20 Fla. L. Weekly Supp. 1166a

Online Reference: FLWSUPP 2012WINDTorts — Fraud — Contracts — Insurance — Personal injury protection — Action by PIP insurer for common law and statutory fraud, breach of contract, unjust enrichment and civil conspiracy against medical center and its owner for alleged business practice of waiving or not collecting deductibles and co-payments from insureds — Jurisdiction — Motion to dismiss for failure to meet jurisdictional threshold is denied where insurer that is not merely seeking restitution of PIP benefits paid but also seeking damages due to fraud alleges in good faith that amount involved in suit exceeds $15,000 — Motion to dismiss fraud claims against owner of medical center on ground that complaint fails to plead sufficient facts to pierce corporate veil is denied where no piercing of veil is required since owner is being sued for his own alleged tortious acts, for which he may be liable even if they were committed within scope of his employment or office — Motion to dismiss civil conspiracy claims against owner is granted where owner’s alleged personal stake in achieving object of conspiracy is purely derivative of that of medical center — Breach of contract claims are also dismissed as to owner who is not alleged to be party to any contract claimed to be breached — Claim for declaratory relief seeking declaration that court agrees with insurer’s factual and legal contentions is denied

WINDHAVEN INSURANCE COMPANY; WINDHAVEN MANAGERS, INC.; and WINDHAVEN UNDERWRITERS, LLC, F/K/A AMERICAN SOUTHWEST INSURANCE MANAGERS OF FLORIDA, LLC, Plaintiff, vs. NORTH MIAMI THERAPY CENTER, INC., and CLAUDE JULES, Defendant. Circuit Court, 11th Judicial Circuit in and for Miami-Dade County, Circuit Civil Division. Case No. 12-8335 CA 20. April 24, 2013. Michael A. Hanzman, Judge. Counsel: Charles J. Grimsley, Miami, for Plaintiff. Susan Guller, Justin Morgan PA, Weston, for Defendant.

ORDER ON DEFENDANTS’ MOTION TO DISMISSAMENDED COMPLAINT AND/OR STRIKE

This cause is before the Court on “Defendants’ Motion to Dismiss Amended Complaint and/or Strike.” Upon reviewing the parties’ submissions, and after entertaining oral argument, the Court enters this Order granting the Motion in part.

INTRODUCTION

Plaintiff, Windhaven Insurance Company, is an insurance carrier which writes automobile policies in the State of Florida. Its affiliate, Plaintiff Windhaven Managers, Inc., adjusts and pays claims filed by the companies’ insureds. The carrier’s policies are underwritten by another affiliate, Plaintiff Windhaven Underwriters, LLC. The Plaintiffs will be collectively referred to as “Plaintiffs” or “Windhaven.”

Windhaven brings this action against Defendant North Miami Therapy Center and its principal, Claude Jules (collectively “NMTC” and “Jules”). NMTC is a medical facility which provides a regime of chiropractic and physical therapies to patients insured in automobile and work related accidents. A number of Windhaven insureds were treated by NMTC, and assigned to NMTC their right to receive benefits (i.e., payments) due under their insurance policies.

Though its pleading spans 212 paragraphs (plus sub-paragraphs), and advances sixteen (16) separate claims for relief, Windhaven’s grievance is singular and simple. It maintains that NMTC engages in, but fails to disclose, “a general business practice of waiving or otherwise not collecting or intending not to collect deductibles and co-payments from the patients, submitting bills claiming that 100% of the total was due and owing and also in failing to notify Plaintiffs [Windhaven] of their [NMTC’s] intention and/or general business practice of waiving applicable deductible and co-payments.” Amended Complaint (“AC”), ¶ 12. According to Windhaven this alleged “general business practice,” and NMTC’s failure to disclose it, constitutes: (a) common law fraud; (b) a violation of Fla. Stat. § 627.736; (c) a breach of contract; (d) unjust enrichment supporting claims for “restitution”; and (e) a civil conspiracy. Windhaven also seeks declaratory relief.

THE ALLEGED SCHEME

Paragraphs 16-62 of the AC, which are incorporated into each substantive count, provide an overview of Florida’s “no fault” law and the alleged scheme perpetrated by NMTC.

