13 Fla. L. Weekly Supp. 830c

Insurance — Personal injury protection — Coverage — Medical expenses — Failure to pay or investigate within 30 days — Exhaustion of policy limits — Insurer’s failure to respond to medical provider’s claim within 30 days does not mandate that insurer is responsible for payment of claim after exhaustion of policy limits — Where insurer decided to deny provider’s claim based on peer review and to settle other claims submitted on behalf of insured until policy limits were exhausted, and there is no showing of bad faith on part of insurer, insurer has satisfied obligations under PIP statute and contractual obligations to insured — Provider/assignee could reserve right to recover payment from insured in event claim is not paid by insurer — Insurer has no duty to escrow funds pending resolution of contested claim

NU-BEST WHIPLASH INJURY CENTER, INC., as assignee of SHEILA TUROR, Plaintiff, vs. PROGRESSIVE AUTO PRO INSURANCE COMPANY, Defendant. County Court, 13th Judicial Circuit in and for Hillsborough County, Civil Division. Case No. 04-CC-16615, Division L. May 24, 2006. John N. Conrad, Judge. Counsel: David S. Dougherty, The Coury Law Firm, P.A., Lake Mary, for Plaintiff. Robert Bartels, Wendy L. Pepper and Amanda H. Reher, Rissman, Barrett, Hurt, Donahue & McLain, P.A., for defendant.

FINAL SUMMARY JUDGMENT

THIS CAUSE having come before the Court on May 3, 2006 pursuant to Defendant’s Amended Motion for Final Summary Judgment, and the Court having reviewed the file, considered the argument and Memorandum of Law submitted by the parties, and being otherwise fully advised in this matter, does hereby make the following findings of fact and conclusions of law:

FINDINGS OF FACT

1. On April 24, 2003, Sheila Tutor (the “insured”) was involved in an automobile accident. At the time of the accident, Ms. Tutor was insured by Defendant, Progressive Auto Pro Insurance Company, under a policy which provided personal injury protection (PIP) benefits to Ms. Tutor in the amount of $10,000.00.

2. As a result of injuries sustained in the accident, Ms. Tutor received medical treatment from Plaintiff, Nu-Best Whiplash Injury Center, Inc., on June 10, 2003, which included certain diagnostic testing.

3. Although there is a dispute as to whether an assignment of benefits took place, Plaintiff has alleged in its complaint that in order to ensure payment of the diagnostic testing, “Sheila Tutor assigned all her rights and benefits under THE POLICY, to the Plaintiff.” As the party opposing the Amended Motion for Final Summary Judgment, this Court finds that Plaintiff is entitled to the inference that a valid assignment of benefits existed.

4. Plaintiff submitted a billing statement for the above-referenced services to Defendant between June 19, 2003 and July 29, 2003.

5. Defendant conducted a peer review of the services provided by Plaintiff, and by letter dated October 13, 2003, concluded that the “testing done on 6/10/03 was not medically necessary, reasonable, or related to the 4/24/03 accident.”

6. Defendant has not paid the claim submitted by Plaintiff and did not pay the claim within thirty (30) days after it was furnished with written notice by Plaintiff.

7. Plaintiff sent a demand letter to Defendant pursuant to Fla. Stat. § 627.736(11).

8. Plaintiff filed suit in this case on December 22, 2003. At the time of filing suit, Defendant still had policy benefits available within which to satisfy the claim submitted by Plaintiff.

9. In support of its Amended Motion for Final Summary Judgment, Defendant filed the Affidavit of Jill Beatty, who is employed as a Litigation Specialist to handle claims for Defendant. In the Affidavit, Ms. Beatty states that Defendant “exhausted Sheila Tutor’s Ten Thousand ($10,000.00) in PIP benefits on September 30, 2004.”

10. The Affidavit submitted by John R. Postlethwaite, D.C., on behalf of Plaintiff, does not set forth any facts based on the personal knowledge of Dr. Postlethwaite to dispute Ms. Beatty’s statement that the policy limits for Ms. Tutor have been exhausted.

