State Farm Mutual Automobile Insurance v. B&A Diagnostic, Inc.
Docket: Case No. 14-cv-24387-KMM
Court: District Court, S.D. Florida; November 15, 2015; Federal District Court
The Court has granted State Farm Mutual Automobile Insurance Co. and State Farm Fire Casualty Co.'s Motion for Summary Judgment against Defendant Alex Alonso, M.D., and other Defendants involved in a case concerning unjust enrichment claims. State Farm alleges that the Defendants submitted fraudulent claims for X-ray services provided under the insureds' No-Fault Personal Injury Protection (PIP) policy. Additionally, State Farm seeks a declaration that it is not responsible for any outstanding payments related to these allegedly unlawful services.
The Court emphasizes the importance of local rules, particularly Local Rule 56.1(b), which mandates that any material facts presented by a movant are deemed admitted unless contested with supporting evidence. The rule is designed to streamline court processes and conserve judicial resources. The Defendants failed to comply with this rule by not opposing State Farm's Statement of Undisputed Material Facts, nor did they provide sufficient factual assertions or citations to support their claims. Their reliance on conclusory statements was deemed insufficient to establish any genuine issues of material fact, leading to the acceptance of State Farm's undisputed facts and the granting of its motion.
The non-moving parties’ non-compliance with Local Rule 56.1(b) results in the Court treating the situation as an unopposed summary judgment motion, where the plaintiff's facts are accepted as admitted. However, the Court must still examine the record to confirm the absence of any genuine material fact issues. The Court must review all evidentiary materials presented for the summary judgment motion to address the merits effectively.
Key undisputed facts include:
- Defendant B&A Diagnostic, Inc. is a licensed Florida health care clinic providing X-ray services in Miami.
- B&A submits medical bills to State Farm for X-ray services.
- Felipe Aguilar is the sole owner of B.A. and hires medical directors.
- Esteban Genao, M.D. was the Medical Director from March 21, 2008, to March 31, 2010, followed by Alex Alonso, M.D. from April 1, 2010, onward.
- Ernesto Alvarez Velasco worked at B.A. conducting X-rays from June 2009 to November 30, 2010, while Jose Angel Ortiz Maza provided similar services from July 2009 to November 2011.
- Alvarez believed he only needed ARRT certification to conduct X-rays and was unaware of the requirement to obtain certification from the Florida Department of Health (DOH), which needed proof of education, completion of an HIV course, and passing a knowledge exam.
- Alvarez did not complete the required HIV course until October 6, 2010, and Dr. Alonso did not verify Alvarez’s certification status.
- After discovering Alvarez’s lack of certification in October 2010, no action was taken by B.A. to prevent him from performing X-rays.
- State Farm learned of the certification issue in December 2010, and Alvarez signed a form acknowledging his role in each X-ray performed prior to November 30, 2010.
- Ortiz had received his Basic Machine Operator certification from Florida in April 2005 and worked continuously at B.A. from 2007 until late 2013.
Ortiz was responsible for performing X-ray scans at B.A., typically conducting two to six scans daily, without the presence of a licensed medical doctor, as there were no policies requiring one to be on-site. He signed disclosure forms for each scan he performed. State Farm learned of Ortiz's illegal X-ray services in early 2012. Dr. Genao, the Medical Director during Ortiz's tenure, did not have a written agreement with B.A., was unaware of his statutory obligations under Florida law, and failed to verify the licensure of technicians or review clinic billings for legality. Genao was physically present at B.A. only once or twice a week and did not engage in daily operations, hiring, or ensuring lawful billing practices. He assumed billings were lawful without conducting any reviews and neglected to collect required co-payments or deductibles.
Dr. Alonso succeeded Genao as Medical Director in April 2010 but also did not enter into a written agreement until March 2011. He failed to verify the licensure of technicians and acknowledged that the X-rays performed by Alvarez during his tenure were unlawful. Alonso was unaware of the need for direct supervision of Ortiz and mistakenly believed BMOs could operate under telephone supervision. He recognized his legal responsibility to ensure all billing conformed to Florida law and admitted it was a violation of his duties to submit bills for illegal services.
