19 Fla. L. Weekly Supp. 667c
Online Reference: FLWSUPP 1908WINDDeclaratory judgments — Insurance — Personal injury protection — Torts — Fraud — Action by insurer against medical provider alleging that provider’s failure to collect deductible and co-payment from insured constituted fraudulent conduct absolving insurer of liability for payment of medical bills — Declaratory judgment — Insurer has failed to state cause of action for declaratory relief where it seeks declaration regarding uncollected amounts that insurer would never be responsible for paying — Common law fraud — Insurer cannot state claim for common law fraud against provider where insurer’s reliance on misrepresentation that provider had collected deductible and co-payment would have caused no damage to insurer, and provider has no relationship with insurer that would give rise to duty to disclose — Statutory fraud — Section 627.736(4)(h) absolves insurer from its payment obligations if insured person has committed fraud, but does not provide remedy for insurer claiming fraud by provider — Section 817.234(7)(a) provides punishment for provider fraud proven in criminal proceeding, but does not create private cause of action against provider — Provisions of PIP statute absolving insurer from payment of claim to person who knowingly submits false or misleading statement and for treatment not lawfully rendered provide affirmative defenses in PIP suit, but do not create private causes of action against provider — Neither does insurer have private cause of action based on alleged violations of administrative rules — Fraudulent inducement — Where insurer cannot claim it relied on any misrepresentation in entering into insurance contract, fraudulent inducement claim cannot be maintained — Breach of contract claim cannot be sustained against provider as assignee where insurer failed to attach assignment to complaint or otherwise indicate that provider/assignee assumed obligations under contract
WINDHAVEN INSURANCE COMPANY, Plaintiff, v. RIGHT CHOICE MEDICAL & REHAB, CORP., CATHERINE A. WALTON, D.C., AND REINALDO R. ESPINOSA, Defendants. County Court, 11th Judicial Circuit in and for Miami-Dade County. Case No. 11 13003 CC 05, Section 06. May 4, 2012. Gladys Perez, Judge. Counsel: Charles J. Grimsley, Ft. Lauderdale, for Plaintiff. Ryan Peterson, Patiño Law Firm, Hialeah, for Defendant.
ORDER GRANTING DEFENDANT’S MOTION TODISMISS AND FOR MORE DEFINITE STATEMENT
THIS CAUSE having come to be heard on the 10th day of February, 2012 on Defendant’s Motion to Dismiss and for a More Definite Statement, and the Court being otherwise advised in the premises, it is hereupon,
ORDERED AND ADJUDGED that:
Defendant’s Motion is hereby GRANTED, as more specifically set forth below.Preliminary Statement
On March 5, 2011, Mr. Milian (claimant) was involved in an automobile accident. Plaintiff provided PIP coverage to Mr. Milian. From March 10, 2011 through June 2, 2011, Mr. Milian was treated by Defendants. His total medical bills were $13,350. Plaintiff brought the instant suit, alleging that Defendants (medical providers) failed to collect the deductible and co-payment from Mr. Milian.
The crux of Plaintiff’s complaint is that Defendants, by failing to collect the deductible or co-payment, perpetrated a fraud on Plaintiff (insurance company). Both parties have filed extensive memoranda of law for the Court’s consideration.Legal Standard
The legal standard this Court must apply in considering a motion to dismiss is clear. A motion to dismiss tests the legal sufficiency of a complaint. See Minor v. Brunetti, 43 So. 3d 178, 179 (Fla. 3d DCA 2010) [35 Fla. L. Weekly D2013a]. It does not present an opportunity for the court to determine factual issues. Id. (quoting See The Fla. Bar v. Greene, 926 So. 2d 1195, 1199 (Fla. 2006) [31 Fla. L. Weekly S171a]; Chodorow v. Porto Vita, Ltd., 954 So. 2d 1240, 1242 (Fla. 3d DCA 2007) [32 Fla. L. Weekly D1074a]). “The trial court may not rely on facts offered in depositions, affidavits, or other proofs. See Jordan v. Griley, 667 So.2d 493 (Fla. 3d DCA 1996) [21 Fla. L. Weekly D334c]; Lewis v. Barnett Bank of S. Fla. N.A., 604 So.2d 937 (Fla. 3d DCA 1992). Rather, the trial court is confined to the facts alleged within the four corners of the complaint. See Chodorow, 954 So. 2d at 1242.” Id.1Petition for Declaratory Judgment
Initially, Plaintiff asserts a Declaratory Action under Chapter 86, Florida Statutes, arguing that the claimant’s treatment was not reasonable, related, or necessary. Plaintiff then argues that Defendant had an affirmative duty to inquire into any applicable deductible to Milian’s medical treatment and collect said deductible from him.
