm Beach County, Case No. 502012AP000034XXXXMB. Click on the link to read the court opinion.

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Filed under Case Law, Fla. Stat. 627.736 (2008)

4th District Court of Appeal Denies Rehearing in PIP Benefit Dispute

The Fourth District Court of Appeal has denied motions for rehearing by appellants in a PIP case decided in the insurer’s favor. The case was the consolidation of two separate PIP cases.

Insureds in both cases sought treatment for injuries sustained in separate accidents and assigned their PIP benefits to their treatment providers. One of the insurers, State Farm, reduced the amount paid to Northwood Sports Medicine, and Northwoods subsequently sued. Prior to that filing, the insured’s PIP benefits were exhausted. State Farm moved for summary judgment; Northwoods amended its complaint to allege that State Farm reduced payments in bad faith. The trial court granted the motion for summary judgment on the sole ground of exhaustion of benefits.

Likewise, in the second case, the insured assigned his benefits to Wellness Associates of Florida. USAA Insurance Co. reduced the payments to Wellness, and Wellness filed a complaint for damages. At the time the suit was filed, less than $14 in unpaid PIP benefits remained and, while the lawsuit was pending, PIP benefits were exhausted. USAA moved for summary judgment, Wellness amended its complaint to allege bad faith, and the trial court entered summary judgment based upon exhaustion of benefits.

For jurisdictional reasons, the appellate court transferred the Northwoods case to the circuit court. The question that the appellate court answered in the affirmative in the Wellness case is whether post-suit exhaustion of benefits absolves the insurer from responsibility to pay an otherwise valid claim where the exhaustion occurred after the insurer: (1) paid an amount that the provider claims is less than required by the contract; (2) received a pre-suit demand letter notifying the insurer of the medical provider’s dispute; and (3) was served with the filed complaint.

In its rationale, the court extended its decision in Simon v. Progressive, rejecting the “reserve or hold” theory by which an insurer is to put money in reserve if it denies or reduces a claim until that claim is resolved. The court concluded that “where the reasonableness of the provider’s claim is in dispute, post-suit exhaustion of benefits extinguishes the provider’s right to further payments, as long as exhaustion is prior to the establishment of the amount to which the medical provider is entitled to under PIP.” The court concluded that post-suit exhaustion of benefits—as was the case in Wellness—should be treated no differently than pre-suit exhaustion of benefits, as long as the amount of PIP benefits to which the provider is entitled has not been established. The court therefore affirmed the final judgment of the trial court in Wellness.

The case in the District Court of Appeal of The State of Florida Fourth District, January Term 2014, is Northwoods Sports Medicine and Physical Rehabilitation, Inc., (A/A/O Suzanne Cabrera), and Wellness Associates of Florida, Inc., (A/A/O Daniel North), Appellants, v. State Farm Mutual Automobile Insurance Company and USAA Casualty Insurance Company, Appellees, Nos. 4d11-1556 and 4d11-3796, [March 5, 2014]. Click on the link to read the June 4, 2014 ruling in the case.

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Filed under Case Law, Fla. Stat. 627.736 (2008)

Attorney Fee Conflict Settled in Advanced Chiropractic v. UAIC

On May 29, 2014, the Florida Supreme Court issued a decision settling a conflict over the timeliness of filing for attorney’s fees.

The case originated in Broward County with an action filed by Advanced Chiropractic against United Automobile Insurance Co. (“UAIC”) for PIP benefits. During the course of the action, the attorney for Advanced moved offices and filed a change of address with the Clerk of Court. Two months later, Advanced and UAIC entered into a settlement agreement in which UAIC agreed to pay Advanced’s attorney’s fees. The trial court judge subsequently entered an order of dismissal in the case.

Advanced’s attorney never received a copy of the dismissal because the Clerk of Court failed to update its records concerning the address change. Once he learned of the dismissal, months later, counsel for Advanced filed a motion for attorney’s fees. Because the motion was filed past the mandatory 30-day deadline, the attorney moved to vacate the order of dismissal based on excusable neglect due to the court’s failure to update its records.

