14 Fla. L. Weekly Supp. 520a
Insurance — Personal injury protection — Coverage — Medical expenses — Exhaustion of policy limits — Where insurer had no reason for reduction of medical bills and was on notice prior to exhaustion of benefits that medical provider disputed reductions, trial court correctly denied insurer’s motion for summary judgment based on exhaustion of benefits — Benefits paid to other providers, which should have been paid to plaintiff provider first and which resulted in exhaustion of benefits, should be considered gratuitous payments
PROGRESSIVE EXPRESS INSURANCE COMPANY, Appellant, v. SOUTH FLORIDA INSTITUTE OF MEDICINE, INC., a/a/o HALIL HAWKEYE, Appellee. Circuit Court, 11th Judicial Circuit (Appellate) in and for Miami-Dade County. Case No. 06-002 AP. L.C. Case No. 02-22421 CC 05. April 11, 2007. An Appeal from County Court for Miami-Dade County. Counsel: Douglas H. Stein, Anania, Bandklayder, Blackwell, Baumgarten, Torricella & Stein, for Appellant. Carlos Lopez and Virginia M. Best, Lopez & Best, for Appellee.
(Before VICTORIA PLATZER, RONALD DRESNICK, and SCOTT M. BERNSTEIN, JJ.)
(PLATZER, J.) This is an appeal from a stipulated final judgment in favor of Appellee, South Florida Institute of Medicine, Inc. (“the Provider”), as assignee of the insured. Progressive Express Insurance Company (“the Insurer”) reserved the right in the Final Judgment to appeal the lower court’s denial of its motion for summary judgment in which it claimed exhaustion of benefits.
The facts of the case are not disputed. The insured was involved in an accident in January 2002. He sought treatment from the Provider, who thereafter timely submitted bills for services to the Insurer. Although certain bills were timely paid, others were reduced.
The Provider filed suit in December 2002, alleging that the Insurer did not pay PIP benefits as required pursuant to its contract of insurance with the insured and Fla. Stat. §627.736. In July 2003, the Insurer filed its answer and affirmative defenses. The Insurer claimed numerous affirmative defenses, including that the services provided were not reasonable, related or necessary (RRN) and exhaustion of benefits.1 The Insurer ultimately withdrew every affirmative defense except exhaustion of benefits. At the time of the final judgment, the Insurer stipulated that the services provided were, in fact, RRN.
The Exhaustion of Benefits Affirmative defense, 13 of 16 originally pled, stated as follows: “Defendant alleges that the medical bills at issue are not overdue as the insured/claimant’s PIP benefits were exhausted prior to the Defendant’s receipt of the Plaintiff’s medical bills at issue.” In October 2005, after over two years of litigation in this case, the Insurer was permitted by the trial court to amend that affirmative defense to state as follows: “Defendant alleges that the medical bills at issue are not overdue as payment has been made and the claimant’s PIP benefits are exhausted. The Defendant has met its contractual obligation and has paid out the maximum benefit allowable under the respective PIP Policy of Insurance.”
In May 2005, the Insurer filed its motion for summary judgment based on exhaustion of benefits. In June, the Insurer filed the affidavit of the Claims Litigation Adjuster in support of its motion. The affidavit stated that the PIP benefits became exhausted in September 2003 and that the Plaintiff never requested that any of the Claimant’s PIP benefits be set aside prior to benefits being exhausted. However, September 2003 is almost three months after the Insurer filed its affirmative defense of exhaustion of benefits, and nine months after the Insurer was put on notice that the Provider objected to the Insurer’s reduction in payment. Thus, the Insurer clearly knew at the time it filed its affirmative defense of exhaustion of benefits that it was maintaining a patently false position.2 Additionally, when it exhausted benefits in September 2003, the Insurer had clearly been put on notice of the Provider’s objection to the reduction in benefits and knew that those funds should have been put on reserve until that claim was resolved.
On October 12, 2005, the trial court denied the Insurer’s Motion for Summary Judgment on the issue of exhaustion of benefits. Thereafter, on December 5, 2005, the parties stipulated to entry of a final judgment. The Insurer stipulated to RRN, but reserved its right to appeal the issue of exhaustion of benefits.
