11 Fla. L. Weekly Supp. 199a
NOT FINAL VERSION OF OPINION
Subsequent Changes at 11 Fla. L. Weekly Supp. 964c
Insurance — Personal injury protection — Coverage — Conditions precedent — Examination under oath — Medical provider/assignee — Under explicit terms of insurance policy requiring person who suffers bodily injury to submit to EUO, neither corporate medical provider making claim based on assignment, nor treating physician working for provider, is required to attend EUO as condition precedent to filing suit against insurer — Insurer’s argument that with assignment obligation to attend EUO transfers to provider but also stays with insured is unpersuasive — Burden transferred to medical provider with assignment was burden that it could not file suit unless and until insured attended EUO, not burden for provider to attend EUO — Despite inability to require provider to submit to EUO, insurer can obtain discovery about treatment by deposing treating physician and using other usual discovery methods to uncover any fraud — Appeals — Court considers construction of contract despite fact that argument was not raised in trial court because error is fundamental — Attorney’s fees — Prevailing party — Fees are awarded to prevailing medical provider, contingent on ultimately prevailing in trial court — Justiciable issues — Due to fact that insurer’s position is not supported by its own policy, court on own motion makes unconditional award of fees to provider
ADVANCED DIAGNOSTIC TESTING, INC., Appellant, v. STATE FARM INS. CO., Appellee. Circuit Court, 11th Judicial Circuit (Appellate) in and for Miami-Dade County. Case No. 02-472 AP. L.C. Case No. 2001008909 SP 25. January 27, 2004. An Appeal from the County Court for Miami-Dade County, Judge Mercedes A. Bach. Counsel: Stuart B. Yanofsky, for Appellant. Nancy W. Gregoire and James P. Murphey, for Appellee.
(BEFORE SIDNEY B. SHAPIRO, PAUL SIEGEL and MICHAEL B. CHAVIES, JJ.
(PAUL SIEGEL, J.) This case represents a bad omen for the future of the practice of law. Attorneys for both parties failed to bring to the attention of the trial court and this court the relevant provisions of the contract which establishes their rights and obligations. As a consequence, the trial judge made the wrong decision in dismissing a suit against an automobile insurer because a treating doctor declined to appear for a sworn statement. It would be a gross miscarriage of justice to permit this result to stand. Before the older generation of lawyers and judges die off, we must pass to our younger brethren the message that whenever a contract or statute is involved in litigation, the sine qua non for every lawyer in the case is a careful and detailed scrutiny of every word of that contract or statute; and counsel should share the important provisions with the court. If these principles are not being emphasized in our law schools, they must be.
Advanced Diagnostic Testing, Inc. (Advanced) provided medical care following an auto accident to a State Farm Insurance Company (State Farm) policy holder. Advanced, a corporation, received an assignment of benefits from its patient assigning to it the patient’s right to payment by State Farm for the medical care. State Farm convinced the trial court that Advanced could only collect the benefits if its employee doctor attend an examination under oath (EUO) requested by State Farm. The trial court granted State Farm’s motion to dismiss Advance’s claim because the treating physician refused to attend the EUO. To support the lower court’s decision, State Farm argues that either (1) the purported assignment was valid, thus carrying with it the obligation to attend an EUO so that Advanced’s claim is void for failure to attend the EUO, or (2) the purported assignment was not a true assignment, but merely a direction to pay, which did not give Advanced standing to sue State Farm.
Both parties have acknowledged that there is no case law binding on this court on the issue of whether a physician working for the health care provider should be required to attend an EUO when the provider’s right to sue is based on an assignment.1 However, it is clear that, under the explicit terms of the insurance policy in the instant case, neither a corporate healthcare provider who is making a claim based on an assignment, nor a treating physician working for the healthcare provider, is required to attend an EUO. The policy states the following:
Person — meansa human being.
State Farm Policy at 4 (p. 8 of State Farm’s Appendix) (emphasis in policy).
Any person who suffers a bodily injury . . . must notify us of the claim in writing as soon as reasonably possible . . . . The person making claim also shall:
. . .
b. be examined by physicians chosen and paid by us as often as we reasonably may require. . . .
c. answer questions under oath when asked by anyone we name, as often as we reasonably ask, and sign copies of the answers.