The test for whether or not a complaint will state a cause of action under Florida’s Declaratory Judgment act is “whether or not the party seeking a declaration shows that he is in doubt or is uncertain as to existence of some right, status, immunity, power or privilege and has an actual, practical and present need for the declaration.” See Lutz v. Protective Life Ins. Co., 951 So. 2d 884, 889 (Fla. 4th DCA 2007) [32 Fla. L. Weekly D160a]. “There must be a bona fide controversy, justiciable in the sense that it flows out of some definite and concrete assertion or a right and there should be involved the legal or equitable relations of parties having adverse interests with respect to the declaration sought. Id.
While declaratory actions are commonplace in the insurance context, they serve a specific purpose not evident in the instant case. Typically, the insurer seeks to determine interpretation of a contractual provision to establish the existence or non-existence of coverage. The Florida Supreme Court recognized this principle, stating:
We conclude that it is illogical and unfair to not allow insureds and insurers to have a determination as to whether coverage exists on the basis of the facts underlying a claim against an insurance policy. Why should an insured be placed in a position of having to have a substantial judgment against the insured without knowing whether there is coverage from a policy? Why should an insurer be placed in a position of either paying what it believes to be an uncovered claim or being in jeopardy of a bad faith judgment for failure to pay a claim? These are precisely the issues recognized by this Court in other contexts that are intended to come within the purpose of the declaratory judgment statute’s “relief from insecurity and uncertainty with respect to rights, status, and other equitable or legal relations.” Coalition for Adequacy & Fairness in School Funding, Inc. v. Chiles, 680 So. 2d 400, 404 (Fla.1996) [21 Fla. L. Weekly S271a].
Higgins v. State Farm Fire and Cas. Co., 894 So. 2d 5, 15 (Fla. 2004) [29 Fla. L. Weekly S533a].
At the outset, Plaintiff has failed to demonstrate a bona fide, present practical need for the declaration. While this Court notes that “the existence of another viable remedy does not preclude a judgment for declaratory relief, a viable declaratory claim must be asserted and exceptional circumstances shown for the prosecution of such claim where there is a pending suit at the time the action is initiated, and the issues raised in the action can be resolved in the pending suit.” See Berrios v. Deuk Spine, 76 So. 3d 967, 970-971 (Fla. 5th DCA 2011) [36 Fla. L. Weekly D2536a].
It is important to understand the anatomy of this case. Plaintiff alleges that Defendant’s failure to collect a deductible or co-payment constitutes fraudulent conduct, which absolves it of liability to pay for medical services rendered by Defendant to Plaintiff’s insured. Noteworthy is the fact that Plaintiff would never be responsible for the alleged uncollected amounts. The contract of insurance and Florida’s No-Fault law require that Plaintiff pay for 80 percent of medical expenses. Therefore, the additional 20 percent, which makes up the co-payment, is a financial responsibility always borne by the insured. Likewise, the insurer is not obligated to assume any financial burden for a deductible. This Court is unable, then, to determine which rights of the Insured’s it seeks to have addressed presently.
