Scenic Health Alliance, Inc. v. State Farm Mutual Automobile Insurance Company

Filing 49

ORDER GRANTING 9 Plaintiff's Motion for Remand. Signed by Judge Joan A. Lenard on 8/24/2015. (gie)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO. 14-62900-LENARD/GOODMAN
SCENIC HEALTH ALLIANCE,
INC., (a/a/o Era Lowry) and all
others similarly situated,
Plaintiff,
v.
STATE FARM MUTUAL
AUTOMOBILE INSURANCE
COMPANY,
Defendant.
_______________________________/
ORDER GRANTING PLAINTIFF’S MOTION FOR REMAND (D.E. 9)
THIS CAUSE is before the Court on Plaintiff Scenic Health Alliance, Inc.’s
Motion for Remand, (“Motion,” D.E. 9), filed January 6, 2015. Defendant, State Farm
Mutual Automobile Insurance Company, filed a Response on January 30, 2015,
(“Response,” D.E. 19), to which Plaintiff filed a Reply on February 6, 2015, (“Reply,”
D.E. 28). With leave of the Court, Defendant filed a brief Sur-reply on February 12,
2015. (“Sur-reply,” D.E. 38.) Upon review of the Motion, Response, Reply, Sur-reply,
and the record, the Court finds as follows.
I.

Background
This is a putative class action arising out of State Farm’s systematic denial of

claims under its Personal Injury Protection (“PIP”) and/or Medical Payments (“MedPay”)
insurance coverage when one of its insureds does not receive initial medical services

within fourteen (14) days of an automobile accident. (See Mot. at 1.) Florida law
permits State Farm to deny such coverage. See Fla. Stat. § 627.736(1)(a)(3) (the “Initial
Treatment Provision”).
On November 12, 2014, Plaintiff filed a one-count Class Action Complaint in
Florida state court seeking: (1) a declaration that State Farm cannot deny payments under
the Initial Treatment Provision; (2) a declaration that the Initial Treatment Provision is
unconstitutional; (3) an injunction prohibiting State Farm from denying future claims; (4)
supplemental relief requiring State Farm to recalculate all submitted claims that were
denied based upon the Initial Treatment Provision; and (5) supplemental relief requiring
State Farm to disseminate an “explanatory notice” informing Class Members of the
Court’s Judgment.

(Compl., D.E. 1-2 ¶ 59(c).)

The Complaint also seeks class

certification for persons who were denied PIP or MedPay coverage by State Farm based
upon the Initial Treatment Provision (Id. ¶ 37.) The Complaint contains no claim for
monetary damages.
On December 22, 2014, State Farm removed this matter to this Court pursuant to
the Class Action Fairness Act (“CAFA”), stating that “this is a putative class action with
more than 100 putative class members that are seeking to recover in excess of $5,000,000
in the aggregate, and there is minimal diversity.” (Notice of Removal, D.E. 1 ¶ 9.) To
establish the amount in controversy, State Farm provided a Declaration from Donald
Vinciguerra—a State Farms claims analyst—stating that the amount of bills State Farm

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has denied based upon the Initial Treatment Provision equals $4,761,977.91.1 (Resp. at 6
(citing Supp. Decl. of Donald Vinciguerra (“Vinciguerra Decl.”), D.E. 19-1 ¶ 6).)
According to State Farm, this amount plus (1) the value of the injunctive relief Plaintiff
seeks (estimated at $202,800 per month), (2) the value of the “supplemental relief”
Plaintiff seeks (estimated at $257,000), and (3) attorneys’ fees (estimated at $150,000),
exceeds the $5 million threshold for federal jurisdiction under CAFA. (See Notice of
Removal ¶¶ 23-31.)
On January 6, 2015, Plaintiff filed the instant Motion for Remand. (D.E. 9.)
Plaintiff does not dispute that there are over 100 persons in the class and that diversity
exists among the parties, but argues that Defendant has failed to sustain its burden of
establishing that the amount in controversy exceeds $5 million. (Mot. at 3.)
II.

