United Auto Insurance Secures Sufficient Cause of Action To Prosecute Federal RICO Claim
Feb 13, 2009
With a U.S. District Judge’s ruling this week that United Automobile Insurance Company has a sufficient cause of action against alleged fraudulent activity by a Miami-based health clinic, the insurer gained a significant foothold in its ability to prosecute Florida Personal Injury Protection (“PIP”)-related violations in federal court.
Florida Wellness & Rehabilitation Center, Mark A. Cereceda, D.C.P.A., and Cereceda & Associates, (the “Cereceda Clinics”) had filed hundreds of lawsuits against United Automobile seeking payment of claims which the insurer claimed were fraudulent. In addition to an allegation that the Cereceda Clinics were submitting fraudulent claims, United Automobile also alleged in its 23-page Amended Complaint that the Clinics engaged in a practice of billing the insurer, while waiving or failing to collect any copayments or deductibles, which is a violation of Florida law.
In denying the Defendant’s motion to dismiss United Automobile’s Complaint this week, the Honorable Joan A. Lenard, United States District Judge for the Southern District of Florida, ruled this week that United Automobile’s Complaint and exhibits setting forth at least 191 instances of alleged fraudulent up-coding, unbundling, and billing for services not rendered, sufficiently stated a cause of action for violations of the Federal Racketeer Influenced and Corrupt Organization Act (“RICO”) by Defendants, the Cereceda Clinics, and Mark A. Cereceda, individually.
United Automobile instituted this RICO action to stop the allegedly fraudulent billing practices; stop the further expenditure of fees and costs incurred in defending these allegedly fraudulent claims; obtain injunctive relief to stop any future fraudulent PIP claims and lawsuits; and obtain money damages for amounts improperly paid to and/or expended in defending the claims.
The civil cause of action granted under RICO is unique in federal law in that it allows private parties to recover treble damages plus attorney’s fees for a claim based on conduct by defendants which violates a variety of federal criminal laws, such as the mail and wire fraud statutes. This week’s ruling allows United Automobile to continue its prosecution of the case in federal court.
It is expected that the defendants in this litigation will deny the allegations in the Complaint.
Judge Lenard’s Order is attached for your review.
Should you have any questions or comments, please do not hesitate to contact Colodny Fass.
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