On June 3, 2019, the Honorable K. Michael Moore, Chief District Judge of the Southern District of Florida, dismissed a claim of fraudulent billing brought by State Farm against a Miami Orthopedic physician.  State Farm’s Complaint alleged that the defendant doctor, a solo-practitioner orthopedist, had submitted more than 1,700 bills for the treatment of auto accident patients over a period of more than 4 years, each one of which was alleged to have been entirely false and/or misleading because of certain CPT codes which State Farm claimed were incorrect based on a retrospective review of hundreds of claims.

State Farm’s Complaint alleged that the doctor’s bills had violated Florida’s Deceptive and Unfair Trade Practices Act (FDUTPA).  Notably, the Complaint stopped short of specifically accusing the doctor of fraud.

State Farm’s accusation against this orthopod was yet one more piece of propaganda it has manufactured in Florida (and everywhere else around the country) designed to create the impression amongst legislators, regulators, judges and jurors that fraud is rampant within No-Fault medical benefits and bodily injury tort systems. State Farm has used frighteningly worded lawsuits making generalized accusations of fraud and assorted other statutory violations against doctors across the country who provide treatment to auto accident patients.

Unfortunately, these propaganda efforts have been successful, particularly in Florida, where legislators have been persuaded over the years to roll back many of the protections intended to be afforded by the PIP statute to injured accident victims in the name of curtailing the fraud State Farm’s lawsuits suggest is so rampant there.

Far more damaging to doctors than the erosion of their legal protections, however, has been the devastating financial impact of being sued by the world’s largest automobile insurance company for fraud.  The accusation alone is often enough to destroy a doctor’s reputation and practice.  But even if it is not, the crippling expense of fighting such lawsuits is often too much for a doctor to bear.  This is why it is so critical that State Farm, or any other insurance company accusing a doctor of fraud, be forced to justify its accusations from the moment they are made and throughout every step of the litigation process.

In this case, counsel for the doctors, Andrew Baratta, Esquire, filed a Motion to Dismiss State Farm’s fraud claim.  First, Baratta argued that State Farm was attempting to avoid the more stringent pleading requirements of the Federal Rules in fraud cases by merely alleging a FDUTPA violation.  State Farm, he argued, must satisfy the particularity requirements for fraud pleading whenever its cause of action sounds in fraud, even if fraud is not specifically pled as a separate cause of action.

Baratta further argued that State Farm’s Complaint failed to comply with the stringent federal standard of fraud pleading by its failure to identify in a single instance how or why State Farm was actually misled by any bill or claim submitted by the doctor.

The Court agreed, finding that State Farm’s “allegations sound in fraud” and that its Complaint must therefore provide the particularity required of fraud allegations.  The Court further wrote: “State Farm alleges that it was misled by ‘deceptive CPT codes’ submitted by Defendants without ever explaining how or why it was deceived by any specific claim or CPT code.”

This failure of pleading led the Court to Dismiss State Farm’s claim of a FDUTPA violation in its entirety.  The finding is significant because State Farm has repeatedly argued in cases around the country that it is not required to identify how or why it was actually misled in any individual claim when alleging fraud in hundreds (or thousands) of claims at once.  This more stringent standard of pleading will make it much harder for insurers to use manufactured claims of generalized “fraud” as a means of intimidation and coercion against doctors whose bills they hope to avoid paying.

If you have any questions regarding this case please contact Andrew Baratta directly at 215.914.2222 or Andrew@barattarussell.com.