In a hearing on the motion to vacate the dismissal, the attorney for Advanced and an employee of the Clerk of Court both filed unsworn statements. The county court found that Advanced had established excusable neglect, vacated the order of dismissal, and allowed Advanced’s attorney to file a motion for attorney’s fees.

UAIC appealed the decision to the circuit court, contending that counsel for Advanced had not established excusable neglect. The circuit court held that, because the statements from the attorney and the Court’s employee were unsworn, there was not sufficient evidence to support the finding of excusable neglect. The circuit court therefore reinstated the order of dismissal.

Advanced appealed to the Fourth District, asserting that the circuit court had failed to apply the correct legal standard. The Fourth District concluded that Advanced had been denied due process and therefore quashed the decision of the circuit court.

Advanced then filed a motion for attorney’s fees. UAIC opposed the motion on the basis that it was untimely pursuant to the FL Rules of Appellate Procedure. The District Court dismissed UAIC’s argument based on the Rules of Appellate Procedure, but nonetheless denied the motion for attorney’s fees on the basis of the FL Supreme Court’s 1991 holding in Stockman v. Downs, which requires parties to plead entitlement to attorney’s fees.

The Fourth District held that, pursuant to the Stockman decision, the request for attorney’s fees must be made in the pleadings which, in this case, would be the petition, the response, or the reply. Because Advanced did not request fees in the petition or reply, the district court held that the motion was untimely. The state Supreme Court then agreed to review the case to consider whether the Fourth District misapplied the Stockman decision.

In the Stockman case, the Supreme Court addressed whether a prevailing party could raise entitlement to attorney’s fees for the first time by motion after trial. The Court held that a claim for attorney’s fees based upon a contract or statute is waived unless it is made in the pleadings. The Court explained that the fundamental concern is that the parties have notice of the claim as it may affect the decisions of the parties with respect to the case.

In distinguishing Stockman from this case, the Court noted that Stockman involved a request at the trial level and that the primary concern—lack of notice—is not implicated in the case at hand. Since Advanced requested attorney’s fees in both the county and circuit courts,   UAIC could not contend unfair surprise when Advanced again claimed entitlement to attorney’s fees. Consequently, the Court quashed the decision in the court below and remanded to the district court for a determination of the amount of attorney’s fees to which Advanced is entitled.

The case is Advanced Chiropractic And Rehabilitation Center, Corporation vs. United Automobile Insurance Company, Supreme Court of Florida, Case No. SC13-153, May 29, 2014.

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Filed under Case Law

Three Chiropractors Found Guilty of Federal Fraud Charges

Three Florida chiropractors involved in a plan to fraudulently obtain money from insurance agencies have been found guilty on federal money laundering and mail fraud charges.

The chiropractors—Hermann Diehl of Miami, Kenneth Karow of West Palm Beach, and Hal Mark Kreitman of Miami Beach—helped set up staged automobile accidents and then filed fake claims for “victims” of the crashes. They also billed insurance agencies for procedures that were not actually performed.

The verdict was rendered on April 22 by a jury in the U.S. District Court for the Southern District of Florida. A fourth defendant, Joel Antonio Simon Ramirez of West Palm Beach, was found guilty of helping to stage the accidents.

All four of the defendants were found guilty of money laundering and mail fraud, with sentencing set for July. They each face a maximum sentence of 20 years in prison.

Readers of FLPIPGuide.com may recall that we wrote about Dr. Karow in a May 17, 2013 post titled, “92 Accused in Staged Accident Fraud Ring, $20 million in Fraudulent Claims.” At that time, an Operation Sledgehammer investigation revealed that chiropractors Lazaro Rodriguez, then 58, of Doral, and Kenneth Karow, then 53, were recruited to serve as owners of clinics involved in the ring.

