                        RECOMMENDED FOR FULL-TEXT PUBLICATION
                            Pursuant to Sixth Circuit I.O.P. 32.1(b)
                                    File Name: 13a0351p.06

                UNITED STATES COURT OF APPEALS
                                FOR THE SIXTH CIRCUIT
                                  _________________


                                                X
                                                 -
 STATE FARM AUTOMOBILE INSURANCE

          Plaintiff-Appellee/Cross-Appellant --
 COMPANY,

                        (13-5028 & 13-5059), -
                                                     Nos. 13-5028/5059

                                                 ,
                                                  >
                                                 -
                                                 -
          v.
                                                 -
                                                 -
 NEWBURG CHIROPRACTIC, P.S.C. and CANE
                                                 -
                        Defendants (13-5028), -
 RUN CHIROPRACTIC, P.S.C.,

             Defendants-Appellees (13-5059), -
                                                 -
                                                 -
 MICHAEL PLAMBECK,                               -
         Defendant-Appellant/Cross-Appellee -
                        (13-5028 & 13-5059). N
                    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: October 10, 2013
                         Decided and Filed: December 18, 2013
     Before: BOGGS and SUTTON, Circuit Judges; CLELAND, District Judge.*

                                    _________________

                                         COUNSEL
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.

        *
        The Honorable Robert H. Cleland, United States District Judge for the Eastern District of
Michigan, sitting by designation.


                                               1
Nos. 13-5028/5059 State Farm Auto. Ins. Co. v. Newburg Chiropractic                 Page 2


        SUTTON, J., delivered the opinion of the court, in which CLELAND, D.J.,
joined, and BOGGS, J., joined in the result. BOGGS, J. (pg. 10), delivered a separate
opinion concurring in the judgment.
                                  _________________

                                       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
Nos. 13-5028/5059 State Farm Auto. Ins. Co. v. Newburg Chiropractic                Page 3


not free him from responsibility under Kentucky’s chiropractic-licensing laws, however,
because those laws also require owners to hold a license. Ky. Rev. Stat. § 312.145(3).

        Many of the clinics’ patients over the years sought treatment for injuries arising
from car accidents. And some of the patients carried car insurance through State Farm.
Because Kentucky law requires it, State Farm’s car insurance policies provide no-fault
coverage for injuries resulting from car accidents. See id. §§ 304.39-020(2), 304.39-
030(1). Covered individuals thus may obtain chiropractic treatment under these plans.
Even better for the patients, Kentucky law requires State Farm to pay for chiropractic
services directly if an insured instructs them to do so. Id. § 304.39-241. Many patients
did just that, and that is how State Farm came to pay Plambeck’s clinics hundreds of
thousands of dollars in medical bills even though State Farm and the clinics had no
contractual relationship with each other. So far as the record shows, none of the State
Farm patients complained about the services they received from these clinics.

        State Farm paid the bills submitted to it by the clinics without ado from
2000 until mid-2004. When State Farm discovered that Plambeck lacked a Kentucky
license, it stopped paying the clinics and sued Plambeck to recover all payments since
2000.

        The district court granted summary judgment to State Farm. Because State Farm
mistakenly believed that Plambeck had a Kentucky license and would not have paid the
bills his clinics submitted had it known otherwise, the court held that the insurance
company was entitled to recoup any amounts it paid stemming from the mistake under
Kentucky law. The court awarded State Farm $557,124.78 in damages.

                                           II.

        A single principle unifies Kentucky common law claims for recovery of funds
mistakenly paid: unjust enrichment. See Tucker v. Denton, 106 S.W. 280, 282 (Ky.
1907). One person may not profit from another’s innocent blunder. See Ky. W. Va. Gas
Co. v. Preece, 86 S.W.2d 163, 165–66 (Ky. 1935) (collecting cases). Thus, if one party
gives another money based on the misapprehension that he must do so, the courts will
Nos. 13-5028/5059 State Farm Auto. Ins. Co. v. Newburg Chiropractic                 Page 4


use their equitable powers to undo the mistaken transaction. See McMurtry v. Ky. Cent.
R.R., 1 S.W. 815, 815 (Ky. 1886); see also Scott v. Bd. of Trs. of New Castle, 116 S.W.
788, 789–90 (Ky. 1909).