State Farm Policy at 6 (p. 10 of State Farm’s Appendix) (emphases in policy).
Based on this language of the policy, which neither party brought to the attention of the trial court or this court, we cannot understand how State Farm can seriously argue that either Advanced, or the treating physician working for Advanced, is a “person making claim.” While Advanced is certainly “making a claim,” it is a corporation, not a human being and therefore does not fit into the definition of “person” set forth in the policy. Therefore, Advanced is not a “person making claim” under the explicit definitions of the insurance policy, and is not required to attend an EUO. Likewise, while the physician who treated the insured is a human being, he is not making a claim, so he is also not a “person making claim” and also is not required to attend an EUO.
As such, it is clear under the terms of the insurance policy drafted by State Farm, that neither Advanced nor the treating physician was required to attend an EUO as a condition precedent to filing suit. This Court also agrees with Advanced that, if it were to determine that either Advanced or the attending physician were a “person making claim” under the policy, and thus required to attend an EUO, the same determination would lead to the absurd result that Advanced or the attending physician could also be required to attend an independent medical examination. This is because a “person making claim” is required under the policy to comply with both obligations.
In making its arguments, State Farm has misconstrued the law of assignments of benefits. At the oral argument of this case, State Farm explicitly stated that it takes the position that it can require an EUO of both the insured and the assignee.2 This position is contrary to well settled law that only one party can “own” the right to make a claim. See, Oglesby v. State Farm Mut. Auto. Ins. Co., 781 So. 2d 469, 470 (Fla. 5th DCA 2001) (“[O]nly the insured or the medical provider ‘owns’ the cause of action against the insurer at any one time. And the one that owns the claim must bring the action if an action is to be brought.”). Therefore, when an insured assigns its right to sue to a health care provider, only the health care provider, and not the insured, “owns” the right to sue and is able to bring suit. See Multicare Medical Center, Inc. v. State Farm Fire and Casualty, 10Fla. L. Weekly Supp. 724a (11th Circuit, Miami-Dade County 2003) and cases cited therein. Similarly, if State Farm were correct that the assignment in the instant case transferred the obligation to attend an EUO to the health care provider, then only the health care provider, and not the insured would have the obligation to attend an EUO. State Farm’s argument that the obligation to attend an EUO transfers to the health care provider, but also stays with the insured, is unpersuasive.
State Farm also misconstrues the law of assignments by arguing that when a person makes an assignment of benefits, he also necessarily transfers his obligations along with the benefits. As support for its argument, State Farm cites Suniland Associates, Ltd. v. Wilbenka, Inc., 656 So. 2d 722, 724 (Fla. 3d DCA 1995) for its statement that “an assignee succeeds to his assignor’s rights under the assignment of a contract and takes with it all the burdens to which it is subject in the hands of the assignor.” Suniland dealt with the assignment of a contract for lease, and simply held that the assignment was subordinate to a mortgage (the referenced burden). In contrast to Suniland, the instant case did not deal with an assignment of a contract, but an assignment of benefits. In other words, the insured did not assign his insurance policy to Advanced, he merely assigned his right to certain proceeds from his insurance policy to Advanced. This situation is not equivalent to the situation in Suniland. However, even analogizing from the Suniland situation to the instant case, State Farm is not correct about how “burdens” are transferred from an assignor to an assignee. To use the Suniland terminology, the “burden” to which the assignor was subject in the instant case was a condition precedent which required the insured to comply with a request for an EUO before filing suit. This “burden” did, in fact, transfer to Advanced, so that it could not file suit until the condition precedent was complied with, meaning that Advanced could not file suit unless and until the insured attended the EUO.
State Farm also cites State v. Family Bank of Hallandale, 667 So. 2d 257, 259 (Fla. 3d DCA 1975) for the proposition that “The assignee steps into the shoes of the assignor and is subject to all equities and defenses that could have been asserted against the assignor had the assignment not been made.” Again, this does not mean that the insured transferred his obligation to attend an EUO to the healthcare provider. Instead, this simply means that State Farm could defend against Advanced using any defense that it could have used against the insured if the insured had not assigned his right to sue. A valid defense that State Farm could have used against the insured if he had not made the assignment would exist if the insured did not attend an EUO. If State Farm were defending this case against the insured, it would not be a defense against the insured that the health care provider did not attend an EUO. Therefore, this is also not a defense that is available when the health care provider has stepped into the shoes of the insured and is subjected to any defenses that would be available against the insured. In other words, when an insured assigns his benefits to a healthcare provider, the obligation to attend an EUO remains with the insured, and the insurer has a good defense to the provider’s claim if the insured refuses an EUO.
