Court Order Issued in PIP Case Alleging Exorbitant Hospital Fees

On February 20, 2015, Judge James S. Moody, Jr., of the U.S. District Court, Middle District of Florida, issued a ruling in the case Herrera, et al. v. JFK Medical Center, et al. That suit, brought in 2014 by four Florida drivers, alleges that the defendant hospitals are exhausting Personal Injury Protection (PIP) benefits by grossly overcharging for services—at up to 65 times what Medicare pays. The lawsuit names JFK Medical Center in Atlantis, Memorial Hospital Jacksonville, North Florida Regional Medical Center in Gainesville, and HCA Holdings, Inc. as defendants.

The plaintiffs, injured in separate motor vehicle accidents, received emergency radiological services at the named HCA-operated defendant hospitals. The services were covered by the plaintiffs’ PIP insurance. The plaintiffs allege that they were charged an “exorbitant” rate for these services, thereby prematurely exhausting their PIP benefits and leaving them with medical expenses in excess of what they would otherwise have to pay.

Plaintiffs allege causes of action for violation of the Florida Deceptive Unfair Trade Practices Act (“FDUTPA”), breach of contract, and breach of the implied covenant of good faith and fair dealing. Plaintiffs sought to have the case certified as a class action.

At a February 17, 2015 hearing, the defendants made motions to dismiss the plaintiffs’ complaint and motions to strike the class allegations. Judge Moody granted the motions in part and denied them in part, as discussed below.

First, HCA argued in its motion to dismiss that, since it is the ultimate parent company of the hospitals, it has no direct liability for the hospitals’ actions. The court, however, held that plaintiffs’ had sufficiently pled a cause of action when they pled that HCA is directly involved in setting and enforcing hospital guidelines and that the hospitals acted as agents of HCA.

Second, the defendants argued that plaintiffs FDUTPA claims fail because plaintiffs cannot allege that HCA was engaged in “trade or commerce” as required by the statute. Recognizing that other courts have held that the types of allegations the plaintiffs are making support a FDUTPA claim, the court held that plaintiffs may proceed to attempt to prove their case.

Third, plaintiffs allege breach of contract based on incorporation of the PIP statute into plaintiffs’ contracts with the hospitals. Because the PIP statute requires that only “reasonable” amounts may be charged, plaintiffs allege that defendants breached the contracts by charging unreasonable rates. The court concluded that plaintiffs may incorporate the PIP statute’s reasonable requirement into the contracts and therefore proceed with the breach of contract claim.

Third, in Count III of their amended complaint, plaintiffs allege that the defendant hospitals breached their duty of good faith and fair dealing by charging them unreasonable rates for medical services. Because plaintiffs failed to allege that an express term of the contract had been breached, the court granted the defendants’ motion to dismiss for failure to state a claim.

Finally, defendants moved to strike the class allegations because individual issues predominate. The court agreed that, given the nature of the claims and individual factual inquiries required, the individualized issues are predominant and the suit cannot proceed as a class action. As a result of that ruling, only one of the plaintiffs—Marisela Herrera—may proceed with the action. The remaining plaintiffs were dismissed without prejudiced to file separate, individual actions.

Click on the link to view the court order in Marisela Herrera et al., v. JFK Medical Center Limited Partnership, et al., Case No. 8:14-cv-2327-T-30TBM in U.S. District Court for the Middle District of Florida.