13 Fla. L. Weekly Supp. 398a

Insurance — Personal injury protection — Coverage — Exhaustion of policy limits — Penalty provisions in PIP statute cannot be extinguished by exhausting policy limits as long as benefits were available to pay claim before it became overdue — Insurer’s motion for summary judgment cannot be granted where there remain genuine issues of material fact concerning lawfulness of insurer’s reductions of medical provider’s bills based on database recommendation and reasonableness of charges submitted

ORLANDO PAIN AND MEDICAL REHABILITATION CENTER, INC., as Assignee of Anthony Oddo, Plaintiff, v. PROGRESSIVE AMERICAN INSURANCE COMPANY, Defendant. County Court, 18th Judicial Circuit in and for Seminole County. Case No. 05-SC-000016. December 8, 2005. J.R. Sloop, Judge. Counsel: Michael B. Brehne, Law Offices of Michael B. Brehne, P.A., Maitland, for Plaintiff. Jason R. Urbanowicz, Rissman, Weisberg, Barrett, Hurt, Donahue & McLain, P.A., Orlando, for Defendant.

ORDER DENYING DEFENDANT’S MOTION FOR SUMMARY FINAL JUDGMENT

THIS CAUSE having come before the Court on Defendant’s Amended Motion for Summary Final Judgment and the Court having heard the argument of counsel, and being otherwise fully advised in the premises, finds as follows:

1. Plaintiff filed a PIP suit, as assignee of Anthony Oddo, against Defendant for reduced medical bills for treatment rendered to Anthony Oddo, as a result of injuries he allegedly sustained in an automobile accident which occurred on June 13, 2004. Plaintiff filed this suit on January 4, 2005.

2. Anthony Oddo was insured under a PIP policy of insurance issued by Defendant. This policy was in full force and effect on the date of the alleged accident and it had a $10,000.00 limit with no deductible.

3. Anthony Oddo assigned his benefits under his PIP policy of insurable to plaintiff.

4. The policy provided PIP benefits in accordance with the requirements of §627.736, Florida Statutes.

5. PROGRESSIVE provided personal injury protection benefits for treatment rendered to Anthony Oddo in accordance with Florida law and the policy coverages purchased.

6. PIP benefits under this policy of insurance were exhausted on December 28, 2004.

7. An insured cannot gain more from the insurance company than the contractual benefit amount in the absence of showing a bad faith on the part of the insurer. See GEICO v. Robinson, 581 So.2d 230 (Fla. App. 3rd Dist. 1991); see also Allstate v. Shilling, 374 So.2d 611 (Fla. App. 4th Dist. 1979); Atkins v. Bellefonte Insurance Co., 342 So.2d 837 (Fla. App. 3rd Dist. 1977); Dixie Insurance Co. v. Lewis, 484 So.2d 89 (Fla. App. 2nd Dist. 1986).

8. Anthony Oddo entered into a contract with PROGRESSIVE for $10,000 in PIP benefits and $10,000 in PIP benefits were paid. When PIP benefits were exhausted, Anthony Oddo received the maximum benefit of the policy from which he sought benefits.

9. When PIP benefits are exhausted, the insured and/or assignor has no further interest in the contract. To hold otherwise would create additional coverage and make the insurer responsible for more than which it was obligated by the policy of insurance. See MTM Diagnostic, Inc. etc., v. State Farm Mutual Automobile Insurance Co., 13th Judicial Circuit, Hillsborough County, Case No. 00-238-X (November 20, 2000) [9 Fla. L. Weekly Supp. 581e].

10. Additionally, there is no requirement that an insurance company set aside a reserve fund for claims that are reduced or denied. Dr. Robert D. Simon, M.D., PA, a/a/o Eric Hon, v. Progressive Express Insurance Company, 904 So.2d 449 (Fla. 4th DCA 2005). If there was, “it would result in unreasonable exposure of the insurance company and would be to the detriment of the insured and other providers . . . This would delay and reduce availability of funds for the payment of claims to other providers and would be inconsistent with the PIP statute’s “prompt pay” provisions.” See id. One of the obligations of an insurance company is to attempt to settle as many claims as possible. Id., citing Farinas v. Florida Farm Bureau General Insurance Co., 850 So.2d 555 (Fla. 2003).

11. The court in Hon stated further, “It is also a prerogative of insurance companies to pay, reduce, or deny claims.” See id. In the matter before this Court, Progressive exercised its prerogative by reducing the claim of the Plaintiff. Progressive had no obligation to set aside any funds. Progressive continued to exercise its prerogative to pay, reduce or deny until such time as its obligation under the policy of Anthony Oddo was fulfilled.

12. However, this Court agrees with Plaintiff and holds, as a matter of law, that the legislatively created penalty provisions contained in the PIP statute can not be extinguished by exhausting policy benefits as long as policy benefits were available to pay Plaintiff’s claim before it became overdue.

CONCLUSIONS OF LAW EXHAUSTION OF POLICY BENEFITS PRIOR TO INITIATION OF LITIGATION

This Court was called upon to determine whether the exhaustion of policy benefits prior to the initiation of litigation would be an absolute bar to the recovery of any amounts for the Plaintiff. This Court determines that despite the exhaustion of policy limits, Defendant cannot escape their obligation to pay statutory interest and penalties if the amounts withheld are ultimately proven to have been due and owing.