Fla. Stat. § 627.739 mandates that all insurers writing automobile policies in the State provide personal injury protection (PIP) coverage. This “no fault” statute, first enacted in 1972, is designed to guarantee the prompt payment of specific and certain benefits to individuals involved in automobile accidents. Many critics of the PIP system insist that it is riddled with fraud and abuse which has resulted in increased premiums, thereby harming consumers. The “scheme” posited by Windhaven is but one species of “fraud” and “abuse” which has supposedly infected the system.¹

Pursuant to § 627.736(1)(a) an insured (as well as others enumerated by the statute) is entitled to PIP benefits at a rate of eighty percent (80%) of their “reasonable” medical expenses, up to a maximum of Ten Thousand Dollars ($10,000.00). The remaining twenty percent (20%), described as a “co-payment,” remains the obligation of the insured.

Insurers are required to offer PIP coverage with varying deductibles “in amounts of $250.00, $500.00 and $1,000.00.” See Fla. Stat. § 627.739(2). The “purpose of a deductible, which is frequently referred to as ‘self-insurance,’ is to alter the point at which insurance company’s obligation to pay will ripen.” Int’l Bankers Ins. Co. v. Arnone, 552 So. 2d 908, 911 (Fla. 1989). “As self-insurance, a deductible requires the insured to share in the risk of loss, and worthy social goals are promoted. The insured is given a monetary incentive to fulfill his or her duty to protect and to adequately maintain his or her property as well as a monetary disincentive to file relatively trivial claims, thereby contributing to the reduction of administrative costs and overall costs of insurance. . .” Gen. Star Indem. Co. v. W. Florida Vill. Inn, Inc., 874 So. 2d 26, 34(Fla. 2d DCA 2004) [29 Fla. L. Weekly D348a]. Deductibles are required to be applied “to 100 percent of the expenses and losses” the insured is entitled to claim. Fla. Stat. § 627.739(2). “After the deductible is met, each insured is eligible to receive up to $10,000 in total benefits. . . .” Id.

Application of these statutory provisions is not particularly difficult. The amount of the deductible is subtracted from the total amount of the expenses and losses. Eighty percent (80%) of the resulting balance is to be paid by the carrier, up to a maximum of Ten Thousand Dollars ($10,000.00). As alleged in the AC, that is precisely what Windhaven’s policies provide:

The amount of any deductible shown in the Schedule or Declarations shall be deducted from the total amount of expenses and losses listed in Paragraphs B.1, B.2 and B.3 of the Personal Protection Coverage Insuring Agreement (section II at page 15 of the exemplar policies), before the application of any percentage limitation for each “insured” to whom the deductible applies.

The amount of any deductible shown in the Schedule or Declarations must be applied to 100 percent of the expenses and losses provided in this policy. After the deductible is met,each named insured is eligible to receive up to a total of $10,000.00. . .

Complaint, ¶ 22, 23. (Emphasis in AC).

According to Windhaven, the insured is legally obligated to actually pay the “deductible” and 20% “co-payment,” an “obligation” Windhaven says exists “because pursuant to the PIP Statute. . . the insurer is only responsible for 80% of “the insured’s/claimant’s” expenses and losses after the deductible is met. Complaint, ¶ 25. Windhaven also alleges that an insured is “responsible for all billing in excess of the insurer’s policy limits so that the total amount of all charges is paid.” See Complaint, ¶ 25. So — according to Windhaven — the insured has an “obligation” to actually pay: (a) the deductible; (b) the 20% co-payment; and (c) amounts owing after PIP benefits are exhausted. Windhaven alleges that these “obligations” are imposed by law and its policies. See Complaint, ¶ 25-29.²

Fla. Stat. § 627.736(5)(d) requires treating clinics, such as NMTC, to submit bills on a completed Centers for Medicare and Medicaid Services (CMS) 1500 form, (formerly a HCFA -1500 form) or any other standard form conforming with the statute. Upon receipt of the claims Fla. Stat. § 627.736(5)(b)(1)(b) obligates the insurer to pay for all lawfully rendered treatment, defined as “being in substantial compliance with all relevant applicable criminal, civil and administrative requirements of the state and federal law related to the provisions of medical services or treatment.” See § 627.732(11). An insurer is not required to make payments “[t]o any person who knowingly submits a false or misleading statement related to the claims or charges.” See Fla. Stat. § 627.736(5)(b)(1)(c).

