11 Fla. L. Weekly Supp. 852a
Insurance — Personal injury protection — Coverage — Exhaustion of policy limits — Insurer cannot claim as defense to ongoing litigation the subsequent exhaustion of PIP benefits by paying bills to other providers whose bills were received subsequent to bill from plaintiff assignee — Where insurer did not make payment on assignee’s bill within 30 days of receipt, made request for information regarding reasonableness and relatedness of services more than 30 days after receiving bill, continued to pay other medical providers thereby nearly exhausting policy limits, and conceded bill to assignee after assignee filed suit, assignee’s bill should have been paid without limitation as to amount of benefits remaining at time when insurer conceded that payment was improperly withheld
MEDPEND, INC., as assignee of LUDA ANDERSON, Plaintiff, vs. ALLSTATE INSURANCE COMPANY, Defendant. County Court, 18th Judicial Circuit in and for Seminole County. Case No. 02-SC-002720. June 21, 2004. John R. Sloop, Judge. Counsel: Brian A. Coury, The Coury Law Firm, P.A., Lake Mary. Julie Walbroel-Pardy, Clark & Pardy, P.A., Ocoee.
FINAL SUMMARY JUDGMENT
THIS CAUSE came upon this Court for hearing on April 28, 2004 on Plaintiff’s Motion for Summary Judgment. The Court, having heard argument of counsel, having reviewed the pleadings, file materials, and being otherwise fully advised in the premises, finds as follows:
UNDISPUTED FACTS
Defendant, Allstate Insurance Company (hereinafter ALLSTATE) issued a policy of insurance that covered LUDA ANDERSON (hereinafter ANDERSON) and which provided $10,000 of personal injury protection (“PIP”) benefits along with $2,000 in extended coverage (“Med-Pay”) in accordance with Florida’s No-Fault Law. The aforementioned policy was in full force and effect on April 17, 2002, the date in which ANDERSON sustained injuries in a motor vehicle accident. ANDERSON required medical services as a result of the motor vehicle accident of April 17, 2002. Plaintiff, MedPend, Inc., (hereinafter MEDPEND), received a valid assignment of benefits from ANDERSON on or about May 8, 2002 and provided durable medical equipment, a custom back brace, to ANDERSON on May 15, 2002.
ALLSTATE received MEDPEND’s bill for $1,125.00 on May 29, 2002 and was required to make a payment decision within thirty days of receipt of MEDPEND’S bill. An explanation of the benefits paid or payment in full was expected to be made on or before June 28, 2002 pursuant to Florida’s No Fault Statute. ALLSTATE did not make any payment and made a request for information regarding the reasonableness and relatedness of MEDPEND’s services on July 3, 2002, more than 30 days after they had received MEDPEND’s bill as prescribed by Florida Statutes § 627.736.
When ALLSTATE received MEDPEND’s bill on May 29,2002, there was more than $1,125.00 in remaining PIP benefits. After the thirty day review period had elapsed, ALLSTATE continued to pay other medical providers and issued a payment to ANDERSON for lost wages thereby nearly exhausting the remaining PIP benefits.
On August 22, 2002, MEDPEND as assignee of ANDERSON, filed this action to contest ALLSTATE’S decision to deny payment for the custom back brace supplied to ANDERSON. MEDPEND claimed ALLSTATE breached the contract of insurance between ANDERSON and ALLSTATE and otherwise violated Florida Law by failing to comply with Florida Statutes §627.736(4)(b).
After this lawsuit was filed, and before benefits were exhausted, ALLSTATE made a decision to concede the May 15, 2002 bill to MEDPEND and tendered a draft in the amount of $93.19 to Plaintiff. Only $.35 of this draft represented payment for the custom back brace provided to ANDERSON and the remaining $92.84 represented interest on the overdue benefits.