Plaintiff contends that the pressing need for the declaration arises from the fact that the Defendant has filed a lawsuit, Right Choice Medial & Rehab, Corp. a/a/o Carlos Milian v. Windhaven, Miami-Dade County Case No. 11-05637-CC-21, and the insured has filed a lawsuit against it, Milian v. Windhaven, Miami-Dade County Case No. 11-06505 SP 21. This fact undermines the Plaintiff’s petition for a declaratory action under Chapter 86. The petition presents numerous assertions as to why the claimant’s treatment was not reasonable, related, or necessary — assertions properly raised in the underlying suits. This is not the typical declaratory action by an insurer wherein it is necessary to have a determination of rights, such as coverage, or otherwise place the Insurer in the precarious position of having to defend an insured in a suit and have a potential judgment entered against it in the absence of a contractual obligation to do so. Accordingly, this Court finds that Plaintiff has failed to state a cause of action for a Declaratory Action and grants Defendant’s motion for a more definite statement.Count ICommon Law Fraud
The essential elements of common-law fraud are: (1) a false statement of fact; (2) known by the person making the statement to be false at the time it was made; (3) made for the purpose of inducing another to act in reliance thereon; (4) action by the other person in reliance on the correctness of the statement; and (5) resulting damage to the other person.
Gandy v. Trans World Computer Technology Group, 787 So. 2d 116, 118 (Fla. 2nd DCA 2001) [26 Fla. L. Weekly D1053b] (citing Mettler, Inc. v. Ellen Tracy, Inc., 648 So. 2d 253 (Fla. 2d DCA 1994) [20 Fla. L. Weekly D85c]).
Plaintiff’s claim for common law fraud essentially is that the submission of HCFA forms without notifying the Insurer that the defendant had failed to collect a deductible or co-payment constituted a material omission and insurance fraud. Even if at first blush this argument might seem legally cognizable, further analysis reveals that it may not be sustained.
First, the Plaintiff has failed to aver facts to meet the elements of common law fraud. Assuming that the HCFA forms contained a material misrepresentation as to the collection of the deductible and co-payment, the Plaintiff’s reliance upon said material misrepresentation would have caused no damage to the Plaintiff. The Plaintiff would not have been responsible for any greater amount had the provider collected the deductible and co-payment than it is responsible for had the provider failed to do so.
Second, although Mr. Milian assigned his benefits to the Defendant, it does not follow that Defendant assumed any obligations under the insurance contract between Milian and the Plaintiff. “A defendant’s knowing concealment or non-disclosure of a material fact may only support an action for fraud where there is a duty to disclose. See Don Slack Ins., Inc. v. Fidelity & Cas. Co. of N. Y., 385 So. 2d 1061 (Fla. 5th DCA 1980). ‘[S]uch duty arises when one party has information that the other party has a right to know because of a fiduciary or other relation of trust or confidence between them.’ State v. Mark Marks, P.A., 654 So. 2d 1184, 1189 (Fla. 4th DCA 1995) [20 Fla. L. Weekly D770a], approved by, 698 So. 2d 533 (Fla. 1997) [22 Fla. L. Weekly S439a] (citation omitted).” See TransPetrol, Ltd. v. Radulovic, 764 So. 2d 878, 879-880 (Fla. 4th DCA 2000) [25 Fla. L. Weekly D1879a].
While Plaintiff has a contractual relationship with the claimant, it does not have a confidential, contractual, or fiduciary relationship with the Defendant. Thus, there are no allegations which would give rise to a duty to disclose.
Third, Plaintiff cites several cases in opposition to Defendant’s motion to dismiss the common law fraud count. The Court has reviewed these cases and finds they are inapposite. Thus, Plaintiff has not provided any legal authority which would permit a claim for common law fraud under the factual scenario sub judice. And, this Court will not create such a claim.