As in commonplace in the PIP arena, Windhaven’s insureds generally assign their claims for “benefits” to the provider (i.e., “NMTC”) which in turn submits payment requests (i.e., “claims”) for services rendered to the insurer. The assignments executed by NMTC patients provide that the insured agrees “to pay any applicable deductible, co-payment, for services rendered after the policy of the insurance exhausts, and for any other services unrelated to the automobile accident.” AC, Exhibit “A.” According to Windhaven, however, NMTC submitted its claims knowing that it had not collected — and had no intention of collecting — the 20% co-payment and deductibles from their patients (i.e., Windhaven’s insureds). Windhaven therefore alleges that NMTC knew it was not entitled to “collect the amounts claimed” — not because needed medical services were not rendered — but because “Defendants knew they had illegally and improperly waived and/or failed to collect the due and owing deductibles and for payments from the patients on whose behalf the forms were being submitted and/or intended not to collect such due payments or had made it a general business practice. . . to waive co-payments and applicable deductibles.” Complaint, ¶ 37. Windhaven alleges that it paid the claims based on its “justified belief that the Defendant clinic had collected the 20% co-payments from each respective insured/claimant (and the applicable respective deductible”). Id.

After outlining this alleged “scheme”, the AC cites Fla. Stat. § 627.736(4) for the unremarkable proposition that an insurance carrier is relieved from any obligation to pay PIP benefits “to or on behalf of an insured person if that person has committed” insurance fraud. The statute provides that insurance fraud “shall void all coverage arising from the claim . . . of the insured person who committed the fraud . . . ,” even if a part of the claim may be legitimate. Id. Although the statute is aimed squarely at fraud committed by an “insured,” Windhaven maintains that it likewise covers fraud committed by a non-insured assignee (i.e., NMTC) because “the provider has stepped into the shoes of the insured via the assignment of benefits. . .” Complaint, ¶ 45.³

The Complaint next alleges that the “general business practice of waiving deductibles and co-payments” is defined as insurance fraud by Fla. Stat. § 817.234(7), a criminal statute that is not “being cited as a basis for this lawsuit. . .” AC, ¶ 46, 47. Plaintiffs allege that NMTC’s “general practice” of waiving these charges, and its failure to disclose the existence of this alleged practice at the time a claim is presented, violates § 627.736, which again voids coverage in the event of fraud committed by an “insured.” Complaint ¶ 51-53.

The AC next identifies 23 “claims” Plaintiffs allegedly paid in “detrimental reliance” on NMTC “misstatements and omissions,” and “without knowledge that the PIP claims were submitted in an unlawful and/or fraudulent manner.” AC, ¶ 54. The AC, in an unusual and apparently pre-emptive measure, then alleges that although the amount paid by Windhaven for services rendered to any particular patient does not meet this Court’s Fifteen Thousand Dollars ($15,000.00) jurisdictional threshold, these “claims” may be “aggregated” to confer subject matter jurisdiction in this Court because they arise from the same “transaction, occurrence, or circumstance,” citing Ben-David v. Educ. Res. Inst., Inc., 974 So. 2d 1138 (Fla. 3d DCA 2008) [33 Fla. L. Weekly D478a]. According to Plaintiffs its “claims” meet the same “transaction, occurrence or circumstances” test because: (a) on four (4) occasions NMTC submitted a consolidated claim for services rendered to multiple parties injured in the same accident which, in the aggregate, resulted in payments exceeding Fifteen Thousand Dollars ($15,000.00); (b) NMTC submitted “claims” in excess of Fifteen Thousand Dollars ($15,000.00) on five (5) occasions, even though no payment on any of them exceeded Fifteen Thousand Dollars ($15,000.00); and (c) NMTC submitted “bills involving the same general business practice,” even though no such bill resulted in a payment exceeding Fifteen Thousand Dollars ($15,000.00). AC, ¶ 55-61.