The Insurer relies on the case of Simon, M.D. v. The Progressive Express Insurance Company, 904 So.2d 449 (Fla. 4th DCA 1993) to support its position that it has fulfilled its obligation to its insured by having paid the full PIP benefits. The Insurer, as well as the dissent, suggests that Simon is controlling in this case. While we agree that Simon stands for the general proposition that an Insurer cannot be required to keep funds in reserve for claims that are reduced or denied, Simon‘sholding does not extend to the suggested proposition that an Insurer can never be required to hold funds in reserve. Simon does not address the issue of whether when the insurance company is on notice of a contested claim, funds should be held in reserve where they have not been exhausted.
Simon is so factually distinguishable from the case at bar, that its holding is inapplicable to this case. In this case, as in Simon, the Provider’s bill, submitted first in time, was not paid in full. However, unlike Simon, the Insurer in this case was put on notice prior to benefits being exhausted that the Provider was contesting the reduced amount. In Simon, the available benefits had either been paid to other providers or committed to other providers before notice was given by the provider that there was an objection to the reduced payment.
In addition, Simon does not address the issue of the reason behind the reduction of benefits. In this case, the Insurer had no reason from the initial submission of the bills for reducing benefits, as is evidenced by its withdrawal of all affirmative defenses except exhaustion of benefits. Although the dissent does not find this issue to be of any import, it is so because of the fact that without a reasonable basis for reducing benefits, not only did the benefits become overdue, but those benefits also accrued as of the date the bills were initially submitted.
The dissent extends United Automobile Insurance Co. v Rodriguez, 808 So.2d 82 (Fla. 2002) beyond its actual holding in finding that no reason is required at all in order for an Insurer to reduce payments. To the contrary, Rodriguez stands for the narrow proposition that the statute does not limit the reasonable proof an insurer is required to have to reduce payments, pursuant to §627.736(4), to a medical report. The statutory requirement of some reasonable basis for the reduction was not eliminated by Rodriguez, merely clarified.
The ultimate stipulation by the Insurer that the services provided were RRN results in the Insurer being obligated to have paid the full amount at the time the bill was submitted: prior to the lawsuit having been filed, prior to the Insurer wrongfully claiming exhaustion of benefits and RRN as affirmative defenses, and prior to the benefits actually having been exhausted by payments to other providers.
Coral Imaging Services a/a/o Virgilio Reyes v. GEICO Indemnity Insurance Company, __So.2d__, (Fla. 3d DCA October 4, 2006) [31 Fla. L. Weekly D2478a] offers direction to the court in situations where providers are paid in a manner not contemplated by Fla. Stat. §627.736. Although Coral Imaging is not an exhaustion of benefits case, it is a case where a provider who should not have been paid was paid by the insurer, rather than a provider who should have been paid first. The Coral Imaging decision held that those wrongful payments should be considered gratuitous in nature and required the insurance company to pay additional benefits even though the PIP benefits had been exhausted. In this case, the benefits paid to other providers, which should have been paid to the Provider first and which resulted in an exhaustion of benefits, should as well be considered gratuitous payments. As such, the trial court’s denial of the Insurer’s Motion for Summary Judgment based upon exhaustion of benefits should, and was, denied by the court below.
The appellee’s motion for attorney’s fees is granted and the case is rema3nded to the trial court to determine the amount of said fees.
AFFIRMED AND REMANDED. (BERNSTEIN, J. concurs and DRESNICK, J., dissents with written opinion.)
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1The other affirmative defenses pled were: 1) Contract Dispute; 2) No Outstanding Bills Overdue; 3) Lack of Subject Matter Jurisdiction; 4) Plaintiff’s Failure to Submit Medical Bills; 5) Medical Bills Not performed by Properly Licensed or Registered Person or Entity, 6) Failure to Perform Conditions Precedent; 8) Usual and Customary Defenses; 9) Failure to Cooperate; 10) Failure to Comply with 21 Day Notice; 11) Failure to Comply with 21/35 Day Rule; 12) Provider’s Failure to Submit Additional Documentation; 14) Improper/Defective CPT Code; 15) Brokering/Fee Splitting; 16) Pre-Suit Demand.
2While we do not suggest, as the defense states, that a judgment should be entered against the Insurer because of this false pleading, we also do not accept the dissent’s view that there is “. . .no rule against alleging an affirmative defense which is factually incorrect. . . .” or that it is acceptable “. . .for parties to allege as many affirmative defenses in their initial pleadings as they can think of and then later to amend them as discovery reveals more information.” Attorneys, as officers of the court, are charged with proceeding in good faith, which extends to the filing of pleadings which have some basis in law or fact.
