Case 6:10-cv-01103-GAP-GJK Document 43

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UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF FLORIDA
ORLANDO DIVISION
STATE FARM FIRE & CASUALTY COMPANY, Plaintiff, -vsSILVER STAR HEALTH AND REHAB INC., JUDITH MCKENZIE and JEAN COLIN, Defendants. _____________________________________ Case No. 6:10-cv-1103-Orl-31GJK

ORDER
This cause comes before the Court without oral argument upon consideration of Defendant Jean Colins Motion to Dismiss or in the Alternative Motion for More Definite Statement (Doc. 24); Defendants Silver Star Health And Rehab Inc.s (Silver Star) and Judith McKenzies Motion to Dismiss or in the Alternative Motion for More Definite Statement (Doc. 36); and Plaintiff State Farm Fire & Casualty Companys (State Farm) respective responses in opposition (Docs. 41 & 42). I. Background Plaintiff sues Silver Star, McKenzie, and Colin (collectively the Defendants) for submission of illegal and fraudulent claims for No-Fault Personal Injury Protection (PIP) benefits and Medical Payment Coverage (MPC). In material part, the Complaint (Doc. 1) alleges that McKenzie, a licensed chiropractic physician, is held out to be the owner of Silver

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Star, a massage establishment. However, Plaintiff alleges that McKenzie owns Silver Star in name only and it is Colin who established and operates Silver Star, despite the fact that he is not a licensed health-care practitioner or relative of McKenzie. Thus, Plaintiff alleges that Colin is really the de facto owner of Silver Star and, as a result, Silver Star is operating in violation of Florida law. Plaintiff further alleges that Defendants contrived McKenzies ownership of Silver Star solely for the purpose of avoiding Floridas statutory licensing requirement. According to the Complaint, Plaintiff paid PIP and MPC benefits to Silver Star totaling over $151,000.00 on behalf of its insureds. In addition, Silver Star has submitted unpaid claims totaling over $70,000.00. Plaintiff seeks damages for unjust enrichment (Count I) and declaratory relief (Count II). II. Standard In ruling on a motion to dismiss, the Court must view the complaint in the light most favorable to the plaintiff, see, e.g., Jackson v. Okaloosa County, Fla., 21 F.3d 1531, 1534 (11th Cir. 1994), and must limit its consideration to the pleadings and any exhibits attached thereto. FED. R. CIV. P. 10(c); see also GSW, Inc. v. Long County, Ga., 999 F.2d 1508, 1510 (11th Cir. 1993). The Court will liberally construe the complaints allegations in the plaintiffs favor. Jenkins v. McKeithen, 395 U.S. 411,421 (1969). However, conclusory allegations, unwarranted factual deductions or legal conclusions masquerading as facts will not prevent dismissal. Davila v. Delta Air Lines, Inc., 326 F.3d 1183, 1185 (11th Cir. 2003). In reviewing a complaint on a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), courts must be mindful that the Federal Rules require only that the complaint contain a short and plain statement of the claim showing that the pleader is entitled to relief. U.S. v.
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Baxter Intern., Inc., 345 F.3d 866, 880 (11th Cir. 2003) (citing FED. R. CIV. P. 8(a)). This is a liberal pleading requirement, one that does not require a plaintiff to plead with particularity every element of a cause of action. Roe v. Aware Woman Ctr.for Choice, Inc., 253 F.3d 678, 683 (11th Cir. 2001). However, a plaintiffs obligation to provide the grounds for his or her entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 554-555 (2007). The complaints factual allegations must be enough to raise a right to relief above the speculative level, Id. at 555, and cross the line from conceivable to plausible. Ashcroft v. Iqbal, __ U.S. __, 129 S. Ct. 1937, 1950-1951 (2009). III. Analysis A. Subject Matter Jurisdiction Defendants do not dispute the existence of complete diversity of citizenship, but contend that the Complaint is based entirely on Defendants alleged violations of Fla. Stat. 400, 408, and 460. Accordingly, Defendants contend that this Court lacks subject matter jurisdiction because no private cause of action exists to enforce the provisions of such statutes. This challenge is based upon the factual allegations in the Complaint, and is therefore a facial attack under Fed. R. Civ. P. 12(b)(1). Morrison v. Amway Corp., 323 F.3d 920, 924 n.5 (11th Cir. 2003). Thus, the allegations in the Complaint are taken as true for the purposes of the instant motions. In response, Plaintiff maintains that its claims are based upon Floridas No-Fault Law (also referred to as Floridas PIP Statute), Fla. Stat. 627.736,1 which establishes civil liability

