A federal appeals court has cleared the way for an insurance company to take back more than $663,000 it paid on what turned out to be false medical bills.
Allstate Insurance Co. won every point before the U.S. Court of Appeals for the Eleventh Circuit. It was reviewing an appeal filed by three medical clinics following their loss in a federal district court in Tampa.
The jury awarded damages for unjust enrichment against three clinics: Best Care Medical Center, Florida Rehabilitation Practice and P.V.C. Medical Center.
At issue is the role of medical director Dr. Sara Vizcay, who was responsible for reviewing claims for the clinics. A Florida law passed in 2003 and updated in 2008 — the Florida Health Care Clinic Act — requires a clinic’s medical director to review billings to ensure accuracy.
“Allstate’s central allegation is that Dr. Vizcay failed to systematically review billings as required [by the act],” Chief Judge Ed Carnes wrote for a panel that included Judge Jill Pryor and Seventh Circuit Judge Kenneth Ripple, sitting by designation. But the doctor only reviewed about five bills a month out of more than a hundred for each clinic, Carnes wrote.
Allstate’s investigation “revealed that many of the claims that the clinics had submitted were false.” The jury agreed, finding that the doctor failed to review the billings as the clinic act requires. As a result, the clinic is liable to the insurance company for payments made on claims for services that were never provided, Carnes wrote.
Carnes called some of the clinic’s arguments on appeal “scattershot.” He summarized the issues properly raised and argued as to whether:
- Florida law provides a judicial remedy for clinic act violations,
- A clinic can be held responsible for its director’s failure to comply,
- The evidence is sufficient to support the jury’s findings,
- Allstate’s fraud claims can be barred by the state statute of limitations, and
- The district court erred in denying the clinics’ motions to separate the trial.
“We answer yes to the first three of those questions and no to the last two of them,” Carnes wrote, upholding the trial court on every point.
Carnes said the defense interpretation of the clinic act “ignores the inconvenient fact that the statute requires the medical director to accept legal responsibility ‘on behalf of the clinic.’”
Carnes added, “It is hornbook law that ‘a principal may be held liable for the acts of its agent that are within the course and scope of the agency.’”
The defense also failed in asserting that the law doesn’t define “systematic review” by the medical director, Carnes wrote. The case does not require a definition of a director’s “bare minimum” review requirements, he added.