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(DRESNICK, J., dissenting.)I respectfully dissent. Appellant, The Progressive Express Insurance Company (“The Insurer”), petitions this court to reverse the summary judgment entered by the county court in favor of Appellee, South Florida Institute of Medicine (“the Provider”). The court below and the majority, in affirming, reasons that because there were benefits remaining when this suit was filed and contrary to the Insurer’s affirmative defense of exhaustion of benefits, the Insurer is liable to the Provider for the amount of the bills that were first in time. They hold that the bills should have been paid even though the insured had exhausted the policy limits at the time of the denial of the Insurer’s motion for summary judgment on the issue of exhaustion of benefits. The majority finds that the filing of the affirmative defense of exhaustion of benefits at a time when benefits were not yet exhausted to be “maintaining a patently false position.” It was not until a month after the Insurer asserted its affirmative defense of “exhaustion of benefits” and nine months after the lawsuit was filed when the Insurer settled a claim with another provider, South Florida Open MRI (“Open MRI”) that benefits were actually exhausted. The majority in affirming reasons that because the Insurer ultimately withdrew every affirmative defense except exhaustion of benefits and stipulated that the services provided were reasonable, related, and necessary, the Insurer was obligated to have paid the full amount of the bills at the time they were submitted — prior to the suit having been filed, prior to the Insurer wrongfully claiming that the services rendered were not reasonable, related, and/or necessary and that the benefits were exhausted prior to the benefits actually being exhausted. However, the majority does not seem to consider that the Insurer was granted leave to amend its affirmative defenses and withdrew every defense except exhaustion of benefits, which at that time were truly exhausted. Thus, there were no longer any factual disputes at issue that would warrant denial of a summary judgment in favor of the Insurer. Therefore, the Final Judgment for Appellee should be reversed, and judgment entered in favor of Appellant.
The insured was injured in an automobile accident on January 1, 2002. The insured assigned his benefits to the Provider for treatment rendered from January through May, 2002. The Provider submitted the bills to the Insurer in a timely manner. The Insurer paid some of the bills in full, but reduced or refused to pay others on the grounds that they were not reasonable, related, or necessary (RRN) and they had improper CPT coding. The Insurer requested the insured’s Medical records from the Provider in order to assist it in its determination of payment. The Provider did not send out these records until after the April 2, 2002 Open MRI bill. The Provider never contested the underpayment, but instead filed this lawsuit against the Insurer on December 6, 2002, alleging that the Insurer failed to pay the full amount of charges for medical services rendered to the insured. At the time the lawsuit was filed, only $442.88 of benefits remained on the policy. The only payment from the policy proceeds subsequent to the filing of this action was made on September 23, 2003 in the settlement of a prior dispute with Open MRI for bills the Insurer had received on March 11, 2002 and April 2, 2002. This September 23 payment exhausted the policy’s benefits. The Insurer filed its affirmative defenses on July 30, 2003, a little over a month before the settlement with Open MRI. On May 24, 2005, the Insurer moved for summary judgment on the basis of exhaustion of benefits, but the motion was denied because there were issues of fact relating to the reasonableness of the medical bills. On November 11, 2005 the Insurer was granted leave to amend its affirmative defenses, withdrawing all, including the defense disputing the reasonableness of the medical bills, except the defense of exhaustion of benefits. On December 5, 2005 Final Judgment was entered in favor of the Provider.
I would reverse that judgment and enter a Final Judgment in favor of the Insurer on the affirmative defense of exhaustion of benefits based upon the holding in Simon v. The Progressive Express Insurance, 904 So.2d 449 (Fla. 4th DCA 2005). The decision of a district court is binding statewide in the absence of a conflicting decision from another district court. Howell-Demarest v. State Farm Mut. Auto. Ins. Co., 673 So.2d 526 (Fla. 4th DCA 1996). Simon held that, absent evidence that the denial or reduction of its claim was in bad faith, or that the PIP insurer had manipulated or acted improperly in reducing it, the Insurer is not liable for amounts exceeding its policy limits notwithstanding whether the benefits were exhausted before or after the Insurer received notice that the medical provider was disputing the amount of payment. 904 So.2d at 450.