Dr. Alonso acknowledged that the billing for X-ray services by Ortiz violated Florida law and admitted to failing in his duties as Medical Director to ensure Ortiz's proper certification and legality of the billing. He also stated he was unaware of any statutory obligations for clinics like B.A. regarding the collection of co-payments and deductibles from patients billed for PIP benefits.
State Farm seeks summary judgment on Counts I (Unjust Enrichment) and II (Declaratory Relief), asserting that there are no genuine material facts indicating that Medical Directors Drs. Genao and Alonso fulfilled their responsibilities, which include ensuring healthcare practitioners had valid certifications, accepting legal responsibility for the clinic, and conducting reviews to prevent fraudulent or unlawful billings. State Farm claims that the charges during the Relevant Time Period were unlawful and thus noncompensable, seeking to recover $1,478,848.40 in paid PIP benefits and a declaration absolving it from paying approximately $697,970 in unresolved bills for those services.
Defendant Alex Alonso, M.D. filed a cross-motion for summary judgment, asserting three primary defenses against State Farm's claims: (1) the doctrine of res judicata prevents the Plaintiff from pursuing the current litigation; (2) the Plaintiff is collaterally estopped from filing this suit; and (3) any unjust enrichment claims related to payments incurred before November 19, 2010 are barred by the statute of limitations.
The legal context includes Florida’s Motor Vehicle No-Fault Law, which mandates that automobile insurance policies include Personal Injury Protection (PIP) coverage for medical benefits related to motor vehicle accidents, regardless of fault. The law specifies that only services that are lawfully provided are eligible for reimbursement, and an insurer is not obligated to pay for services deemed unlawful at the time they were rendered. Additionally, a service provider may only charge a reasonable amount for their services.
The law defines "lawful" as substantial compliance with all relevant state and federal regulations concerning medical services. Claims for services rendered by unlicensed individuals are explicitly prohibited, and insurers are not required to pay such claims. Florida’s Health Care Clinic Act (HCCA) mandates that clinics operate under a license from the Agency for Health Care Administration (AHCA) and requires clinics owned by non-licensed individuals to appoint a licensed Medical Director responsible for ensuring compliance with licensing and billing regulations. Charges submitted under a clinic with a non-compliant Medical Director are considered unlawful and unenforceable.
Furthermore, the Radiological Personnel Certification Act (RPCA) stipulates that individuals must hold a certificate and operate under licensed supervision to use radiation or perform radiologic technology, reinforcing the necessity of legal compliance for healthcare providers in Florida.
The certification process for applicants requires an application fee and proof of specific educational qualifications per Fla. Stat. 468.304. Practicing radiologic technology without an active Florida Department of Health (DOH) certificate constitutes a criminal offense according to Fla. Stat. 468.311(1). A Basic Machine Operator (BMO) is defined as someone employed by a licensed practitioner to perform radiographic functions under their direct supervision, as outlined in Fla. Stat. 468.301(1) and 468.302(3)(a). "Direct supervision" mandates the physical presence of the licensed practitioner, who assumes legal liability for the BMO's actions (Fla. Stat. 468.301(7)).
The court found that Drs. Alonso and Genao, as Medical Directors of B.A., did not fulfill their statutory obligations during the relevant time period. They failed to take legal responsibility for the clinic, ensure proper licensing of health care practitioners, or supervise clinic billings. Consequently, the services rendered to State Farm's insureds during this time were deemed unlawful and non-compensable.
Evidence showed that Alvarez performed X-rays without appropriate certification and continued to do so even after this was discovered, constituting criminal acts. Ortiz, certified only as a BMO and lacking direct supervision while performing X-rays, also engaged in unlawful acts.
Under Florida law, a claim for unjust enrichment requires that a plaintiff conferred a benefit on a defendant who knowingly accepted it, and it would be inequitable for the defendant to retain this benefit without payment. This principle aims to prevent the wrongful retention of benefits contrary to justice and equity.