Within its Motion for Final Summary Judgment, ALLSTATE conceded MEDPEND’s bill should have been paid within thirty days after receipt as ALLSTATE had not complied with Florida Statute §627.736 (4)(b) requiring the Defendant to investigate the charges to determine whether or not the charges were reasonable, necessary, and related to the automobile accident. ALLSTATE expected to rely upon the exhaustion of ANDERSON’S benefits as a defense to this action in which MEDPEND is challenging ALLSTATE’s non-payment of its charges.
CONCLUSIONS OF LAW
The issue in the instant case is identical to that presented in Pinnacle Medical, Inc. d/b/a ISO Data Diagnostics v. Allstate Insurance Company, 5 Fla.L.Weekly Supp. 663a (17th Judicial Circuit in and for Broward County, Florida April 23, 1998), which is “whether an insurer is entitled to pay PIP benefits claims in any order they deem appropriate until the benefits are exhausted; or whether an insurer is required to “set aside” funds in the amount which would be due a medical provider whose bill has been challenged, at least until challenges to the denial of payment are resolved.”
The facts in Pinnacle are similar to the instant case in that Pinnacle’s bill was received by Allstate on September 21, 1995 and 30 days later their bill was still not paid, however, Allstate had paid other providers whose bills were received after Pinnacle’s bill until PIP benefits were exhausted. The trial court granted Allstate’s Motion for Summary Judgment based upon the fact that the PIP benefits had been exhausted, the very argument being made by Allstate in the instant case.
The reviewing Court in Pinnacle ultimately reversed the trial court’s Order granting Allstate’s Motion for Summary Judgment. The Court reasoned that if insurers like Allstate were permitted to pay providers’ bills in any order they so desired, thus, ignoring some providers until benefits were exhausted, as in Pinnacle, then this procedure “would permit and sanction allowing an insurer to apply the payments of medical bills in any manner it chose and, in some cases, to exhaust PIP benefits so as to deny payment to any medical providers who are not favored.” Pinnacle at 663a.
In Seminole Casualty Insurance Company v. Philip D. Schtupak, D.C., P.A., a/a/o Erick Petit, 9 Fla.L.Weekly Supp. 529a (17th Judicial Circuit in and for Broward County, Florida), the Circuit Court affirmed the trial court’s entry of Final Summary Judgment in favor of Philip D. Schtupak, D.C. The Court held that because the insurer owed the medical provider Plaintiff 80% of the reasonable, necessary, and related expenses by thirty days after receipt of the bill, its liability was established at that time and the subsequent exhaustion of benefits was irrelevant in the suit below. Applying this reasoning to the instant case, Allstate’s liability as to MEDPEND’s bill accrued within the 30 days after receipt of MEDPEND’s bill and the subsequent exhaustion of benefits or near exhaustion of benefits is irrelevant.
In Nu-Wave Diagnostics v. Fortune Insurance Company, 8 Fla.L.Weekly [Supp.] 229b (Circuit Court, 17th Judicial Circuit in and for Broward County, Florida, January 22, 2001), the Defendant, Fortune, exhausted the insured’s/assignee’s PIP benefits after it had received Plaintiff’s bill by paying other medical providers who submitted their bills after the Defendant received Plaintiff’s bills.
The Court reversed the summary final judgment entered in favor of the Defendant, Fortune, by the trial court. The Circuit Court reasoned that, “[i]f the procedure used in this case was allowed in each instance as a matter of law, it would permit an insurer to apply payments of medical bills in any manner it chose and, in some cases, to exhaust PIP benefits so as to deny payment to any medical providers who are not favored.”
The Circuit Court in Physicians First Choice Interpretation, Inc., a/s/o Herline De Castro v. Allstate Insurance Company, 10 Fla.L.Weekly Supp. 675c (Circuit Court, 11th Judicial Circuit in and for Miami-Dade County, Florida, July 15, 2003), held that an insurer is not entitled to pay PIP benefit claims in any order it deems appropriate until the benefits are exhausted. The Court in Physicians noted that the plaintiffs’ arguments focus not on the insurer’s maximum liability, but the insurer’s priority and method of making payments to various providers. The Court went on to illustrate that recent cases suggest that insurers must pay overdue claims which have been unlawfully withheld even if policy limits have been exceeded. Physicians at 675c.
