11 Fla. L. Weekly Supp. 851a

Insurance — Personal injury protection — Coverage — Exhaustion of policy limits on subsequently submitted bills — Insurer’s motion for summary judgment based on exhaustion of benefits is denied because plaintiff/assignee will be entitled to statutory interest and penalties regardless of exhaustion of policy limits if he proves insurer wrongfully denied payment of his bill

PAUL A. ANDREWS, DDS LMT, as Assignee of Christine Redmond, Plaintiff, v. PROGRESSIVE CONSUMERS INSURANCE COMPANY, a corporation authorized and doing business in the State of Florida, Defendant. County Court, 18th Judicial Circuit in and for Seminole County. Case No. 02-SC-004381-19-F. June 2, 2004. Mark E. Herr, Judge. Counsel: Michael B. Brehne, Law Offices of Michael B. Brehne, P.A., Maitland, for Plaintiff. Chandra Miller, Thompson, Goodis, Thompson, Groseclose & Richardson, P.A., St. Petersburg, for Defendant.

ORDER ON DEFENDANT’S MOTION FOR SUMMARY JUDGMENT BASED ON EXHAUSTION OF BENEFITS

THIS CAUSE came on for hearing April 22, 2004 on Defendant’s Motion for Summary Judgment, the Court having heard argument of counsel and being otherwise fully advised in the premises, ORDERS AND ADJUDGES as follows:

FINDINGS OF FACT

1. Plaintiff is a medical service provider who provided medical services to Christine Redmond as a result of a motor vehicle accident she was involved in on August 6, 2001.

2. At the time of the accident, Defendant had issued a standard automobile insurance policy that had coverages for personal injury protection benefits (PIP) that was in full force on the date of loss.

3. Therefore, according to the policy, Defendant would be liable for 80% of the charges submitted by medical providers for care related the motor vehicle accident.

4. During the handling of claims submitted on behalf of Ms. Redmond, Defendant began to deny and or reduce claims submitted by a chiropractor as early as his first date of service with Christine Redmond.

5. Progressive continued to deny bills for Christine Redmond’s chiropractic services from August through December, 2001.

6. As a result, in December, 2001, attorney Steven Johnson filed a lawsuit on behalf of the chiropractor to recover his outstanding bills.

7. At the time the chiropractor’s lawsuit was filed, there remained PIP benefits available for Christine Redmond.

8. Ms. Redmond was also treating with Dr. Paul Andrews for her accident related injuries. Specifically, she began treating on or around December 5, 2001 and continued through August 20, 2002.

9. On December 5, 2001, Christine Redmond executed an assignment of benefits in favor of Dr. Andrews.

10. After receiving bills for these visits, Progressive submitted Dr. Andrews’ bills to their Mitchell Medical bill review system which consistently recommended payment to Dr. Andrews for his services.

11. However, despite the recommendation by Mitchell Medical to pay Dr. Andrews’ bill, Progressive “overrode” the Mitchell system and not pay the bill submitted for August 20, 2002.

12. The only explanation given for non-payment of this bill was “benefits pending per resolution of PIP litigation.”

13. Plaintiff initiated litigation to recover payment of their August 20, 2002 date of service on December 17, 2002.

14. Defendant defended alleging exhaustion of benefits which occurred on December 4, 2002 as a result of settlement with the chiropractor for dates of service incurred prior to the August 20, 2001 bill from Dr. Andrews.

15. Defendant now has moved this Court for an order granting them summary judgment based on their exhaustion theory.

16. Defendant claims that because litigation was initiated after benefits were exhausted, Plaintiff can not recover any sums whatsoever as Defendant has fulfilled its contractual obligations by paying out Christine Redmond’s policy limits.

17. It is this issue that this Order is directed.

CONCLUSIONS OF LAW

The Florida No Fault Law was intended to provide a minimum level of insurance benefits without regard to fault. United Auto. Ins. Co. v. Rodriguez, 808 So.2d 82, 85 (Fla. 2001). The Florida Supreme Court summarized the criteria governing payment of benefits and penalties as follows: (1) an insured may seek the payment of benefits for a covered loss by submitted “reasonable proof” of such loss to the insurer; (2) if the benefits are not paid within thirty days and the insurer does not have reasonable proof that is not responsible for the payment, the payment is “overdue”; (3) all “overdue” payments shall bear simple interest at a rate of ten percent per year; and (4) whenever an insured files an action for payment of PIP benefits and prevails, the insured is entitled to attorneys’ fee. Id.

Fla. Stat. §627.736(4)(b) requires that when an insurer pays only a portion of the claim or rejects the claim, the insurer must provide at the time of the partial payment or rejection an itemized specification of each item that the insurer has reduced, omitted, declined to pay and request any information that the insurer desires the claimant to provide related to the medical necessity of the denied treatment or to explain the reasonableness of the reduced charge . . .