PLAINTIFF’S LEGAL THEORIES

Commencing at paragraph 63, the AC specifies the legal theories being advanced. The first three (3) counts allege claims for common law fraud based upon NMTC’s failure to disclose its “general business practice of waiving deductibles and co-payments.” AC, ¶ 65. Counts 4-6 allege claims for statutory fraud based upon Fla. Stat. § 627.736, again alleging that as an assignee of benefits NMTC “became the de facto ‘insured person’ for purposes of Fla. Stat. § 627.736.” AC, ¶ 78. Counts 7-9 allege that NMTC breached Plaintiff’s insurance policies by committing fraud and misrepresentation, relying on a standard provision that precludes coverage for any “insured” that has made fraudulent statements or engaged in fraudulent conduct “in connection with any accident or loss for which coverage is sought under policy.” AC, ¶ 127, 128.⁴

Counts 10-12 seek restitution of amounts paid, again premised on an alleged failure to “charge or collect the deductibles and co-payments.” AC, ¶ 160. And in Counts 13-15 each Plaintiff alleges claims for “civil conspiracy” engaged in by and between NMTC and its principal, Jules. Plaintiffs allege that Jules was acting in a personal capacity and possessed “an independent personal stake in achieving the object of the conspiracy.” AC, ¶ 187. Finally, count 16 seeks declaratory relief.

THE ALLEGED HARM

The AC alleges that Plaintiff has suffered damages which “include but are not limited to the above policy benefits [in the amount of $134,418.99 paid to NMTC], penalties, postage, interest, costs and attorney’s fees paid to or on behalf of insureds and claimants and the expenses incurred to adjust and investigate these claims.” AC, ¶ 62.

In its memo Windhaven further illuminates how this alleged scheme actually harms insurers. It first insists that insurance companies use deductibles and co-payments to “prevent people from seeking medical care that may not be necessary” based upon the perception that it is “free.” Memo, pp 6-7. By routinely waiving deductibles and co-payments providers such as NMTC desensitize patients to the costs of health care, thereby inducing them to “purchase” unnecessary treatment. Id.⁵ In the PIP context, Windhaven says that the routine failure to charge deductibles and co-payments causes patients to “keep returning” to the clinic, thereby enabling it to bill until 80% of its charges reach the “coveted $10,000” insurance benefit. According to Windhaven, absent the “fraudulent scheme” of not charging deductibles and co-payments these “insureds” would not have sought the treatment — or at least most of it — and Windhaven would not have had to “pay” for it.

Windhaven also claims that the practice of waiving deductibles and co-payments results in a “material misstatement” of the charges a provider submits to insurers, a theory explained by Judge Easterbrook in Kennedy v. Connecticut Gen. Life Ins. Co., 924 F.2d 698 (7th Cir. 1991).

The provider in Kennedy (Kennedy) performed chiropractic services on Myers, the spouse of an employee insured under a group health policy issued by Cigna. Although the policy had a 20% co-pay, Kennedy contracted with Myers “to accept as full compensation whatever the insurer would pay.” Kennedy, 924 F. 2d at 699. Upholding Cigna’s refusal to pay for Kennedy’s services, the court found that Kennedy had violated the policy provision requiring that the “physician must create a legal obligation in the employee or dependent.” Id. at 702. The court simply “enforced” that policy term. Id.

In route to its narrow contractual holding, the Kennedy court ruminated on the benefits of “co-payments,” noting that they “sensitize employees to the costs of health care, leading them not only to use less but also to seek out providers with lower fees.” Id. at 699. But “[w]hen a provider routinely waives co-payments, a fee stated as 80% of the charge is a phantom number,” which exceeds 80% of the true fee customarily charged. An insurer, however, “wants to pay only 80% of what the provider customarily seeks as his entire compensation.” Id. at 701. So in the case of a provider who routinely waives the 20% co-pay, the amount the insurer should pay is only 80% of the 80% typically charged; in other words 64% of the “inflated” customary charge. Allowing the provider to recover the difference was described by Judge Easterbrook as the “64% solution.” Id.⁶

Under this “damage” theory, Windhaven would be entitled to recover the difference between what it actually paid and the amount it would have paid had NMTC’s “customary charge” been accurately represented (i.e., the 64% solution).