11. This Court finds that the personal injury protection (PIP) benefits available to Ms. Tutor, in the amount of $10,000.00, were exhausted on or before September 30, 2004.

12. There has been no allegation by Plaintiff that the actions taken by Defendant were done in bad faith.

CONCLUSIONS OF LAW

The issue presented to this Court is whether an insurance company, which issued a personal injury protection policy to an insured, has a legal obligation to pay a bill submitted by a medical provider, including the payment of interest and attorney’s fees, based upon the following facts:

a) Plaintiff provided medical treatment to the insured when PIP benefits were available under the policy.

b) Defendant failed to pay the claim within thirty (30) days after it was furnished with written notice by Plaintiff.

c) After the thirty (30) day period expired, Defendant denied the claim because it concluded that the testing performed by Plaintiff “was not medically necessary, reasonable, or related to the 4/24/03 accident.”

d) Plaintiff filed suit against Defendant when PIP benefits were still available under the policy.

e) The PIP benefits available under the policy were exhausted after suit was filed.

f ) There is no allegation by Plaintiff that Defendant acted in bad faith.

The decision in this case is controlled by Fla. Stat. §§ 627.730-627.7405, commonly known as the Florida Motor Vehicle No-Fault Law (“No-Fault Law”), and the case law interpreting these statutes. In particular, Fla. Stat. § 627.736 sets forth the specific obligations of an insurance company with respect to a claim submitted under a personal injury protection benefits policy. Fla. Stat. § 627.736(4)(b) states that 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.” This section further provides that “notwithstanding the fact that written notice has been furnished to the insurer, any payment shall not be deemed overdue when the insurer has reasonable proof to establish that the insurer is not responsible for the payment.” This provision concludes with the following language:

This paragraph does not preclude or limit the ability of the insurer to assert that the claim was unrelated, was not medically necessary, or was unreasonable or that the amount of the charge was in excess of that permitted under, or in violation of, subsection (5). Such assertion by the insurer may be made at any time, including after payment of the claim or after the 30-day time period for payment set forth in this paragraph.

The language of this statute clearly allows an insurance company the right to contest a PIP claim, without imposing liability and penalties, after the 30-day time period has run. It is only when the insurer is ultimately found liable for a contested claim that the statutory penalties of interest and attorney’s fees become applicable. See United Automobile Insurance Company v. Rodriguez, 808 So. 2d 82 (Fla. 2001) and Allstate Insurance Company v. Kaklamanos, 843 So. 2d 885 (Fla. 2003). Based upon the review of relevant case law, this Court finds that Defendant’s failure to respond to Plaintiff’s claim within 30 days in this case does not mandate that Defendant is responsible, as a matter of law, for payment of the claim, including the statutory penalties of interest and attorney’s fees. See AIU Insurance Company v. Daidone, 760 So. 2d 1110, 1112 (Fla. 4th DCA 2000) and Fla. Stat. § 627.736(4)(c) (“Interest shall be due at the time payment of the overdue claim is made.”). Therefore, the remaining issue for the Court’s determination is whether Defendant can still be held liable for payment of Plaintiff’s claim, including the statutory penalties, when the insured, Ms. Tutor, has exhausted her PIP benefits prior to a determination of potential liability on behalf of Defendant to pay the claim.

This case presents a very difficult issue which requires the Court to analyze the right of an insured, or assignee, to recover PIP benefits pursuant to Florida’s No-Fault law in light of the rights and obligations of an insurance company pursuant to its contract of insurance with the insured. This Court finds that by continuing to incur medical expenses until the exhaustion of the policy limits, the insured imposed a continuing, contractual obligation on Defendant to satisfy those claims. Defendant’s failure to pay those additional claims until the pending claim was resolved would have exposed Defendant to multiple lawsuits by other medical providers whose bills would have been placed on hold until the merits of Plaintiff’s pending claim could be resolved. This process would clearly frustrate the intent of the PIP statute to provide for prompt payment of these claims.

