## Facts

- Michael Plambeck was the sole owner of two Kentucky chiropractic clinics: Newburg Chiropractic, P.S.C. and Cane Run Chiropractic, P.S.C.
- Plambeck had held a Kentucky chiropractic license in the past but let it lapse from 1993 until May 2005; he held a chiropractic license in another state during part of that time.
- Plambeck did not treat patients at either clinic; all treatment was provided by chiropractors licensed in Kentucky.
- Plambeck mistakenly believed he did not need an active Kentucky license because he was only the owner and did not provide patient care.
- Kentucky law required owners of chiropractic clinics to hold a Kentucky chiropractic license, and violation carried criminal penalties.
- The clinics treated patients injured in car accidents, including many insured by State Farm Automobile Insurance Company.
- Under Kentucky’s no-fault/medical-pay framework, State Farm paid the clinics directly for treatment rendered to its insureds, even though State Farm had no contract with the clinics.
- State Farm assumed Plambeck was properly licensed and did not independently verify his Kentucky licensing status for years.
- Over roughly four years, State Farm paid the clinics more than $500,000 (the district court later entered a damages award of $557,124.78).
- After discovering Plambeck’s Kentucky license had lapsed, State Farm stopped paying and sued Plambeck and the clinics to recover the prior payments, asserting unjust enrichment/money had and received based on mistaken payment and illegality/public-policy theories.
- State Farm did not claim that the patients failed to receive the treatments billed, or that the care was defective.

## Issues

1. Whether, under Kentucky common-law restitution (money had and received/unjust enrichment), State Farm could recover payments made to clinics whose owner lacked a required Kentucky chiropractic license when licensed chiropractors provided the services.
2. Whether the owner’s licensing violation made the underlying patient-clinic arrangements so unlawful that State Farm’s prior payments were “not due either in law or conscience.”
3. Whether State Farm’s mistake about Plambeck’s Kentucky licensure, without proof of deficient or valueless services, justified restitution.

## Decision

- The Sixth Circuit reversed the district court’s summary judgment for State Farm.
- The court held State Farm could not recoup the payments under Kentucky unjust-enrichment principles because State Farm did not show the clinics held money “not due either in law or conscience.”
- Even assuming the owner’s licensing violation made the clinic operations unlawful, the court declined to treat that fact alone as a basis for restitution where insureds received the chiropractic services they sought from Kentucky-licensed providers.
- The court reasoned that State Farm obtained what it paid for: payment of its insureds’ treatment bills for services actually performed.
- The court rejected State Farm’s attempt to convert a regulatory/licensing violation—addressed by criminal or administrative sanctions—into a retroactive refund right for an insurer.

## Legal Principles

- Kentucky restitution for mistaken payment (often framed as money had and received) requires proof that the defendant retains money “not due either in law or conscience.”
- A payor’s mistake, standing alone, does not automatically permit recovery; the payor must show that retention of the funds would be unjust under the circumstances.
- Where services of value were actually rendered and received, restitution is generally unavailable absent proof the payor did not receive what it bargained for (such as worthless services, fraud, or comparable misconduct affecting the value of performance).
- Illegality or regulatory noncompliance does not necessarily create a restitution claim for third parties when the challenged transactions delivered the bargained-for value and the governing law supplies other sanctions.

## Conclusion

The Sixth Circuit held that Kentucky unjust-enrichment law did not allow State Farm to recover more than $500,000 in payments made for chiropractic treatment actually provided by Kentucky-licensed chiropractors, even though the clinics’ owner lacked a required Kentucky license during the payment period, because State Farm failed to prove the clinics retained money that was not due in law or conscience.


State Farm Automobile Insurance Co. v. Newburg Chiropractic, P.S.C., 741 F.3d 661 (2013)