Deuk Spine Institute Lawsuit: State Farm Billing Case Explained

The Deuk Spine Institute lawsuit that drew the most attention was a federal case brought by State Farm Mutual Automobile Insurance Company, which accused Florida neurosurgeon Dr. Ara Deukmedjian and the law firm Morgan & Morgan of running a secret arrangement to inflate surgical charges in auto-accident personal-injury claims.¹²³ Both Dr. Deukmedjian and Morgan & Morgan denied the allegations, and no criminal charges were filed.

What State Farm Alleged

The case that produced the most extensive record was Crable v. State Farm, an uninsured motorist claim arising from a November 2008 accident and filed in Ocala in 2010.² The plaintiff claimed about $76,000 in economic damages, and roughly $65,000 of that, or 85%, came from procedures performed by Dr. Deukmedjian.⁴

State Farm’s theory was that Dr. Deukmedjian would issue high bills, Morgan & Morgan would use those figures to push up the value of settlements and jury awards, and the surgeon would then quietly accept a much smaller payment behind the scenes. The insurer said billing data showed Dr. Deukmedjian charged $8.14 million for Morgan & Morgan clients between 2009 and 2011 but accepted roughly $4.84 million.¹ One contested invoice charged $61,788 for a spinal surgery that State Farm argued is typically performed in under an hour.⁵

The Evidence Behind the Claim

A central witness was Margaret Zukoski, a former Morgan & Morgan paralegal. In deposition, she testified that the firm referred patients to Deuk Spine for surgery to “generate money,” and that Dr. Deukmedjian agreed to accept half of his billed amount while the full figure was used at mediation and trial.⁴

Records produced in a related state court action showed Morgan & Morgan had referred about 176 clients to Deuk Spine and paid the clinic roughly $2.96 million for litigation-related cases over three years.⁴ State Farm called it a “$10 million relationship.”⁶ Dr. Deukmedjian and Morgan & Morgan rejected the characterization, and the disputes stayed civil, focused on whether the charges were necessary and reasonable.¹

Contempt Finding and Discovery Battle

Much of what became public came out of a bruising discovery fight. On November 14, 2011, U.S. Magistrate Judge Thomas B. Smith ordered Morgan & Morgan to turn over its vendor check history and invoices from Deuk Spine for the 176 identified clients, and ordered Deuk Spine to produce a properly prepared representative for deposition within 30 days. The court found Deuk Spine had failed its deposition obligations under the federal rules.⁴

Things got worse at a January 13, 2012 deposition. State Farm moved for contempt and sanctions two weeks later. U.S. District Judge Roy B. Dalton Jr. reviewed the transcript and wrote that “Dr. Deukmedjian has shown nothing but contempt for the discovery process and orders of the Court.”⁷ The court found the surgeon had been late producing documents, arrived unprepared, unilaterally capped his deposition at two hours, and refused to answer questions outside his own narrow reading of the subpoena.²

Citing “unusual and compelling circumstances,” the magistrate ordered future depositions of Dr. Deukmedjian and Deuk Spine to be taken inside the federal courthouse in Ocala, with the court present. The court also compelled production of more than 4,000 pages of email between the law firm and the practice.² On April 17, 2012, Judge Dalton overruled every objection Dr. Deukmedjian and Deuk Spine filed and affirmed the discovery orders in full.⁷ That September, a further order required Dr. Deukmedjian to turn over his surgical logs so State Farm could compare them against the invoices.⁵

How the Case Ended

The Crable case never reached a jury. According to consumer accounts citing contemporaneous news coverage, Dr. Deukmedjian agreed to drop his claim against the accident victim for surgical charges of nearly $100,000, and the trial was cancelled.³ The available court records do not describe a final judgment or settlement resolving State Farm’s broader allegations about the billing arrangement.

Related Billing Scrutiny

The State Farm case is not the only time the institute’s billing has drawn criticism, though the other disputes are separate from that litigation. Deuk Spine introduced a “warranty” program under which it provides follow-up care at no extra charge if a surgery-related complication occurs, but only when the insurer or employer pays the institute’s full billed rate rather than Florida’s workers’ compensation fee schedule.⁸ Industry commentator Joe Paduda called it a “marketing gimmick” that charges insurers a premium for the surgeon to take on the risk of fixing outcomes “that I maybe should have gotten right in the first place,” and contrasted it with Medicare’s refusal to reimburse providers for certain preventable errors. Critics also questioned how “success” would be defined, what would count as a breach, and whether patients could enforce the warranty at all.⁹

1
Orlando Sentinel. Inflated Auto Insurance Claims: Morgan & Morgan, Dan Newlin Deny State Farm Allegations
2
CaseMine. Crable v. State Farm Mutual Automobile Insurance Company
3
PissedConsumer. Deuk Spine Institute Complaints
4
Justia. Crable v. State Farm, Order on Discovery Motions
5
Orlando Sentinel. State Farm Can View Surgical Records in Lawsuit Over Claim
6
InsuranceDefense.net. Quarterly Litigation Update
7
Justia. Crable v. State Farm, Order Overruling Objections
8
WorkCompCentral. Deuk Spine Institute Warranty Program
9
BoxerLaw. Dr. Deuk