Finally, Windhaven maintains that Fla. Stat. § 627.736(4)(h) allows it to recover all “benefits” paid “to or on behalf of an insured person if that person had committed, by a material act or omission, 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 established in a court of competent jurisdiction.” Id. Assuming this Statute permits a private cause of action, and applies in a circumstance where the alleged fraud is (a) committed solely by an assignee; and (b) is a type that could not have been committed by the insured, Windhaven would be entitled to a return of all amounts paid on the claims.

THE MOTION TO DISMISS

(a) Subject Matter Jurisdiction

Defendants, perhaps prompted by Windhaven’s unorthodox pre-emptive strike, claim this Court lacks subject matter because: (a) none of the “claims” paid reached $15,000, and (b) the “claims” are not subject to aggregation as Windhaven suggests. See AC, ¶ 55. Windhaven responds with its “aggregation” theory, saying that because the “claims” arose from the same “transaction, or circumstances or occurrence” they may properly be combined; and when combined they exceed the $15,000 threshold. The Court agrees that it has subject matter jurisdiction; albeit not for the reason Windhaven advances.

As the Third District explained as recently as last week, “[t]he pleading threshold to invoke the subject matter of the circuit court when the complaint is one for money damages is not high. The requirement is merely that the amount claimed must be made in good faith.” Foley v. Wilson, 2013 Fla. App. LEXIS 6021 (Fla. 3d DCA, April 17, 2013) [38 Fla. L. Weekly D855a]. This threshold “routinely is satisfied” with the general allegation that the plaintiff seeks damages “in excess of fifteen thousand ($15,000) dollars. . .” an allegation Windhaven makes here. Subject matter jurisdiction “does not depend on a preliminary determination of the amount the plaintiff may actually recover or the ultimate disposition of the lawsuit.” Id. Rather, subject matter jurisdiction “is satisfied at the initial pleading stage by a good faith assertion of the amount involved in the lawsuit.” Id.

By focusing on the amount of the “claims” for payment submitted by NMTC, and whether those “claims” can be aggregated to meet this Court’s jurisdictional threshold, both parties miss the target. The “claims” to be assessed for purposes of this Court’s subject matter jurisdiction are not the insurance “claims” submitted by NMTC, but rather the litigation “claims” made in this lawsuit. This is not a case where NMTC is suing to collect on its “claims” for services provided to Windhaven’s insureds; “claims” which may — or may not — have been subject to aggregation in order to confer subject matter jurisdiction in this Court. See, e.g., Canonico v. Devine, 130 So. 2d 319 (Fla. 3d DCA 1961). In this litigation Windhaven is suing for “damages” caused by an alleged fraudulent scheme, and has alleged that those “damages” vastly exceed this Court’s jurisdictional threshold. The fact that the underlying “claims” submitted by NMTC (and paid by Windhaven) are components of those “damages” — and that none of those underlying “claims” exceed $15,000 — is legally irrelevant. Windhaven alleges — in good faith — that as a result of NMTC’s fraudulent scheme (i.e., the fraud “claim” asserted) it is entitled to recover damages in excess of this Court’s minimum jurisdictional threshold. Put simply, it alleges — in good faith — that the “amount involved in the lawsuit” exceeds $15,000. Nothing more is required. Foley, supra.

b) The Liability of Mr. Jules

The pending Motion to Dismiss also challenges the “individual liability of Claude Jules.” Mr. Jules is named as a defendant in every count pled, and is alleged to be “the director, owner and registered agent of” NMTC. AC, ¶ 6. The AC alleges that Jules’ conduct was motivated for purposes of “fraudulently enriching himself and his clinic (which he owns) at the expense of Plaintiff.” AC, ¶43. Plaintiffs further point out that the corporation was organized to transact “legal business,” and that its stated corporate purpose does not include “defrauding or deceiving insurer(s) by falsifying bills sent to insurer(s) in order for reimbursement or something similar.” AC, ¶ 42. In a nutshell, Windhaven alleges that: (a) these alleged wrongdoings were outside the stated purpose of the corporate entity; and (b) Jules committed these wrongs — with NMTC — for personal gain.