Plaintiff’s claim for common law fraud is hereby DISMISSED with prejudice.Count IIStatutory Fraud
According to Plaintiff, section 627.736(4)(h), Florida Statutes, establishes the Defendant’s fraud. That section provides:
Benefits shall not be due and payable to or on behalf of an insured person if that person has committed, by a material act or omission, any insurance fraud relating to personal injury protection coverage under his or her policy, if the fraud is admitted to in a sworn statement by the insured or if it is established in a court of competent jurisdiction. Any insurance fraud shall void all coverage arising from the fraud under the personal injury protection coverage of the insured person who committed the fraud, irrespective of whether a portion of the insured person’s claim may be legitimate, and any benefits paid prior to the discovery of the insured person’s claim shall be recoverable by the insured form the person who committed insurance fraud in their entirety.
In Koile v. State 934 So.2d 1226, 1230-1231 (Fla. 2006) [31 Fla. L. Weekly S501a], the Florida Supreme Court set forth the applicable law for statutory construction, stating:
Before resorting to the rules of statutory interpretation, courts must first look to the actual language of the statute itself. Joshua v. City of Gainesville, 768 So. 2d 432, 435 (Fla. 2000) [25 Fla. L. Weekly S641a]; accord BellSouth Telecomms., Inc. v. Meeks, 863 So. 2d 287, 289 (Fla. 2003) [28 Fla. L. Weekly S775b] . . . When the statute is clear and unambiguous, courts will not look behind the statute’s plain language for legislative intent or resort to rules of statutory construction to ascertain intent. See Lee County Elec. Coop., Inc. v. Jacobs, 820 So. 2d 297, 303 (Fla. 2002) [27 Fla. L. Weekly S379a]. In such instance, the statute’s plain and ordinary meaning must control, unless this leads to an unreasonable result or a result clearly contrary to legislative intent. See State v. Burris, 875 So. 2d 408, 410 (Fla. 2004) [29 Fla. L. Weekly S149a]. When the statutory language is clear, “courts have no occasion to resort to rules of construction — they must read the statute as written, for to do otherwise would constitute an abrogation of legislative power.” Nicoll v. Baker, 668 So. 2d 989, 990-91 (Fla. 1996) [21 Fla. L. Weekly S96a].
Section 627.736(4)(h) absolves an Insurer from its payment obligations to its insured “if that person” has committed fraud relating to coverage “under his or her policy.” The conduct of Defendant will not void the insured’s coverage under the plain language of the provision cited by Plaintiff. See All Family Clinic of Daytona Beach, Inc. d/b/a Florida Medical Associates a/a/o Ann Sofie Fors v. Progressive Express Insurance Company, 13 Fla. L. Weekly Supp. 996a (Fla. Cty. Ct. 7th Cir. Aug. 3, 2006). Therefore, that section “is not applicable and does not provide a remedy for an insurance carrier claiming insurance fraud by a health care provider/assignee.” See id.
Plaintiff also cites section 817.234(7)(a), a criminal statute that prohibits a medical provider from agreeing with the insured to waive deductibles and copayments or for any reasons intents not to collect the total amount charged. While if it is proven in a criminal proceeding, beyond a reasonable doubt, that Defendant in fact engaged in said conduct, Defendant may be subject to the statutory punishment, section 817.234(7)(a) does not create in the insurance company a private cause of action against the medical provider.
Plaintiff’s claim for statutory fraud is hereby DISMISSED with prejudice.Count IIIFraudulent Billing
Plaintiff asserts a count for “fraudulent billing,” citing section 627.736(5)(b)(1)(c), Florida Statutes. That section states, “[a]n insurer or insured is not required to pay a claim or charges . . . [t]o any person who knowingly submits a false or misleading statement relating to the claim or charges.” While it is clear that fraudulent billing could serve as an affirmative defense in an underlying PIP suit by the provider, and, if properly plead and proved, would absolve the Insurer of liability under Florida’s No-Fault statute, the statute does not create a private cause of action for the insurer to bring a stand alone claim. See United Automobile Ins. Co. v. A 1st Choice Healthcare Systems, 21 So. 3d 124, 128-29 (Fla. 3d DCA 2009) [34 Fla. L. Weekly D2268a](“It is axiomatic that whether a private right of action exists for violation of a statute is a matter of legislative intent . . . Absent a specific expression of such intent, a private right of action may not be implied.”). This Court will not imply a private cause of action in absence of legislative action and direction by statutory enactment. Finally, Plaintiff is unable to sustain a fraud count, because it is unable to establish any damages, as previously discussed.
