Fifth District Court of Appeal Rules Insurer Need Not Pay Future Bills From Provider That Knowingly Submitted Fraudulent Bills for the Same Claimaint and Accident
Jul 9, 2012
On June 29, 2012, in the case of Chiropractic One v. State Farm, 2012 WL 2465012, (Fla. 5th DCA June, 29, 2012) the Fifth District Court of Appeal affirmed a trial court’s grant of summary judgment in favor of State Farm Mutual Automobile Insurance Company (“State Farm”) and favorably interpreted portions of the fraud-fighting provisions of the 2003 Personal Injury Protection (“PIP”) statutory changes.
Chiropractic One had treated 19 State Farm insureds for injuries sustained in automobile accidents. The insureds assigned their PIP benefits to Chiropractic One and bills were submitted directly to State Farm. After it conducted an investigation, State Farm determined that Chiropractic One was engaging in a pattern of misleading or fraudulent practices in its billing. State Farm withheld benefits on the bills submitted and filed a declaratory judgment action seeking a declaration that, pursuant to Florida Statute Section 627.736(5)(b)1.c, Chiropractic One’s misconduct relieved State Farm and the insureds from liability for the charges.
On appeal, Chiropractic One was not contesting that it had knowingly submitted false and misleading bills. Rather, it argued that the carrier had an obligation to determine that each bill submitted (on an individual basis) was either valid or not. In a sharply worded opinion, the Fifth District unanimously rejected the argument as follows:
In this appeal, Chiropractic One does not argue about whether it committed what amounts to fraud. It does not quibble with the conclusion that many of its billings were knowingly false, misleading, improper and unlawful. Rather, its position is that the trial court erred:
[W]hen it ruled that neither Appellees nor their insureds were responsible for any of the past or future claims submitted by Appellant thereby relieving Appellees of their burden to investigate each and every “claim” for services submitted by Appellant and to provide an explanation of benefits regarding the approval or denial of each claim as mandated by Fla. Stat. §627.736(4)(b).
Chiropractic One appears to be arguing that paragraph (4)(b) required State Farm to continue investigating the compensability of bills submitted by the appellant even after it knowingly submitted false and misleading billing statements. It apparently believes that it may continue to submit improper and misleading claims vis-a-vis each insured and that it is up to State Farm to catch them at it. Their hide-and-seek position is not well-founded.
Paragraph (4)(b) provides a thirty-day investigation period during which an insurer might either pay the claim or discover the facts that warrant a refusal to pay. See January v. State Farm Mut. Ins. Co., 838 So. 2d 604, 607 (Fla. 5th DCA 2003). It is simply a safe harbor for insurers to avoid penalties on claims. Id. If the insurer pays the claim beyond the thirty-day investigative period allowed by the statute, it is subject to a penalty. See United Auto. Ins. Co. v. Rodriguez, 808 So. 2d 82 (Fla. 2001).
While the opinion makes clear that the PIP statutory provisions in question are strong fraud-fighting tools, the court was careful to point out that “facts here justify the outcome.” Although it recognized the “logic” behind extending the invalidation to bills submitted before the fraudulent billing was discovered, the court declined to do so in this case, explaining that: “The facts in this case do not go that far and the final summary judgment likewise does not venture into that arena. We, accordingly, leave that determination for another day, and affirm the final summary judgment rendered by the trial court.”
An amicus brief detailing the rampant nature of PIP fraud in Florida and the legislative history of PIP statutory changes was submitted by Colodny Fass on behalf of the Florida Property and Casualty Association in this appeal.
The decision is not final until any motions for rehearing are resolved.
The opinion and case summary is attached for review.
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