In Simon, a physician accepted a reduced payment from an insurer, and then later resubmitted claims for the balance. By the time he resubmitted the claims, the funds remaining on the policy were committed to another medical provider. The physician sued the insurer, summary judgment was entered in favor of the insurer, and that judgment was affirmed by the 4th DCA. The physician asserted, as did the Provider in the case at hand, that under “the English rule” its claims should have been paid first because they were submitted first, and that because the claim was filed before the actual disbursement of the committed funds, the insurer was liable for payment even if it had already exhausted the policy benefits. The Simon court rejected this argument, explaining that if it was accepted, insurance companies would have to hold funds in reserve to cover claims from providers that were denied or reduced until the statute of limitations period expired or a suit was filed and concluded. The court found that such a requirement would delay and reduce the availability of funds for payment of claims to other providers and would be inconsistent with the PIP statutes’ goal of prompt payment.
The majority claims that “Simon does not address the issue of the reason behind the reduction of benefits,” and notes that here, the Insurer “had no reason from the submission of the bill for reducing benefits, as is evidenced by its withdrawal of all affirmative defenses except exhaustion of benefits.” Actually, Simon does address this point when it states:
It is the obligation of insurance companies to attempt to settle as many claims as possible. Farinas v. Florida Farm Bureau General Insurance Co., 850 So.2d 555, 560 (Fla. 4th DCA 2003). It is also a prerogative of insurance companies to pay, reduce, or deny claims.
Id. Furthermore, I could find no requirement in the PIP statute for there to be a reason for the denial or reduction in a bill, even one which is RRN. The most that Florida Statute § 627.736(4) provides is: “Benefits. . . due. . .(1). . . shall be due and payable as loss accrues,. . .” Section (4)(b) says that payments provided pursuant to the PIP statute shall be overdue
[I]f 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. If such written notice is not furnished to the insurer as to the entire claim, any partial amount supported by written notice is overdue if not paid within 30 days after such written notice is furnished to the insurer. Any part or all of the remainder of the claim that is subsequently supported by written notice is overdue if not paid within 30 days after such written notice is furnished to the insurer.
The Insurer in this case asked for this information when it paid only a portion of the entire bill. Significantly, the statute (§627.736(4)(b)) allows an insurer to pay only a portion of the claim:
When an insurer pays only a portion of a claim or rejects a claim, the insurer shall provide at the time of the partial payment or rejection an itemized specification of each item that the insurer had reduced, omitted, or declined to pay and any information that the insurer desires the claimant to consider related to the medical necessity of the denied treatment or to explain the reasonableness of the reduced charge.
This portion of the statute goes on to state that that claim shall not be considered overdue
when the insurer has reasonable proof to establish that the insurer is not responsible for the payment. For the purpose of calculating the extent to which any benefits are overdue, . . . . 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 statute itself provides a penalty if it is determined that the payment is overdue:
All overdue payments shall bear simple interest at the rate established under §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.
The Florida Supreme Court in United Automobile Insurance Co. v. Rodriguez, 808 So.2d 82 (Fla. 2002) acknowledged that interest and attorney’s fees are the only penalty the statute authorizes. Nowhere in the PIP statute is the court given the authority to require an insurance company to pay a bill if it exceeds its contractual obligation, which was $10,000 in this case, just because it did not pay a bill which it later admitted was RRN when submitted, even if it had no basis for failing to pay the entire bill.
In the case below, the Provider argued that Physician’s First Choice Interpretation and Coral Imaging Services upheld the application of “the English rule” in the PIP context. In Physician’s First Choice Interpretation, which did not cite to “the English rule” by name but applied it in principle, the circuit court held that insurers must pay claims which have been unlawfully withheld, even if policy limits are to be exceeded by the making of such payments, when the Insurer’s priority and method of making payments to various providers was incorrect. Physician’s First Choice Interpretation, Inc. a/a/o Herline De Castro v. Allstate Insurance Co., 10 Fla. L. Weekly Supp. 675c (Fla. 11th Cir. Ct. July 15, 2003). This case, even though it appears to contradict Simon, was decided prior to the decision in Simon.
Also, the majority’s contention that this case is more closely aligned with Coral Imaging Services v. Geico Indemnity Insurance Co., 31 Fla. L. Weekly D2478 (Fla. 3d DCA 2006) than Simon, is mistaken. In Coral Imaging, which is not an exhaustion of benefits case, the court held that an insurer’s payment of a medical bill to a medical provider who was not entitled to be paid (because the provider had untimely submitted its bill) was a gratuitous payment, and the Insurer was required to pay additional benefits even though the PIP benefits had been exhausted. However, this case is distinguishable on two grounds. First, in the instant case, every medical provider that the Insurer paid was entitled to its payment, and therefore, the payment to Open MRI which exhausted the benefits could not be considered gratuitous. Secondly, the Insurer, in its underpayment or refusal asked the Medical Provider for additional information to assist it in its determination of payment. This information was not received until after the Insurer received the bill from Open MRI, which ultimately resulted in the exhaustion of benefits.