Jules says that “Plaintiffs have failed to state a cause of action against Claude Jules individually for any of the five causes of action as they have not pled sufficient facts in order to pierce the corporate veil of Defendant, North Miami Therapy Center, Inc.” Motion, ¶ 24. This is not a case, however, where a plaintiff is seeking to “pierce the corporate veil” and hold an individual accountable for an entities’ debts and obligations. See, e.g., Gasparini v. Pordomingo, 972 So. 2d 1053, 1055 (Fla. 3d DCA 2008) [33 Fla. L. Weekly D295a] (a corporation is a separate legal entity, distinct from the individual persons comprising them, and, absent some basis to pierce the corporate veil, there is no basis for imposing liability for corporate debts and obligations upon the individuals). Rather, Jules is being sued for his alleged tortious acts; acts he may be personally liable for even if committed within the scope of his employment or office. Orlovsky v. Solid Surf, Inc., 405 So. 2d 1363 (Fla. 4th DCA 1981); Roth v. Nautical Eng’g Corp., 654 So. 2d 978 (Fla. 4th DCA 1995) [20 Fla. L. Weekly D1013a]. The Court therefore denies Jules’ Motion to Dismiss the substantive fraud counts.

Cases such as Orlovsky, however, do not salvage Windhaven’s “conspiracy” claim. As Windhaven acknowledges, “[o]rdinarily a corporation cannot conspire with its own directors, officers, or employees since the corporation acts through these individuals.” Buckner v. Lower Florida Keys Hosp. Dist., 403 So. 2d 1025, 1029 (Fla. 3d DCA 1981). An “exception” to this rule exists when “the individual has an independent personal stake, apart from that of the corporation, in achieving, the object of the conspiracy.” Greenberg v. Mount Sinai Med. Ctr. of Greater Miami, Inc., 629 So. 2d 252, 256 (Fla. 3d DCA 1993) Cedar Hills Properties Corp. v. E. Fed. Corp., 575 So. 2d 673 (Fla. 1st DCA 1991).

Windhaven says that Jules had a “personal stake” in achieving the object of the conspiracy because — and only because — he stood to make more money as the “owner” of the company if it successfully implemented in the alleged fraudulent scheme. If this were a sufficient “personal stake” to trigger the exception, the “exception” would no doubt swallow the rule, as every owner of a business ipso facto reaps financial gain as a result of fraud which brings undeserved funds into the corporate coffers. An owner’s “financial benefit” from fraud, realized solely by virtue of his/her ownership, is simply not a sufficient personal stake “apart from that of the corporation” to trigger the “exception” to the general rule precluding conspiracy claims between a corporate entity and affiliated individuals. See, e.g., Garrido v. Burger King Corp., 558 So. 2d 79 (Fla. 3d DCA 1990) (claim for conspiracy dismissed as complaint contained no allegations that individuals alleged to conspire with corporate entity “acting in a personal capacity apart from their employee status”); Am. Credit Card Tel. Co. v. Nat’l Pay Tel. Corp., 504 So. 2d 486, 489 (Fla. 1st DCA 1987) (individuals could not be found to have conspired with corporate entities “unless it was shown that they had a personal stake in the illegal activity separate and distinct from that of the corporation”). Here Jules’ alleged “personal stake” is purely derivative to that of the corporation. Under such circumstances he cannot be found to have “conspired” with it. The Court grants Jules’ Motion to Dismiss the civil conspiracy claims.

As noted previously, see footnote 4 supra, the Court also dismisses Jules as a defendant in the breach of contract claims as he is not alleged to be a party to any contract Windhaven claims was breached. Nor does Windhaven allege that Jules “assumed” the obligations imposed by any such agreement.

c) The Declaratory Relief Claim

Finally, in Count 16 Windhaven seeks “declaratory relief,” asking that the Court “agree” with the factual and legal contentions supporting its tort and contract claims. Windhaven simply recites — virtually verbatim — its factual allegations and opinions on how the statutes implicated should be “interpreted,” inviting the Court to concur with its analysis. If Windhaven’s view of the facts and governing law prevails it will succeed on its substantive claims. If not, it won’t. But the purpose of the Declaratory Judgment Act is not to secure the Court’s “opinion” on the legal and factual issues that may have to be resolved in a case. Its purpose is to “afford parties relief from insecurity and uncertainty with respect to rights and status.” Roth v. The Charter Club, Inc., 952 So. 2d 1206 (Fla. 3d DCA 2007) [32 Fla. L. Weekly D837a].

