13 Fla. L. Weekly Supp. 840a
Insurance — Personal injury protection — Medical payments — Coverage — Exhaustion of policy limits — Where medical provider submitted bills to insurer after exhaustion of PIP benefits but while medpay benefits still remained, claim is for medpay benefits only and is governed by contract principles rather than No-Fault law — Priority of payments — Assignment given to provider by insured conferred on provider right to priority of payment of bills from medpay benefits over later-submitted claims from other providers or insured — While it is prerogative of insurer to pay, reduce or deny claims without reserving disputed benefits, insurer reduces or denies claims at own peril, and if it is subsequently shown that claim should have been paid, insurer will be required to pay claim despite exhaustion of medpay benefits — Further if provider establishes that claims should have been paid, insurer will be obligated to pay prejudgment interest
DENNIS J. D’ERAMO, D.C., P.A., as assignee of PAUL STRAM, Plaintiff, vs. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant. County Court, 18th Judicial Circuit in and for Seminole County. Case No. 02-CC-1312. May 10, 2006. John R. Sloop, Judge. Counsel: John L. Morrow. Thomas Andrew Player, Weiss Legal Group, P.A., Maitland.
ORDER ON REHEARING
This matter came before the court on April 4, 2006, on Defendant’s Motion for Rehearing. The Defendant requested rehearing of its motion for final summary judgment, originally heard on October 7, 2004, by the Honorable Ralph E. Ericksson. Rehearing was allowed, and both parties re-argued their respective positions. Having heard argument of counsel and being advised in the premises, the court finds as follows:
1. The Plaintiff, Dennis J. D’Eramo, DC, PA, provided treatment to State Farm’s insured, Paul Stram, for injuries sustained in an automobile accident which occurred on January 22, 1998.
2. The Plaintiff accepted a valid assignment of benefits from Paul Stram, and submitted bills to State Farm for the treatment Plaintiff provided to Paul Stram.
3. Paul Stram’s policy with State Farm provided both Personal Injury Protection and Medical Payment benefits.
4. The Personal Injury Protection benefits available to Paul Stram were exhausted before the Medical Payment benefits.
5. The bills at issue in this lawsuit were submitted to State Farm after the Personal Injury Protection benefits were exhausted, but while Medical Payment benefits still remained.
6. Accordingly, this claim is for Medical Payment benefits only and the provisions of the Florida No-Fault law do not apply; this claim is governed by contract principles unaffected by the statutory requirements or limitations of the No-Fault law.
7. State Farm failed to pay the Medical Payment benefits sought by the Plaintiff, and subsequently exhausted the benefits by payment to other medical providers who had submitted bills to State Farm after the bills at issue in this lawsuit.
8. State Farm asserted that it is entitled to summary judgment for the following reasons:
a. The Plaintiff, as assignee, is not entitled to any greater rights or benefits under the policy than State Farm’s insured;
b. State Farm had no obligation or duty to reserve or set aside the disputed benefits as held by Simon v. Progressive Express Insurance Company, 904 So. 2d 449 (Fla. 4th DCA 2005);
c. Even if it is shown that State Farm should have paid the disputed benefits, State Farm cannot be held liable for interest thereon.
9. Plaintiff agreed with State Farm that as an assignee Plaintiff is not entitled to any greater rights under the insurance policy than the insured, but made the important distinction that as the assignee of Paul Stram, Plaintiff has an additional and critical right conferred by the assignment that the insured and subsequent assignees do not have: the right to priority payment. Boulevard National Bank of Miami v. Air Metal Industries, Inc., 176 So. 2d 94 (Fla. 1965); see also, State Farm Fire and Casualty Co. v. Ray, 556 So. 2d 811 (Fla. 5th DCA 1990), which held the Boulevard English Rule applicable to claims for insurance benefits. Plaintiff’s position is not that State Farm is obligated to pay benefits above and beyond the policy limits, but that State Farm is obligated to pay the benefits rightfully owed to the Plaintiff and wrongfully given to another provider that did not have priority over the Plaintiff’s claim. The bills submitted by the Plaintiff under the assignment provided State Farm with notice of the claim for benefits for those bills and established the Plaintiff’s right to priority of payment of those bills over later-submitted claims of other providers or the insured.
10. Plaintiff likewise agreed with State Farm that the Simon case is binding on this court and that State Farm had no obligation to reserve or set aside the disputed benefits. Plaintiff disagreed that the holding of Simon is in any way dispositive of this case or contrary to Plaintiff’s fundamental arguments; Plaintiff asserts that an insurer may reduce or deny claims without setting aside any reserve, but it does so at its own peril, and if it is subsequently shown that those claims should have been paid the insurer faces the consequences of having taken that risk.
11. With respect to State Farm’s claim that it can not be liable for interest if benefits are not payable due to the exhaustion, Plaintiff argued that even if this court were to find that the benefits were not payable, if it is shown that Plaintiff’s claims should have been paid prior to exhaustion of benefits, State Farm would at a minimum be liable for pre-judgment interest. Plaintiff correctly argued that pre-judgment interest is allowed in Florida from the date the debt becomes due, regardless of whether the underlying debt is ever paid, and the fact that there is a dispute as to whether the debt is actually due has no bearing on the issue. Lumberman’s Mutual Casualty Co. v. Percefull, 653 So. 2d 389 (Fla. 1995).
12. Having considered the foregoing arguments of counsel and having reviewed the case law presented by the parties,
IT IS ADJUDGED that:
13. The assignment of benefits given to Plaintiff by State Farm’s insured confers on Plaintiff the important right to priority of payment of bills submitted by Plaintiff over later-submitted claims of other providers or the insured. If Plaintiff shows that the claims at issue herein should have been paid, then State Farm would be obligated to pay the benefits rightfully owed to the Plaintiff and wrongfully given to another provider that did not have priority over the Plaintiff’s claim.
14. Plaintiff’s position is not inconsistent with Simon v. Progressive Express Insurance Company, 904 So. 2d 449 (Fla. 4th DCA 2005) which simply holds that an insurer does not have an obligation to reserve or set aside benefits in dispute. Consistent with Simon, this court finds that it is the prerogative of insurance companies to pay, reduce, or deny claims, without setting aside any reserve; however, when an insurer reduces or denies a claim, it does so at its own peril, and if it is subsequently shown that those claims should have been paid the insurer faces the consequences of having taken that risk.
15. Further, if Plaintiff shows that the claims at issue herein should have been paid, then State Farm would be obligated to pay pre-judgment interest thereon.
Accordingly, Defendant’s Motion for Final Summary Judgment is DENIED.
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