Tag Archives: State Farm

Federal Agents Arrest Participants in Medical Fraud Ring

On August 28, 2016, the Sun Sentinel reported the arrest of two women and a man who were part of a South Florida ring that staged fake car crashes. The ring aimed to defraud insurance companies by charging for massage therapy and chiropractic services to victims that did not need the medical treatment.

The defendants, Guillermo Garcia, 46; Mayre Lopez, 39; and Taymi Gonzalez, 35, were said to have collected more than $1.6 million over a span of two years from different insurance companies, including Allstate Insurance Company, Geico, Infinity, Metlife, Progressive, State Farm and Travelers of Florida. They all pleaded not guilty and are currently awaiting trial.

According to the indictment filed on August 4, the ring began in December 2012 and was carried out until September 2014 in Miami-Dade and other areas of South Florida. The indictment stated that the defendants had conspired to send fraudulent information and billing through the mail to auto insurance companies for alleged medical treatment from the clinic, Rehabilitation Tomasa.

According to the indictment, Gonzalez, Lopez and Garcia not only helped prepare fraudulent claims to insurance companies to validate treatment at Tomasa but also took part in training the ‘victims’ on what they should say to insurance representatives to deflect suspicion. The indictment stated, “ Garcia, Lopez and Gonzalez would deposit the checks into bank accounts they controlled and then convert the proceeds to cash in order to pay the recruiters, accident participants and clinic employees, and to enrich themselves.”

Click here to view the full story.

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11th Circuit Appellate Division Rules Insurer’s Adjuster Notes not Discoverable

On January 5, 2015, the Appellate Division of the Eleventh Judicial Circuit in and for Miami-Dade County issued a ruling reversing the lower court’s order compelling production of the insurer’s pre-litigation documents.  The court held that such documents are not discoverable in a first-party coverage lawsuit between the insured and the insurer.

In 2011, respondent Yesenia Romero sued State Farm for PIP benefits, alleging State Farm breached the insurance contract and violated the Florida PIP statute in not paying for claims resulting from a 2009 motor vehicle accident. Romero filed a request for State Farm’s “entire claims file concerning the case,” including all of the adjuster’s notes made prior to the pre-suit demand letter.  State Farm objected to the production, asserting work-product privilege.

A hearing on the issue was held in the trial court.  Following an in camera inspection of the adjuster’s notes, the judge determined that they were not protected under the work-product doctrine because they were not prepared in anticipation of litigation.  The court ordered State Farm to produce all the adjuster’s notes.  State Farm sought to have the appellate division quash the order.

In its analysis, the appellate division noted that all three levels of Florida’s judiciary, including its own court, have said that an insurance company’s claims file documents are not discoverable in a first-party coverage and damages lawsuit between an insurer and the insured. The court cited a Third District case, Castle Key v. Benitez, in concluding that “where the insured is not seeking a bad faith claim, but rather seeks relief for breach of contract,” the insurer’s claims file documents are not discoverable.

In this case, where the plaintiff was alleging breach of contract and not bad faith, the appellate division determined that the trial court erred in ordering State Farm to produce the documents and therefore quashed the trials court’s order.

State Farm v. Yesenia Romero, Case No. 13-48 AP (Fla. 11th Circuit January 5, 2015).

Castle Key Ins. Co. v. Benitez, 124 So. 3d 379 (Fla. 3d DCA 2013).

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Third DCA Upholds Ruling in PIP Case Millennium Radiology v. State Farm

On December 10, 2014, the Third District Court of Appeal affirmed a trial court ruling in Millennium Radiology (a/a/o Yesenia Arango) v. State Farm. In the case, Yesenia Arango’s $10,000 PIP policy limits were exhausted after a lawsuit was filed and served on State Farm by Millennium Radiology.

Roig Lawyers attorney Mark Rose had successfully argued in the lower court that paying out the entire $10,000 was a complete bar to additional claims against the policy of insurance, absent bad faith on the insurer’s part or the insurer’s payment of untimely submitted bills. Following the ruling, the case was certified as a question of great public importance to the Third District Court of Appeal.

The Third District Court of Appeal affirmed the ruling, finding that in an action brought by an assignor of PIP benefits that is founded upon a breach of contract, exhaustion of PIP benefits after a lawsuit is filed “absolves the insurer from any responsibility to pay an otherwise valid claim” where the exhaustion occurred (1) after the insurer paid an amount less than the provider feels was appropriate; (2) after a lawsuit has been served on the insurer; and (3) absent any bad faith by the insurer in the handling of the claims.