 

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Filed under Case Law, Insurance Fraud

Florida Supreme Court Refuses to Review PIP Case

The Florida Supreme Court has refused to consider a petition seeking to overturn a 2012 state law reducing PIP benefits.

In an attempt to curb fraud and lower insurance rates, HB 119—Personal Injury Protection (PIP) for Auto Insurance Fraud—requires people involved in motor vehicle crashes to seek treatment within 14 days, and allows up to $10,000 in benefits for emergency medical conditions and up to $2,500 for non-emergency conditions.

The law also prevents accident victims from using PIP coverage to pay for treatment by certain medical providers, and set benchmarks for insurers to lower rates on PIP coverage.

In 2013, Leon County Circuit Judge Terry Lewis ruled that the law illegally shut out some medical providers, namely acupuncturists and massage therapists.

As reported in an earlier blog post titled “Motion for Rehearing of Florida PIP Injunction is Denied,” the Florida First District Court of Appeal reversed the ruling in October, 2013, saying that the challengers to the law needed a “factual” plaintiff who had actually been harmed by the law rather than a hypothetical plaintiff, as named in the complaint. The Florida Supreme Court denied review of that decision in this week’s ruling.

An attorney representing medical providers who claim they were unfairly shut out by the law said he anticipates filing an amended case within 30 days using a named plaintiff alleged to have been harmed by the 2012 PIP reforms.

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Filed under Case Law, Fla. Stat. 627.736 (2012), Insurance Fraud

Chiropractors in $2.3 Million PIP Insurance Fraud Scheme will Face RICO Charges

A federal judge ruled that the chiropractors who were allegedly behind a $2.3 million ploy to defraud an insurance company must face charges for violating the Racketeer Influenced and Corrupt Organizations Act (RICO) and Florida’s Deceptive and Unfair Trade Practices.

In July 2012, GEICO Insurance Company filed a lawsuit against two Orlando-based clinics—KJ Chiropractic Center LLC and Wellness Pain & Rehab Inc.—in addition to their two founders and a number of co-conspirators, known as “runners.” These runners helped perpetrate the suspected scam by exploiting willing third-party participants who faked accidents and injuries.

According to an article in Courthouse News Service, U.S. District Judge Charlene Edwards Honeywell said in her order that the fraudulent PIP claims resulted in more than $2.3 million in unwarranted insurance benefits and emerged from:

  • Staged accidents;
  • Real accidents in which claimants received treatment at clinics even though they were not truly injured; and
  • Real accidents in which claimants incurred some injuries, but received treatments that were pre-programmed, unnecessary, excessive and unlawful.

GEICO charged that the defendants advanced their unlawful plot by paying “anyone who referred accident victims to the clinics, offering cash directly to patients who agreed to accept unnecessary chiropractic treatment.” The insurance company also claimed the clinics provided treatment that was not in the best interest of patients because its sole intent was to maximize profits, the article said.

The U.S. District Court for Florida’s Middle District, Orlando Division, adopted Judge David Baker’s full recommendations made in October 2013 to deny the defendants’ motion to dismiss a second amended complaint on all but one count.

Judge Honeywell Edwards said she felt that GEICO adequately supported its argument with “factual allegations to state plausible claims for relief. As such, the court agrees with the Magistrate Judge that GEICO’s claims are sufficiently pled.”

The case is GEICO v. KJ Chiropractic Center LLC et. al., U.S. District Court for the Middle District of Florida, Case No. 6:12-CV-1138-ORL-36-DAB. Click on the link to read the complaint.

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Filed under Case Law, Insurance Fraud

AHCA Revokes License of M&D Mobile Diagnostic

In 2008, M&D Mobile Diagnostic applied for and was issued a Certificate of Exemption to operate a health care clinic in Lake Worth, FL. In 2013, the state Agency for Health Care Administration filed an Administrative Complaint seeking to revoke that certificate and, on January 16, 2014, issued a final order revoking M&D Mobile’s exemption certificate.

