315 F. Supp. 3d 1291
S.D. Fla.2018Background
- Calhoun Orthopaedics (Calhoun), formed in 2011 and owned by licensed practitioners (including Drs. Cereceda and Mevorah), provided care to auto-accident patients and obtained payment via letters of protection and occasional PIP billing; CBO (billing company) performed billing for Calhoun.
- Calhoun physicians performed surgeries at Metropolitan Hospital under an arrangement where Metropolitan assigned patient accounts to Calhoun; Calhoun paid Metropolitan less than the billed (face) amount and then sent the Metropolitan bills (showing Calhoun as assignee) to plaintiffs' attorneys for inclusion in settlement demand packages.
- State Farm settled numerous BI claims after receiving demand packages that included Calhoun and Metropolitan bills; settlements were lump-sum and not allocated among claimants, counsel, and medical providers.
- State Farm sued Calhoun, CBO, Dr. Cereceda, and Dr. Mevorah alleging violations of FDUTPA (predicated on statutes including patient-brokering/anti-kickback/anti-rebate, Insurance Fraud Statute, and HCCA), common-law fraud (misrepresentations/omissions in bills/demands), and unjust enrichment (disgorgement of settlement proceeds).
- The parties cross-moved for summary judgment. The Court found disputed factual issues on whether the arrangement produced unlawful kickbacks/split-fees, whether defendants made material misrepresentations or omissions to insurers, and whether Calhoun qualified for the HCCA wholly-owned exemption (supervision requirement), and thus denied defendants’ motion and granted plaintiff’s motion in part and denied it in part.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Calhoun–Metropolitan arrangement violated patient-brokering/anti-kickback/anti-rebate statutes (i.e., produced unlawful split-fees/kickbacks) | Arrangement produced unlawful kickbacks: Calhoun kept the difference between settlement proceeds and (its fees + amount paid to Metropolitan) | Some claims show no windfall; factual disputes whether amounts were remuneration for referrals or risk-sharing for providing care to indigent patients | Denied summary judgment for defendants — factual disputes (possible windfalls and losses) preclude resolution at summary judgment |
| Whether defendants violated the Insurance Fraud Statute by omitting material facts (e.g., that Metropolitan accounts were purchased/paid at discounted amounts) | Defendants had statutory duty to avoid false/incomplete written statements to insurers; omission of discount/payment-in-full was material | No duty to disclose or statements were not false; some reliance on attorney-disclosure precedent | Denied summary judgment for defendants — intent, materiality, and misleading nature are factual issues for jury |
| Whether Calhoun operated unlawfully under the HCCA (i.e., whether it was a clinic and whether it qualified for the wholly-owned exemption requiring supervision) | Calhoun is a clinic and did not satisfy the supervision requirement for the exemption; therefore charges are noncompensable | Calhoun did not tender charges to third-party payors in the relevant sense; owners supervised or exemption applies | Denied summary judgment for both sides — court found Calhoun is a clinic but disputed whether required supervisory/ownership exemption criteria are met; fact issues remain |
| Whether State Farm can recover under FDUTPA and unjust enrichment (causation, damages, disgorgement) despite alleged insurer knowledge of Project Calhoun | State Farm can show objective injury (price premium) and seek disgorgement; evidence supports damages based on reasonable-value adjustments | State Farm’s knowledge of the Arrangement and lack of allocation in settlements precludes causation/reliance and makes damages speculative | Denied defendants’ motion; FDUTPA recovery does not require subjective reliance and factual disputes over damages/causation remain; summary judgment inappropriate |
Key Cases Cited
- Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment standard)
- Anderson v. Liberty Lobby, 477 U.S. 242 (summary judgment/genuine issue standard)
- State Farm Mut. Auto. Ins. Co. v. Silver Star Health & Rehab, 739 F.3d 579 (11th Cir. 2013) (HCCA licensing and unenforceability of charges by unlicensed clinic)
- Carriuolo v. General Motors Co., 823 F.3d 977 (11th Cir. 2016) (FDUTPA: objective inquiry; reliance not required)
- United States v. Marder, 208 F. Supp. 3d 1296 (S.D. Fla. 2016) (disputed facts on whether remuneration constituted referral-driven kickbacks)
- Mark Marks, P.A. v. State, 698 So.2d 533 (Fla. 1997) (attorney-disclosure context under Florida insurance-fraud statute)