State Farm also argues policy reasons for requiring healthcare providers to attend EUOs. It asserts that “If a health care provider . . . is allowed to avoid the discovery approved in the above cases [an EUO of the health care provider], as it apparently intends to attempt, an insurer has no way to confirm whether the policy benefits are being improperly eroded by unnecessary and illegal treatment.” This argument is disingenuous. Kaminester v. State Farm Auto. Ins. Co., 775 So. 2d 981 (Fla. 4th DCA 2000), a case in which State Farm was represented by one of the same attorneys that it is represented by in the instant case, establishes that insurance companies have the right to discovery to investigate treatment, so health care providers will not avoid discovery by not being required to attend EUOs.3
This court is not unsympathetic to what we perceive to be State Farm’s motive in seeking an EUO from Advanced’s treating doctor. Some insurers consider South Florida to be an active locus of insurance fraud, especially in auto accident cases. In our criminal courts, we have seen prosecutions for staging phony accidents and for charging for medical care never delivered. State Farm must have the means available to it to investigate potentially fraudulent claims. And it does, without resorting to a contract EUO of the treating doctor. Section 627.736(6)(c) of the Florida Statutes (1999) allows an insurer to petition a court for discovery of facts about an injured person’s treatment or the dates and costs of such treatment. Kaminester, supra, allowed State Farm to obtain an MRI lease, even after it had paid its insured’s claim. Once a provider sues State Farm on an assignment, State Farm can depose the treating doctor if it wishes, and also engage in all the usual discovery methods to uncover any fraud.
Therefore, this Court is not convinced that medical providers should be required to attend EUOs as a general matter, and moreover, it is clear that the policy involved in the instant case explicitly does not require either Advanced or the treating physician to attend an EUO. As such, the trial court’s order dismissing the case is REVERSED.
Before turning to the attorneys fee issue, we briefly explore whether this court has violated the holding of Dober v. Worrell, 401 So. 2d 1332 (Fla. 1981), which prohibits an appellate court from considering an argument on appeal that was not raised in the trial court. Of course, it is not the appellant that seeks to have this court read and consider the language of State Farm’s contract, but rather the court itself which has done so. The error made in this case is basic to the judicial decision under review and equivalent to a denial of due process; we view it as a fundamental error. State v. Johnson, 616 So. 2d 1 (Fla. 1993). Of even greater significance is the fact that Advanced would be entitled to prevail on appeal on the issue relating to the significance of the assignment of benefits to Advanced and the fact that that assignment does not carry with it a requirement that an employee of Advanced, rather than the policyholder, appear for an EUO. This is so even without the specific policy definition and provisions quoted above, but not in the briefs in this case.
The court both conditionally and unconditionally grants attorneys fees to Advanced for this appeal. The Petitioner has requested attorneys fees pursuant to Florida Statute § 627.428. This section provides, in relevant part, that “in the event of an appeal in which the insured or beneficiary prevails, the appellate court shall adjudge or decree against the insurer and in favor of the insured or beneficiary a reasonable sum as fees or compensation for the insured’s or beneficiary’s attorney prosecuting the suit in which the recovery is had.” Pursuant to this statute, the Petitioner as the prevailing party in this appeal, is entitled to attorneys fees if it ultimately prevails in this case in the trial court. Tench v. American Reliance Ins. Co., 671 So. 2d 801 (Fla. 3d DCA 1996), and cases cited therein. Thus this is a conditional award of fees.
In addition, due to the fact that State Farm’s position is not supported by its own policy, this Court also elects, on its own motion, to grant attorneys fees pursuant to section 57.105(1) of the Florida Statutes (1999)4. This is an unconditional award. The statute provides in part that:
Upon the court’s initiative or motion of any party, the court shall award a reasonable attorney’s fee to be paid to the prevailing party in equal amounts by the losing party and the losing party’s attorney on any claim or defense at any time during a civil proceeding or action in which the court finds that the losing party or the losing party’s attorney knew or should have known that a claim or defense when initially presented to the court or at any time before trial:
(a) Was not supported by the material facts necessary to establish the claim or defense; or
(b) Would not be supported by the application of then-existing law to those material facts.
