State Farm Fire & Casualty Company v. Silver Star Health and Rehab
2013 U.S. App. LEXIS 16255
| 11th Cir. | 2013Background
- Silver Star Health and Rehab was an Orlando chiropractic clinic that billed State Farm for patient treatment; State Farm paid over $151,000 and withheld about $86,000 in subsequently billed charges.
- Florida law requires clinics to be licensed unless exempt; one exemption applies to clinics “wholly owned by one or more licensed health care practitioners.”
- State Farm alleged Silver Star and owner Judith McKenzie concealed ownership by Jean Colin (not a licensed practitioner) to appear exempt and avoid licensing.
- State Farm sued for a declaratory judgment that it need not pay the outstanding bills and for unjust enrichment to recover amounts already paid.
- A jury returned verdict for State Farm on unjust enrichment; the district court entered that judgment and granted the requested declaratory relief.
- Silver Star appealed, raising four issues: availability of a judicial remedy under the licensing statute, availability of unjust enrichment given alleged privity, correctness of the jury instruction on “wholly owned,” and apportionment of costs.
Issues
| Issue | Plaintiff's Argument (State Farm) | Defendant's Argument (Silver Star) | Held |
|---|---|---|---|
| 1. Judicial remedy for licensing violation | Statute makes claims by unlicensed clinics unlawful; court can decide lawfulness and grant declaratory relief | Only criminal or administrative enforcement available; no private judicial remedy because statute is silent | Court: Judicial relief available; statutes render claims by unlicensed clinics noncompensable and courts can decide lawfulness |
| 2. Unjust enrichment available given assignments | Unjust enrichment available because Silver Star retained benefits it was not legally entitled to | Assignment created privity, barring unjust enrichment between parties in contract | Court: No privity; assignment did not transfer contractual duties, so unjust enrichment is proper remedy |
| 3. Jury instruction on “wholly owned” | Instruction listed common ownership factors and noted none were dispositive | Instruction misstated law by implying control or other factors were required | Court: Instructions, read together, accurately stated law and did not mislead jury |
| 4. Joint-and-several taxation of costs | Joint-and-several costs appropriate given coordinated scheme to evade licensing | Apportionment among defendants required; court abused discretion | Court: Default joint-and-several rule applies; Silver Star failed to justify apportionment; no abuse of discretion |
Key Cases Cited
- Active Spine Centers, LLC v. State Farm Fire & Casualty Co., 911 So. 2d 241 (Fla. 3d DCA 2005) (court upheld denial of payment where clinic failed to meet licensing statute)
- McMahan v. Toto, 311 F.3d 1077 (11th Cir. 2002) (federal court follows intermediate state appellate decisions absent indication state supreme court would rule differently)
- Butler v. Trizec Props., Inc., 524 So. 2d 710 (Fla. 2d DCA 1988) (recognizes unjust enrichment to prevent wrongful retention of benefits)
- Shaw v. State Farm Fire & Cas. Co., 37 So. 3d 329 (Fla. 5th DCA 2010) (assignment of benefits does not transfer contractual duties to assignee)
- Ocean Comms., Inc. v. Bubeck, 956 So. 2d 1222 (Fla. 4th DCA 2007) (discusses quasi-contract/unjust enrichment remedy when no express contract exists)
- Morgan v. Family Dollar Stores, Inc., 551 F.3d 1233 (11th Cir. 2008) (standard for reviewing jury instructions)