The insurance company has an obligation to settle as many claims as possible, and has discretion, subject to the requirement of good faith, in how it elects to settle claims, even the ability to settle certain claims to the exclusion of others. See Farinas v. Florida Farm Bureau General Insurance Co., 850 So. 2d 555 (Fla. 4th DCA 2003). Under the particular circumstances of this case, Defendant’s decision to deny the claim was based on a peer review performed by R.C. Harding, D.C., who rendered an opinion that the services provided by Plaintiff were “not medically necessary, reasonable, or related to the 4/24/03 accident.” Given this information, Defendant chose to deny the pending claim and to settle other claims submitted on behalf of Ms. Tutor until the policy limits had been exhausted. This Court concludes that Defendant’s decision to pay other claims submitted on behalf of Ms. Tutor, absent a showing of bad faith, satisfies its statutory obligations under Florida’s No-Fault law, as well as its contractual obligations to the insured. See Government Employees Insurance Company v. Robinson, 581 So. 2d 230 (Fla. 3rd DCA 1991) and Neuro-Imaging Associates, P.A. v. Nationwide Insurance Company of Florida, 10 Fla. L. Weekly Supp. 738a (Fla. 15th Jud. Cir. January 7, 2002). Furthermore, under an assignment, an assignee obtains no greater rights under the contract than those rights enjoyed by the assignor. See MTM Diagnostics, Inc. v. State Farm Mutual Automobile Insurance Co., 9 Fla. L. Weekly Supp. 581e (Fla. 13th Jud. Cir. November 20, 2000). Once an insurer fulfills its financial obligations to the insured under the contract, an assignee would have no additional rights to seek benefits, absent a showing of bad faith by the insurer. The assignee/medical provider can reserve its right to recover payment of the bill from the insured in the event the claim is not paid by the insurance company.

Florida law further provides that an insurer has no duty to escrow funds pending the resolution of a contested claim. See Chambers Medical Group, Inc. v. Progressive Auto Pro Insurance Company, 13 Fla. L. Weekly Supp. 367a (Fla 13th Jud. Cir. December 16, 2005) and Dr. Robert Simon, M.D., P.A., (a/a/o Hon) v. Progressive Express Insurance Company, 904 So. 2d 449 (Fla. 4th DCA 2005). In Simon, the Court specifically held that the automatic application of a “reserve” or “hold” provision to funds available at the time a claim is submitted would result in unreasonable exposure of the insurance company and would be to the detriment of the insured and other providers with properly submitted claims. Id. at 450. Additionally, Florida’s “No-Fault” law has no provision allowing funds to be escrowed or reserved for contested claims. The failure of the legislature and the courts to recognize a duty on behalf of an insurer to reserve funds pending the litigation of a contested PIP claim leaves this Court to conclude that the right to contest the denial of a PIP claim, absent a showing of bad faith, can be extinguished through an exhaustion of benefits by the insured after the claim has been submitted.

In making its decision, the Court is also relying upon the following opinions: Premier Open MRI, LLC v. Progressive Express Insurance Company, 11 Fla. L. Weekly Supp. 839a (Fla. 13th Jud. Cir. May 26, 2004); Comprehensive Physician Services v. The Hartford Insurance Company of Midwest, 12 Fla. L Weekly Supp. 351a (Fla. 13th Jud. Cir. January 20, 2005); and Dr. Robert D. Simon, M.D., P.A. v. Progressive Express Insurance Company, 13 Fla. L. Weekly Supp. 502a (Fla. 15th Jud. Cir. December 7, 2005).

WHEREFORE, it is ORDERED and ADJUDGED as follows:

1. That Defendant’s Amended Motion for Final Summary Judgment is hereby GRANTED.

2. That the Court reserves jurisdiction to award attorney’s fees and costs to Defendant, if appropriate. Defendant shall have thirty (30) days from the date of this Final Summary Judgment to assert said claim.

* * *