11 Fla. L. Weekly Supp. 33a
Torts — Health maintenance organizations — Action brought by physician and medical association against HMOs arising out of termination of provider contract — Deceptive and unfair trade practices — HMOs are exempted from Florida Deceptive and Unfair Trade Practices Act as entities regulated by the Department of Insurance — Civil conspiracy claim alleging HMOs conspired to commit deceptive and unfair trade practices fails for lack of underlying actionable wrong — Common law fraud — Count alleging that misrepresentations induced physician into continuing contract with HMOs, and not alleging that misrepresentations were made at time contract was entered into and induced physician to enter into contract, is barred by economic loss rule — Tortious interference with doctor-patient relationship — Claim for tortious interference cannot lie for HMOs’ interference with plaintiffs’ relationship with HMO members where HMOs were party to relations between plaintiffs and members, and plaintiffs have not shown that malice was sole basis for the interference — Even if privilege to interfere did not apply to HMOs, court would find that plaintiffs failed to state cause of action for tortious interference with doctor-patient relationship where complaint does not allege interference with a specific relationship, but only interference with such relationships as an indirect consequence of termination of provider contract
SETH B. CUTLER, M.D., d/b/a SETH B. CUTLER, M.D., P.A., and BROWARD COUNTY MEDICAL ASSOCIATION, INC., Plaintiffs, v. HUMANA MEDICAL PLAN, INC., a Florida corporation; HUMANA HEALTH PLAN OF FLORIDA, INC., a Florida corporation; and HUMANA HEALTH INSURANCE COMPANY OF FLORIDA, INC., a Florida corruption, Defendant. Circuit Court, 17th Judicial Circuit in and for Broward County. Case No. 00-814(09). September 29, 2003. Robert Lance Andrews, Judge.ORDER
THIS CAUSE having come before the Court upon the Defendants’ Motion for Partial Summary Judgment, and the Court having considered same, having heard argument of counsel and otherwise being duly advised in premises, finds and decides as follows:
The instant action arises out of a written provider contract between Dr. Cutler and Humana, whereby Dr. Cutler agreed to evaluate and treat Humana members, in exchange for Humana paying him for services rendered in accordance with particular rate schedules incorporated into the contract. This Court previously granted summary judgment on the first three counts of the Amended Complaint that relied upon the existence of a private right of action under Chapter 641, finding that there was no private right. The Defendants now move for partial summary judgment on Count IV (Declaratory Relief pursuant to Florida’s Deceptive and Unfair Trade Practices Act (FDUTPA)); Count V (Actual Damages pursuant to FDUTPA); Count VI (Civil Conspiracy); Count VII (Common Law Fraud); Count X (Wrongful Termination); Count XI (Tortious Interference with Patient Relationship). Count X (Wrongful Termination) was dismissed at the hearing held on the Motion for Partial Summary Judgment, as there was no opposition thereto. The remaining counts are discussed below.
Turning first to Count IV and Count V which state claims pursuant to §501.204, Florida Statutes for violations of FDUPTA, the Defendants argue that Chapter 501 Florida Statutes cannot be invoked against the Defendants as they are HMOs and governed by Chapter 641, which does not afford a private right of action for unfair and deceptive trade practices. Plaintiffs, in turn, argue that the provisions of Chapter 641 do not supersede rights under any other statute, including Chapter 501. Plaintiffs further argue that because §501.212, which provides for exemptions to claims under §501.204, does not include causes of action brought pursuant to Chapter 641, and therefore the legislature meant to exclude it from the non-application of Chapter 501. Plaintiffs’ argument in this regard is misplaced. Section 501.212 provides in pertinent part:
This part does not apply to:
(4) Any person or activity regulated under laws administered by the Department of Financial Services or the Office of Insurance Regulation of the Financial Services Commission . . . .
The Defendants, as HMOs, are regulated by the Department of Insurance, pursuant to Part II, Chapter 641, Florida Statutes, entitled Health Maintenance Organizations. International Medical Centers, Inc. v. State Department of Insurance, 604 So.2d 505, FN5 (Fla. 1st DCA 1992). As such, HMOs are exempted from the application of Chapter 501. See Aztec Medical Services, Inc. v. Burger, 792 So.2d 617, 619, FN2 (Fla. 4th DCA 2001) (Unfair Trade Practices Act claim alleged against United Healthcare dismissed because, as plaintiffs conceded, United Healthcare is exempt from the Act.). Therefore, this Court finds that the Defendants are entitled to summary judgment as a matter of law on Count IV (Declaratory Relief pursuant to Florida’s Deceptive and Unfair Trade Practices Act (FDUTPA)); and Count V (Actual Damages pursuant to FDUTPA) of the Amended Complaint.