Legal Standard
“[W]hen a notice of removal’s allegations are disputed, the district court must find

‘‘by the preponderance of the evidence, that the amount in controversy exceeds’ the
jurisdictional threshold.’” Dudley v. Eli Lilly & Co., 778 F.3d 909, 913 (11th Cir. 2014)
(quoting Dart Cherokee Basin Operating Co., LLC v. Owens, __ U.S. __, 135 S. Ct. 547,
553-54 (2014) (quoting 28 U.S.C. § 1446(c)(2)(B))); see also Pretka v. Kolter City Plaza
II, Inc., 608 F.3d 744, 752 (11th Cir. 2010) (“‘Where, as here, the plaintiff has not pled a
specific amount of damages, the removing defendant must prove by a preponderance of

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In his original Declaration attached to State Farm’s Notice of Removal,
Vinciguerra calculated the claims denied at $4,867,475.41. (See D.E. 5 ¶ 4.) However, this
amount “incorrectly included some bills where State Farm had: (a) originally denied payment of
the bills . . . ; but (b) ultimately reconsidered the bills and made a payment.” (Response at 6.)

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the evidence that the amount in controversy exceeds the jurisdictional requirement.’”)
(quoting Williams v. Best Buy Co., Inc., 269 F.3d 1316, 1319 (11th Cir. 2001)). That is,
the defendant must prove “‘that the amount in controversy more likely than not exceeds
the [applicable] jurisdictional requirement.’” Pretka, 608 F.3d at 752 (quoting Tapscott
v. MS Dealer Serv. Corp., 77 F.3d 1353, 1356-57 (11th Cir. 1996)). “[I]n making this
calculation, ‘[a] court may rely on evidence put forward by the removing defendant, as
well as reasonable inferences and deductions drawn from that evidence.’” Dudley, 778
F.3d at 913 (quoting S. Fla. Wellness, Inc. v. Allstate Ins. Co., 745 F.3d 1312, 1315 (11th
Cir. 2014)). To satisfy its burden, a defendant “may introduce [its] own affidavits,
declarations, or other documentation[.]” Pretka, 608 F.3d at 755. Finally, the Court must
bear in mind that “no antiremoval presumption attends cases invoking CAFA, which
Congress enacted to facilitate adjudication of certain class actions in federal court.” Dart,
135 S. Ct. at 554.
III.

Discussion
“CAFA grants federal district courts jurisdiction over class actions where (1) any

member of the plaintiff class is a citizen of a state different from the state of citizenship
of any defendant, (2) the aggregate amount in controversy exceeds $5 million, and (3) the
proposed plaintiff class contains at least 100 members.” Dudley, 778 F.3d at 911 (citing
28 U.S.C. § 1332(d)(2), (5)-(6); S. Fla. Wellness, 745 F.3d at 1315). Plaintiff argues that
remand is required because State Farm has failed to sustain its burden of proving that the
amount in controversy exceeds $5 million. (Mot. at 5-9.) First, it argues that the value of
the injunctive and declaratory relief demanded in the complaint is too speculative to be
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included in the amount in controversy calculation. (Id. at 5-8.) Second, it argues that
State Farm overcalculated the at-issue attorneys’ fees at $150,000 because “only those
amounts of fees expended as of the date of removal are included in the jurisdictional
amount.” (Id. at 8 (citations omitted).) Third, it argues that the $4,761,977.91 figure is
speculative because it is unclear whether the claims included therein are “based on the
amounts that are properly payable under the PIP statute, including whether those bills are
limited by the fee schedule in Florida Statutes.” (Id. at 9.)
In Response, State Farm argues that the bills denied based on the Initial Treatment
Provision exceed $4.76 million, the value of the injunctive relief will likely exceed
$200,000, the requested supplemental relief will likely exceed $250,000, and attorneys’
fees through trial will likely succeed $150,000—thus, it argues, the amount in
controversy exceeds $5 million in the aggregate. (See Resp. at 5-18.) Because it is
Defendant’s burden to prove the amount in controversy exceeds the jurisdictional
threshold, the Court will address the Parties’ arguments in the order presented by
Defendant.
a.