In this case, Dr. Paul Andrews rendered medical care and treatment to Christine Redmond and billed Progressive Insurance Company for his services rendered for date of service August 20, 2002. Defendant admits to timely receiving the bills for this date of service as well, readily admits that the services provided to her were in fact necessary and related to a motor vehicle accident for which Progressive afforded 80% PIP insurance coverage. The only question remaining is why did Progressive refuse to pay for this one date of service?

Plaintiff filed this lawsuit to recover this outstanding amount owed by Progressive. Defendant, however, contends that because Progressive paid out to other providers the entire sums available under the personal injury protection portion of the contract issued by Defendant to someone else, they are somehow relieved of any responsibility regarding the bills submitted by Plaintiff. Defendant further believes that simply because benefits in this case exhausted that no other payments should be made to Plaintiff in this case.

This Court finds that should Plaintiff prove that Defendant wrongfully denied payment of their bill, Plaintiff would be entitled to statutory interest and penalties on the disputed amounts regardless of the remaining policy benefits pursuant to Fla. Stat. §627.736(4)(b)&(c). This is so because the penalty provisions of statutory interest and attorney’s fees are always a part of a claim for overdue PIP benefits.

To be sure, Fla. Stat. §627.736(4)(b) states:

Personal injury protection insurance benefits paid pursuant to this section shall be “overdue” if not paid within 30 days after the insurer is furnished written notice of the fact of a covered loss and of the amount of same.

Fla. Stat. §627.736(4)(c) demands:

all “overdue” payments shall bear simple interest at the rate established under Fla. Stat. §55.03 or the rate established in the insurance contract, whichever is greater, for the year in which the payment became overdue, calculated from the date the insurer was furnished with written notice of the amount of covered loss. Interest shall be due at the time payment of the overdue claim is made. Id.

The supreme court stated that the legislative intent evinced in the penalty provisions is clear: The provisions were intended to promote the prompt resolution of PIP claims by imposing several reasonable penalties on insurers who pay late. United Auto. Ins. Co. v. Rodriguez, 808 So. 2d 82, 85 (Fla. 2001). Thus, if an insurer does not have reasonable proof that they are not responsible for payment of a claim and does not pay within 30 days of the claim submission, they are exposed to the statutory penalties attendant to an “overdue” claim. Jones v. State Farm Mut. Auto. Ins. Co., 694 So. 2d 165 (Fla. 5 DCA 1997).

Most recently, the 5th DCA reiterated that the holding in United Automobile does not mean that an insurer is 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 insurer pays the contested claim, the insurer will be liable to pay interest on the claim and the insured’s attorney’s fees. January v. State Farm Mut. Ins. Co., 838 So. 2d 604, 607 (Fla. 5 DCA 2003).

As such, the PIP insurer is given thirty days to investigate and to either pay the claim or discover the facts that warrant a refusal to pay. Id. at 606. “If it does not do so, then the claim is overdue and the statutory penalties for failing to pay the claim timely (interest and fees) are due.” Id.

Nowhere in the statute or cases stemming from it, is there an interpretation that extinguishes the clear statutory liability imposing penalties and interest on overdue claims! By the plain language of the statutory definitions, the claims submitted by Plaintiff are now “overdue” and if the charges are found to be “reasonable” or if a jury decides defendant did not have “reasonable proof” to reduce the bills, Defendant is liable for statutory interest on the unpaid sums and attorney’s fees. See, Walter A. Afield, M.D., P.A. v. USAA Casualty Ins. Co., 10 Fla. L. Weekly Supp. 546(a) (County Crt. 13th Judicial Cir. Case No. 2002-6072 Div. H Feb. 2003) (Although PIP benefits have been exhausted, the Plaintiff is entitled to receive statutory interest and attorney’s fees and costs): Steven A. Wilson, D.C. v. Maryland Casualty Co., 10 Fla. L. Weekly Supp. 532b (County Crt. 6th Judicial Cir. Case No. 01-1014 CO-42 Feb. 21, 2003) (Although the PIP benefits have exhausted, Plaintiff is entitled to statutory interest for the late payments made and the court reserves jurisdiction on the amount to attorney’s fees and costs).

Lastly, statutory interest is an element of damage in any PIP suit and inures to the benefit of the insured. Leigh Taylor v. Fla. Farm Bureau, 8 Fla. Law Weekly Supp. 209(b) (County Crt. 18th Judicial Cir. Case. No. 99-CC-3779-20 Nov. 27, 2000). As such, this Court can not ignore the statutory requirements imposing interest as a penalty for eventually paying an overdue claim as this would deprive Plaintiff of a legislatively granted right that has been in existence since 1971.

As such, this Court DENIES Defendant’s Motion for Summary Judgment based on exhaustion of benefits because if Plaintiff prevails, this Court is statutorily obligated to award interest and penalties on the outstanding amounts.

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