       Mistaken payment cases come in two types. The first is tied to a contract. If one
party to a contract pays money to another party to the same contract based on a false
factual or legal premise affecting her contractual duties, she may recover the funds. See
Phoenix Indem. Co. v. Steiden Stores, 267 S.W.2d 733, 734 (Ky. 1954). The second
covers a broader spectrum of misapprehensions. If one person pays another based on a
false assumption that the money is due—if in Kentucky’s phrasing the money is paid
“without consideration[] and not being due, either in law or conscience”—the court may
force the recipient to return the money. McMurtry, 1 S.W. at 815; see also Gratz v.
Redd, 43 Ky. (4 B. Mon.) 178, 190 (1843); Riverside Ins. Co. v. McDowell, 576 S.W.2d
268, 269 (Ky. Ct. App. 1979).

       In trying to recover its payments to the clinics, State Farm says that it mistakenly
believed the clinics had a properly licensed owner and that it would not have made the
payments had it known otherwise. Because State Farm and the clinics never had a
contractual relationship, the first category of mistake cases do not cover it. That leaves
the second type of case, requiring State Farm to show that it paid money to the clinics
not due to them “either in law or conscience.” McMurtry, 1 S.W. at 815. That is a high
bar, and State Farm has not cleared it.

       State Farm never credibly explains how any misapprehension about the clinics’
license affected its duty to pay for treatments provided to its policyholders. Even if we
assume that the contracts between the clinics and the State Farm policyholders violated
Kentucky public policy, as State Farm urges, that does not establish State Farm’s right
to obtain the services for free.       At most, the licensing problem affected the
policyholders’ legal duty to pay for the clinics’ services, not State Farm’s. State Farm’s
legal duty to pay for these services arose under Kentucky statutory law, not under a
contractual relationship with the clinics. And State Farm’s statutory duty requires it to
“honor the written direction of benefits provided by an insured” specifying how to
Nos. 13-5028/5059 State Farm Auto. Ins. Co. v. Newburg Chiropractic                 Page 5


“direct the payment of benefits among the different elements of loss,” Ky. Rev. Stat.
§ 304.39-241—elements of loss that include expenses incurred for “medical care,
physical rehabilitation, rehabilitative occupational training, licensed ambulance services,
and other remedial treatment and care. . . . includ[ing treatments rendered by] all healing
arts professions licensed by the Commonwealth of Kentucky,” id. § 304.39-020(5)(a).

       Perhaps if State Farm’s insureds had not directed the insurance company to pay
for these services, no payment might have been due. Who knows? But that is not what
happened. All relevant policyholders received the chiropractic treatment they asked for,
and they directed State Farm to make payments to the clinics for these treatments. In
light of that directive, Kentucky law required State Farm to pay for the services. To be
sure, Kentucky law with respect to retaining mistakenly paid money—that which “in law
or conscience” they should not keep—suggests a continuum of possibilities, not a North
Star. But State Farm sits at the far end, the least promising end, of that continuum when
it claims a right to obtain the windfall of receiving medical treatment for its
policyholders in fact without the duty to pay for it in law.

       One other premise of State’s Farm argument deserves mention. Its void-against-
public-policy argument assumes that the policyholders themselves (or State Farm
standing in their shoes) could now recover the money they paid the clinics for services
actually provided. As a general rule, a party may not recover money paid to satisfy
obligations in a void contract if “there is no proof that the services which were rendered
to him were defective or that he in any other way did not receive value for the money
which he paid.” Comet Theatre Enters., Inc. v. Cartwright, 195 F.2d 80, 83 (9th Cir.
1952); see also Universal Acupuncture Pain Servs., P.C. v. State Farm Mut. Auto. Ins.
Co., 196 F. Supp. 2d 378, 387–88 (S.D.N.Y. 2002) (dismissing a claim for unjust
enrichment similar to this one on that ground); cf. City of Louisville v. Zanone, 58 Ky.
(1 Met.) 151, 153–54 (1858) (concluding that money mistakenly paid in accordance with
a void ordinance could not be recovered in restitution where the party seeking restitution
“is enjoying a benefit from the work and labor expended”). “There is no unjust
enrichment if the claimant receives the counterperformance specified by the parties’
Nos. 13-5028/5059 State Farm Auto. Ins. Co. v. Newburg Chiropractic                Page 6


unenforceable agreement.” Restatement (Third) of Restitution and Unjust Enrichment
§ 32(2). The policyholders in this instance received what they bargained for: treatment
by chiropractors, indeed treatment by licensed chiropractors. That the clinics’ owner
was unlicensed violated Kentucky law, to be sure, but it did not affect the bargained-for
exchange between each patient and each chiropractor.