Amount of bills State Farm denied pursuant to the Initial Treatment
Provision: $4,761,977.91

Florida Statute § 627.736(1)(a) states that an insurance company must provide
certain coverage to certain individuals who receive “initial services and care . . . within
14 days after the motor vehicle accident.” It is undisputed that State Farm systematically
denies coverage under this provision if the individual does not receive initial medical
services and care within 14 days of an accident. (See Mot. at 1.) State Farm calculates
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that from January 1, 2013 through December 22, 2014 (the date of removal), it denied
bills totaling $4,761,977.91 because the insured did not receive initial medical services
and care within 14 days of the accident. (See Resp. at 5 (citing Vinciguerra Decl. ¶ 6).)
Pursuant to section 627.736(1)(a), Florida Statutes, the general rule in Florida is
that an insurer must pay 80% “of all reasonable costs for medically necessary treatment
resulting from an automobile accident, subject to certain limits.” S. Fla. Wellness, , 745
F.3d at 1314. However, section 627.736(5)(a)(1) includes a permissive fee schedule
which authorizes motor vehicle insurers to limit certain coverage to 80% of 200% of the
Medicare allowable rates for those services. State Farm utilizes the statutory fee schedule
in its PIP/MedPay reimbursements. (See Lowry Policy, D.E. 16-1 at 3 (“IMPORTANT
NOTICE- Under No-Fault Coverage, the only medical expenses that are payable under
the Florida Motor Fehicle No-Fault Law. The most we will pay for such reasonable
medical expenses is 80% of the ‘schedule of maximum charges’ found in the Florida
Vehicle No-Fault Law . . . .”); id., D.E. 16-2 at 2 (We will limit payment of Medical
Expenses described in the Insuring Agreement of this policy’s No-Fault Coverage to
80% of a properly billed and documented reasonable charge, but in no event will we pay
more than 80% of the . . . . No-Fault Act ‘schedule of maximum charges’ including the
use of Medicare coding policies and payment methodologies . . . .”).)
Accordingly, Plaintiff argues that the $4,761,977.91 amount is overstated and
speculative because Vinciguerra’s Declaration does not state whether that figure is
“based on the amounts that are properly payable under the PIP statute, including whether
those bills are limited by the fee schedule in Florida Statutes.” (Mot. at 9.) State Farm
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argues that this distinction is irrelevant because the total amount denied by State Farm
defines its exposure in the event that the provision is ruled unconstitutional: “The demand
letter attached to the Complaint makes clear that SHA is seeking the full amount that it
billed State Farm; not just the amount ‘limited by the fee schedule.’” (Resp. at 7-8.)
State Farm argues that whether the full amount billed is ultimately limited by the fee
schedule is an affirmative defense that need not be considered for amount-in-controversy
purposes. (Id. at 8.) Plaintiff characterizes Defendant’s argument as “ridiculous,” and
maintains that application of the fee schedule is mandatory in determining the amount in
controversy. (Reply at 4-5.) It argues that “[u]nder a policy with a fee schedule, the
billed charges are largely irrelevant, because the amount that is payable under the policy
is governed by the fee schedule.” (Id. at 2.)
“The value of injunctive or declaratory relief for amount in controversy purposes
is the monetary value of the object of the litigation that would flow to the plaintiffs if the
injunction were granted.” Leonard v. Enter. Rent a Car, 279 F.3d 967, 973 (11th Cir.
2002). “[I]f the value of the underlying claim exceeds the insurer’s potential liability
under the policy, the amount in controversy in the declaratory judgment action is the
insurer’s potential liability under the policy—the policy limit.” N.H. Indem. Co. v. Scott,
No. 8:11–cv–943–T–23MAP, 2012 WL 6537098, at *2 (M.D. Fla. Dec. 14, 2012) (citing
Payne v. State Farm Mut. Auto. Ins. Co., 266 F.2d 63, 65 (5th Cir. 1959)2; see also 14AA
Charles Alan Wright, et al., Federal Practice and Procedure § 3710 (4th ed. 2011) (“[I]f
2

In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981), the Eleventh
Circuit adopted as binding precedent all decisions handed down by the former Fifth Circuit
before October 1, 1981.