The count for fraudulent billing is DISMISSED with prejudice; however, Plaintiff is not precluded from raising arguments as an affirmative defense in underlying PIP suits.Count IVViolation of The Florida Administrative Code
The instant count is not at issue, because the Plaintiff has dismissed it. However, this Court will note that Plaintiff’s contentions that it has a private cause of action and that the acts and practices of the Defendants are wrongful and unlawful because they violate the Florida Administrative Code is not supported by law. The Insurer in a PIP case does not enjoy a private right of enforcement of an administrative code, regulatory statutes, licensing compliance regulations, or medical records standards. See Ali v. McCarthy, 17 Fla. L. Weekly Supp. 661a (Fla. 18th Cir. Ct. May 25, 2010); Perez v. Alan, 18 Fla. L. Weekly Supp. 192a (Fla. 19th Cir. Ct. Oct. 29, 2010); Milo Diagnostic Ctr., Inc. v. State Farm & Casualty Co., 18 Fla. L. Weekly Supp. 211a (July 1, 2010).Count VTreatment Not Lawfully Rendered
Section 627.736(5)(b)(1)(b), Florida Statutes, provides that an “insurer is not required to pay a claim or charges. . .for any service or treatment that was not lawful at the time rendered.” While this statute provides for a complete defense to a suit for medical bills under Florida’s No-Fault law, it does not create a private cause of action to an insured. (Pertinent law and discussion is found elsewhere in this order and will not be repeated here).
This count is DISMISSED with prejudice; however, the dismissal is without prejudice to the extent that Plaintiff may raise the arguments set forth in this count as an affirmative defense in the underlying PIP suits.Count VITortious Interference
This count is not at issue.Count VIIFraudulent Inducement
Plaintiff attempts to articulate a fraud in the inducement claim, asserting that Defendant induced Milian to participate in unnecessary medical treatment, inflating medical bills, and “intentionally removing the personal economic consequences that Milian would have had to pay out of his own funds.” The necessary elements of fraud in the inducement are: that (1) defendant made a statement concerning a material fact; (2) knowing that said statement was false; (3) with the intent that plaintiff act on the false statement; and (4) plaintiff was damaged as a result of their reasonable reliance on the false statement. See Gemini Investors III, L.P. v. Nuñez, 78 So. 3d 94, 97 (Fla. 3d DCA 2012) [36 Fla. L. Weekly D2206a]. Fraud in the inducement is an independent tort, which grants relief to a party who has been fraudulently induced into entering into a contract. See HTP, Ltd. v. Lineas Aereas Costarricenses, S.A. 685 So. 2d 1238, 1239 (Fla.1996) [21 Fla. L. Weekly S447a](emphasis added). Fraudulent inducement does not relate to the breaching party’s performance of the contract; it is fraud extraneous to the contract. See Connecticut General Life Ins. Co. v. Jones, 764 So. 2d 677, 681 (Fla. 1st DCA 2000) [25 Fla. L. Weekly D1351a].
Here, the Defendant is a provider of medical services. It was not a party to the insurance contract. Therefore, any alleged fraud in the instant case must have occurred after Milian and the Plaintiff entered into the contract. Plaintiff is unable to claim that it relied upon any misrepresentation in entering into an agreement, and, consequently, may not maintain a claim for fraud in the inducement against Defendant.
This count is DISMISSED with prejudice.Count VIIIBreach of Contract2
Plaintiff asserts a claim for breach of contract between itself and the Defendant/provider. Under Plaintiff’s alleged theory, because the claimant assigned its claim to Defendant, the Defendant had a duty to submit claims in accordance with the policy terms.