Defendants next move for summary judgment on Count VI (Civil Conspiracy) arguing that the conspiracy claim fails for lack of an underlying actionable wrong. In Count VI, Plaintiffs alleges that the Defendants conspired to commit unfair and deceptive trade practices in violation of §641.3901, Florida Statutes; and §501.203, Florida Statutes. It is well settled that “[a]n act which does not constitute a basis for an action against person cannot be made the basis of a civil action for conspiracy.” Buckner v. Lower Florida Keys Hospital Dist., 403 So.2d 1025, 1027 (Fla. 3d DCA 1981). As Plaintiffs do not have an actionable claim under either §641.3901, Florida Statutes, or §501.204, Florida Statutes, there can be no conspiracy claim based on these acts. Therefore, Defendants are entitled to summary judgment on Count VI (Civil Conspiracy) of the Amended Complaint. This Court will afford Plaintiffs the opportunity to amend their complaint to allege civil conspiracy based on acts other than those pursuant to §641.3901, Florida Statutes, and §501.203, Florida Statutes.
The Defendants move for summary judgment on Count VII (Common Law Fraud) arguing that the economic loss rule precludes an action for fraud where the alleged fraudulent conduct is interwoven with the breach of contract. The Defendants argue that the alleged misrepresentations occurred in the course of its performance under the contract, and therefore the claim is barred by the economic loss rule. Plaintiffs, in turn, argue that the action for fraud is not based on the performance of the contract, but rather the fraudulent inducement of the contract by the Defendants, and the economic loss rule does not bar claims for fraudulent inducement. HTP, Ltd. v. Lineas Aereas Costarricenses, 685 So.2d 1238, 1239 (Fla. 1996). However, while the economic loss rule has not eliminated causes of action based upon torts independent of the contractual breach, the supreme court recognized that certain fraudulent inducement claims are barred by the economic loss rule. Hotels of Key Largo, Inc. v. RHI Hotels, Inc., 694 So.2d 74 (Fla. 3d DCA 1997). The supreme court in HTP, Ltd., agreed with the analysis and explanation in the case of Huron Tool and Eng’g Co. v. Precision Consulting Services, Inc., 209 Mich. App. 365, 532 N.W. 2d 542 that:
Fraud in the inducement presents a special situation where parties to a contract appear to negotiate freely — which normally would constitute grounds for invoking the economic loss doctrine — but where in fact the ability of one party to negotiate fair terms and make an informed decision is undermined by the other party’s fraudulent behavior . . . .
The distinction between fraud in the inducement and other kinds of fraud is the same as the distinction drawn by a New Jersey federal district court between fraud extraneous to the contract and fraud interwoven with the breach of contract. With respect to the latter kind of fraud, the misrepresentations relate to the breaching party’s performance of the contract and do not give rise to an independent cause of action in tort.
HTP, Ltd. v. Lineas Aereas Costarricenses, 685 So.2d at 1240. “A critical distinction must be made where the alleged fraudulent misrepresentations are inseparably embodied in the parties’ subsequent agreement.” Hotels of Key Largo, 694 So.2d at 76.
“Misrepresentations relating to the breaching party’s performance of a contract do not give rise to an independent cause of action in tort, because such misrepresentations are interwoven and indistinct from the heart of the contractual agreement.” Id. “To determine whether the economic loss rule bars recovery under fraud, the question is simply this: is the fraud alleged in an act of performance or in a term of the bargain.” Bankers Mutual Capital v. United States Fidelity and Guaranty Company, 784 So.2d 485, 489 (Fla. 4th DCA 2001) (citations omitted). “[T]he economic loss rule does not bar a cause of action or fraud in the inducement, where the fraud alleged pertains to a term of the contract and is relied upon in inducing the completion of the agreement . . . . [but] a cause of action for fraud is barred where the fraud alleged pertains to the performance of the contract.” Id. (citations omitted). Count VII of the Amended Complaint states:
“HUMANA” through its agents, employees and/or representatives, made fraudulent representations to DR. CUTLER and other physicians that physician claims would be honored and dealt with fairly and timely. Based upon these fraudulent representations, “HUMANA” fraudulently induced DR. CUTLER to continue to ratify his contract and enter into subsequent amendments.
