13 Fla. L. Weekly Supp. 495a

Insurance — Personal injury protection — Demand letter — Retroactive application of statute — Constitutionality — Impairment of contract — Medical provider acquired property interest in cause of action for PIP benefits when insurer declined to pay benefits — Accordingly, provider’s cause of action vested under PIP statute in effect at time insurer contracted with insured, and insurer’s non-payment of provider’s charges vested in provider a substantive right to file cause of action against insurer pursuant to section 627.736 without necessity of pre-suit demand letter — Where 2003 amendment to statute imposing demand letter requirement created retroactive application of demand letter provision by requiring that demand letter be submitted to insurer before lawsuit could be filed even after cause of action has vested, requirement constituted a legislative impairment of contract in violation of article I, section 10 of Florida Constitution

WEST GABLES OPEN MRI, INC., as assignee of Clara Perez, Plaintiff, vs. PEAK PROPERTY AND CASUALTY INSURANCE COMPANY, Defendant. County Court, 11th Judicial Circuit in and for Miami-Dade County, Civil Division. Case No. 03-5925 SP 23 (2). February 22, 2006. Caryn Canner Schwartz, Judge. Counsel: David S. Kuczenski, Paul Schrier, P.A., Miami, for Plaintiff. Stephen. M. Rosansky, Hengber, Goldstein & Ray, Fort Lauderdale, for Defendant.

ORDER DENYING DEFENDANT’S MOTION FOR FINAL SUMMARY JUDGMENT

THIS CAUSE having come before the Court on January 27, 2006 on Defendant’s Motion for Summary Judgment on Issue of Plaintiff’s failure to comply with the 2003 statutory demand letter prerequisite, and the Court having heard argument of counsel and being otherwise advised in the premises, the Court makes the following findings of law and fact:

UNDISPUTED FACTS

1. The Defendant insured the claimant, Clara Perez on August 30, 2000 under an automobile insurance contract providing personal injury protection benefits governed under Section 627.736 (2000), Florida Statutes.

2. On August 30, 2000, the insured was injured in a motor vehicle accident.

3. The Plaintiff performed MRI Services upon the Defendant’s insured.

4. The Plaintiff, West Gables Open MRI, Inc., is the assignee of the insured, Clara Perez, the insured of Peak Property and Casualty Ins. Co.

5. The Plaintiff submitted its billing to the Defendant pursuant to the statutory prerequisites.

6. On October 30, 2000, the Plaintiff takes the position that Defendant breached the contract.

PROCEDURAL POSTURE

7. The Plaintiff filed this matter on March 19, 2003, and the Defendant was served on July 7, 2004.

8. On March 14, 2005 the Defendant filed its Motion for Final Summary Judgment based on the Plaintiff’s failure to file a fifteen day pre-suit demand letter pursuant to Section 627.736(11), Florida Statutes (2003).

LEGAL ANALYSIS

At the outset, this Court recognizes that personal injury protection insurance benefits are a property interest that are created by statute. Metropolitan Dade County v. Sokolowski, 439 So.2d 932 (Fla. 3d DCA 1983) Reh’g Den. Nov. 17, 1983. Procedural due process rights derive from a property interest in which the individual has a legitimate claim. Id., Board of Regents v. Roth, 408 U.S. 564, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972). Once acquired, a property interest falls within the protections of procedural due process. Id.

During the 2003 Legislative Session, the Florida Legislature prescribed that a pre-suit demand letter be submitted to an insurer prior to the initiation of litigation for all claims under Section 627.736, Florida Statutes. Subsection 11 requires that the party claiming no-fault benefits must submit to the insurer a letter that inter alia states that the party claiming benefits is going to initiate litigation against the insurer if benefits are not paid.

Subsection 11 states:

(a) As a condition precedent to filing any action for benefits under this section, the insurer must be provided with written notice of an intent to initiate litigation. Such notice may not be sent until the claim is overdue, including any additional time the insurer has to pay the claim pursuant to paragraph (4)(b).

. . .

(d) If, within 15 days after receipt of notice by the insurer, the overdue claim specified in the notice is paid by the insurer together with applicable interest and a penalty of 10 percent of the overdue amount paid by the insurer, subject to a maximum penalty of $250, no action may be brought against the insurer.

Article I, Section 10 of the Florida Constitution provides:

SECTION 10. Prohibited laws. — No bill of attainer, ex post facto law or law impairing the obligation of contracts shall be passed.