Fla. Stat. 627.736 establishes the requirements for payment of PIP benefits under Floridas No-Fault Law.
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between the parties. As set forth in the Complaint, Plaintiff bases its 627.736 claim on the allegation that Silver Star submitted numerous reimbursement claims for services related to motor vehicle accidents involving Plaintiffs insureds that were fraudulent. Plaintiff maintains that, under 627.736, it has no obligation to pay Silver Star for services that were not lawfully rendered.2 According to Plaintiff, it relies on Fla. Stat. 400, 408, and 460 only insofar as those statutes serve as the basis for rendering Defendants services unlawful. A fair reading of the Complaint reveals that Plaintiffs claims concern Defendants entitlement to benefits pursuant to 627.736. Plaintiff is not attempting to assert a private cause of action under Fla. Stat. 400, 408, and 460, and there seems to be no dispute that it would be unable to do so. Defendants Silver Stars and McKenzies argument that subject matter jurisdiction is lacking by virtue of 28 U.S.C. 13593 also fails. While Defendants read this statute to relate to a joinder of claims, it clearly relates only to the joinder of parties. There is no suggestion that any of the defendants in this action have been improperly joined for jurisdictional purposes. Therefore, 28 U.S.C. 1359 does not preclude diversity jurisdiction in this case.

Specifically, 627.736(a)(2) provides that an insurance policy shall provide reimbursement only for such services and care that are lawfully provided, supervised, ordered, or prescribed by . . . a chiropractic physician licensed under chapter 460 or that are provided by . . . [a] health care clinic licensed under ss 400.990-400.995. Fla. Stat. 627.736(a)(2) (emphasis added). Specifically, 28 U.S.C. 1359 provides that [a] district court shall not have jurisdiction of a civil action in which any party, by assignment or otherwise, has been improperly or collusively made or joined to invoke the jurisdiction of the court. 28 U.S.C. 1359.
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B. Piercing the Corporate Veil Colin and McKenzie argue that the Complaint lacks any allegations by which the corporate veil of Silver Star could be pierced to hold them individually liable. Plaintiff responds that it is not necessary to pierce the corporate veil as to Colin or McKenzie since their liability is based on their own personal fraudulent conduct separate from Silver Star. Looking at the facts in the light most favorable to Plaintiff, the Court finds that Plaintiff has pled sufficient facts to find Colin and McKenzie individually liable. Specifically, the allegations are that Colin and McKenzie participated in a scheme intended to generate payment from Plaintiff for improper and illegal medical treatment allegedly provided to Plaintiffs insureds. (Doc. 1 at 9.) Further, Plaintiff alleges that its payments went directly to Colin and McKenzie. (Id. at 10.) Because it is alleged that Colin and McKenzie are direct participants in the alleged improper conduct, it is not necessary to pierce the corporate veil.4 Accordingly, Colins and McKenzies Motions to Dismiss as to this ground will be denied. C. Unjust Enrichment - Count I Silver Star and McKenzie argue that Count I is barred by both Fla. Stat. 627.736 and the economic loss rule. Floridas economic loss rule generally prohibits parties in contractual privity from recovering in tort for purely economic damages. Indemnity Ins. Co. of N. Amer. v. Amer. Aviation, Inc., 891 So. 2d 532, 536 (Fla. 2004). Here, however, the contractual relationship is between Plaintiff and its insureds (i.e., the insurance policies). There is no direct contractual relationship

For the same reasons, McKenzies argument that Plaintiff fails to state a claim and lacks standing to bring the instant claims against her is denied.
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between Plaintiff and Defendants. As such, Silver Stars and McKenzies argument that Count I is barred by the economic loss rule is unfounded. The Court also finds that Count I is not preempted by Fla. Stat. 627.736(12).5 As stated by the court in Nationwide Mut. Co. v. Ft. Myers Total Rehab Ctr., 657 F. Supp. 2d 1279 (M.D. Fla. 2009), [n]othing in [ 627.736(12)] provides that a cause of action exists only if there is a conviction, or that other causes of action are pre-empted. Id. at 1287 (emphasis in original). Accordingly, the Silver Stars and McKenzies Motion to Dismiss as to these grounds is denied. D. Declaratory Relief - Count II Defendants Silver Star and McKenzie argue that Fla. Stat. 86.011 does not provide a substantive right and therefore the Court must determine whether it has jurisdiction under 28 U.S.C. 2201, the federal Declaratory Judgment Act. Colin also argues that Plaintiff has failed

Fla. Stat. 627.736(12) provides: An insurer shall have a cause of action against any person convicted of, or who, regardless of adjudication of guilt, pleads guilty or nolo contendere to insurance fraud under s. 817.234, patient brokering under s. 817.505, or kickbacks under s. 456.054, associated with a claim for personal injury protection benefits in accordance with this section. An insurer prevailing in an action brought under this subsection may recover compensatory, consequential, and punitive damages subject to the requirements and limitations of part II of chapter 768, and attorneys fees and costs incurred in litigating a cause of action against any person convicted of, or who, regardless of adjudication of guilt, pleads guilty or nolo contendere to insurance fraud under s. 817.234, patient brokering under s. 817.505, or kickbacks under s. 456.054, associated with a claim for personal injury protection benefits in accordance with this section.