Even if “the English rule” did apply, the Insurer complied with that rule. In MTM Diagnostic v. State Farm Mutual Automobile Insurance Co., 9 Fla. L. Weekly Supp. 581e (Fla. 13th Cir. Ct. November 20, 2000), the court held that the Insurer’s partial payment of what it deemed to be a reasonable amount of the assignee’s claim satisfied the priority of payment requirement. The circuit court stated that an insurer is obligated under its contractual duties to the insured to continue paying other applicable claims, even if that exhausted available benefits. Here, the Insurer paid the Provider the portion of its bills which the Insurer deemed appropriate and sent an accompanying explanation of the reductions. The Provider accepted the reduced payments without protest, so the Insurer had no reason to know that the Provider was in disagreement with its assessment of the bills, or that it was going to challenge them until the Provider filed the lawsuit. At no time did the Provider even request that any of the PIP benefits in dispute be set aside. Subsequent to the Provider’s acceptance of the reduced payment, without protest, but prior to it putting the Insurer on notice by filing the lawsuit, the Insurer continued to pay and fully satisfy the bills of the other medical providers. The only payment made by the Insurer after it was put on notice of the Provider’s lawsuit was to Open MRI in settlement of a dispute filed prior to the Provider’s. That payment just happens to be the payment that exhausted the benefits remaining on the policy.
It is the law in this state that the maximum liability of an insurer under a PIP policy, absent bad faith, is the amount contracted for even though the insured’s losses greatly exceed that amount. Industrial Fire & Casualty Ins. Co. v. Cowan, 364 So.2d 810 (Fla. 3d DCA 1978). It is also the law of this state that a person cannot assign a greater right than he or she has under a contract, therefore no principle of law would impose on a PIP insurer a duty owed to a medical provider which is not owed to the insured. Mutual of Omaha Ins. Co. v. Gold, 795 So.2d 119 (Fla. 5th DCA 2001). See also, Alderman Interior Systems, Inc. v. First National-Heller Factors, Inc., 376 So.2d 22 (Fla. 2d DCA 1979); Pulte Home Corp. v. Ply Gem Industries, 804 F.Supp. 1471 (M.D. Fla. 1992).
Since the majority imposes on the Insurer the obligation to pay even though the Insurer has already exhausted benefits, they must have found bad faith or some other theory to impose liability because of the Insurer’s assertion of an affirmative defense of “exhaustion of benefits” when the benefits were not yet exhausted. It is not uncommon for parties to allege as many affirmative defenses in their initial pleadings as they can think of and then later to amend them as discovery reveals more information. Any affirmative defense that is not raised in the answer is waived. Florida Rules of Civil Procedure Rule 1.140(b)(3), see also, Jones v. Florida Insurance Guaranty Association, 908 So.2d 435 (Fla. 2005) and Seminole Casualty Insurance Co. v. Schtupak, 9 Fla. L. Weekly Supp. 529a (Fla. 17th Cir. Ct. Judicial Circuit Appellate). Furthermore, I could find no rule against alleging an affirmative defense which is factually incorrect nor any case which resulted in the imposition of a judgment against a party for alleging an affirmative defense which was factually incorrect when alleged.
While it may be possible to find bad faith under the facts as they exist in this case because of the Insurer’s claims or pleading practice, that finding would have to be made by a jury. The determination of whether an insurer has satisfied its duty to exercise good faith when handling claims against its insured is one for the jury. Farinas v. Florida Farm Bureau General Insurance Co., 850 So.2d at 556. See also, Fla. Stat. § 624.155. Bad faith is not an issue to be decided in a motion for summary judgment, particularly when it is not even pled. Here, the Provider filed a notice of its intention to pursue a bad faith claim. If they have such a claim it should be pursued in a separate action and not found to be the basis for first party liability without a factual finding of bad faith. The appropriate remedy for the assertion of an affirmative defense which is found to be patently false when asserted is covered under Florida Statute §57.105, not by the imposition of liability over a valid and true affirmative defense.
