12 Fla. L. Weekly Supp. 543a
Attorney’s fees — Insurance — Personal injury protection — Offer of settlement — Where insurer and medical provider entered into settlement agreement without consent of insureds and without addressing issue of attorney’s fees, and record is unclear whether provider will pursue insureds for any outstanding fees above what insurer has paid to provider, insureds may still maintain cause of action for breach of contract against insurer notwithstanding insurer’s indication that it will indemnify insureds if provider seeks payment from them — Order denying insureds’ motions for attorney’s fees is reversed, case is remanded for factual determination of when insurer’s initial offer of settlement was made, and trial court is directed to make determination of appropriate fees if initial offer was made after insured filed suit against insurer
CHARMAINE SUTHERLAND and MARILYN MILLER, Appellants, vs. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellee. Circuit Court, 17th Judicial Circuit (Appellate) in and for Broward County. Case Nos. 03-11362 CACE (08), 02-19336 CACE (08). (Consolidated). March 1, 2005. Counsel: Robert P. DiStefano. Nancy W. Gregoire. Jonathan S. Brook.
OPINION
(J. LEONARD FLEET, J.) THIS CAUSE comes before the Court upon Appellant’s, Charmaine Sutherland, Appeal of the County Court’s Order denying Plaintiff’s Motion to Enforce Settlement and for Fees and Costs and denying Plaintiff’s Motion for Rehearing, and Appellant’s, Marilyn Miller, Appeal of the County Court’s Order denying Plaintiff’s Motion for Attorney’s Fees and Costs. These cases were consolidated on appeal, and having reviewed the appellate record in its entirety, considered relevant case and statutory law, and otherwise being advised in the premises, the Court finds and decides as follows:
1. Miller case
Appellant, Marilyn Miller (hereinafter “Miller”), was involved in an automobile accident on June 5, 1996, suffered injuries, and was treated by Dr. Silverstein (hereinafter “Silverstein”). Silverstein was authorized to bill and collect directly from Miller’s insurance company, State Farm Mutual Insurance Company (hereinafter “State Farm”). On September 27, 1996, State Farm was furnished with written notice of a covered loss and the amount of said loss. On February 28, 1997, Miller filed suit for nonpayment of benefits against State Farm. State Farm made a settlement offer to Silverstein in the amount of $867.74 for a bill which was in excess of $11,000. However, the record is unclear as to the date of the initial settlement offer, and the parties dispute, whether State Farm made its initial offer prior to or after Miller filed suit. The record does indicate State Farm made an offer on June 3, 1997, which Silverstein rejected, and then later accepted while the parties were preparing for trial. State Farm asserts the June 3, 1997, tender of payment was the second such attempt by State Farm. Although it has not provided the specific date or evidence of such offer for the record, State Farm asserts the first attempt was made prior to the initiation of the lawsuit.
In October, 1997, the trial court entered a Final Judgment in favor of State Farm on the issue of Miller’s lack of standing and directed Silverstein to arbitrate the claim with State Farm. However, after the constitutionality of the statutory arbitration requirement was challenged on appeal, the case was remanded to the trial court for proceedings consistent with Nationwide Mutual Fire Ins. Co. v. Pinnacle Medical, Inc., 753 So.2d 55 (Fla. 2000). Upon remand, Miller argued there was not a true assignment, and even if there was, Silverstein had authorized her to sue State Farm on his behalf. The trial court denied State Farm’s Motion for Summary Judgment holding there were issues of fact and law regarding the assignment. On or about July 6, 2002, Dr. Silverstein offered to accept the $867.74 tendered earlier. Following Silverstein’s acceptance of the check, Ms. Miller and State Farm, entered into a Stipulation of Issue Resolution agreeing to move forward with the proceedings in order to resolve the sole remaining issue, Miller’s entitlement to attorney’s fees and costs. Miller filed her Motion for Attorney’s Fees, Legal Assistance Fees and Costs on October 29, 2001. On September 3, 2002, the trial court entered an Order denying the motion.
Miller now appeals this Order arguing it is erroneous and contrary to the manifest weight of evidence since the offer to pay Silverstein was made on June 3, 1997, months after the initial complaint was filed. Miller asserts she is entitled to attorney’s fees since State Farm confessed judgment in paying Silverstein after suit was filed, even though the amount ultimately paid to her treating physician was not more than the previous offer of settlement.