Defendant argues in its motion for summary judgment that the policy limits in this case are now exhausted and therefore, the Plaintiff cannot receive any benefits greater than those contracted for or any other recovery in the form of statutory interest or penalties from this lawsuit. This is an inaccurate assessment of clearly established Florida law.

The Florida Supreme Court held in United Auto. Ins. Co. v. Rodriguez, 808 So. 2d 82, 85 (Fla. 2001) 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.

In sum, the criteria governing payment of benefits and penalties are as follows:

(1) an insured may seek the payment of benefits for a covered loss by submitting “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 it 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’ fees.

Under the language of the Florida No-Fault Law, an insurer is subject to specific penalties once a payment becomes “overdue”; the penalties include interest and attorneys’ fees. Id. This holding is consistent with the decisions of the district courts that have addressed this statutory provision, including: Fortune Ins. Co. v. Pacheco, 695 So. 2d 394 (Fla. 3d DCA 1997) (holding the insurer liable for statutory penalties where the insurer paid PIP benefits more than thirty days after receipt of the claim); Jones v. State Farm Mutual Auto. Ins. Co., 694 So. 2d 165 (Fla. 5th DCA 1997) (holding the insurer liable for statutory penalties but noting that the insurer can still contest the claim where the insurer failed to pay PIP benefits within thirty days of receipt of the claim); Martinez v. Fortune Ins. Co., 684 So. 2d 201 (Fla. 4th DCA 1996) (holding the insurer liable for statutory penalties where the insurer paid PIP benefits more than thirty days after receipt of the claim); Crooks v. State Farm Mutual Auto. Ins. Co., 659 So. 2d 1266 (Fla. 3d DCA 1995) (holding the insurer liable for statutory penalties where the insurer paid PIP benefits more than thirty days after receipt of the claim); Dunmore v. Interstate Fire Ins. Co., 301 So. 2d 502 (Fla. 1st DCA 1974) (holding the insurer liable for statutory penalties where the insurer failed to pay PIP benefits within thirty days of receipt of the claim; the insurer did not dispute the insured’s entitlement to benefits). Cf. AIU Ins. Co. v. Daidone, 760 So. 2d 1110 (Fla. 4th DCA 2000) (setting forth no facts but nevertheless holding that failure to pay PIP benefits within thirty days subjects an insurer to statutory penalties but “does not deprive the insurer of its right to contest payment.”).

Nowhere in the statute is there a “safe harbor” provision to excuse a carrier from the penalties and interest provisions contained in the statute. In fact, just the opposite is true. The carrier is always liable for the interest attendant to overdue or wrongfully denied claims along with attorney’s fees and costs.

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.

This Court can not rewrite the PIP statute or add or delete provisions of the clear statutory text. United Auto. Ins. Co. v. Rodriguez, 808 So. 2d 82 (Fla. 2001). (“Legislative intent, as always, is the polestar that guides a court’s inquiry under the Florida No-Fault Law (“the Law”). Where the wording of the Law is clear and amenable to a logical and reasonable interpretation, a court is without power to diverge from the intent of the Legislature as expressed in the plain language of the Law.”). Id.

Interest is a basic element of a claim for breach of contract and is ALWAYS part of a claim for overdue PIP benefits. Brite Et al. v. Orange Belt Securities Co., 182 So. 892 (Fla. 1928) (Interest as an element of damage for a breach of a contract to pay money is awarded from the time of default, which may be fixed by the time specified, or by the making of a demand). 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). See also, January v. State Farm Mut. Ins. Co., 838 So. 2d 604, 607 (Fla. 5 DCA 2003) (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. “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”).

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. As such, subsequent exhaustion of benefits before or after suit, does not erase Defendant’s potential breach of contract or violation of the statute.

Further, Plaintiff had a vested interest in the action the moment the bill became overdue as long as there were benefits to cover the claim when the bill was submitted. Therefore, exhaustion of benefits is irrelevant if there were sufficient benefits available at the time the claim was submitted, as Plaintiff’s rights to interest and penalties vested at the time the bill was wrongfully denied before exhaustion.

Defendant argues that once the policy is exhausted, there are no more benefits to receive. But payment of interest, or attorney’s fees, is never included in the $10,000.00 policy limits, thus, exhaustion of benefits does not preclude carriers from having to pay claims for statutory interest or attorney’s fees above policy limits for a claim that was wrongfully denied or remains overdue.

Contrary to Defendant’s assertion, payment of statutory interest is not dependant upon the actual payment of PIP benefits. Rather, it is based on the finding that the bills were owed and currently overdue. As such, Plaintiff should have the opportunity to prove to a jury that the claim was wrongfully reduced at the time it was submitted and there were ample benefits available to pay them.

In this case, however, the primary contention by Plaintiff is that the reductions were done improperly. As such, Defendant’s motion for summary judgment can not be granted as there remains genuine issues of material fact and discovery pending concerning the lawfulness of Defendant’s reductions of bills submitted by Plaintiff’s based upon a database recommendation as well as the reasonableness of the charges submitted by Plaintiff. It is a jury question whether Defendant’s reductions were lawful pursuant to Fla. Stat. §627.736(5)(a).

Therefore it is ORDERED AND ADJUDGED:

1. That Defendant’s Motion for Summary Judgment based on exhaustion of benefits is DENIED.

2. There remains genuine issues of material fact regarding the lawfulness of Defendant’s reductions and the reasonableness of Plaintiff’s charges.

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