10 Fla. L. Weekly Supp. 129a
Insurance — Personal injury protection — Fraud — Insurer’s motion for leave to amend complaint for declaratory relief and unjust enrichment against diagnostic service which filed claim for MRIs but failed to disclose identity of imaging facility that actually made MRI images, seeking to add count for fraud and assert entitlement to punitive damages and attorney’s fees — There is no basis in law or equity to support claim for attorney’s fees where attorney’s fees cannot be recovered in action for declaratory relief, and insurer has no standing to assert a claim based on violation of patient brokering statute — Where MRIs were unquestionably covered services, and there was no allegations that patients, imaging facilities or radiologists have timely made competing claims in connection with the MRIs, insurer has failed to allege facts showing damage — Patients, imaging facilities, and radiologists are indispensable parties which insurer failed to join — Motion for leave to amend denied without prejudice
THE HARTFORD INSURANCE COMPANY OF THE MIDWEST, INC., a foreign corporation, individually and for the use and benefit of its insureds, Plaintiff, vs. UNIVERSAL DIAGNOSTICS SERVICES, INC.; a Florida corporation, Defendant. County Court, 17th Judicial Circuit in and for Broward County. Case No. 00-13562 (54). December 18, 2002. Zebedee W. Wright, Judge. Counsel: Beth A. Moriarty, Moriarty & Monroe, Winter Park. Charles J. Kane, Kane & Kane, Boca Raton.
[Subsequent order at 10 Fla. L. Weekly Supp. 554c.]Order Denying Leave to Amend Without Prejudice
On October 10, 2002, the Court heard the Plaintiff’s Motion for Leave to Amend the Complaint to assert an additional count for fraud against the Defendant and against a proposed additional party, Tara Duval. Upon consideration, the motion for leave to amend is denied without prejudice.
The proposed Amended Complaint asserts three counts: (1) Unjust enrichment (2) Declaratory relief asserting violation of F.S. §817.505 and (3) Fraud. It asserts entitlement to compensatory and punitive damages, attorneys fees and costs.
There are no facts pled entitling the Plaintiff to assert a claim for attorneys fees and the showing made by the Plaintiff fails to demonstrate an adequate basis for alleging punitive damages pursuant to F.S. §768.72. The Plaintiff asserted that an action for fraud entitles the Plaintiff to assert a claim for punitive damages both against the Defendant and the proposed additional Defendant, Tara Duval.
The Plaintiff cited Perdue Farms, Inc. v. Hook, 777 So.2d 1047 (Fla. 2d DCA 2001) for the proposition that attorneys fees may be recovered in an action brought pursuant to Chapter 86, Florida Statutes seeking declaratory relief. But that case based entitlement to fees and an assertion of entitlement to punitive damages on Florida’s trade secrets law, F.S. §688.004(1), a statute expressly providing that relief. The mere bringing of an action under Chapter 86 is no basis in and of itself to assert a claim for attorneys fees. Harris v. Richard N. Groves Realty, Inc., App. 4 Dist., 315 So.2d 528 (1975).
The Plaintiff asserts that sufficient showing has been made based on a deposition of Tara Duval wherein she admitted that the Defendant did not own the MRI equipment used in the 3 MRIs referred to in the Amended Complaint. The Plaintiff asserts that submission of a claim wherein the Defendant identified itself as the supplier of service without identifying the imaging facility with whom it had contracted or leased for the use of equipment was a sufficient misrepresentation for purposes of alleging fraud and to support an allegation of entitlement to punitive damages.
