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State Farm Automobile Insurance Co. v. Newburg Chiropractic, P.S.C.

United States Court of Appeals, Sixth Circuit

December 18, 2013

State Farm Automobile Insurance Company, Plaintiff-Appellee/Cross-Appellant (13-5028 & 13-5059),
v.
Newburg Chiropractic, P.S.C. and Cane Run Chiropractic, P.S.C., Defendants (13-5028), Defendants-Appellees (13-5059), Michael Plambeck, Defendant-Appellant/Cross-Appellee (13-5028 & 13-5059).

Argued: October 10, 2013

Appeal from the United States District Court for the Western District of Kentucky at Louisville. No. 3:06-cv-00281—Charles R. Simpson III, District Judge.

ARGUED:

Kenneth Richard Stein, MATTHEWS, STEIN, SHIELS, PEARCE, KNOTT EDEN & DAVIS, L.L.P., Dallas, Texas, for Appellant/Cross-Appellee Plambeck and Appellees Newburg and Cane Run.

Benjamin G. Kemble, JONES, ANDREWS & ORTIZ, P.C., San Antonio, Texas, for Appellee/Cross-Appellant.

ON BRIEF:

Kenneth Richard Stein, MATTHEWS, STEIN, SHIELS, PEARCE, KNOTT EDEN & DAVIS, L.L.P., Dallas, Texas, for Appellant/Cross-Appellee Plambeck and Appellees Newburg and Cane Run.

Benjamin G. Kemble, David V. Jones, JONES, ANDREWS & ORTIZ, P.C., San Antonio, Texas, John M. Bush, QUINTAIROS, PRIETO, WOOD & BOYER, P.A., Louisville, Kentucky, for Appellee/Cross-Appellant.

Before: BOGGS and SUTTON, Circuit Judges; CLELAND, District Judge. [*] SUTTON, J., delivered the opinion of the court, in which CLELAND, D.J., joined, and BOGGS, J., joined in the result.

OPINION

SUTTON, Circuit Judge.

Michael Plambeck owned two chiropractic clinics in Kentucky that treated patients injured in car accidents, including some of State Farm's customers. All of the treating chiropractors were licensed to practice in Kentucky. Plambeck, however, was not. Plambeck assumed that he did not need to keep his Kentucky license because he was the owner of the facility and did not treat any patients in the State. State Farm, on the other hand, assumed that Plambeck had a license because Kentucky law required chiropractic practitioners and owners of chiropractic clinics to hold one. For years, Plambeck continued to operate his facilities, and for years State Farm continued to pay bills for the chiropractic treatments of its insureds. Throughout this period of time, neither party confirmed the accuracy of these assumptions.

Both parties eventually learned that their assumptions were false. That discovery led to this question: May State Farm recover more than $500, 000 paid to Plambeck's clinics over four years even though all of the patients received the chiropractic services they requested? We conclude that it may not.

I.

During the years covered by this dispute, Plambeck was a licensed chiropractor somewhere. He just was not licensed as a chiropractor in Kentucky. From 1993 until May 2005, Plambeck allowed his Kentucky chiropractic license to lapse. During that same period, he was the sole owner of two chiropractic clinics in the State: the Newburg clinic and the Cane Run clinic. Plambeck never treated patients at the two clinics. He instead hired licensed Kentucky chiropractors who treated all of the patients. That did not free him from responsibility under ...


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