A federal judge in Florida has allowed State Farm Mutual Automobile Insurance Company to move forward with most of its claims in a lawsuit alleging that a network of medical providers and surgery centers engaged in an illegal patient brokering scheme. The insurer says the arrangement led to inflated medical bills and manipulated insurance settlements totaling over $3 million.
In a ruling issued March 21, US District Judge Charlene Edwards Honeywell denied most of the defendants’ motions to dismiss, finding that State Farm had plausibly alleged violations of Florida’s Deceptive and Unfair Trade Practices Act (FDUTPA). The court also allowed the insurer’s unjust enrichment claim to proceed against several individuals and entities affiliated with a company called Spine Centers of America.
At the same time, the judge dismissed the unjust enrichment claims against a group of surgeons and surgery centers, concluding that State Farm had not directly conferred a financial benefit on those parties.
State Farm’s complaint describes a network of entities and individuals—including Spine Centers of America, surgeons, and two outpatient surgical centers—that allegedly orchestrated a referral and billing arrangement aimed at maximizing insurance payouts on personal injury claims.
The lawsuit claims that Spine Centers, a non-physician-owned marketing company, recruited patients and referred them to participating surgeons and facilities. In return, those providers allegedly accepted pre-arranged flat fees while allowing Spine Centers to bill insurers for the full cost of procedures, often at many times the actual payment.
In one example cited by the insurer, a surgeon was paid $2,000 for a procedure that Spine Centers billed at $47,688. The inflated charges were submitted to State Farm as part of “global bills” in settlement demand packages prepared by personal injury attorneys. State Farm says these billing practices distorted the value of claims and forced the insurer into inflated settlements to avoid exposure to bad faith litigation.
Florida law prohibits the payment or receipt of kickbacks or fee splits for patient referrals. State Farm contends the arrangement violated not only state law but also the terms of its insurance policies, which exclude coverage for fraudulent or illegal billing practices.
The defendants moved to dismiss the case on multiple grounds, including failure to plead fraud with the specificity required under federal rules. But the judge ruled that State Farm had met the necessary standard by detailing a “multi-act scheme” and citing specific instances of alleged misconduct. The court noted that when fraud is part of a complex, ongoing arrangement, courts may relax the usual requirement to specify the exact “who, what, when, where and how” of each false claim.
State Farm’s claims were deemed sufficiently specific, particularly with respect to the role of Spine Centers and its executives in setting billing rates, submitting claims, and profiting from the arrangement. The court also accepted State Farm’s argument that the conduct at issue qualified as a per se violation of FDUTPA because it involved alleged violations of Florida’s patient brokering and insurance fraud statutes.
The defendants had also argued that FDUTPA claims were preempted by Florida’s Office of Insurance Regulation, but the court rejected that view, citing precedent that allows FDUTPA claims based on fraudulent billing practices not directly overseen by state regulators.
While the FDUTPA claims remain intact, the judge dismissed State Farm’s unjust enrichment claims against several defendants, including surgeons Zoltan Bereczki and George El Bahri, and their affiliated practices and surgery centers.
The court reasoned that while these providers may have participated in the alleged scheme, they were paid fixed fees by Spine Centers before any insurance bills were submitted. Because State Farm did not directly or indirectly confer a benefit on those defendants, the court found that an essential element of unjust enrichment—direct receipt of a benefit—was missing.
In contrast, the unjust enrichment claims were allowed to proceed against Spine Centers and its executives, who allegedly controlled the billing practices and directly profited from insurance settlements.
One defendant, Anthony Hernandez, sought to remove references in the complaint to a past conviction for health care fraud and money laundering. The court agreed in part, ordering that allegations related to prior conduct involving a non-party entity be stricken from the complaint as irrelevant and potentially prejudicial. However, the judge allowed the fact of Hernandez’s 2020 conviction to remain.
All defendants are now required to respond to the remaining claims in the complaint within two weeks of the court’s order. The case is expected to proceed through discovery unless resolved by settlement or summary judgment.
Case: State Farm Mutual Automobile Insurance Company v. Spine Centers of America, Inc., et al.
Court: U.S. District Court for the Middle District of Florida
Case No.: 8:24-cv-1064-CEH-AEP
Judge: Charlene Edwards Honeywell
Date of ruling: March 21, 2025
Plaintiff: State Farm Mutual Automobile Insurance Company
Defendants: Spine Centers of America, Robert Cagno, Lester Morales Jr., Brian Carlton, DC, Anthony Hernandez, Lifespine LLC, Dr. Zoltan Bereczki, North Florida Orthopedic Medicine LLC, Dr. George El Bahri, Surgical Center of North Florida LLC, Legacy Surgery Center LLC
