19 Fla. L. Weekly Supp. 561b
Online Reference: FLWSUPP 1907SCHLInsurance — Personal injury protection — Coverage — Medical expenses — Lawfully rendered services — Despite being issued a clinic exemption by Agency for Health Care Administration, medical provider was not wholly owned by licensed physician where management company held equitable or security interest in provider, and sham owner did not have indicia of ownership — Further, management company improperly exercised control over provider’s treatment and business decisions in violation of statute governing chiropractic medicine — Because provider’s services were not lawfully rendered, they are not compensable under PIP statute
ALLSTATE INSURANCE COMPANY, Plaintiff, v. DANIEL SCHLEUB and GLOBAL PHYSICAL THERAPY CENTER, P.A as assignees of Ghanshyam Budhoo, Gregorio Calcano and Jennifer Hardy, Defendants. Circuit Court, 9th Judicial Circuit in and for Orange County. Case No. 2011-CA-9409-O. November 10, 2011. Honorable Lisa Munyon, Judge. Counsel: Donald J. Masten, Masten, Lyerly, Peterson & Denbo, LLC, Orlando, for Plaintiff.
FINAL JUDGMENT
THIS CAUSE having come before the Court on Plaintiff’s Motion for Summary Judgment, and the Court having reviewed the records, having heard argument of counsel and the Court being otherwise fully advised in the premises, makes the following findings of fact and conclusions of law:
1. Based on the underlying medical records and pleadings there is no genuine issue of material fact and Plaintiff is entitled to Final Judgment.
2. Defendant must substantially comply with all Florida Statutes in order for its bills to be compensable under no-fault. See F.S. §627.732(11). The issuance of an AHCA clinic exemption is irrelevant to the factual question as to whether the facility is wholly owned by a licensed physician. The statute specifically states that the right to an exemption certificate is limited to “any person or entity providing health care services which is not a clinic, as defined under s. 400.9905.” For the reasons discussed below, GLOBAL qualified as a clinic because it was not wholly owned by SCHLEUB. GLOBAL did not meet the conditions required for applying for a clinic exemption.n
3. Florida Statutes §§627.736 400.990 and 460.4167 each use the term “wholly owned.” These statutes are part of a comprehensive legislative mandate aimed at curtailing fraud and abuse. The everyday definition of wholly pursuant to Merriam-Webster’s Online Dictionary (2010) is; to the full or entire extent: completely. Ownership is defined by Black’s Law Dictionary 1106 (6th Ed. 1990) as the collection of rights allowing one to use and enjoy property, including the right to convey it to others; ownership implies the right to possess a thing, regardless of any actual or constructive control; ownership rights are general, permanent, and inheritable. Ownership rights may be present, future or contingent rights. Taking these definitions together, it is clear that SCHLEUB did not wholly own GLOBAL based upon the following:
a) Global Physical Therapy Center, P.A. submitted CMS-1500 forms to ALLSTATE for services allegedly rendered to ALLSTATE’s insureds.
b) Global Physical Therapy Center, P.A. was a Florida corporation, reportedly owned by SCHLEUB
c) An AHCA exemption was issued based on SCHLEUB’s purported ownership of Global Physical Therapy Center, P.A.
d) SCHLEUB was paid as an independent contractor by GLOBAL and was not in possession of keys to GLOBAL.
e) SCHLEUB did not have the ability to hire/fire employees or to determine the compensation for himself or any other employee, nor did SCHLEUB have access to any payroll records.
f) SCHLEUB did not own any of the medical or office equipment within GLOBAL.
g) SCHLEUB had no involvement, and was not named on the lease for the facility.
h) SCHLEUB had no financial risk of loss associated with SCHLEUB’s purported ownership, other than loss of employment.
i) There was no monetary exchange for the purchase of the facility and SCHLEUB did not own any stocks or shares in Global Physical Therapy Center, P.A.
j) SCHLEUB was not named on, nor did he have access to the bank account maintained by Global Physical Therapy Center, P.A.
