State Farm Fire & Casualty Company v. Silver Star Health and Rehab

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[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 12-12181
________________________
D.C. Docket No. 6:10-cv-01103-GAP-GJK
STATE FARM FIRE & CASUALTY COMPANY,
Plaintiff - Appellee
Cross-Appellant,
versus
SILVER STAR HEALTH AND REHAB,
JUDITH MCKENZIE,
JEAN COLIN,
Defendants - Appellants
Cross-Appellees.
________________________
Appeals from the United States District Court
for the Middle District of Florida
________________________
(August 6, 2013)
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Before CARNES, Chief Judge, WILSON and EBEL, * Circuit Judges.
PER CURIAM:
The Florida Health Care Clinic Act requires that all medical clinics
operating in Florida be licensed by the State unless they fall within a statutory
exemption. See Fla. Stat. § 400.991. One of the exemptions is for clinics that are
“wholly owned by one or more licensed health care practitioners.” Id. §
400.9905(4)(g). That exemption is at the heart of this case. State Farm Fire &
Casualty Company contends that Silver Star Health and Rehab and one of its
owners, Dr. Judith McKenzie, concealed the ownership interest of Jean Colin, who
is not a licensed health care practitioner, so that Silver Star would appear to qualify
for the wholly owned exemption, thereby evading the Act’s licensing
requirements. The reason that it matters to State Farm is, as we will explain, if
Silver Star does not qualify for the “wholly owned” exemption, it has been
operating unlawfully under Florida law, which gives State Farm a defense to
charges and claims Silver Star has made for services it rendered the insurance
company’s insureds.
I.
Silver Star was a chiropractic clinic located in Orlando, Florida. (The record
does not indicate if it is still operating.) Some of its patients were insured by State
*
Honorable David M. Ebel, United States Circuit Judge for the Tenth Circuit Court of
Appeals, sitting by designation.
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Farm. When a patient’s treatment was covered by a State Farm insurance policy,
the patient would sign an assignment of benefits form that allowed Silver Star to
bill State Farm directly for the treatment it provided. Between May 2008 and
December 2009, State Farm paid Silver Star more than $151,000. Between
December 2009 and March 2010, Silver Star billed State Farm an additional
$86,000 that it has not yet paid.
State Farm’s position is that it does not have to pay that $86,000 because the
treatment was not “lawfully provided” since Silver Star did not comply with the
licensing statute. Florida law provides that an insurer is not required to pay for
medical treatment that is not “lawfully provided.” See id. §§ 400.9935(3),
627.736(1)(a)1. State Farm filed a lawsuit against Silver Star, McKenzie, and
Colin 1 in federal district court seeking: (1) a declaratory judgment that it is not
required to pay the outstanding bills from Silver Star; and (2) damages for unjust
enrichment of more than $151,000, the amount that State Farm has already paid
Silver Star. The unjust enrichment count was tried to a jury, which returned a
verdict for State Farm. The district court entered judgment on the jury verdict, and
the court also entered the declaratory judgment that State Farm sought. Silver Star
has appealed the final judgment against it and State Farm has cross-appealed (on a
discovery issue and a jury instruction issue) as a precautionary measure. We begin
1
We refer to the three defendants collectively as “Silver Star,” unless the context requires
an individual reference.
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by addressing Silver Star’s contentions because we will need to reach State Farm’s
cross-appeal only if Silver Star prevails.
II.
Silver Star has never contended that it was licensed under the Florida Health
Care Clinic Act at the time this lawsuit was filed. Nor has it ever contended that
any exemption other than the “wholly owned” one applies to it. Still, Silver Star
raises four issues in its appeal. It contends that: (1) Florida law does not provide
State Farm with a judicial remedy for a violation of the licensing requirements of
the Health Care Clinic Act; (2) even if Florida law does provide State Farm with a
judicial remedy, a cause of action for unjust enrichment is unavailable because
State Farm and Silver Star were in privity of contract; (3) the district court’s jury
instruction on the meaning of “wholly owned” misstated the law; and (4) the
district court abused its discretion by apportioning costs jointly and severally
among the three defendants.
A.
Silver Star’s basic contention is that Florida law does not provide State Farm
with a judicial remedy. According to Silver Star, the only two ways that the
licensing requirements of the Florida Health Care Clinic Act may be enforced are
as: (1) criminal penalties for people who violate them, Fla. Stat. § 400.993, and (2)
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administrative penalties imposed by the Florida Agency for Health Care
Administration, id. § 400.995. Its position is that because the Act does not
expressly state that a violation of its licensing requirements can be determined by a
court in a civil action, the district court erred by allowing State Farm’s lawsuit to
proceed.