The case is Millennium Radiology v. State Farm, Case No. 3D12-3143 (Fla. 3rd DCA, December 10, 2014). Click on the link to view the court ruling.

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Miami D & J Rehabilitation Center Target of Another DIF Fraud Arrest

Yalily Clavero Ruiz is the latest to be arrested by the Florida Division of Insurance Fraud (DIF) in connection with deceptive activities at D & J Rehabilitation Center, a Miami clinic that was incorporated in 2009. According to DIF, the 34-year old manager is charged with insurance fraud, grand theft and organized scheme to defraud.

Clavero Ruiz allegedly instructed patients, many of whom were staged accident participants, to sign for treatment that was not provided to them. In one instance, video surveillance conducted on behalf of State Farm showed that Clavero Ruiz paid $1,000 to a patient, who did not receive any treatment, to sign off as if treatment was provided.

DIF has made numerous arrests this year tied to staged accidents and participants who were referred to D & J Rehabilitation.

In October, our FL PIP Guide reported on two recently arrested in the scheme—Victor Manuel Hernandez and Vladimir Caro—whose involvement caused hundreds-of-thousands in fraudulent billings to be submitted to insurance companies.

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State Farm Survey Finds Drivers Admit to Cell Phone Use Behind-the-Wheel

Although most drivers support laws that prohibit cell phone use while driving, they don’t necessarily practice what they preach. That’s what State Farm Insurance Company found when they surveyed drivers about their cell phone habits behind the wheel.

According to the Sixth Annual State Farm Distracted Driving Survey—which dug deeper into consumers’ cell phone usage in vehicles—situations arose where drivers were “more likely” and “less likely” to use their cell phones. Among respondents who admitted to using their cell phones while driving, State Farm found:

Drivers are more likely to use their cell phone when they are:

  • Stopped at a red light – 63 percent
  • On an open highway – 30 percent

Drivers are less likely to use their cell phone under these conditions:

  • Dark outside – 75 percent
  • Fog – 91 percent
  • Snow – 92 percent
  • Icy – 93 percent
  • Heavy traffic – 78 percent
  • Construction zone – 87 percent
  • Rain – 88 percent
  • School zone – 83 percent

Even though most drivers say they avoid using their cell phones while in school and construction zones, the survey found that at least 10 percent reported those zones have no impact on their cell phone use while driving.

In the six years that State Farm has been conducting these surveys, trends have emerged:

  • There has been a steady reduction in the number of drivers talking on hand-held cell phones.
  • The number of people who report texting while driving has remained stable over six years.
  • Smartphone ownership is growing. By 2014, drivers who reported owning a smartphone grew to 80 percent. The greatest increases are among adults age 40 and older.
  • Smartphones create new distractions. There is a significant increase over six years in drivers using their phones for: accessing the Internet, reading email, responding to email, programming and listening to a navigation system and reading social media.
  • Drivers are more likely to talk on a hand-held phone than they are to text message while driving. Both activities are the greatest among drivers ages 18-29. They decreased as the age of drivers increased.
  • There has been an increase in the percentage of drivers who say they talk on hands-free cell phones while driving. This can possibly be attributed to advances in technology and laws restricting hand-held use.

“These six-year trends make it apparent that smartphones have created many new distractions for drivers to juggle,” Chris Mullen, Director of Technology Research at State Farm said. “While much attention is paid to the dangers of talking and texting while driving, it’s critical that we also address the increasing use of other smartphone features and other sources of distraction.”

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Fraud Charges Filed in West Palm Beach False Insurance Claim Case

The fact that Frank Assouman was not even in his truck at the time it was hit in a Boca Raton parking lot did not stop him from filing more than $25,000 in false insurance claims.

The crash report and a witness statement taken at the time of the accident indicate that the West Palm Beach resident was not in his parked vehicle when it was struck by another driver. Damage to Assouman’s vehicle was estimated at $1,500.

Days later he sought medical care, including an MRI at Delray Diagnostics and other treatment obtained from Modern Medicine, Inc.

In addition to filing a claim for property damage, Assouman reportedly filed a $21,815 injury claim with State Farm and a $3,035 claim with his own carrier of Windhaven Insurance.  Both claims were denied.

The Florida Division of Insurance Fraud filed a fraud charge against Assouman for less than $20,000.