ALLSTATE, in its Motion for Final Summary Judgment, cites this Court’s holding in Taylor v. Florida Farm Bureau Insurance Company, 8 Fla.L.Weekly Supp. 209b. Taylor is distinguishable from the instant case in that the instant case involves a plaintiff who is an assignee of the Defendant’s insured accepting the assignment of benefits in lieu of payment at the time the custom back brace was supplied. ANDERSON executed the assignment of benefits and later submitted a claim for lost wages to ALLSTATE which was paid after thirty day review period had passed. The law in Florida prioritizes assignees who give an insurer notice of the claim by virtue of the submission of their bill shortly after the goods or services are provided to the insured. In addition, the instant case involves a situation where ALLSTATE received Plaintiff’s bill on May 29, 2002, ignored said bill and continued to pay providers whose bills were received after MEDPEND’s bill. Taylor does not address the issue of an insurer ignoring one provider and paying the bills of subsequent providers until benefits are exhausted. The defendant in Taylor paid what it thought was a reasonable amount to the plaintiff. Taylor is essentially not applicable to the instant case because it involves facts and circumstances that are not consistent with this case.
ENGLISH RULE
MEDPEND, as an assignee, had a preferred and prior right over other medical providers whose bills were received after MEDPEND’s bill. In Boulevard National Bank of Miami v. Air Metal Industries, Inc., 176 So.2d 94 (Fla. 1965), the Florida Supreme Court held that the “English Rule” regarding assignments and their assignees is the proper rule to be applied in Florida. The English Rule gives preference to the assignment which was received first. Boulevard National Bank at 96.
In citing Boulevard National Bank, the Fifth District Court of Appeals in State Farm Fire and Casualty v. Ray, 556 So. 2d 811 (Fla. 5th DCA 1990), acknowledged that the English Rule gives priority to the assignee first giving notice to the creditor. Ray at 812.
Therefore, the assignee who first gives notice of its claim to the debtor has a preferred and prior right. Following the Florida Supreme Court’s reasoning, MEDPEND, in the instant case, should have been paid before providers whose bills were received after MEDPEND’s bill of May 29, 2002.
INTENT OF NO-FAULT STATUTE AND PLAINTIFF’SENTITLEMENT TO ATTORNEY’S FEES & COSTS
In illustrating the legislative intent of the penalty provisions of the No-Fault Statute, the Florida Supreme Court in United Automobile Insurance Company v. Rodriguez, 808 So.2d 82 (Fla. 2001), stated that “[t]he provisions were intended to promote the prompt resolution of PIP claims by imposing several reasonable penalties on insurers who pay late.” Rodriguez at 86. The Court in Rodriguez, cited its earlier decision in Ivey v. Allstate Insurance Company, 774 So. 2d 679 (Fla. 2000), where it stated that “[i]t is the incorrect denial of benefits, not the presence of some sinister concept of ‘wrongfulness,’ that generates the basic entitlement to the fees if such denial is incorrect.” Rodriguez at 86.
The Court in Ivey stated that “the purpose of the no-fault statutory scheme is to ‘provide swift and virtually automatic payment so that the injured insured may get on with his life without undue financial interruption.” Ivey at 683 and 684. Likewise, in Crooks v. State Farm Mutual Automobile Insurance Company, 659 So. 2d 1266 (Fla. 3rd DCA 1995), the Court stated that the plain meaning and intent of Section 627.736(4)(b) is to guarantee swift payment of PIP benefits. Crooks at 1268.
