12 Fla. L. Weekly Supp. 158a

NOT FINAL VERSION OF OPINION
Subsequent Changes at 13 Fla. L. Weekly Supp. 175b

Attorney’s fees — Insurance — Personal injury protection — Justiciable issues — Where benefits were exhausted more than two years before suit was filed, provider was notified at least twice that benefits were exhausted, and defense of exhaustion of benefits was not waived by insurer’s failure to raise defense in responsive pleading, medical provider knew or should have known that suit was not supported by material facts necessary to establish claim or by application of existing law to facts — Insurer’s motion to determine entitlement to award of attorney’s fees granted

PHYSICAL THERAPY WALK-IN CLINIC, P.A., (as assignee of Maria Altaf), Plaintiff, vs. PROGRESSIVE EXPRESS INSURANCE COMPANY, Defendant. County Court, 13th Judicial Circuit in and for Hillsborough County, Small Claims Division. Case No. 02-19401-SC, Division H. November 3, 2004. Daniel E. Gallagher, Judge. Counsel: Kimberly A. Sandefer, Gale L. Young, Gale L. Young, P.A., Tampa. Matthew D. Brumley, Timothy Patrick.

[Editor’s note: See 14 Fla. L. Weekly Supp. 23a, in which the circuit court, on appeal from subsequent order in this case, reversed subsequent order and remanded with instructions to reinstate order granting attorney’s fees.]

ORDER GRANTING DEFENDANT’S MOTION TO DETERMINE ENTITLEMENT TO ATTORNEY’S FEES PURSUANT TO § 57.105, FLORIDA STATUTES

THIS CAUSE came on to be heard before this Court on October 15, 2004 on Defendant’s Motion to Determine Entitlement to Attorney’s Fees Pursuant to § 57.105, Florida Statutes, and after hearing arguments of counsel and being fully advised in the premises, the Court finds as follows:

1. Maria Altaf was involved in an automobile accident on or about November 21, 1999. Personal injury protection benefits were available to Ms. Altaf under a policy of insurance issued by Defendant, PROGRESSIVE EXPRESS INSURANCE COMPANY.

2. Plaintiff, PHYSICAL THERAPY WALK-IN CLINIC, P.A., as assignee of Maria Altaf, filed a Complaint alleging a breach of the insurance contract.

3. The policy of insurance at issue in this matter provided coverage up to a limit of $10,000.00 less a deductible $2,000.00, resulting in coverage available to Maria Altaf in the amount of $8,000.00.

4. Defendant paid all personal injury protection benefits available to Maria Altaf under the policy of insurance. As a result, all benefits were exhausted on July 18, 2000, approximately two (2) years prior to the filing of this action.

5. Plaintiff was notified on at least two occasions that all benefits available to Maria Altaf under the subject insurance policy had been exhausted. Specifically, Plaintiff was notified that all benefits had been exhausted when Defendant filed its Amended Motion for Summary Judgment citing exhaustion of benefits as the basis for its motion.

6. Despite said knowledge, Plaintiff continued to pursue this action and failed to dismiss its Complaint after having been advised that all benefits had been exhausted within 21 days after receiving Defendant’s Amended Motion for Summary Judgment. Plaintiff failed to avail itself of the “safe harbor provision” set forth in § 57.105(4), Florida Statutes and continued to maintain this action against Defendant.

7. An Amended Order Granting Summary Judgment was rendered on January 23, 2004. The Court held that the benefits had been exhausted on July 18, 2000, that Plaintiff had been notified that all benefits had been exhausted and that Plaintiff knew or should have know prior to filing suit that it did not then and does not now have a ripe, viable cause of action.

8. Subsequent to the entry of the Amended Order Granting Summary Judgment, Defendant filed its Motion to Determine Entitlement to Attorney’s Fees pursuant to § 57.105, Florida Statutes.

9. § 57.105(1)(a) and (b), Florida Statutes, provides in pertinent part:

“Upon . . . 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 . . . 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 . . . 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

(b) would not be supported by the application of the then-existing law to those material facts.