We disagree with Silver Star, as did the district court. Although the Act
does not expressly refer to a judicial remedy, it provides that “[a]ll charges or
reimbursement claims made by or on behalf of a clinic that is required to be
licensed under this part, but that is not so licensed, or that is otherwise operating in
violation of this part, are unlawful charges, and therefore are noncompensable and
unenforceable.” Id. § 400.9935(3). In addition, Florida’s no fault statute provides
that “[a]n insurer . . . is not required to pay a claim or charges . . . [f]or any service
or treatment that was not lawful at the time rendered . . .,” id. § 627.736(5)(b)1.b.,
and it defines “lawful” as “in substantial compliance with all relevant applicable
criminal, civil, and administrative requirements of state and federal law related to
the provision of medical services and treatment,” id. § 627.732(11) (emphasis
added). The state law administrative requirements part of that definition covers
the licensing requirements of the Florida Health Care Clinic Act, the plain
language of which plainly says that a charge or reimbursement claim by an
unlicensed clinic that is not exempt from licensing is “unlawful . . .
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noncompensable and unenforceable.” Because courts are traditional forums for
determining the lawfulness, compensability, and enforceability of claims, it would
make no sense to read into a statute a provision that courts lack the authority to
decide the crucial question on which the lawfulness, compensability, and
enforceability of a claim depends, which in this case is whether the exemption
Silver Star asserts applied, excusing its failure to obtain a license.
Active Spine Centers, LLC v. State Farm Fire & Casualty Co., 911 So. 2d
241 (Fla. 3d DCA 2005), supports our interpretation of the Florida acts. See
McMahan v. Toto, 311 F.3d 1077, 1080 (11th Cir. 2002) (“[A]bsent a decision
from the state supreme court on an issue of state law, we are bound to follow
decisions of the state’s intermediate appellate courts unless there is some
persuasive indication that the highest court of the state would decide the issue
differently.”) In the Active Spine Centers case, State Farm denied payment of
claims for medical treatment on the grounds that the clinic that had provided the
treatment did not comply with Florida’s licensing statute. 2 911 So. 2d at 242–43.
The clinic sought a declaratory judgment that it was entitled to be paid. Id. at 243.
The trial court entered summary judgment in favor of State Farm because the clinic
did not comply with the licensing statute, and that judgment was affirmed on
appeal. Id. at 243, 245.
2
Active Spine Centers involved an earlier version of Florida’s licensing statute, but that
version differs from the current one only in ways that do not matter to this appeal.
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As for the unjust enrichment claim, Florida courts have long recognized a
cause of action for unjust enrichment “to prevent the wrongful retention of a
benefit, or the retention of money or property of another, in violation of good
conscience and fundamental principles of justice or equity.” Butler v. Trizec
Props., Inc., 524 So. 2d 710, 711 (Fla. 2d DCA 1988). State Farm claimed in this
case that Silver Star was unjustly enriched because it accepted payments from
State Farm that it was not entitled to under Florida law. If an entity accepts and
retains benefits that it is not legally entitled to receive in the first place, Florida law
provides for a claim of unjust enrichment. See Standifer v. Metro. Dade Cnty., 519
So. 2d 53, 54 (Fla. 3d DCA 1988) (recognizing the cause of action for unjust
enrichment applied where a humane society kept all the proceeds from the sale of
animals it seized from the plaintiff and Florida law provided that the humane
society may retain “only the expenses it has incurred in respect to the sale, care,
and provision for the animals, with the remainder to go to the owner”).
Under Florida law State Farm was entitled to seek a judicial remedy to
recover the amounts it paid Silver Star and to obtain a declaratory judgment that it
is not required to pay Silver Star the amount of the outstanding bills. The district
court did not err by rejecting Silver Star’s arguments to the contrary. 3
Barb.
3
Because Florida law is not unclear on these points, we DENY Silver Star’s motion that
we certify questions about them to the Florida Supreme Court.
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Silver Star next contends that State Farm cannot prevail on a cause of action
for unjust enrichment because that cause of action does not exist between two
contracting parties under Florida law and Silver Star and State Farm were in privity
of contract. See Diamond “S” Dev. Corp. v. Mercantile Bank, 989 So. 2d 696, 697
(Fla. 1st DCA 2008) (“[A] plaintiff cannot pursue a . . .claim for unjust enrichment
if an express contract exists concerning the same subject matter.”). According to
Silver Star, because some of the patients executed assignments of benefits to State
Farm, allowing Silver Star to bill State Farm directly for the cost of the treatment,
the two entities were in privity of contract. We disagree. Under Florida law the
assignment of benefits “does not entail the transfer of any duty to the assignee. . . .”