       Nor does it make a difference that, had State Farm declined to pay for the
services in the first instance, Plambeck might not have been able to recover the money
in court because his license had lapsed. That is a far cry from compelling the return of
four years’ worth of payments for services actually rendered. In the words of Judge
Cardozo: “[Although t]he law may at times refuse to aid a wrongdoer in getting that
which good conscience permits him to receive[,] it will not for that reason aid another
in taking away from him that which good conscience entitles him to retain.” Schank v.
Schuchman, 106 N.E. 127, 129 (N.Y. 1914); see also Zanone, 58 Ky. (1 Met.) at 153 (“If
it appear[s] that the party paying has received and enjoyed a benefit or consideration, he
will not be aided by a court of equity in recovering back that which he has paid, but
which he could not have been compelled to pay, had he resisted at the outset.”).

       That conclusion also makes sense in the context of a licensing statute that already
sets penalties for violations of its terms but conspicuously does not provide for a civil
remedy, much less one to the tune of a half-million dollars. See Ky. Rev. Stat.
§ 312.991(1).    The licensing statute instead provides only criminal penalties—a
maximum $500 fine or imprisonment for six months or both—for each licensing offense.
Id. As the Kentucky Supreme Court explained in interpreting another statute, “[i]t is a
primary rule of statutory construction that the enumeration of particular things excludes
the idea of something else not mentioned.” See Smith v. Wedding, 303 S.W.2d 322, 323
(Ky. 1957). Other courts have followed this path. See Van Zanen v. Qwest Wireless,
LLC, 522 F.3d 1127, 1131 (10th Cir. 2008) (refusing to order an unlicensed professional
to return already made payments in part because “recognizing a claim for unjust
enrichment would provide a remedy not intended by the licensing statute”); Comet
Nos. 13-5028/5059 State Farm Auto. Ins. Co. v. Newburg Chiropractic                 Page 7


Theatre Enters., 195 F.2d at 81 (declining to disgorge payments made to an unlicensed
contractor where the licensing statute did not specify such a remedy).

         A contrary result, it seems to us, would promote unjust enrichment, not prevent
it, or at least would create more unjust enrichment than it would alleviate. As the
situation now stands, State Farm paid for chiropractic services and its customers
received those services from licensed physicians. Everyone got what they wanted. State
Farm now asks us to award it more than $500,000, to make Plambeck the best of
neighbors—the insurer of State Farm—all because the company discovered (belatedly)
that Plambeck let his license lapse. That remedy won’t help the patients that the
licensing statute was meant to protect. And it won’t prevent unjust enrichment.
“[C]ourts are normally not in the business of creating an inequitable situation where one
does not already exist.” Schlueter v. Latek, 821 F. Supp. 2d 1079, 1082 (E.D. Wis.
2011).

         State Farm’s contrary rule would undercut the objectives of licensing statutes in
some instances and incentivize negligent conduct in others. A corporation could neglect
to check the licensing status of the contractor it hired to renovate its storefront only to
benefit from this oversight later by recovering payments made on its void contract once
construction is complete, saving hundreds of thousands of dollars in construction costs.
See Comet Theatre Enters., 195 F.2d at 81–83. Or a developer could hire an architect
licensed in Michigan to design condominiums in Idaho where he is not licensed,
discovering after the condominiums are designed, built and sold, that he may recover
everything paid to the unlicensed-in-Idaho architect and double his profits. See Farrell
v. Whiteman, 200 P.3d 1153, 1156–62 (Idaho 2009). A corporation could employ an
insurance broker unlicensed in its State, obtain necessary insurance for a number of
years, and then (once it got around to checking the broker’s license) could recoup all the
insurance payments it previously made on the back end as a reward for its lax
investigation on the front end. See Van Zanen, 522 F.3d at 1128–33. Or, in a slight twist
on this case, an insurance company could ignore the licensing status of the clinics from
which its policyholders are receiving treatment, pay for those treatments at the time of
Nos. 13-5028/5059 State Farm Auto. Ins. Co. v. Newburg Chiropractic                Page 8


service, then seek restitution for all payments made years after the fact. None of this is
hyperbole, as demonstrated by the recoupment efforts in this case and the other three
cited cases.

