State Farm Mutual Automobile Insurance Co. v. Performance Orthopaedics & Neurosurgery, LLC
278 F. Supp. 3d 1307
S.D. Fla.2017Background
- State Farm alleges a scheme where orthopedic/ophthalmic practices (Calhoun, Omni) and surgical facilities (Metropolitan, Coral Gables) used pre-arranged, discounted payments but circulated invoices showing much higher "usual and customary" charges to plaintiffs' attorneys, who then included them in settlement demands to State Farm.
- CBO performed billing for Calhoun and transmitted inflated invoices/demand packages; Omni sent similar packages directly for Coral Gables charges after Metropolitan closed. Letters of Protection (LOPs) promised payment from settlements.
- State Farm alleges it was unaware of the below‑the‑line payments and paid over $3.8 million in settlements based on inflated invoices; it sues under FDUTPA, common-law fraud, unjust enrichment, and seeks declaratory relief.
- Defendants moved to dismiss for failure to state claims, failure to plead fraud with particularity, and for failure to join accident‑victim parties; Coral Gables was later dismissed by stipulation.
- The court denied dismissal of FDUTPA and fraud claims as to entities CBO, Calhoun, Omni, and Metropolitan, but dismissed fraud/FDUTPA claims against individual owners (Cereceda, Triana, Mevorah) without prejudice; unjust enrichment and declaratory relief were dismissed without prejudice. Plaintiff given 30 days to amend.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether alleged billing scheme falls within FDUTPA "trade or commerce" | Billing and submission of inflated invoices are commercial acts and deceptive to insurers | Conduct related to settlement/claims is not "trade or commerce" under FDUTPA | Court: conduct qualifies as "trade or commerce"; FDUTPA claims survive against entity defendants |
| Whether FDUTPA requires a statutory predicate | FDUTPA can be pleaded traditionally (deceptive/unfair practice) without a predicate statute | FDUTPA claim fails absent violation of a predicate statute | Court: traditional FDUTPA claim pled; need not show statutory predicate |
| Whether fraud and FDUTPA claims satisfy Rule 9(b) particularity | Complaint alleges sample invoices, demand packages, claim numbers, settlement dates and describes how State Farm relied — sufficient for entities | Defendants say plaintiff lacks specific who/when/where and thus fails Rule 9(b) | Court: allegations satisfy Rule 9(b) as to CBO, Calhoun, Omni, Metropolitan; insufficient as to individual owners — dismiss individuals without prejudice |
| Whether unjust enrichment and declaratory relief survive | State Farm: payments were not owed because services resulted from unlawful referral arrangements; equitable relief appropriate | Defendants: statutes cited do not create private remedy and do not render charges noncompensable | Court: unlike Silver Star, cited statutes do not expressly make charges unenforceable; plaintiff has not shown it owed nothing — unjust enrichment and declaratory claims dismissed without prejudice |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (plausibility standard for federal pleading)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (Plaintiff must plead factual content to state plausible claim)
- Butler v. Yusem, 44 So.3d 102 (Fla. 2010) (elements of common-law fraud; no requirement that reliance be reasonable)
- State Farm Fire & Cas. Co. v. Silver Star Health & Rehab, 739 F.3d 579 (11th Cir. 2013) (unjust enrichment permitted where statute made charges noncompensable)
- Brooks v. Blue Cross & Blue Shield of Fla., Inc., 116 F.3d 1364 (11th Cir. 1997) (Rule 9(b) particularity requirements in fraud suits)