Eleventh Circuit Upholds Civil Insurance Fraud Judgment Against Florida Clinic – State Farm v. Physicians Injury Care Clinic

October 28, 2011 by David S. Seltzer

As a south Florida insurance fraud defense attorney, I was interested to read an Eleventh U.S. Circuit Court of Appeals decision on civil liability for insurance fraud. In State Farm Mutual Automobile Insurance Co. v. Physicians Injury Care Clinic, the federal appeals court upheld a Central Florida ruling making PICC liable for alleged fraudulent claims stemming from false auto accidents. State Farm claimed the defendants pushed its insureds through a course of unnecessary medical treatment that was specifically designed to exhaust their PIP benefits. After an initial mistrial, a jury in the Middle District of Florida agreed and awarded financial damages to State Farm. The Eleventh eventually upheld that award.

The opinion does not describe the alleged fraudulent scheme in detail, but it does note that each patient had a PIP limit of $10,000. State Farm sued for the cost of the improper benefits, as well as a declaratory judgment that it was not required to pay any new costs that were pending. Eight patients who had been treated for car crash injuries by PICC intervened as defendants in the first trial, making counterclaims against State Farm for breach of contract and other torts. At trial, the defendants argued that they should not face civil liability for insurance fraud because Florida law authorizes insurers to sue people found guilty of PIP insurance fraud in criminal courts. This argument was unsuccessful. After the mistrial and the second trial that the Eleventh did not detail, a jury found for State Farm on all counts.

On appeal, the defendants raised the preemption issue, but to no avail. The Eleventh Circuit found that the statute was not an exclusive remedy, but could coexist with the common law. It also found that the insurer’s common-law fraud claim was not barred by Florida’s economic loss rule, which bars tort-based lawsuits over matters arising from contracts. However, the court said that because the defendants had assigned their right to payment of PIP benefits to PICC — a common way of handling auto insurance benefits — the law did not apply, since PICC was not privy to the contract. State Farm presented enough evidence to prove its fraud allegations, the court said; it provided testimony from a doctor and two former patients alleging that PICC gave pre-determined diagnoses and medically unnecessary treatments. For similar reasons, the Eleventh found that the trial court was correct not to grant summary judgment on State Farm’s declaratory judgment motion. Turning next to the counterclaims, the Eleventh also rebuffed arguments that State Farm was not entitled to judgment as a matter of law on unjust enrichment, and that it should not have been permitted to make a claim under Florida’s deceptive trade practices statute. However, the Eleventh did reverse the trial court on the issue of withdrawal of PIP payments not yet paid, finding that State Farm was legally required to get a doctor’s opinion first.

As a Miami insurance fraud defense lawyer, I’m always interested to see an insurer turn to the civil courts rather than pursuing a criminal case. It’s not clear why State Farm filed a lawsuit in this case rather than relying on prosecutors, but it’s possible that prosecutors declined to bring any case. If that’s the case, the insurance company may have benefited from a small but important difference between the two systems: The standard of proof in civil cases is lower. In criminal cases, prosecutors must be able to prove insurance fraud beyond a reasonable doubt — and it could be that the proof was just not strong enough. If that’s true in any of my work as a Fort Lauderdale insurance fraud defense attorney, I will defend the case aggressively, seeking to show jurors why the evidence of my client’s wrongdoing doesn’t meet legal standards for conviction.

If you’re charged with insurance fraud in Florida and you’re looking for experienced legal representation, you should call Seltzer Law, P.A. We offer free, confidential case evaluations and we answer our phone 24 hours a day and seven days a week. To get in touch, send us a message through our website or call 1-888-THE-DEFENSE (1-888-843-3333).

Similar blog posts:

Trustee for Bankrupt Mortgage Firm Sues Deloitte for Audits That Failed to Detect Fraud

Florida Prosecutions for Mortgage Fraud May Rise as Lenders Scrutinize Failed Loans

Prosecutors Decline to Retry Mortgage Fraud Defendants Whose Trial Ended With Hung Jury