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the claim exceeds the policy limits, the maximum limit of the insurer’s liability under the
policy for the particular claim is the measure for determining whether the statutorily
required amount in controversy is satisfied.”) (citations omitted); cf. New York Life Ins.
Co. v. Viglas, 297 U.S. 672, 678 (1936) (“For breach short of repudiation or an
intentional abandonment equivalent thereto, the damages under such a policy as this do
not exceed the benefits in default at the commencement of the suit.”). Accordingly, the
Court finds that the amount in controversy is State Farm’s maximum liability under the
policy limits set by the statutory fee schedule. See N.H. Indem., 2012 WL 6537098, at
*2; Wright, et al., Federal Practice and Procedure § 3710 (4th ed. 2011).
Vinciguerra’s Declaration states merely that “the amount of bills denied . . .
totaled $4,761,977.91,” (D.E. 19-1 ¶ 6.); it does not state whether this figure accounts for
the fee schedule reductions (or other policy limitations) which limit State Farm’s liability.
Indeed, State Farm concedes that the $4,761,977.91 figure is not based on the reduced
amounts for which it would be liable under the policy limits set by the statutory fee
schedule. (See Response at 7-8.) State Farm has not identified, much less proved by a
preponderance of the evidence, a set of circumstances under which it could be liable for
the full $4,761,977.91 in denied benefits.3 Accordingly, the Court finds that State Farm
has not proved by a preponderance of the evidence that its maximum liability under the
limits imposed by the policy is $4,761,977.91.

3

Notably, the Complaint does not seek a declaration requiring State Farm to pay all
of the claims as submitted; rather, it seeks a declaration that State Farm cannot deny claims
based on the Initial Treatment Provision and requiring State Farm to “recalculate” the submitted
claims. (Compl. ¶ 59(c).)

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The Court pauses to note that applying statutory fee schedule limitations for
amount in controversy purposes is not an academic exercise—it is a major part of the
equation and potentially jurisdiction determinative. In South Florida Wellness, Inc. v.
Allstate Insurance Co., South Florida Wellness sought reimbursement from Allstate
pursuant to the general rule set forth in Florida Statute § 627.736(1)(a), i.e., 80% of all
reasonable costs for medically necessary treatment. 745 F.3d at 1314. Allstate instead
reimbursed South Florida Wellness under the statutory fee schedule contained in Florida
Statute § 627.736(5)(a). Id. at 1313-14. South Florida Wellness filed a putative class
action against Allstate in state court seeking a declaration that Allstate failed to clearly
and unambiguously indicate in the insurance policy that it was going to limit its payments
to the statutory fee schedule, as required by the Florida Supreme Court’s decision in
Geico General Insurance Co. v. Virtual Imaging Services, Inc., 141 So.3d 147 (Fla.
2013). Id. at 1314. Allstate removed the case under CAFA and submitted the affidavit of
an employee who, like Vinciguerra, was familiar with PIP claim-related business records
maintained by Allstate. Id.
She calculated that Allstate had paid out $126,474,216.25 in benefits for
those claims based on the fee schedule in § 627.736(5)(a). She also
calculated that if Allstate had not limited payment based on §
627.736(5)(a), then the putative class members would have been entitled to
$194,651,033.94 in benefits (80% of the billed amounts). Allstate
maintained that the amount in controversy was the difference between those
two figures—$68,176,817.69—because that is the additional amount of
benefits the putative class members would be eligible to recover in the
event that they received the declaratory judgment.