(emphasis added). By its plain language, Count VII alleges that the misrepresentations induced Dr. Cutler into continuing his contract with Humana; there are no allegations that misrepresentations were made at the time the contract was entered into and which induced him to enter into the agreement. Therefore, Count VII of the Amended Complaint, as pled is barred by the economic loss rule, and Defendant is entitled to summary judgment. This Court will however, afford Plaintiffs the opportunity of amending their Complaint to attempt to allege fraud in the inducement which would survive the application of the economic loss rule.
Defendant next move for summary judgment on Count XI (Tortious Interference with Patient Relationship), arguing that the relationships with which Defendant allegedly interfered arose from the contract agreement between Defendant and its members and Defendant and Plaintiffs, and an action for tortious interference does not exist against one who is himself a party to the contract allegedly interfered with. Plaintiffs argue that there is a separate relationship to which Defendant is not a party predicated upon doctor-patient relationship which has a business component. Plaintiffs further argue that Florida courts have recognized that although there is a privilege to interfere where one is a party to a contract, that privilege is only a valid defense where the interference was not done for some improper purpose. Plaintiffs assert that the facts alleged in the Amended Complaint clearly show that Defendants’ interference with Plaintiffs’ relationships with their clients was done with malicious purpose and it is not privileged under the law in Florida.
It is well settled that under Florida law, “a claim for tortious interference with contract cannot lied where the alleged interference is directed at a business relationship to which the defendant is a party.” Ernie Haire Ford, Inc. v. Ford Motor Company, 260 F.3d 1285, 1293 (11th Cir. 2001). It is undisputed that Defendant was a party to the relations between Plaintiffs and their patients. Interdependent contractual relations existed among Plaintiffs, their patients and Humana. Ex parte Blue Cross and Blue Shield of Alabama, 773 So.2d 475, 480 (Ala. 2000). “While the rights and duties between different sets of parties to a multiparty contract may differ and the respective interest of the parties may compete, the performance of one of the duties or the pursuit of one of the competing interests cannot be validly branded as interference.” Id.
Additionally, while it is true that the privilege to interfere does not extend to defendants when they have acted with malicious or conspiratorial motives, “[t]he privilege is qualified only where malice is the sole basis for the interference; in other words, the party must be interfering solely out of spite, to do harm, or for some other bad motive.” Ford, 260 F.3d at 1294, FN9. Count XI of the Amended Complaint alleges that:
Dr. Cutler has a patient-doctor relationship with “Humana” insured patients and a business relationship with these patients.
“Humana” was aware of and had knowledge with the relationship with “Humana” insured patients.
“Humana effectively terminated Dr. Cutler’s relationship with “Humana” insured patients prior to January 31, 2000, the purported date of the termination. More particularly, “Humana” directed patients away from Dr. Cutler prior to January 31, 2000, even though his termination had not been yet effected.
“Humana’s” unilateral termination of the relationship of Dr. Cutler with “Humana” insured patients was wrongful and without proper cause. This was an intentional and unjustified interference with the relationship Dr. Cutler had with “Humana” insured patients.
As a result of “Humana’s” tortious interference, Dr. Cutler has sustained damage to the patient-doctor relationship with “Humana” insured patients, as well as to the resulting business relationship.
The Amended Complaint does not allege that the interference was done solely with malice, out of spite, to do harm, or for some other bad motive.
However, even if this Court were to find that Plaintiffs sufficiently alleged malice so that the privilege to interfere would not apply to Defendants, this Court would nevertheless be forced to find that Plaintiffs had failed to state a cause of action for tortious interference with the doctor-patient relationship. In order to support a claim for tortious interference with a business relationship as that alleged here, there must be a showing that the defendants actually interfered with a particular doctor/patient relationship. Lake Hospital and Clinic, Inc. v. Silversmith, 551 So.2d 538, 544 (Fla. 4th DCA 1989) (citations omitted); Brumer v. HCA Health Services of Florida, Inc., 662 So.2d 1385, 1386 (Fla. 4th DCA 1995). It is not sufficient to show that there was an interference with such relationships as an indirect consequence of the termination of the Plaintiff’s contract. Id. (citations omitted). The Amended Complaint does not allege interference with a specific relationship. Therefore, Defendant is entitled to summary judgment as to Count XI. This Court will afford Plaintiffs the opportunity to amend the complaint to allege interference with a particular doctor-patient relationship.
Accordingly, it is hereby
ORDERED AND ADJUDGED that Defendant’s Motion for Partial Summary Judgment is GRANTED.
It is further ORDERED AND ADJUDGED that Plaintiffs shall have twenty (20) days from the date of this Order to file an Amended Complaint as to Count VI (Civil Conspiracy); Count VII (Common Law Fraud); and Count XI (Tortious Interference with Patient Relationship).
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