Windhaven does not allege that any of the operative documents, such as its policies or the NMTC assignments, are unclear, or that it is uncertain with respect to its rights or status. The only thing it is apparently uncertain of is whether its view of the facts and law will prevail — something every litigant (or at least every sane one) also doubts to some degree. The Court and/or fact finder will answer that question over the course of the proceedings as the legal and factual issues raised are disposed of in due course.

Based upon the foregoing reasons the Court hereby ORDERS:

1. Defendants’ Motion to Dismiss for lack of subject matter jurisdiction is DENIED.

2. Defendant Jules’ Motion to Dismiss Counts 7, 8 and 9 is GRANTED. The claims asserted in these counts (breach of contract) against Jules individually are dismissed with prejudice.

3. Defendants Motion to Dismiss Counts 13, 14 and 15 (Civil Conspiracy) is GRANTED. These counts are dismissed with prejudice.

4. Defendants’ Motion to Dismiss Count 16 is GRANTED. Plaintiff’s claim for Declaratory Relief is dismissed with prejudice.

5. Defendants shall file their Answer and Affirmative Defenses to the remaining counts (as well as any counterclaims, cross-claims or third party claims) within thirty (30) days of the date of this Order.

__________________

¹In its Memorandum of Law in opposition to the Motion to Dismiss (“Memo”), Windhaven directs the Court to comments made by, among others, “State Officials” who have observed that: (a) “a number of greedy and unscrupulous legal and medical professionals have turned the Ten Thousand Dollar ($10,000.00) PIP coverage into their personal slush fund;” (b) “that PIP fraud has spread like a plague, consistently seeking new, untreaded territory in its insatiable greed to bleed every possible benefit from the State required PIP coverage;” and (c) that “while many Floridians struggle financially due to a faltering economy, the ingenuity of white collar criminals defrauding our citizens and businesses out of their hard-earned dollars continues to grow. . . [leading] to a significant increase in PIP premiums, which translates into a “fraud tax” of nearly $1 billion on Floridians. . .” Memo, pp. 3-4. There is no doubt that some participants in — and observers of — our PIP system feel a sense of outrage and frustration over what they perceive to be pervasive abuse of this statutory regime. Others no doubt feel differently. But it is not the function of this Court to address whatever ills may have befallen this legislation. This Court’s only task is to resolve the specific claims asserted in this particular litigation; nothing more.

²During oral argument the Court pressed Windhaven’s counsel to point out where its policies, or Florida’s PIP statute, mandate that an insured actually pay the deductible, the co-payment or amounts due in excess of policy limits, as a condition of the insurer’s obligation to pay benefits. Windhaven was unable to direct the Court to any such provision in its policies, or any such statute. Instead, Windhaven points the Court to the definition of the term “deductible” contained in “Dictionary.com,” which instructs that a “deductible must be paid by the insured, before the benefit of a policy can apply.” See Memo, p. 5. Similarly, Windhaven cites “Dictionary.com’s” definition of “co-payment” as a contribution that “must be paid before any policy benefit is payable by an insurance company.” Windhaven also maintains that Fla. Stat. § 627.739(2), which provides that an insured is eligible to receive up to $10,000 in benefits “after the deductible is met” (language also found in its policies) requires actual payment by the insured. The Court disagrees.

As for the definitions of “deductible” and “co-pay” contained in Dictionary.com, the Court finds them to be unpersuasive and contrary to the ordinary meaning and more traditional dictionary definitions of those terms. See, e.g., Webster’s Dictionary of English Language (1980 Edition) (defining deduct “as to take away, separate or remove, in numbering, estimating or calculating; to subtract); Black’s Law Dictionary, Special Deluxe Fifth Ed. (1979) (defining “deductible” as “that which may be taken away or subtracted,” and “the portion of an insured loss to be borne by the insured before he is entitled to recovery from the insurer.”). A deductible is “borne” by the insured because the insurer is not required to pay benefits until the insured sustains a loss in excess of the deductible, and is responsible only for loss over the “deductible” assumed by the insured.