2. Sutherland case
Appellant, Charmaine Sutherland (hereinafter “Sutherland”) was involved in an automobile accident on October 13, 1996, suffered injuries and was treated by Silverstein. As in the Miller case, Silverstein was authorized to bill directly and collect from State Farm. On January 9, 1997, State Farm was provided with written notice of the covered loss and said amount. On May 19, 1997, prior to Sutherland filing suit, State Farm offered to settle the bill, which was in excess of $10,000, for the amount of $1,761.75. Silverstein rejected this offer and authorized Sutherland to make a claim against State Farm. Sutherland filed suit on July 29, 1997, asserting State Farm breached its policy with her. State Farm maintained Sutherland lacked standing based on an assignment to Silverstein. Ultimately, the trial court entered Orders on November 15, 2000 and February 21, 2001, finding Sutherland was the proper party to bring suit. In July 2001, while the parties were preparing for trial, Silverstein agreed to accept the offer of $1,761.75 for payment of his treatment of Sutherland. Sutherland and State Farm entered into a Stipulation of Issue Resolution which stated the sole remaining matter to be determined was Sutherland’s entitlement to attorney’s fees and costs.
On September 13, 2002, while the fee motion was still pending, Sutherland filed an Emergency Motion to Enforce Settlement asserting Silverstein had not received payment from State Farm, and the granting of the Emergency Motion would result in a confession of judgment on the part of State Farm. After a hearing on the matter, the trial court directed State Farm to pay Silverstein in accordance to the agreement and denied Sutherland’s Motion. The trial court ultimately held the prior Stipulation was binding, and there had been no confession of judgment. Sutherland moved for rehearing which was denied on June 10, 2003.
Sutherland now appeals these Orders arguing a failure to recover more than a pre-suit offer does not necessarily preclude her from recovering fees, costs and prejudgment interest. Sutherland maintains the trial court erred in denying the Motion for Attorney’s Fees, and, in effect, dismissing her complaint for breach of contract without allowing her the opportunity to prove said breach and damages, whether actual or nominal, if any.
Additionally, in both the Miller and Sutherland cases, the parties dispute whether Silverstein is still holding the insureds personally liable for the remaining balance. State Farm asserts the settlements with Silverstein represent full and final payment for the treatment, it will indemnify the insureds if Silverstein pursues an action against them, and there is no record evidence to support the claims that State Farm failed to protect the insureds’ interests. To the contrary, the insureds assert State Farm took no action to protect them by obtaining a release from Silverstein in their favor for the balances remaining on their respective bills. Miller further contends Silverstein had executed an affidavit one year after the settlement agreement and before receipt of payment stating he was still holding her personally liable for the balance after receipt of any payment from the insurer.
The standard of review on a determination of entitlement to attorney’s fees predicated upon statutory interpretation of a contract or statute is de novo. O’Hare v. Hamric, 868 So.2d 687 (Fla. 4th DCA 2004); Stevens v. Zakrzewski, 826 So.2d 520 (Fla. 4th DCA 2002). Florida law has established, pursuant to contract or statute, attorney’s fees may be awarded upon settlement of a claim. Pepper’s Steel & Alloys, Inc. v. United States, 850 So.2d 462 (Fla. 2003). Here, the relevant statute, Section 627.428, Florida Statutes, provides in pertinent part:
(1) Upon the rendition of a judgment or decree by any of the courts of this state against an insurer and in favor of an insured or the named beneficiary under a policy or contract executed by the insurer, the trial court, or, 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.
§627.428, Fla. Stat.
This statute has been interpreted as a method to discourage insurance companies from contesting valid claims and is intended to reimburse insureds for attorney’s fees when they must enforce the insurance contract in court proceedings. Bell v. U.S.B. Acquisition Co., 734 So.2d 403 (Fla. 1999). When judgment is rendered in favor of an insured, attorney’s fees shall be awarded against the insurer. Pepper’s Steel & Alloys, Inc., 850 So.2d at 465; State Farm Fire & Cas. Co. v. Palma, 629 So.2d 830 (Fla. 1993). The payment of a settlement prior to the rendition of a verdict is the functional equivalent of a confession of judgment or a verdict in favor of the insured. Wollard’s v. Lloyd’s & Cos. of Lloyd’s, 439 So.2d 217 (Fla.1983); United Automobile Insurance Company v. Zulma, 661 So.2d 947 (Fla. 4th DCA 1995). Thus, an insurance company cannot escape paying attorney’s fees by simply ignoring the outstanding medical bill, wait until suit is filed, and then argue a judgment at trial was not rendered since settlement was made prior to trial. Fortune Insurance Company v. Brito, 522 So.2d 1028 (Fla. 3d DCA 1988).