The general rule is that a substantive statute will not operate retrospectively absent clear legislative intent to the contrary, but that a procedural or remedial statute is to operate retrospectively. State Farm Mut. Auto. Ins. v. Laforet, 658 So.2d 55, 61 (Fla.1995). Arrow Air, Inc. v. Walsh, 645 So.2d 422 (Fla.1994); Alamo Rent-A-Car, Inc. v. Mancusi, 632 So.2d 1352 (Fla.1994); City of Lakeland v. Catinella, 129 So.2d 133 (Fla.1961). Even when the Legislature expressly states that a statute is to have retroactive application, Courts have refused to apply a statute retroactively if the statute impairs vested rights, creates new obligations, or imposes new penalties. State Farm Mut. Auto. Ins. v. Laforet, 658 So.2d 55, 61 (Fla.1995).

Substantive statutes are presumed to operate prospectively rather than retrospectively unless the Legislature clearly expresses its intent that the statute is to operate retrospectively. Alamo Rent-A-Car, Inc. v. Mancusi, 632 So.2d 1352 (Fla. 1994) Reh’g Den. March 15, 1994. State v. Lavazzoli, 434 So.2d 321 (Fla.1983); Walker & LaBerge, Inc. v. Halligan, 344 So.2d 239 (Fla.1977); Thayer v. State, 335 So.2d 815 (Fla.1976). This is especially true when retrospective operation of a law would impair or destroy existing rights. Id. Procedural or remedial statutes, on the other hand, are to be applied retrospectively and are to be applied to pending cases. City of Lakeland v. Catinella, 129 So.2d 133 (Fla.1961); Johnson v. State, 371 So.2d 556 (Fla. 2d DCA 1979).

As was stated in Benyard v. Wainwright, 322 So.2d 473, 475 (Fla.1975) substantive law prescribes duties and rights and procedural law concerns the means and methods to apply and enforce those duties and rights. Mancusi.

In Lumbermens Mut. Cas. Co. v. Ceballos, 440 So.2d 612 (Fla. 3d DCA 1983), the Third District Court of Appeals held that an insurance policy is a contract. §624.02, Fla. Stat. (1981). Moreover, the statute in effect at the time the insurance contract is executed governs any issues arising under that contract. Id. See Metropolitan Life Insurance Co. v. Fugate, 313 F.2d 788 (5th Cir. 1963); Allison v. Imperial Casualty & Indemnity Co., 222 So.2d 254 (Fla. 4th DCA 1969); Poole v. Travelers Ins. Co., 130 Fla. 806, 179 So. 138 (1937). In Lumbermens, the Third District ruled that by applying a statute to contracts entered into before the statute was effective would constitute a legislative impairment of contract in violation of article I, section 10 of the Florida Constitution. Id.

In Hassen v. State Farm Mut. Auto. Ins. Co., 674 So.2d 106 (Fla. 1996), Reh’g Den. May 20, 1996, the Florida Supreme Court held that in the absence of an express legislative statement to the contrary, an enactment that affects substantive rights or creates new obligations or liabilities is presumed to apply prospectively. Arrow Air, Inc. v. Walsh, 645 So.2d 422, 425 (Fla.1994). The Supreme Court held that it will not divine an intent that a new law be applied to disturb existing contractual rights or duties when there is no express indication that such is the legislature’s intent. Walker & LaBerge, Inc. v. Halligan, 344 So.2d 239, 243 (Fla.1977). Consistent with these rules of construction, it is generally accepted that the statute in effect at the time an insurance contract is executed governs substantive issues arising in connection with that contract. Hassen v. State Farm Mut. Auto. Ins. Co., 674 So.2d 106 (Fla. 1996), Reh’g Den. May 20, 1996.

Courts have held that [t]wo interrelated inquiries arise when determining whether statutes should be retroactively applied. The first inquiry is one of statutory construction: whether there is clear evidence of legislative intent to apply the statute retrospectively. See Landgraf v. USI Film Prods., 511 U.S. 244, 280, 114 S.Ct. 1483, 128 L.Ed.2d 229 (1994); Hassen v. State Farm Mut. Auto. Ins. Co., 674 So.2d 106, 108 (Fla.1996). If the legislation clearly expresses an intent that it apply retroactively, then the second inquiry is whether retroactive application is constitutionally permissible. See State Farm Mut. Auto. Ins. v. Laforet, 658 So.2d, 55, 61 (Fla.1995); State Dep’t of Transp. v. Knowles, 402 So.2d 1155, 1158 (Fla.1981); see also Arrow Air, Inc. v. Walsh, 645 So.2d 422, 425 n. 8 (Fla.1994). At the outset, it should be noted that: “A statute does not operate ‘retrospectively’ merely because it is applied in a case arising from conduct antedating the statute’s enactment. . . . Rather, the court must ask whether the new provision attaches new legal consequences to events completed before its enactment.” Landgraf, 511 U.S. at 269-70, 114 S.Ct. 1483; see also Charles B. Hochman, The Supreme Court and the Constitutionality of Retroactive Legislation, 73 Harv. L.Rev. 692, 692 (1960) (“A retroactive statute is one which gives to preenactment conduct a different legal effect from that which it would have had without the passage of the statute.”). The general rule is that in the absence of clear legislative intent to the contrary, a law affecting substantive rights, liabilities and duties is presumed to apply prospectively. See Hassen, 674 So.2d at 108; Arrow Air, 645 So.2d at 425.