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Id. Thus, in South Florida Wellness, the difference between reimbursement under the
general rule in Section 627.736(1)(a) and reimbursement under the statutory fee schedule
in Section 627.736(5)(a) was over 35%. See id.
Here, too, Plaintiff billed State Farm under the general rule in Section
627.736(1)(a). (See D.E. 1-2 at 23.) However, pursuant to the insurance policy, State
Farm was only required to reimburse at the lower rates established by the statutory fee
schedule in Section 627.736(5)(a). (See Lowry Policy, D.E. 16-1 at 3; D.E. 16-2 at 2.)
Applying a 35% difference to this case would reduce State Farm’s figure by
$1,666,692.27—from $4,761,977.91 to $3,095,285.64, although even these numbers are
a product of “impermissible speculation.” Lowery v. Ala. Power Co., 483 F.3d 1184,
1220 (11th Cir. 2007); see also Pretka, 608 F.3d at 752.
In any event, the Court finds that State Farm has failed to prove by a
preponderance of the evidence that it is potentially liable under its insurance policy for
$4,761,977.91 in bills denied. See N.H. Indem., 2012 WL 6537098, at *2 (citing Payne,
266 F.2d at 65); Wright, et al., Federal Practice and Procedure § 3710 (4th ed. 2011).
The Court further finds that any amount it might assign based on the record evidence and
the figures provided in South Florida Wellness would be impermissibly and “hopelessly
speculative.” Porter v. MetroPCS Commcn’s Inc., 592 F. App’x 780, 783 (11th Cir.
2014) (citing Lowery, 483 F.3d at 1220). “While absolute certainty is neither attainable
nor required, the value of declaratory or injunctive relief must be ‘sufficiently measurable
and certain’ to satisfy the amount-in-controversy requirement.” S. Fla. Wellness, 745
F.3d at 1316 (quoting Morrison v. Allstate Indem. Co., 228 F.3d 1255, 1269 (11th Cir.
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2000)). Here, without calculations based on the fee schedule, the value of the declaratory
relief is simply too uncertain and speculative to include in amount in controversy
calculation. See Mann, 505 F. App’x 854, 856 (11th Cir. 2013) (“When the value of
injunctive relief is ‘too speculative and immeasurable,’ it will not be included in the
amount in controversy.”) (quoting Leonard, 279 F.3d at 973).
b.

Injunctive relief

Plaintiff requests an injunction prohibiting State Farm from denying future claims
based on the Initial Treatment Provision. (See Compl. ¶ 59(c)(5).) Defendant appears to
argue that the value of injunctive relief is $202,800 per month, as this is the amount of
bills it denies every month based on the Initial Treatment Provision. (See Notice of
Removal ¶ 26; Response at 11.)4 Plaintiff argues that this relief is too speculative to be
included in the amount in controversy calculation because, for example, the insureds may
stop purchasing State Farm’s policy, physicians may stop providing treatment to State
Farm’s insureds, and State Farm may stop denying bills based on the Initial Treatment
Provision. (Mot. at 5-7 (citing Mann, 505 F. App’x 854; Advantage Open MRI, Inc. v.
State Farm Mut. Auto. Ins. Co., No. 8:08–CIV–2308–T–17–EAJ, 2009 WL 2958659
(M.D. Fla. Sept. 15, 2009)).) Defendant argues that it will more likely than not continue
denying bills based on the Initial Treatment provision, and it is unlikely that insureds will
cancel (or not renew) their state-required PIP insurance. (Resp. at 13.)

4

It only “appears” that this is State Farm’s argument because it states that it “has
been taking such reductions” at a rate of $202,800 per month. It is not clear what “reductions”
State Farm is taking if it is simply refusing to pay the bill submitted by the insured or medical
provider.

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“For amount in controversy purposes, the value of injunctive or declaratory relief
is the ‘value of the object of the litigation’ measured from the plaintiff’s perspective.”
Morrison, 228 F.3d at 1268 (quoting Ericsson GE Mobile Commcn’s, Inc. v. Motorola
Commcn’s & Elecs., Inc., 120 F.3d 216, 218-20 (11th Cir. 1997)). “‘In other words, the
value of the requested injunctive relief is the monetary value of the benefit that would
flow to the plaintiff if the injunction were granted.’” Id. (quoting Cohen v. Office Depot,
Inc., 204 F3d 1069, 1977 (11th Cir. 2000)). The Defendant must show that “the benefit
plaintiffs will obtain from the injunction is ‘sufficiently measurable and certain to satisfy
the . . . amount in controversy requirement.” Lutz v. Protective Life Ins. Co., 328 F.
Supp. 2d 1350, 1359 (S.D. Fla. 2004) (quoting Morrison, 228 F.3d at 1269 (quoting
Ericsson, 120 F.3d at 221)). “If the monetary value of the requested injunctive relief is
‘too speculative and immeasurable to satisfy the amount in controversy requirement,’ this
Court need not even address whether the injunctive relief should be aggregated.” Id.
(quoting Leonard, 279 F.3d at 973).
The Court finds that State Farm has failed to prove by a preponderance of the
evidence that the value of the injunction equals $202,800 per month. In fact, there is no
evidence regarding the value of the injunction as it relates to future claims. Although the
Notice of Removal alleges that State Farm denies bills totaling $202,800 per month based
on the Initial Treatment Provision, it cites to no affidavit, declaration, transcript,
spreadsheet, or other evidence supporting this statement. The Court reviewed all of the
relevant Exhibits attached to the Notice of Removal, as well as Vinciguerra’s
Supplemental Declaration, and none of them address the value of the injunction.
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In calculating the amount in controversy, “‘[a] court may rely on evidence put
forward by the removing defendant, as well as reasonable inferences and deductions
drawn from that evidence.’” Dudley, 778 F.3d at 913 (quoting S. Fla. Wellness, 745 F.3d
at 1315).