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State Farm Granted Summary Judgment in Lake Worth Chiropractic PIP Benefits Case

On July 14, 2014, the 15th Judicial Circuit for Palm Beach County affirmed a lower court decision granting summary judgment to State Farm in a claim for PIP benefits brought by Lake Worth Emergency Chiropractic Center.

In the underlying case, Judge Bosso-Pardo granted defendant’s Motion for Final Summary Judgment, entering final judgment for the defendant, State Farm, upon finding that the pre-suit demand letter, required by Florida Statute 627.736(10) (2010), was insufficient in that it demanded payment for services that were never billed to State Farm.

Judge Bosso-Pardo found that the Plaintiff’s “withdrawing” the unbilled service after suit had commenced was insufficient to cure the defect and that the demand letter requirements under Florida Statute 627.736(10) must be strictly construed and adhered to by those seeking to initiate litigation against a Florida PIP insurer.

The Circuit Court affirmed this decision, concluding that section 627.736(10) requires strict compliance and that, in this case, the demand letter did not strictly comply with the PIP statute requirements. As such, Lake Worth Emergency Chiropractic Center failed to satisfy the condition precedent to filing its law suit, and the trial court was correct in awarding final summary judgment in favor of State Farm.

The case is Lake Worth Emergency Chiropractic Center v. State Farm, in the Fifteenth Judicial Court for Palm Beach County, Case No. 502012AP000034XXXXMB. Click on the link to read the court opinion.

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4th District Court of Appeal Denies Rehearing in PIP Benefit Dispute

The Fourth District Court of Appeal has denied motions for rehearing by appellants in a PIP case decided in the insurer’s favor. The case was the consolidation of two separate PIP cases.

Insureds in both cases sought treatment for injuries sustained in separate accidents and assigned their PIP benefits to their treatment providers. One of the insurers, State Farm, reduced the amount paid to Northwood Sports Medicine, and Northwoods subsequently sued. Prior to that filing, the insured’s PIP benefits were exhausted. State Farm moved for summary judgment; Northwoods amended its complaint to allege that State Farm reduced payments in bad faith. The trial court granted the motion for summary judgment on the sole ground of exhaustion of benefits.

Likewise, in the second case, the insured assigned his benefits to Wellness Associates of Florida. USAA Insurance Co. reduced the payments to Wellness, and Wellness filed a complaint for damages. At the time the suit was filed, less than $14 in unpaid PIP benefits remained and, while the lawsuit was pending, PIP benefits were exhausted. USAA moved for summary judgment, Wellness amended its complaint to allege bad faith, and the trial court entered summary judgment based upon exhaustion of benefits.

For jurisdictional reasons, the appellate court transferred the Northwoods case to the circuit court. The question that the appellate court answered in the affirmative in the Wellness case is whether post-suit exhaustion of benefits absolves the insurer from responsibility to pay an otherwise valid claim where the exhaustion occurred after the insurer: (1) paid an amount that the provider claims is less than required by the contract; (2) received a pre-suit demand letter notifying the insurer of the medical provider’s dispute; and (3) was served with the filed complaint.

In its rationale, the court extended its decision in Simon v. Progressive, rejecting the “reserve or hold” theory by which an insurer is to put money in reserve if it denies or reduces a claim until that claim is resolved. The court concluded that “where the reasonableness of the provider’s claim is in dispute, post-suit exhaustion of benefits extinguishes the provider’s right to further payments, as long as exhaustion is prior to the establishment of the amount to which the medical provider is entitled to under PIP.” The court concluded that post-suit exhaustion of benefits—as was the case in Wellness—should be treated no differently than pre-suit exhaustion of benefits, as long as the amount of PIP benefits to which the provider is entitled has not been established. The court therefore affirmed the final judgment of the trial court in Wellness.

The case in the District Court of Appeal of The State of Florida Fourth District, January Term 2014, is Northwoods Sports Medicine and Physical Rehabilitation, Inc., (A/A/O Suzanne Cabrera), and Wellness Associates of Florida, Inc., (A/A/O Daniel North), Appellants, v. State Farm Mutual Automobile Insurance Company and USAA Casualty Insurance Company, Appellees, Nos. 4d11-1556 and 4d11-3796, [March 5, 2014]. Click on the link to read the June 4, 2014 ruling in the case.

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State Farm v. MR Services I, Inc.

