Health clinics may want to review their auditing obligations and practices in light of a June 23 ruling by the Eleventh Circuit.
Allstate decided to look into the billing practices of a group of Florida health clinics. The investigation revealed that numerous bills submitted by the clinics were false. It also revealed that the doctor serving as medical director of the clinics didn’t adequately review their billings for accuracy, apparently reviewing only five claims a month at each clinic.
Allstate sued for recovery of all claims it had paid the clinics—all claims, not just false claims. Allstate rested its claims on Florida’s Health Care Clinic Act, which requires a clinic to have a medical director, who must “conduct systematic reviews of clinic billings to ensure that the billings are not fraudulent or unlawful.” The act declares that all claims made by a clinic “that is … operating in violation of this part [of the act], are unlawful charges, and therefore are noncompensable and unenforceable.”
The jury ruled in favor of Allstate on its claims of fraud, negligent misrepresentation, and unjust enrichment. The trial court reduced the damages for the fraud and negligent misrepresentation to zero but left in place the award for unjust enrichment. The court also granted Allstate declaratory judgment that it had no obligation to pay outstanding claims submitted by the clinics while in violation of the act.
On appeal by the defendants, the Eleventh Circuit upheld the trial court’s judgment, rejecting defense arguments that the act afforded no judicial relief, that clinics weren’t liable for a medical director’s failure, and that the evidence was insufficient to find noncompliance with the auditing requirement. As to the defense argument that Allstate’s claims were barred by the statute of limitations, the court found that “the argument made no sense” and was “beyond understanding.”
The case is Allstate v. Vizcay, No. 14-13947 (11th Cir., Jun. 23, 2016).
Speak Your Mind