k) SCHLEUB did not receive any bills related to Global Physical Therapy Center, P.A., i.e. monthly rent, utilities, phone, etc.
l) SCHLEUB had no right to examine any of the financial records of Global Physical Therapy Center, P.A.
m) SCHLEUB was not issued any K-1 forms based on the profit/loss of the business, nor did he ever see or sign any of the tax returns filed by Global Physical Therapy Center, P.A., he merely received a 1099 form.
n) SCHLEUB did not have the authority to retain counsel or accountants on behalf of GLOBAL.
o) SCHLEUB had no control over treatment protocol, accounts payable or accounts receivable.
p) After being advised that SCHLEUB would be represented to the public as owner of the facility, SCHLEUB’s weekly salary at GLOBAL increased by $100.00.
q) At the time of Global Physical Therapy Center, P.A.’s closure, SCHLEUB did not receive any assets or equipment owned by Global Physical Therapy Center, P.A., nor did SCHLEUB own any of the accounts receivable. SCHLEUB had no knowledge as to where the accounts receivables, assets or equipment went after Global Physical Therapy Center, P.A.’s closure.
5. GLOBAL was created to circumvent the requirements of Florida Statutes §§627.736 400.990 and 460.4167. GLOBAL falsely represented to the public that it was wholly owned by a licensed chiropractor. In determining whether a facility is wholly owned by a licensed chiropractor, an insurer may consider the following:
a. The amount paid for the clinic by SCHLEUB was not the fair market value for the transfer or creation;
b. The relationship between GLOBAL and SCHLEUB;
c. The retention of the benefit of clinic ownership by others even though GLOBAL was ostensibly owned by SCHLEUB.
d. The “successor” clinic is, in effect, the same as the “predecessor” clinic by way of substantial ownership and management,
e. The unlawful motive behind the creation of GLOBAL;
f. The three enterprises, Global Physical Therapy Center, Omni Prime Group, Corp., and Lancaster Physical Therapy have substantially identical management, business purpose, operation, equipment, customers, and supervision;
g. The “sham owner” did not have the following indicia of ownership:
i. Did not have access (keys) to the facility;
ii. Did not own equipment located within the facility;
iii. Did not have access/control of the facility’s bank account(s);
iv. Did not own stocks/shares in facility;
v. Did not receive annual K-1 forms based on profit/loss of facility;
vi. Did not have authority to retain counsel and hire accountants;
vii. Was not responsible for the income taxes;
viii. Was not responsible for payment of vendor bills, including utilities;
ix. Was not involved in the day to day operational activities of the facility;
x. Did not determine the amounts billed to insurers;
xi. Was not involved in the facility’s marketing;
xii. Was not in control of the facility’s payroll;
xiii. Was not in control and was not involved in employment decisions;
xiv. Did not maintain patient records;
xv. Did not dictate office policies and decisions pertaining to pricing, advertising;
xvi. Did not dictate decisions as to office personnel and hours of operation of the facility.
6. A management company’s equitable interest/security interest in a clinic renders the services non-compensable under no-fault. i.e. the management company’s equitable interest/security interest is an ownership interest such that the facility is not wholly owned by a licensed health care provider, and the services were not lawfully rendered under F.S. §§400.990, 460.4167 and 627.736.
7. In addition Y & J. Vertical Management improperly exercised control, in violation of F.S. §460.4167, over the selection of the course of treatment, the procedures to be used as part of such course of treatment; the manner in which such course of treatment is carried; the patient records; the policies and decisions relating to pricing, credit, refunds, warranties, and advertising; and the decisions relating to office personnel and hours of practice
8. GLOBAL’s services were performed in violation of Florida Statutes, §§627.736(1)(a), (5)(a), 5(b)(1) and 5(d); Florida Statutes, §627.732(11), Florida Statutes, §460.4167, and Florida Statutes, §400.9935(3), and its bills are not properly payable. Under F.S. §627.736(5)(b)(1) neither “an insurer or insured is not required to pay a claim or charges: . . . (b) For any service or treatment that was not lawful at the time rendered.
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