Fla. Stat. 627.736(12).

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to state a cause of action for declaratory relief and, thus, this Court should decline to exercise its discretion over Count II. In the alternative, each of the Defendants request a more definite statement pursuant to Fed. R. Civ. P. 12(e). Inasmuch as this is a diversity case, Plaintiffs remedy is governed by 28 U.S.C. 2201. Accordingly, Count II will be construed as purporting to state a claim for relief pursuant to 28 U.S.C. 2201.6 Claims under 28 U.S.C. 2201 must be definite and concrete, and admi[t] of specific relief through a decree of conclusive character, as distinguished from an opinion advising what the law would be upon a hypothetical state of facts. MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007) (citations and quotations omitted). At a minimum, such claims must be supported by allegations from which a continuing and substantial controversy may reasonably be inferred. Malowney v. Fed. Collection Deposit Group, 193 F.3d 1342, 1347 (11th Cir. 1999). Additionally, the continuing controversy may not be conjectural, hypothetical, or contingent; it must be real and immediate, and create a definite, rather than speculative threat of future injury. Id. (citations omitted). Plaintiff alleges that Defendants have submitted additional claims for payments totaling over $70,000.00, which have not yet been paid, and are false, misleading, and deceptive. Plaintiff asserts that it is in doubt as to its rights under the terms of the applicable insurance policies and

As a practical matter, however, the elements required under the federal or state declaratory judgment acts are not materially different. Nirvana Condo. Assn, Inc. v. QBE Ins. Corp., 589 F. Supp. 2d 1336, 1343 n.1 (S.D. Fla. 2008) (comparing Malowney v. Fed. Collection Deposit Group, 193 F.3d 1342 (11th Cir. 1999), with Floyd v. Guardian Life Ins. Co., 415 So. 2d 103 (Fla. 3d DCA 1982)).
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Fla. Stat. 627.736 as to whether or not any bills submitted by Defendants are properly payable due to the facts and circumstances of this case. (See Doc. 1 at 46.) Specifically, Plaintiff requests a declaration regarding whether: (1) State Farm is legally obligated to pay the pending claims which have become due if Defendants submission of the claims resulted in violation of Florida Statutes or the public policy of the State of Florida; (2) State Farm is legally obligated to pay claims that have been submitted to State Farm for reimbursement but which have not yet come due if the claims are based on the same billing practice and procedure specifically identified above as having been committed by the Defendants; ( 3) invoices submitted by Defendants to State Farm that have been paid were done so in violation of Florida law and/or the public policy of the State of Florida; and (4) Whether McKenzie is an owner of Silver Star, as that term is used in Fla. Stat. 400, 408, and 460. (Doc. 1 at 9-10.) The Court concludes that questions 1 and 2 present an actual controversy between the parties regarding whether Defendants are entitled to payment on the pending claims and, therefore, should not be dismissed. However, the Court holds that the damage claim asserted in Count I will decide the issues at stake in questions 3 and 4; specifically, whether the claims submitted by Defendants were indeed fraudulent and in violation of Florida law. Thus, the Court, in its discretion, grants Defendants Motions to Dismiss as to questions 3 and 4 of Plaintiffs declaratory judgment claim.
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Finally, the Court has reviewed the Complaint and determines that a more definite statement of questions 1 and 2 of Plaintiffs claim for declaratory relief is not needed. IV. Conclusion Based on the foregoing, it is ORDERED as follows: 1. Defendant Jean Colins Motion To Dismiss Plaintiffs Complaint Or In The Alternative Motion for More Definite Statement (Doc. 24), filed on September 20, 2010, is GRANTED IN PART and DENIED IN PART. The Motion is GRANTED insofar as it seeks dismissal of Questions 3 and 4 of Plaintiffs Declaratory Judgment Claim (Count II). The Motion is DENIED in all other respects. 2. Defendants Silver Star Health And Rehab Inc.s and Judith McKenzies Motion To Dismiss Plaintiffs Complaint Or In The Alternative Motion for More Definite Statement (Doc. 36), filed on October 4, 2010, is GRANTED IN PART and DENIED IN PART. The Motion is GRANTED insofar as it seeks dismissal of Questions 3 and 4 of Plaintiffs Declaratory Judgment Claim (Count II). The Motion is DENIED in all other respects. DONE and ORDERED in Chambers, in Orlando, Florida on November 29, 2010.

Copies furnished to: Counsel of Record Unrepresented Party

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