Courts recognize unjust enrichment as a valid cause of action in automobile liability insurance cases when a service provider improperly retains benefits. In relevant cases, insurers can deny payments for unlawfully rendered services, and it is not necessary for a defendant to receive payments directly for unjust enrichment claims to arise. In this instance, State Farm established that it conferred $1,478,848.40 in benefits to B.A., who accepted these benefits, while also acknowledging that Alvarez, Dr. Alonso, and Dr. Genao benefited from payments made to B.A. for illegal services. Florida law allows insurers to deny payment for such services, and allowing the defendants to keep these benefits would violate equitable principles.
State Farm is entitled to declaratory relief, confirming that it is not obligated to pay the defendants for unlawful services. Dr. Alex Alonso's motion for summary judgment claims three affirmative defenses: res judicata, collateral estoppel, and statute of limitations. He contends that the issues were previously litigated in the 2013 Action and that unjust enrichment claims for payments before November 19, 2010, are time-barred. State Farm counters that Dr. Alonso cannot invoke res judicata since he was not a party to the 2013 Action and that his collateral estoppel defense fails due to the specifics of the 2013 Settlement Agreement.
State Farm contends that Dr. Alonso's defense based on the statute of limitations is mitigated by doctrines of delayed discovery and equitable tolling. The doctrine of res judicata, or claim preclusion, applies when there is (1) identity of the thing sued for, (2) identity of the cause of action, (3) identity of parties, and (4) identity of the quality or capacity of the parties involved. If parties voluntarily dismiss a complaint with prejudice, a modified form of res judicata applies to the settlement agreement that prompted the dismissal, with courts focusing on the agreement itself to discern the parties' intent regarding claims barred by the dismissal. The scope of preclusive effect is determined by the settlement agreement's terms rather than the original complaint. Dr. Alonso's res judicata argument is based on three points: that State Farm’s claims are barred by a prior final judgment involving the same parties, that the cases involve the same causes of action, and that he was in privity with B.A. However, this argument overlooks the distinction between the effects of a prior judgment and a settlement agreement. The record indicates that the parties dismissed the 2013 Action with prejudice pursuant to a settlement agreement addressing specific claims, while also stating that it does not affect any future claims or disputes. The court concludes that the intent of the 2013 Settlement Agreement is clear when interpreted under traditional contract principles.
The voluntary dismissal pertains solely to damages specified in Exhibits 'E' and 'J' of the Amended Complaint from the 2013 Action. The Plaintiff asserts that none of the current claims overlap with those that would be barred by the 2013 Settlement Agreement, which is explicitly limited to damages in Exhibits E and J and does not act as a blanket prohibition on future claims by either party. Consequently, State Farm’s claims are outside the scope of the 2013 Settlement Agreement and are not subject to res judicata.
Regarding collateral estoppel, which prevents the relitigation of issues already resolved in prior cases, a party must prove four essential elements: (1) the issue must be identical to one from the previous litigation; (2) it must have been actually litigated; (3) its resolution must have been critical to the prior judgment; and (4) the opposing party must have had a full and fair opportunity to litigate the issue. The Eleventh Circuit stipulates that a consent judgment can only serve as collateral estoppel if it is evident that the parties intended for it to operate as a final adjudication of a specific issue. Generally, settlements do not create preclusive effects unless such intent is clear.
Dr. Alonso contends that the elements for collateral estoppel are satisfied, while the Plaintiff maintains that the 2013 Settlement Agreement was not intended to have preclusive effects. The agreement explicitly states that the dismissal by Judge Ungaro should not be construed as a final judgment on any issue. The Court concurs that the 2013 Settlement Agreement's language indicates a lack of intent for it to operate as a final adjudication of any issue, and confirms that the issues currently before the Court differ from those resolved in the 2013 Settlement Agreement, which also clarifies that no admission of wrongdoing was made by B.A.
The Court determines that the 2013 Settlement Agreement lacks judicial merit, meaning collateral estoppel does not apply, referencing *Tampa Bay Water v. HDR Eng’g, Inc.*. Dr. Alonso argues that the statute of limitations bars State Farm’s unjust enrichment claims, noting Florida lacks a specific statute for such claims. Instead, limitations are drawn from related allegations, with a four-year limit for claims based on fraud. Dr. Alonso asserts that any claims prior to November 19, 2010, are barred, while State Farm counters with delayed discovery and equitable tolling doctrines. Dr. Alonso carries the burden of proof for this affirmative defense.