While the Plaintiff has attempted to allege a case predicated on a violation of F.S. §817.505, it is clear that the Plaintiff has no standing to assert a claim based on an alleged violation of that law for PIP claims submitted in 1998 and 1999. F.S. §817.505(5). Only the attorney general or a state attorney has standing to pursue that cause of action. Moreover, it is the public policy of Florida that an insurer may bring an action for such relief only after the commencement of a criminal prosecution and the entry of a plea of guilty, plea of nolo contendere or adjudication of guilt. F.S. §627.736(12) effective June 19, 2001. So it is clear that there is no basis in the law or at equity to support a claim for attorneys fees. But the Plaintiff has asked the court, nevertheless, to consider its proposed amendments including a claim for punitive damages on what the Plaintiff argues is a sufficient allegation and showing of fraud.No Ultimate Facts Alleged Showing Intentional Misrepresentation of Material Facts Causing Damage
The allegation of a claim for fraud includes, among other elements, an allegation of ultimate facts tending to show that the alleged tortfeasor intentionally misrepresented a material fact on which the Plaintiff reasonably relied thereby causing damage. The Plaintiff is a corporation that provided indemnity insurance against liability to the patients who undisputedly underwent MRI testing that the Defendant arranged and paid for. Thus, those patients were entitled to indemnification in the reasonable amount attributable to the MRI services actually received, regardless of who scheduled the testing. There are no allegations that the Defendant submitted an assigned claim for this testing. At the hearing, the Plaintiff did not contest that the patient’s had retained their rights to benefits. Presumably, the Plaintiff paid the claim amounts to the Defendant pursuant to directions received from the patients. These patients had no obligation under the PIP law to wait until they were sued by the Defendant or anyone else in connection with these services. Kaklamanous v. Allstate Ins. Co., 796 So.2d 555, 561 (Fla. 1st DCA 2001).The patients exercised their right to be indemnified by permitting the Plaintiff to pay the Defendant. Under F.S. §627.736(5) the Plaintiff had the option to follow those directions or to pay its insureds, the patients. There are no allegations that the MRI services the patients received were not reasonably valued at the amount the Plaintiff actually paid. Neither are there any allegations that those services were not medically necessary or unrelated to injuries sustained in a covered motor vehicle accident.
The Plaintiff, nevertheless, asserts that failure to disclose the identity of the imaging facility that actually made the images was a material omission that misled the Plaintiff causing damage. There are no allegations tending to show how, if at all, that was material. Two of the 3 claims alleged are for services done in 1998 before there was any legal requirement to use any mandatory claim form. The law then only required a showing of the nature and amount of the claim. F.S. §627.736(4)(b). No allegation or showing has been made of any Florida rule or regulation requiring such disclosure in the mandated form.
In sum and substance, the Plaintiff asserts that because the Defendant claimed to be a medical provider or claimed to “render” service in 1998 and 1999, it can be shown that such claim was an intentional, willful and knowing misrepresentation of material fact. The Plaintiff asserts that Tara Duval’s admission that the Defendant did not own the MRI equipment and contracted or leased the use of it and MRI personnel is enough to show she and the Defendant intentionally misrepresented material facts. The court takes notice that the seminal case in Florida addressing the meaning of the term “rendering” as set forth in F.S. §627.736(5) was NuWave Diagnostics v. State Farm Mutual Automobile Ins. Co., 6 FLW [Fla. L. Weekly] Supp. 522a (Broward Co. Ct. 5/7/99). Prior to that no Florida court had addressed the subject matter. After that case was decided, other county court decisions took a different view. It was not until 2001 that the Third District Court of Appeal addressed the “rendering” issue in a per curiam decision. Federated National Insurance Company v. Physicians Charter Services, 788 So.2d 403 (Fla. 3rd DCA 2001).Indeed it was not until 2001 that the Florida legislature defined the term “broker” and made the ownership of medical equipment meaningful. F.S.§627.732(1) eff. June 19, 2001. Entitlement to Punitive Damages Has Not Been Demonstrated