“Under Florida law, the assignment of a contract right does not entail the transfer of any duty to the assignee, unless the assignee assents to assume the duty. . .Assignment of a right to payment under a contract does not eliminate the duty of compliance with contract conditions, but a third-party assignee is not liable for performance of any duty under a contract, unless he was a party to the agreement or has become a party by subsequent agreement. Absent such an event, which is in the nature of a novation, the duty of performance of the conditions to the right of payment remains with the assignor.” See Shaw v. State Farm Fire and Casualty Company, 37 So. 3d 329, 332 (Fla 5th DCA 2010) [34 Fla. L. Weekly D2189a]
Although this general principle of law has been recently recognized in Shaw, substantial legal authority may be derived from the discussion regarding the issue in Judge Furguson’s dissent in Banner Supply Company v. Habitat 1 Construction Corporation, 519 So. 2d 1, 2-3 (Fla. 3d DCA 1987)(Furguson, J, dissenting)(citing Jenkins v. City Ice & Fuel Co., 118 Fla. 795, 160 So. 215 (1935) (the assignment of a contract does not give to the other party to the original agreement a right of action against the assignee for its breach, nor is mere assignee liable unless he expressly agreed to be bound); De La Rosa v. Tropical Sandwiches, Inc., 298 So. 2d 471 (Fla.3d DCA 1974) (an assignment of rights under a contract does not include an assumption of obligations or liabilities the assignor may have to other parties to the contract unless expressly agreed to by the assignee), cert. denied, 312 So. 2d 760 (Fla.1975); see also Sans Souci v. Div. of Fla. Land Sales & Condos., 448 So. 2d 1116 (Fla. 1st DCA 1984) (assignment normally involves the assignee’s acquiring of rights, not obligations of the assignor); Dependable Ins. Co. v. Landers, 421 So. 2d 175 (Fla. 5th DCA 1982) (generally unless the assignee assumes the assignor’s duties or liabilities, assignee is not affirmatively liable to debtor). . .Other respectable authorities state the principle as an axiom. 6A C.J.S. Assignments § 92, at 748 (1975) (in the absence of an express contract provision, an assignee is not required to assume the original responsibilities of the assignor); 6A C.J.S. Assignments § 94, at 749 (1975) (as a general rule, unless there has been an express assumption of liability, the assignee is not liable to the debtor for liabilities incurred by the assignor or in connection with the subject matter of the assignment); 6 Am.Jur.2d Assignments § 109, at 291 (1963) (it is a general principal that an assignment of a contract does not operate to cast upon the assignee the duties and obligations or the liabilities imposed by the contract on the assignor, in the absence of the assignee’s assumption of such liabilities); 4 Fla. Jur. 2d Assignments § 19, at 99 (1978) (the mere assignment of a personal contract does not operate to cast upon the assignee obligations or liabilities imposed by the contract on the assignor, in the absence of assumption of such liabilities by the assignee)).
Plaintiff failed to attach the assignment of benefits to the complaint or in any other manner indicate that the Defendant assumed obligations under the insurance contract. In absence of any such averment, Plaintiff may not sustain a claim for breach of contract against the provider.
This count is DISMISSED without prejudice.
__________________
1It should be noted that Plaintiff filed a memorandum of law and attached as two exhibits: 1) the Second Interim Report of the Fifteenth Statewide Grand Jury, examining fraud in PIP cases; and 2) Cabinet Presentation of Personal Injury Protection from the Office of Insurance Regulation. Plaintiff also gives considerable mention to Fraud Red Flag Indicators. Even assuming for argument sake that these materials would be admissible, which this Court does not find, they constitute matters outside the four corners of the complaint. Accordingly, this Court will not consider any of these materials in deciding the motion at issue.
2The court notes that this count may be subject to dismissal on procedural grounds as well. See Fla. R. Civ. P. 1.170 (compulsory counterclaim)
* * *