Shaw v. State Farm Fire & Cas. Co., 37 So. 3d 329, 332 (Fla. 5th DCA 2010) (en
banc), overruled on other grounds by Nunez v. Geico Gen. Ins. Co., No. SC12-650,
— So. 3d —, 2013 WL 3214401, at *8 (Fla. June 27, 2013). Because Silver Star
did not assume any contractual duty to State Farm, there was no privity of contract
between the two and State Farm would not have a cause of action against Silver
Star for breach of contract. State Farm’s only cause of action for the amount that it
has already paid State Farm is the one it pursued in this case — unjust enrichment.
See Ocean Comms., Inc. v. Bubeck, 956 So. 2d 1222, 1225 (Fla. 4th DCA 2007)
(“A contract implied in law, or quasi contract, operates when there is no contract to
provide a remedy where one party was unjustly enriched, where that party received
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a benefit under circumstances that made it unjust to retain it without giving
compensation.”) (quotation marks omitted).
C.
Silver Star also contends that the district court erroneously instructed the
jury on the meaning of “wholly owned.” The district court instructed the jury, in
relevant part, that:
Several factors are commonly tied to the ownership of a business
entity:
(1) Ownership of the stock of a corporation and the exercise of
corporate powers
(2) The extent of any capital investment in the business
(3) The right to profit from the business and the risk of loss
(4) The power to sell the business or cause it to cease
operations
(5) The extent to which an individual participates in the
management and control of the business operations.
Silver Star contends that those five factors “misstate the law and are misleading”
because Florida law does not require that an owner of a corporation do any of those
things to prove ownership. But the instructions do not state that all or even some
of those factors were required. They say, instead, that the factors were “commonly
tied” to ownership of a business.
“[W]e review jury instructions de novo to determine whether they misstate
the law or mislead the jury to the prejudice of the party who objects to them.”
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Morgan v. Family Dollar Stores, Inc., 551 F.3d 1233, 1283 (11th Cir. 2008)
(quotation marks omitted). Even though our review is de novo, “the standard is
deferential.” Id. (quotation marks omitted). “As long as the instructions accurately
reflect the law, the district court is afforded wide discretion as to the style and
wording employed. . . .” Id. (quotation marks omitted). “When the instructions,
taken together, properly express the law applicable to the case, there is no error
even though an isolated clause may be inaccurate, ambiguous, incomplete or
otherwise subject to criticism.” Id. (quotation marks omitted). We reverse only
“where we are left with a substantial and ineradicable doubt as to whether the jury
was properly guided in its deliberations.” Id. (quotation marks omitted).
Silver Star argues that the jury instructions emphasized control of the
business, which it says was improper because Florida law does not require that an
owner of a business exercise control over it. But the court made it clear to the jury
that while it should consider the five factors, “no single factor is necessarily more
significant than the others.” And it also instructed the jury that: “[A]n owner may
delegate responsibilities to another, yet still not cede actual ‘ownership.’ If a
person has the right to possess and control a business, he or she may still be the
‘owner’ of it, regardless of the extent to which that person is involved in its
affairs.” (Emphasis added.) Taken as a whole, those instructions do not
improperly emphasize control and they do not leave us with “a substantial and
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ineradicable doubt as to whether the jury was properly guided in its deliberations.”
Id. (quotation marks omitted). They are therefore not a basis for reversing the
judgment of the district court. Id.
D.
Finally, Silver Star argues that the district court abused its discretion by
imposing costs jointly and severally among the three defendants. The default rule
is that costs are to be imposed jointly and severally, and the burden is on the party
seeking to avoid that to introduce evidence justifying apportionment and persuade
the court to do that. In re Paoli R.R. Yard PCB Litigation, 221 F.3d 449, 469 (3d
Cir. 2000). Silver Star failed to do that. The district court explained that joint and
several imposition of costs was justified because “[t]his was, in essence, a
conspiracy” among the three defendants to evade the licensing requirements of the
Florida Health Care Clinic Act. There was no abuse of discretion.
AFFIRMED. 4
4
Because we affirm the judgment of the district court, State Farm’s cross-appeal is
DISMISSED AS MOOT.
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