       Pointing to Phoenix Indemnity Co. v. Steiden Stores and Riverside Insurance Co.
v. McDowell, State Farm claims that Kentucky law compels recovery under these
circumstances. 267 S.W.2d at 733; 576 S.W.2d at 268. Not true. Both cases apply the
same general rule we have applied. Under Kentucky law, a person may recover money
paid due to a mistake of law or fact if the money was not due in law or conscience.
Applying that rule, Phoenix Indemnity held that an insurance company could recover
money it paid to an insured where it was mistaken about a key fact that significantly
affected the amount the insurance contract obligated it to pay. 267 S.W.2d at 734–35.
And Riverside Insurance allowed an insurance company to recover money it paid under
the mistaken belief that the law required it to cover a larger amount of personal injury
damages than it actually did. 576 S.W.2d at 269. Here, by contrast, State Farm was not
mistaken about whether it owed Plambeck money for his clinics’ services; it was
mistaken about whether it could have avoided these obligations by refusing to pay,
knowing that the courts might well deny Plambeck recovery for public policy reasons.
This is not the kind of mistake that Kentucky courts will remedy in equity. See Zanone,
58 Ky. (1 Met.) at 153.

       State Farm persists that Plambeck should not be allowed to retain the payments
it made because he acted illegally when he owned a chiropractic clinic in Kentucky
without a license. This observation is entirely true, and nothing in our opinion should
suggest that Plambeck was not in the wrong. To the contrary: For all we know, he still
may face criminal sanctions for his conduct. See Ky. Rev. Stat. § 312.991(1). But we
are not asked to decide whether Plambeck acted wrongly. We are asked to decide
whether State Farm brought a viable civil claim to recover payments made. The answer
to the latter question and the former are not inexorably intertwined. Indeed, as shown,
the existence of criminal penalties in the licensing statute combined with the absence of
civil remedies suggests that State Farm should not recover. See Smith, 303 S.W.2d at
Nos. 13-5028/5059 State Farm Auto. Ins. Co. v. Newburg Chiropractic                   Page 9


323 (“It is a primary rule of statutory construction that the enumeration of particular
things excludes the idea of something else not mentioned.”); see also Comet Theatre
Enters., 195 F.2d at 81. In the last analysis, State Farm’s cause of action fails as a matter
of law.

                                             III.

          In view of this disposition of State Farm’s mistake claim, the other issues raised
by the parties fall by the wayside. State Farm cannot recover funds paid to the later-
formed corporate clinics that Plambeck owned for the same reasons it cannot recover
funds paid to Plambeck as a sole proprietor. And State Farm’s allegations of error in the
district court’s damage award are now moot.

                                             IV.

          For these reasons, we reverse in part and affirm in part.
Nos. 13-5028/5059 State Farm Auto. Ins. Co. v. Newburg Chiropractic               Page 10


                    ______________________________________

                     CONCURRENCE IN THE JUDGMENT
                    ______________________________________

        BOGGS, Circuit Judge, concurring in the judgment only. While I agree with the
final outcome of this case based solely on Kentucky law, I do not agree with all of the
reasoning in the lead opinion. In particular, it seems to treat Plambeck’s failure to
maintain adequate licensure as a mere administrative quibble of no real consequence.
However, the breadth of the opinion’s reasoning would seem to apply equally to far
greater faults as well.

        In addition, I think the specter of insurance companies lying in the weeds,
making huge payouts in the hope of later recovery through fly-specking credentials, is
no more than a fantasy. In this case, the insurance company paid the chiropractic bills
of its insureds in good faith. Only later did the insurance company learn that some of
its counterparties were unlicensed. While Kentucky law demands our outcome today,
I would not gloss over the problems that this decision could create or uncover.