10. Defendant satisfied all of its obligations to Plaintiff under § 627.736, Florida Statutes, and its contractual obligations to the insured, when it exhausted the policy limits in payment of the insured’s benefits on July 18, 2000. Neuro-Imaging Assoc., P.A. v. Nationwide Ins. Co. of Fla., 10 Fla. L. Weekly Supp. 738a (Fla. Palm Beach Cty. Ct., Jan. 7, 2002); MTM Diagnostic, Inc., etc., v. State Farm Mut. Auto. Ins. Co., 9 Fla L. Weekly Supp. 581e (Fla. 13th Cir. Ct. Nov. 20, 2000); David W. Darrow, D.C., P.A. v. Progressive Express Ins. Co., 9 Fla. L. Weekly Supp. 117a (Fla. 18th Cty. Ct. Nov. 14, 2001).

11. As all benefits under the policy available to Maria Altaf were exhausted on July 18, 2000, Plaintiff’s interests in the policy, by way of the assignment, were also extinguished when the interests of the insured/assignor were extinguished. Id. The assignee under an insurance contract can receive no greater rights than the assignor had under said contract. Id.

12. Plaintiff failed to conduct a reasonable pre-suit investigation before instituting this action.

13. Plaintiff knew or should have known that its lawsuit was not supported by the material facts necessary to establish Plaintiff’s claim, nor was it supported by the application of the existing law to those material facts.

14. Plaintiff argued in opposition to Defendant’s Motion to Determine Entitlement to Attorney’s Fees that Defendant was not entitled to raise exhaustion of benefits as a defense. Plaintiff cited Defendant’s failure to file a response to Plaintiff’s Complaint and argued that Defendant’s failure to file a response to the Complaint asserting said defense constituted a waiver of the defense.

15. Exhaustion of benefits is not one of the defenses enumerated in Rule 1.110(d), Fla. R. Civ. P., as one that must be raised in a response to the Complaint or it is deemed waived. See Fla. R. Civ. P. 1.110(d).

16. Plaintiff’s reliance on Bartosek Chiropractic Ctr., P.A. v. Nationwide Gen. Ins., 10 Fla. L. Weekly Supp. 199a (Palm Beach Cty. Ct. January 21, 2003) is misplaced. The issue addressed by the court in that opinion was whether the insurer’s method and priority of payment was in compliance with § 627.736, Florida Statutes. The court did not address whether failure to raise exhaustion as a defense in a responsive pleading causes it to be waived.

17. Plaintiff’s reliance and citation to Premier Open MRI, LLC (a/a/o Deborah Braden) v. Progressive Express Ins. Co., Case No. 03-19164-CC-L, 11 Fla. L. Weekly Supp. 653b (Hillsborough Cty. Ct., April 27, 2004), is also misplaced. Although this Court certified the case to the Second District Court of Appeals, the opinion does not reveal what question was certified for resolution. Further, that case involved exhaustion of benefits which occurred after suit had been filed, a situation distinctly different from the present matter.

18. Exhaustion of benefits, as a defense, is not waived when a defendant fails to raise it in a responsive pleading. See e.g. Coral Ridge Prop., Inc. and Westinghouse Elec. Corp. v. Playa Del Mar Assoc., Inc., 505 So. 2d 414, 417 (Fla. 1987).

19. The Court further finds that the cases cited and relied upon by Plaintiff in arguing that the award of sanctions under § 57.105, Florida Statutes, were opinions discussing an older version of the statute in which a different standard applied to determining whether an award of sanctions was warranted. The statute in existence and discussed in those cases permitted an award of attorney’s fees in instances where there was a “complete absence of a justiciable issue of either law or fact.” The standard imposed by the current version of the statute only requires a finding that the cause of action was either “(a) . . . not supported by the material facts necessary to establish the claim . . .; or (b) would not be supported by the application of the then-existing law to those material facts.” F.S. § 57.105.

Based on the foregoing findings of fact, IT IS THEREUPON ORDERED AND ADJUDGED that:

1. Defendant’s Motion to Determine Entitlement to Attorney’s Fees Pursuant to § 57.105, Florida Statutes, is hereby GRANTED.

2. The Court reserves jurisdiction to determine the amount of fees to be awarded to Defendant.

* * *