More importantly, Windhaven’s selected definitions — to the extent they require actual payment in order for an amount to be considered a “deductible” or “co-pay” — are inconsistent with Florida’s PIP statute. As for deductibles, contrary to Windhaven’s urging, § 627.739(2) provides for an insured’s entitlement to benefits once the deductible is “met” — not once it is “paid.” A deductible is “met” when an insured’s loss exceeds the deductible amount, regardless of whether it is actually paid. Nor does Windhaven’s policy require actual payment. And neither the statute nor Windhaven’s policy requires payment of the “co-pay” or “excess” amount billed as a condition to the insured’s right to receive benefits. Had the legislature — or Windhaven — desired to make actual payment the sine qua non of an insured’s rights to benefits, such a provision could easily have been enacted in our PIP statute or placed in the policy. Because no such provision exists, either by statute or contract, the Court finds that actual payment by an insured of the deductible, co-pay or excess charges, is not a condition of Windhaven’s payment obligations.

³The Court agrees that as an assignee NMTC would be subject to the carrier’s defense of insurance fraud committed by its assignor, the insured. Fred S. Conrad Const. Co. v. Exch. Bank of St. Augustine, 178 So. 2d 217, 219 (Fla. 1st DCA 1965) (“It is fundamental that the assignee of a contract or non-negotiable chose in action occupies the same position as its assignor and is subject to the same equities, conditions and defenses that could have been asserted against the assignor”); Kelly v. Lodwick, 82 So. 3d 855, 858 (Fla. 4th DCA 2011) [36 Fla. L. Weekly D731a] (Same). Here, however, Windhaven has not asserted any claims based on alleged wrongdoing by its insureds, or any alleged breach of contract by its insureds. At oral argument Windhaven in fact conceded that its insureds were “unwitting” participants in the alleged fraud. Rather each of its claims are premised on alleged independent conduct on the part of NMTC, the provider. Furthermore, the “fraud” alleged here is not one that could have been committed by an insured, as an insured is certainly under no duty to disclose the business practices of their health care providers. Under such circumstances the Court does not necessarily agree that NMTC, as an assignee of the insured’s claim, is an “insured person” for purposes of the statute, such that its alleged fraud would void coverage. Whether § 627.736(4)(h) — explicitly or implicitly — provides an insurer with a private cause of action and, if so, whether alleged fraud by an assignee — particularly a “fraud” which could not have been alleged against an insured — is within its grasp, are issues beyond the scope of this Order.

⁴At oral argument this Court indicated it would dismiss the breach of contract claims as even assuming that NMTC, as an assignee of “benefits” payable, became a “party” to the contract, Windhaven fails to allege the breach of any contractual provision. Rather, Windhaven’s contract claims are premised solely upon the allegation that NMTC committed fraud; thereby relieving it of any obligation to pay benefits. It appears as though Judge Dresnick denied NMTC’s initial Motion to Dismiss these claims and NMTC’s pending Motion does not again challenge them, except as to Defendant Jules. The Court dismisses Jules from these claims as he is not alleged to be a party to (or to have assumed) the contracts supposedly breached. The Court leaves for another day the question of whether Windhaven has viable contract claims against NMTC.

⁵On the flipside, one could argue that a provider’s unwavering insistence on payment of “deductibles” and “co-payments” would deter many patients from seeking necessary treatment.

⁶A critical distinction between Kennedy and this case is that the insurance plan in Kennedy expressly provided that a treating physician “must create a legal obligation in the employee or dependent” to pay the co-pay; a provision the provider in Kennedy violated by agreeing to “accept as full compensation whatever the insurer would pay.” Id. at p. 699. The Kennedy court again simply “enforced” that provision. Windhaven’s policies do not obligate provider assignees to create a “legal obligation” on the part of their insureds, and the assignments used by NMTC in fact do so by requiring the insured to remain liable for deductibles, co-payments, and excess charges. Windhaven’s case therefore must be based on its claim that NMTC’s alleged “general practice” of routinely waiving deductibles and co-payments amounts to fraud, as a provider’s decision to waive such payments, in any particular case, does not violate any term of Windhaven’s policy. Nor is a provider’s decision to forego payment from any particular insured a violation of law or inherently fraudulent. The legislature, however, has declared as a matter of public policy that a “general practice” of routinely doing so is insurance fraud. Fla. Stat. §817.234(7).

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