In accordance with Florida law, a health care clinic must be licensed if it provides health care services to individuals and then bills third party payers for those services. An exception to the licensing rule exists where health care services are provided by a “licensed health care practitioner,” as defined by statute, and the business is wholly owned by that practitioner. Under those circumstances, the term “clinic” does not apply, and the entity may claim to be exempt from licensure and receive a “Certificate of Exemption” from the state health care administration.

The applicant, Michael Josaphat, based his claim for exemption from licensure on being a licensed health care practitioner, as defined by statute. However, Josaphat’s license is for a Certified Radiologic Technologist license. The Health Care Agency determined that such a license is not one fitting the statutory definition of “licensed health care practitioner,” and therefore does not entitle Josaphat to a Certificate of Exemption. The Agency ordered, therefore, that the certificate be revoked and M&D subject to sanctions.

The case is State of Florida, Agency for Health Care Administration, v. M&D Mobile Diagnostic Imaging, Inc., Case No. 13-544PH, AHCA File No. 2013010999.

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Filed under Case Law

State Farm v. MR Services I, Inc.

In accordance with Florida’s PIP Statute, Plaintiff State Farm informally requested discovery from Defendant MR Services pursuant to Fla. St. § 627.736(6)(b). MR Services informally responded, but only in part, and the responses were deemed inadequate and incomplete. State Farm petitioned the Court for an order permitting discovery.

MR Services argued that it need not fully respond to the discovery requests because State Farm could obtain the discovery it wanted from other cases pending in Broward County. The Court held that, while this may be true, it does not preclude discovery under the provisions of the PIP Statute.

The Court therefore granted the Motion to Allow Discovery and required that MR Services produce all documents and information requested by State Farm.

State Farm is thus entitled to:

  • Take the depositions of Dr. Mark Gans, Gary Howle, and Stacy Howle
  • Issue a third-party subpoena to LinkedIn for account information on subscriber Gary Howle
  • Receive from MR Services complete income tax returns, financial statements, and balance sheets from 2008 through 2012

Click on the link to view the Order in State Farm Mutual Automobile Insurance Co. vs. MR Services, Inc., No. 16-2013-CA-1731-XXXX-MA (Fla. 4th Cir. Ct. 2014).

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3rd DCA Denies Millennium Petition for Writ of Certiorari in Legal Title Dispute

State Farm issued a policy to Hery Alvarez, whose mother, Josefa Alvarez, was in an accident while a passenger in her son’s car. Hery Alvarez and Josefa Alvarez lived in the same household, and Josefa Alvarez sought treatment at Millennium Diagnostic under her son’s PIP policy. She assigned her benefits to Millennium. She did not have vehicle insurance or her own PIP policy.

State Farm denied payment to Millennium. State Farm argued that the mother was the registered owner of a Ford Expedition and therefore should have had PIP through her own policy. She did not have insurance coverage on the Expedition, which was operable. She had leased the vehicle for her daughter, who had bad credit.

In the trial court, Millennium argued that Josefa Alvarez’s daughter, Ana Alvarez, was actually the beneficial owner of the Expedition. The trial court agreed and entered Summary Judgment, finding that the daughter was the beneficial owner of the Expedition. State Farm appealed the decision to the 11th Circuit Court of Appeals.

Florida §627.733, requires that every owner or registrant of a motor vehicle in FL is required to maintain motor vehicle insurance securing PIP benefits. An owner is a person who holds legal title to a motor vehicle. An owner of a registered, operable motor vehicle who fails to have PIP security in effect at the time of an accident shall have no immunity from tort liability, but shall be personally liable. Thus, if Josefa Alvarez is not the legal owner of the vehicle—beneficial ownership having passed to her daughter—she would not be required to have PIP coverage on the Expedition and could seek treatment under her son’s policy.