The Plaintiff has incorrectly cited the Perdue case in support of a claim for attorneys fees, but that case can be cited for the proposition that a case of first impression requires substantially more showing to support a claim for punitive damages. There the court said: “In contract, exemplary damages are not recoverable unless the defendant’s conduct constituting the breach of contract rises to the level of an independent tort showing actual malice, moral turpitude, wantonness or outrageousness. See Griffith v. Shamrock Village, Inc., 94 So.2d 854 (Fla. 1957); John Brown Automation, Inc. v. Nobles, 537 So.2d 614 (Fla. 2d DCA 1988).” Perdue at 1053. Here, the Defendant served as scrivener of the claims that belonged to the Plaintiff’s insureds. There are no facts alleged tending to show that the Defendant had no right to consider opinion that was contrary to that expressed by the trial court in the NuWave case or contrary to that ultimately expressed in later decisions of the district courts of appeal. The Plaintiff Has Failed to Allege Facts Showing Damage
A somewhat similar case was recently decided in Seminole County where the trial court held that the insurer was still responsible to its insured for the reasonable amount or value of MRI services received even though the services and billing were done similarly. Barcus v. State Farm Mut. Auto. Ins. Co., 9FLW [Fla. L. Weekly] Supp. 414a (Fla. Seminole Co. Ct. April 2, 2002) (appeal to 5th DCA rejected and appeal transferred to 18th Cir. Ct.). The notion that the cost for covered procedures had to be reimbursed was also recently rejected in U.S. v. Liss, 265 F.3d 1220 (C.A. Fla. 11th 2001) where the court noted that because Medicare covered the procedures no restitution by criminal violators was warranted as Medicare had sustained no damage. Similarly, here the Plaintiff has alleged nothing suggesting it has any damage as the procedures were unquestionably covered and there are no allegations that the patients, the imaging facilities or the radiologists have made timely claim on the Plaintiff for anything in connection with these procedures. There are no allegations that any of these patients are still treating, that they have any claims that could not be paid because benefits are exhausted or that the Plaintiff has received any competing claims. There are no allegations that the recovery of the actual damages or any punitive damages will be paid to the Plaintiff’s insureds pursuant to any obligation to do so. At best, the allegations are that the Plaintiff is unhappy with the profit made by the Defendant for its efforts. As noted by Judge Marbelstone in his judgment in Barcus:
There is no doubt or dispute that Barcus incurred a debt to MMGO and received exactly the necessary product and services her treating physician ordered. No showing or allegation has been made that Barcus has no liability for the necessary testing services and interpretation she received. Clearly she is entitled to no windfall. Similarly, neither is State Farm. State Farm has no standing to assert defenses only available, if at all, to Barcus.
The same is true here. The Plaintiff is entitled to no windfall. Absent a timely submission of a competing claim for the same procedures, the Plaintiff has sustained no damage. F.S. §627.736(5)(b) then required claim submission within 30 days following the date of the procedures for the 1999 services. At a minimum the Plaintiff must show that it is obligated to someone else for these same funds.The Plaintiff Has Failed to Join Indispensable Parties
The Plaintiff has styled its proposed Amended Complaint as an action for its own account and for the benefit of its insureds (presumably the patients who underwent the MRI testing). Since the Plaintiff would not have been authorized to pay the Defendant without a direction to do so from those patients, it follows that if the benefits are disgorged from the Defendant, then the Defendant may have some viable claim against those patients who are clearly not entitled to a windfall. What happens here materially affects their rights. Perhaps they do not want their directions rejected. Alternatively, if disgorgement occurs, perhaps they want to use the proceeds to buy peace from the Defendant in any event. This is a circumstance they have no obligation to sit by and suffer without voice. Kaklamanous v. Allstate Ins. Co., 796 So.2d 555, 561(Fla. 1st DCA 2001). Similarly, if made to repay the funds to the Plaintiff, so too might the Defendant have an action against the imaging facilities and the radiologists and they in turn might have against the Plaintiff or the patients for indemnification. Thus, it appears that the patients, the imaging facilities and radiologists all have a stake in this proceeding if permitted to continue.
The Motion for Leave to Amend to add punitive damages claim is denied without prejudice.
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