Under Florida law, a cause of action accrues when the last element occurs, but may be delayed or tolled under certain circumstances, such as fraudulent concealment. The delayed discovery doctrine allows for a claim to accrue only when the plaintiff knows or should have known of the tortious act. In fraud cases, claims must be initiated within four years of discovering the relevant facts. Equitable tolling permits filing after the statutory period if inequitable circumstances hindered timely action, thereby supporting justice by allowing meritorious claims to be heard despite delays.
Equitable tolling applies when a plaintiff is misled, prevented from asserting rights, or mistakenly asserts rights in the wrong forum. The Florida Supreme Court supports its application based on the undisputed evidence in this case. State Farm alleges that Defendants misrepresented the legality and compensability of services provided. To overcome the four-year statute of limitations, State Farm's claims rely on the discovery of Defendants' unlawful conduct. Evidence shows State Farm became aware of Alvarez's unlawful X-ray performance in December 2010, Ortiz's in early 2012, and issues of medical compliance with Drs. Alonso and Genao in mid-2014, along with B. A.’s failure to collect patient co-payments in September 2014. The delayed discovery doctrine allows State Farm’s claims to proceed as all relevant knowledge was acquired within the limitations period. Additionally, Defendants' false representations led State Farm to believe B&A was operating lawfully, resulting in continued payments for unentitled services. Licenses obtained through deception are considered void ab initio. While evidence suggests active deception, it is not a prerequisite for equitable tolling. Thus, equitable circumstances exist to preserve State Farm's cause of action, and the court denies summary judgment for Dr. Alonso, granting State Farm's motion for summary judgment instead.
Defendant Alex Alonso, M.D.’s Motion for Summary Judgment is denied. State Farm Mutual is awarded $316,315.63 against Defendants B&A and Dr. Genao, and State Farm Fire is awarded $178,866.72 against the same defendants, both judgments being joint and several. Additional judgments include $811,254.59 against Defendant B.A. for State Farm Mutual, $172,411.46 against Defendant B.A. for State Farm Fire, $43,290.73 against Defendant Alvarez for State Farm Fire, and $28,210.58 against Defendant B.A. for State Farm Fire. State Farm is not obligated to pay $697,970.00 to Defendants for unpaid services related to its insureds. The case will be closed, with all pending motions denied as moot.
The non-Alonso Defendants are represented separately from Dr. Alonso. State Farm’s claims focus on the period from March 21, 2008, to November 16, 2011. State Farm contends that B.A. operated unlawfully during this period by routinely waiving or failing to collect co-payments and deductibles from insureds. A previous Motion for Summary Judgment filed by the non-Alonso Defendants was denied due to lack of a supporting statement of undisputed material facts. Florida law prohibits providers from waiving co-payments or deductibles from PIP patients and mandates that charges should not exceed customary amounts for similar services. It is undisputed that B.A. and its Medical Directors did not make a good-faith effort to collect co-payments or deductibles during the relevant period.
Failure to make a good-faith effort to collect co-payments constitutes "insurance fraud," rendering the charges submitted to State Farm during the Relevant Time Period unlawful and noncompensable under Florida Statutes 627.736(5)(b)(1) and 817.234(7)(a). The Court will examine the Defendants' affirmative defenses, specifically the non-Alonso Defendants, who assert defenses of statute of limitations and res judicata in response to State Farm’s Motion for Summary Judgment. Their arguments are based on the same facts as those presented by Dr. Alonso, claiming that the Plaintiff's cause of action is barred by a four-year statute of limitations and that the outcomes of a prior case have preclusive effects. In 2013, State Farm sued B. A and Alvarez (State Farm Mutual Automobile Insurance Co. v. B. A Diagnostic, et al., No. 13-cv-24393-UU), which was voluntarily dismissed with prejudice following a settlement. Dr. Alonso's claim of privity with B. A in this prior action is ineffective; privity is broadly defined and does not solely rely on traditional contractual relationships. As a nonparty to the 2013 Action, Dr. Alonso can only claim nonparty preclusion if one of the limited exceptions to the rule applies, but no evidence suggests any such exceptions are relevant in this case.