The trial court found that Ana Alvarez was the beneficial owner of the vehicle. Relying on State Farm v. Hartzog, 917 So. 2d 363, 364-65 (Fla. 1st DCA 2005), the court concluded that the name on the title is not the “litmus test” for determining ownership for insurance purposes. In Hartzog, Barbara Hartzog agreed to purchase a vehicle from Donnie Welch. Welch kept title in his name and maintained the insurance policy on the vehicle. When Hartzog was involved in an accident shortly after the purchase agreement was entered into, the 1st District Appellate Court concluded that Hartzog was the beneficial owner because Welch no longer owned the vehicle, pursuant to the purchase agreement, and Hartzog continued to make payments to Welch. The “overt acts” of Hartzog—having exclusive possession and control of the vehicle—were said to be key factors in determining beneficial ownership of a vehicle.

The appellate court in this case distinguished Hartzog. Here, no purchase agreement existed between Josefa Alvarez and her daughter, Ana Alvarez. In fact, there could not be because the lessor, not Josefa Alvarez, owned the Expedition, and Josefa did not have the right to transfer the title. Additionally, the court found that Josefa’s subjective intent to gift the vehicle to her daughter was insufficient to contradict her legal interest in the vehicle.

Thus concluding that Ana did not have beneficial ownership of the vehicle and that Josefa held legal title, the Appellate Court ordered that summary judgment be reversed, and the case remanded to the trial court. On December 5, 2013, the 3rd DCA denied a petition for writ of certiorari by Millennium.

Millennium Diagnostic v. State Farm, No. 3D13-0423 (3rd DCA 2013).
State Farm v. Millennium Diagnostic, No. 11-102 (Fla. 11th Cir. Ct. App. Div.).

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Filed under Case Law, Fla. Stat. 627.736 (2012)

Court Grants State Farm Motion in Terlep Chiropractic Case

Defendant State Farm’s insured, Mark Kundrat, was allegedly involved in a car accident on July 9, 2009.  Kundrat sought treatment for injuries sustained in the accident from Plaintiff Terlep Chiropractic. On November 22, 2010, Terlep filed a cause of action against State Farm, alleging failure to pay PIP benefits.  As an affirmative defense, State Farm argued that Terlep Chiropractic lacked standing to bring the cause of action.  Terlep argued that a “Financial Policy & Consent Form” signed by Kundrat as a condition of receiving treatment conveyed to Terlep the right to bring any and all causes of action against State Farm.

The document signed by Kundrat, and upon which Terlep relies, contains a paragraph entitled “Assignment of Benefits.”  In that paragraph, Kundrat assigned payment directly to Terlep Chiropractic and agreed that he is financially responsible for charges not covered by the assignment or which the insurer declines to pay.  The court found that this language unambiguously serves only to direct payment by the insurance company to the medical provider and that there is no language conveying any and all rights, including the right to bring any and all causes of action.  Because the language in the instant case does not convey a full assignment of any and all benefits and rights under the policy, the Plaintiff does not have standing to bring this cause of action against Defendant.

Terlep, in turn, argues that State Farm lacks standing to challenge the assignment of benefits because it lacks privity of contract.  The court points out, however, that State Farm is not challenging the contract between Terlep and Kundrat.  Rather, State Farm is raising the issue of the interpretation of the “assignment of benefits” part of the agreement.

Terlep further argues that it has standing to bring the cause of action based on equitable assignment.   The court concludes that the cases upon which Terlep relies for this argument should be distinguished because they involved situations in which the documents contained ambiguities and inconsistencies.  In this case, the document at issue is “clear and unambiguous,” and therefore equitable principles do not apply.

Plaintiff’s final argument is that it is the real party in interest and that entry of final judgment against it would deny it a remedy at law.  The document provides, however, that the insured is financially responsible for any payments not made to Plaintiff, and any cause of action is therefore between Kundrat and State Farm.

The court granted Defendant State Farm’s motion for full and final summary judgment.

The case is Terlep Chiropractic v. State Farm, Circuit Court, 6th Judicial Circuit in and for Pinellas County. Case No. 10-006194-SC. December 5, 2013.

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Filed under Case Law, Fla. Stat. 627.736 (2012)