In accordance with Florida’s PIP Statute, Plaintiff State Farm informally requested discovery from Defendant MR Services pursuant to Fla. St. § 627.736(6)(b). MR Services informally responded, but only in part, and the responses were deemed inadequate and incomplete. State Farm petitioned the Court for an order permitting discovery.

MR Services argued that it need not fully respond to the discovery requests because State Farm could obtain the discovery it wanted from other cases pending in Broward County. The Court held that, while this may be true, it does not preclude discovery under the provisions of the PIP Statute.

The Court therefore granted the Motion to Allow Discovery and required that MR Services produce all documents and information requested by State Farm.

State Farm is thus entitled to:

  • Take the depositions of Dr. Mark Gans, Gary Howle, and Stacy Howle
  • Issue a third-party subpoena to LinkedIn for account information on subscriber Gary Howle
  • Receive from MR Services complete income tax returns, financial statements, and balance sheets from 2008 through 2012

Click on the link to view the Order in State Farm Mutual Automobile Insurance Co. vs. MR Services, Inc., No. 16-2013-CA-1731-XXXX-MA (Fla. 4th Cir. Ct. 2014).

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3rd DCA Denies Millennium Petition for Writ of Certiorari in Legal Title Dispute

State Farm issued a policy to Hery Alvarez, whose mother, Josefa Alvarez, was in an accident while a passenger in her son’s car. Hery Alvarez and Josefa Alvarez lived in the same household, and Josefa Alvarez sought treatment at Millennium Diagnostic under her son’s PIP policy. She assigned her benefits to Millennium. She did not have vehicle insurance or her own PIP policy.

State Farm denied payment to Millennium. State Farm argued that the mother was the registered owner of a Ford Expedition and therefore should have had PIP through her own policy. She did not have insurance coverage on the Expedition, which was operable. She had leased the vehicle for her daughter, who had bad credit.

In the trial court, Millennium argued that Josefa Alvarez’s daughter, Ana Alvarez, was actually the beneficial owner of the Expedition. The trial court agreed and entered Summary Judgment, finding that the daughter was the beneficial owner of the Expedition. State Farm appealed the decision to the 11th Circuit Court of Appeals.

Florida §627.733, requires that every owner or registrant of a motor vehicle in FL is required to maintain motor vehicle insurance securing PIP benefits. An owner is a person who holds legal title to a motor vehicle. An owner of a registered, operable motor vehicle who fails to have PIP security in effect at the time of an accident shall have no immunity from tort liability, but shall be personally liable. Thus, if Josefa Alvarez is not the legal owner of the vehicle—beneficial ownership having passed to her daughter—she would not be required to have PIP coverage on the Expedition and could seek treatment under her son’s policy.

The trial court found that Ana Alvarez was the beneficial owner of the vehicle. Relying on State Farm v. Hartzog, 917 So. 2d 363, 364-65 (Fla. 1st DCA 2005), the court concluded that the name on the title is not the “litmus test” for determining ownership for insurance purposes. In Hartzog, Barbara Hartzog agreed to purchase a vehicle from Donnie Welch. Welch kept title in his name and maintained the insurance policy on the vehicle. When Hartzog was involved in an accident shortly after the purchase agreement was entered into, the 1st District Appellate Court concluded that Hartzog was the beneficial owner because Welch no longer owned the vehicle, pursuant to the purchase agreement, and Hartzog continued to make payments to Welch. The “overt acts” of Hartzog—having exclusive possession and control of the vehicle—were said to be key factors in determining beneficial ownership of a vehicle.

The appellate court in this case distinguished Hartzog. Here, no purchase agreement existed between Josefa Alvarez and her daughter, Ana Alvarez. In fact, there could not be because the lessor, not Josefa Alvarez, owned the Expedition, and Josefa did not have the right to transfer the title. Additionally, the court found that Josefa’s subjective intent to gift the vehicle to her daughter was insufficient to contradict her legal interest in the vehicle.

Thus concluding that Ana did not have beneficial ownership of the vehicle and that Josefa held legal title, the Appellate Court ordered that summary judgment be reversed, and the case remanded to the trial court. On December 5, 2013, the 3rd DCA denied a petition for writ of certiorari by Millennium.

Millennium Diagnostic v. State Farm, No. 3D13-0423 (3rd DCA 2013).
State Farm v. Millennium Diagnostic, No. 11-102 (Fla. 11th Cir. Ct. App. Div.).

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