A substantive, vested right is “an immediate right of present enjoyment, or a present, fixed right of future enjoyment.” Millennium Diagnostic Imaging Center, Inc., as assignee for Lisette Morales v. Progressive Express Ins. Co., 12 Fla. L. Weekly Supp. 80b, Cty. Ct., 11th Jud. Cir. Miami-Dade County. Case No. 04-838 CC-24. October 5, 2004. In Millennium, the Court held that when the Defendant issued an explanation of benefits that denied payment for the benefits claimed, the Plaintiff accrued a cause of action. The Plaintiff’s right to bring suit based upon the denial was vested and perfected prior to the August 1, 2003 effective date of the 2003 amendments to 627.736(11). This Court agrees with the legal analysis and the holding of Millennium v. Progressive.

FACTUAL ANALYSIS

This Court finds that since the Florida no-fault statute prescribes duties and rights the statute is substantive in nature, thus it is to be applied prospectively. In the present matter, the Court finds that West Gables Open MRI, Inc., acquired a property interest in the present cause of action when Peak Property declined to pay benefits subsequent to October 30, 2000. Thus, West Gables’s cause of action vested under the statute in effect at the time that Peak Property contracted with Clara Perez. This Court finds that Peak Property’s non-payment for West Gables’s charges vested in West Gables a substantive right to file a cause of action against Peak Property pursuant to Florida Statute 627.736 without the necessity of filing a pre-suit demand letter. The demand letter requirement, which became effective as of August 1, 2003, imposed a significant penalty on all insureds whose cause of action has vested. To those insureds or assignees, the demand letter prerequisite is an entirely new provision; it would apply to all actions brought under section 627.736 since its effective date if it were to be applied retroactively; and it significantly alters the rights by creating additional obligations, thus impairing vested rights where the cause of action has already vested. By applying section 627.736(11), to causes of action that have already vested, the Legislature is in essence subjecting the insured and assignees in first-party actions to an additional obligation that impedes access to the Courts by creating an additional obligation once the cause of action has accrued. In addition, where no demand letter was served, the retroactive application of 627.736(11) also would grant to Peak Property the additional substantive right to avoid being sued and paying attorney fees and costs in claims it denied prior to the effective date of the 2003 amendments to 627.736(11). To say that, under these circumstances, section 627.736(11) is simply a remedial clarification that does not retroactively impose a new penalty is not a justifiable interpretation.

This Court finds that the requirement created a retroactive application of demand letter provision of the no-fault statute by requiring that before a lawsuit may be filed against an insurer, a demand letter must be submitted, even after a cause of action has vested. This Court finds that since the demand letter requirement retroactively applies the statute to causes of action that have already vested, this Court finds that the requirement impairs vested rights, creates new obligations, and imposes new penalties. Since the demand letter statute imposes new obligations on causes of action that have vested, this Court finds that the prerequisite to West Gables filing suit where the cause of action has already vested, impairs West Gables’ vested rights by creating additional obligations. Thus, this Court finds that as applied to causes of action that have already vested, the demand letter prerequisite conflicts with Section 10 of the Florida Constitution prohibiting laws “impairing the obligation of contracts.”

CONCLUSIONS OF LAW

Accordingly, the demand letter requirement under Subsection 10 has retroactive applications to causes of action that have already vested. This Court finds that by applying the demand letter requirement of Section 627.736(11), Florida Statutes (2003) to contracts entered into before the statute was effective constitutes a legislative impairment of contract in violation of article I, section 10 of the Florida Constitution. Consequently, the Court DENIES Defendant’s Motion for Final Summary Judgment.

ORDERED AND ADJUDGED that said Motion be, and the same is hereby DENIED.