State Farm’s defense, that Advanced failed to comply with a condition precedent to bringing suit because the insured’s obligation to attend an EUO transferred to Advanced or its physician, was not supported by material facts because the language of the policy clearly only requires a “person making claim” to attend an EUO, and explicitly defines “person” as “a human being.” Advanced is a corporation, not a human being, and the treating physician was not making a claim. Therefore, there were no facts supporting that either was a “person making claim” and required to attend an EUO. The only reason that State Farm succeeded with this argument below is due to the fact that its attorney did not bring this language to the attention of the trial court. Such lack of candor to the court is disappointing. Also disappointing is the fact that Advanced’s attorney did not bring the language to the attention of the trial court. This Court can only assume that Advanced’s attorney was not aware of the language due to a failure to read the policy, and that State Farm’s attorney was aware of the language, but chose not to make the trial court aware of it.5 At oral argument, Advanced’s attorney was not aware of the “person” definition, while State Farm’s attorney was.
Based on the foregoing, this case is REMANDED to the trial court for the assessment of attorneys fees against State Farm and its attorneys in accordance with Florida Statutes §§ 57.105 and 627.428. (SIDNEY B. SHAPIRO, J. CONCURS and MICHAEL B. CHAVIES, J. CONCURS IN PART.)
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1On this issue, research has revealed two published county court cases, one finding that health care providers are required to attend EUOs and one finding that they are not required to attend EUOs. See, M.D.C. v. State Farm Mutual Automobile Insurance Company, 9 Fla. L. Weekly Supp. 252a (15th Circuit, Palm Beach County 2001) (granting summary judgment because individuals associated with the health care provider refused to attend EUOs and also referring to an unpublished order from a Broward County court doing the same); Advanced Diagnostic Testing Inc. v. State Farm Fire and Casualty, 10Fla. L. Weekly Supp. 731b (11th Circuit, Miami-Dade County 2002) (denying summary judgment and rejecting the argument of the insurance company that the health care provider was required to attend an EUO).
2This position is consistent with the argument set forth in State Farm’s Answer Brief. See Answer Brief at 11 (“The only issue, therefore, is whether the EUO is also enforceable against a health care provider that has taken an assignment of Policy benefits.”) (emphasis added).
3Furthermore, even if State Farm was correct that EUOs were the only means of investigating fraudulent claims, its argument would be equally applicable to cases which do not involve assignments. In other words, if it is a good policy to subject health care providers to EUOs in order for insurance companies to determine the validity of claims, it would be a good policy regardless of whether the case is being brought by the health care provider through an assignment or whether it is being brought by the insured himself. If the Court were to adopt this reasoning in cases involving assignments only, the result would be the unequal application of this policy. If the insurance company wishes to advance the policy, it should do so through legislative means or policy change.
4Appellate attorneys fees can be granted under section 57.105. Visoly v. Security Pacific Credit Corp., 768 So. 2d 482 (Fla. 3d DCA 2000). Appellate attorneys fees may also be granted under Fla. R. App. P. 9.410 for filing a brief that is frivolous.
5By failing to make the trial court aware of the relevant policy language, State Farm’s attorney may have violated Rule 4-3.3 (A lawyer shall not knowingly . . . (2) fail to disclose a material fact to a tribunal when disclosure is necessary to avoid assisting a criminal or fraudulent act by the client) or Rule 4-8.4(c) (a lawyer shall not engage in conduct involving dishonesty, fraud, deceit, or misrepresentation) of the Rules Regulating The Florida Bar. Potential consequences for violating these rules include suspension or disbarment; see Florida Standards For Imposing Lawyer Sanctions 6.11 and 6.12 and The Florida Bar v. Miller, 28 Fla. L. Weekly S749 (Fla. Oct. 2, 2003). Thus, counsel for State Farm could place their licenses at risk if they continue to seek dismissal of similar provider claims without informing the presiding judge of the policy language.
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(MICHAEL B. CHAVIES, CONCURRING.) I agree with the portion of the opinion which reverses the trial court’s order of dismissal and holds that medical providers are not required to attend examinations under oath.
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