To satisfy its burden, a defendant “may introduce their own affidavits,

declarations, or other documentation[.]” Pretka, 608 F.3d at 755. Here, Defendant has
offered nothing to support its statement that it denies $202,800 worth of bills per month.
Accordingly, it has not proved the value of the injunction by a preponderance of the
evidence, and the Court therefore will not include it in the amount in controversy
calculation. See Mann, 505 F. App’x at 856 (“When the value of injunctive relief is ‘too
speculative and immeasurable,’ it will not be included in the amount in controversy.”)
(quoting Leonard, 279 F.3d at 973); see also Lutz, 328 F. Supp. 2d at 1359.
c.

Supplemental relief and attorneys’ fees

State Farm estimates that it would cost approximately $257,000 in additional
salary cost for State Farm to reconsider and recalculate the payment of benefits
associated with the claims it denied based on the Initial Treatment Provision. (See Decl.
of Travis Houlihan, D.E. 1-8 ¶¶ 5-6.) It also estimates that reasonable attorneys’ fees will
likely exceed $150,000, based on recent class action settlements involving similar issues
regarding reimbursement and payment of Florida PIP benefits. (See Notice of Removal ¶
30; Response at 15-16 (citing Total Care Chiro. VII, Inc. v. Mercury Ins. Co., Case No.
10-012853 (19) (Fla., 17th Jud’l Cir. July 22, 2014) (fee award to class counsel, which
included the counsel involved in this case, was $640,000); MRI Assocs. of St. Pete, Inc.
v. First Floridian Auto & Home Ins. Co., Case No. 10-CA-013131 (C) (Fla., 13th Jud’l
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Cir. July 11, 2014) (fee award of $550,000); MRI Assocs. of St. Pete, Inc. v. First
Acceptance Ins. Co., Case No. 10-CA-03919 (F) (Fla., 13th Jud’l Cir., May 29, 2014)
(fee award of $295,000); MRI Assocs. of St. Pete, Inc. v. Dairyland Ins. Co., Case No.
8:11-CV-665-JSM-MAP (M.D. Fla. Jan. 23, 2013) (fee award of $182,058).
Plaintiff argues that the $257,000 estimated for recalculating the claims cannot be
included in the amount in controversy calculation because it is a cost of compliance.
(Reply at 9 (citing Cohen, 204 F.3d at 1079 n.8 (“The potential cost of compliance to the
defendant, however, is irrelevant in determining the value of the benefit that would be
obtained by the plaintiff from an injunction.”).) It further argues that only attorneys’ fees
up to the time of removal can be included in the amount in controversy. (Id. at 7.)
Having previously found that State Farm failed to carry its burden of proof with
respect to the amount of bills denied and the value of injunctive relief, the Court need not
address “supplemental relief” and attorneys’ fees because even accepting State Farm’s
arguments, their sum total would not approach, much less exceed, the $5 million amount
in controversy threshold for federal jurisdiction under CAFA.
IV.

Conclusion
Accordingly, it is ORDERED AND ADJUDGED that:
1.

Plaintiff’s Motion for Remand (D.E. 9), filed January 6, 2015, is
GRANTED;

2.

This case is REMANDED to the Circuit Court for the Seventeenth Judicial
Circuit in and for Broward County, Florida. The Clerk is directed to take

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all necessary steps and procedures to effect remand of the above-captioned
action;
3.

All other pending motions are DENIED AS MOOT; and

4.

This case is now CLOSED.

DONE AND ORDERED in Chambers at Miami, Florida this 24th day of August,
2015.
_____________________________________
JOAN A. LENARD
UNITED STATES DISTRICT JUDGE

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