In January v. State Farm Mutual Insurance Company, 838 So. 2d 604 (Fla. 5th DCA 2003), the Fifth District Court of Appeal stated that “an insurer is not automatically obligated to pay a claim when the thirty-day period has passed. The insurer may contest the claim after the thirty days, but accepts the risk that if the insured prevails, the insurer will be liable to pay interest on the claim and the insured’s attorney’s fees.” January at 607.
The First District Court of Appeal in Dunmore v. Interstate Fire Insurance Company, 301 So. 2d 502 held that attorney’s fees shall be awarded to an insured in ‘any dispute’ arising under the ‘no fault’ statute which proceeds to judgment against an insurer. Dunmore at 502 and 503.
By agreeing to pay the disputed benefits, and moving for summary judgment, ALLSTATE conceded payment to MEDPEND was overdue, the custom back brace was reasonable, necessary and related to the accident of April 17, 2002 and thus properly payable but for the exhaustion of ANDERSON’s benefits. ALLSTATE also conceded such an admission entitled MEDPEND to ask this Court to consider taxing reasonable attorney’s fees and costs against ALLSTATE at least up to the point in which the initial draft was tendered to MEDPEND.
An insurer cannot avoid a statutory obligation for attorneys fees by paying policy proceeds after suit is filed but before a judgment is entered. The payment of the claim is the functional equivalent of a confession of judgment thus making the plaintiff a “prevailing party”. Wollard v. Lloyds & Co., 439 So.2d 217, 218 (Fla. 1983); Gibson v. Walker, 380 So. 2d 531, 533 (Fla. 5th DCA 1980); Cincinnati Insurance Company v. Palmer, 297 So. 2d 96 (Fla. 4th DCA 1974). The court has no discretion to deny attorney’s fees after such payment. Avila v. Latin American Prop. & Cas. Ins. Co., 548 So.2d 894 (Fla. 3d DCA 1989); Amador v. Latin American Ins. Co., 552 So.2d 1132 (Fla. 3d DCA 1988); Losicco v. Aetna Casualty & Surety Co., 588 So.2d 681 (Fla. 3d DCA 1991).
Whenever an insured prevails against an insurer, the court must award attorney’s fees, even if the insurer believed in good faith that the benefits should not have been paid. INA v. Lexow, 602 So.2d 528 (Fla. 1992); United Automobile Ins. Co. v. Zulma, 661 So.2d 947 (Fla. 4th DCA 1995).CONCLUSION
Florida law as it relates to the exhaustion of PIP benefits and the rights and priorities of assignees is clear. The aforementioned cases illustrate that an insurer cannot claim as a defense to ongoing litigation the subsequent exhaustion of PIP benefits by paying bills of other providers whose bills were received subsequent to the Plaintiff’s bills. Florida law dictates that an assignee who gives prior notice of its bill has priority over subsequent assignees. Therefore, MEDPEND’s bill which was received by ALLSTATE on May 29, 2002 should have been paid without limitation as to the amount of benefits remaining at the point in time in which ALLSTATE conceded payment was improperly withheld.
IT IS HEREBY ORDERED AND ADJUDGED THAT:
1. Plaintiff’s Motion for Summary Judgment and Entitlement to Attorney’s Fees is hereby GRANTED.
2. Plaintiff, MedPend, Inc., as assignee of Luda Anderson, shall recover from the Defendant, Allstate Insurance Company, $1,124.65 plus simple interest of 9% on the overdue benefits from May 29, 2002. (749 days as of June 15, 2004)
3. The Court recognizes Plaintiff’s entitlement to the recovery of a reasonable attorney’s fees and the taxation of costs against the Defendant.
The Court hereby enters Judgment in favor of the Plaintiff, MedPend, Inc., as assignee of Luda Anderson, in the amount of $1,239.51 ($1,124.65, the amount billed minus of credit of $.35, plus $207.70 interest minus a credit of $92.84 previously paid) and the Court reserves jurisdiction to determine the amount of reasonable attorney’s fees and costs to be awarded to the Plaintiff and taxed against the Defendant.
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