The Florida Supreme Court has clearly expressed any such settlement shall be construed to include all damages, attorney’s fees, taxable costs and prejudgment interest which would be included in a final judgment if the final judgment was entered on the date of the offer of settlement. Scottsdale Insurance Company v. DeSalvo, 748 So.2d 941 (Fla. 1999); Danis Industries Corporation v. Ground Improvement Techniques, Inc., 645 So.2d 420 (Fla. 1994). This operates to relieve the insurer from further exposure to the insured’s attorney’s fees since fees, costs and interest are no longer being incurred after the date the insurer offers the full amount for which it is liable. This also operates to prohibit an insurer from avoiding attorney’s fees by making a belated offer of its coverage or offering less than the insured could recover in a final judgment. Id. Of particular note is the Florida Supreme Court’s express statement a failure to recover more than an offer of settlement does not preclude an insured from being awarded any portion of their attorney’s fees and costs. Scottsdale, 748 So.2d at 943.
Accordingly, in the Miller case, a factual determination as to exactly when the initial offer of settlement was made by State Farm to Silverstein is crucial. If the initial settlement was made after Miller filed suit, then attorney’s fees should be awarded, regardless of whether the initial offer and any subsequent offers were the same amount.
Finally, Florida law has also addressed the question of whether an insured has standing to bring a breach of contract action against an insurer where (i) the insurer refuses to pay medical expenses; (ii) the insured has incurred no out-of-pocket expenses; (iii) the medical provider has not brought an action against the insured, and (iv) the policy contains a defend and indemnify provision. Allstate Insurance Company v. Kaklamanos, 843 So.2d 885 (Fla. 2003). An insured’s action in a PIP benefit case is to be assessed as an action in breach of contract rather than strictly in terms of damages. Id. at 892. Such a breach of contract action arises thirty days after written notice to the insurer that reasonable and necessary medical treatment covered by the insurance has resulted in a debt. §627.736(4)(b), Fla. Stat. An insured who incurs reasonable and necessary medical expenses in an automobile accident, sustains losses, and incurs liability for PIP benefits, whether or not the medical bills have been paid, is entitled to sue the defaulting insurer for such benefits when they have not been paid within 30 days after the insurer is furnished with proper written notice. Kaklamanos, 843 So.2d at 897.
The entering into of an arrangement between a medical provider and an insurer, without the consent of an insured who is bringing suit against the insurer, is problematic. By settling with the medical provider, to the exclusion of the insured who brought the suit, the issue of attorney’s fees is not addressed as part of the settlement, as contemplated under both Scottsdale and Danis. In the instant cases, State Farm and Silverstein entered into settlement arrangements without the consent of either Miller or Sutherland. As the record is contradictory, it remains unclear whether Silverstein will pursue Miller or Sutherland for any outstanding fees above what State Farm has paid him. Notwithstanding State Farm’s indication it will indemnify the insureds if the provider seeks payment from the insureds, Florida case law under Kaklamanos holds insureds may still maintain a cause of action for breach of contract against the insurer where PIP benefits have not been paid in accordance with applicable statutory provisions. Therefore, in the instant case, the insureds may maintain a cause of action for breach of contract against State Farm.
Accordingly, it is hereby
ORDERED AND ADJUDGED the Order of the trial court in the Miller case denying Plaintiff’s Motion for Attorney’s Fees and Costs is REVERSED. This cause is REMANDED to the trial court for a factual determination of the date State Farm’s initial offer of settlement was made. The trial court is directed to make a determination of appropriate attorney’s fees in the event the initial offer of settlement was made after Miller filed suit against State Farm.
FURTHER ORDERED AND ADJUDGED the Order of the trial court in the Sutherland case is REVERSED, and this cause is REMANDED to the trial court for proceedings consistent with this Court’s ruling.
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