14 Fla. L. Weekly Supp. 887a
Insurance — Personal injury protection — Reimbursement of benefits — Operation of commercial vehicle — Where insured, who was injured while operating city vehicle, suffered no actual loss even after having reimbursed city half of recovery received from third-party tortfeasor in settlement of workers’ compensation lien, PIP carrier could have denied insured’s PIP claim and has no right to reimbursement of unreasonable and unnecessary payment of PIP benefits from city
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Plaintiff, vs. CITY OF VERO BEACH, Defendant. County Court, 19th Judicial Circuit in and for Indian River County. Case No. 2006-1490CC06. June 1, 2007. David C. Morgan, Judge. Counsel: David B. Kampf. Wayne R. Coment, Office of the City Attorney.
ORDER DENYING PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT ORDER GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT
THIS CAUSE came to be heard upon each party filing a Motion for Summary Judgment. Arguments on the motions were heard on May 18, 2007. Each party presented relevant statutory and case law authority which the Court has fully considered.
The complaint is based on a claim for reimbursement pursuant to Section 627.7405, Florida Statutes, for personal injury protection (PIP) benefits paid by plaintiff to its insured, Mr. Bridgewater. It is undisputed that Mr. Bridgewater was injured as a result of an automobile accident while operating a commercial vehicle owned by the defendant, City of Vero Beach (City).
After the crash, the City paid 100% of Mr. Bridgewater’s medical expenses, and 108.5% of Mr. Bridgewater’s lost wages pursuant to the City’s self-insured workers’ compensation coverage. As such, a lien in favor of the City was created against any recovery Mr. Bridgewater might obtain from a third-party tortfeasor.1 Subsequently, Mr. Bridgewater obtained a recovery from a third-party tortfeasor in the net amount of $6,500.00. The City then settled their statutory workers’ compensation lien for one-half that amount, or $3,250.00. The plaintiff then paid $3,250.00 in PIP benefits to Mr. Bridgewater to reimburse him for the amount his settlement was diminished by the satisfaction of the lien.
The City acknowledges that Section 627.7405 “usually” entitles the PIP carrier to a claim of reimbursement “arising from the operation of a commercial vehicle”. However, the City maintains that Mr. Bridgewater was not entitled to these PIP benefits, given that the City had already paid to him or on his behalf amounts that far exceeded the coverage limits for PIP benefits under Mr. Bridgewater’s PIP policy.2 As authority, the City cites to Section 627.736(4), which provides in relevant part:
(4) Benefits; when due. — Benefits due from an insurer under ss. 627.730-627.7405 shall be primary, except that benefits received under any workers’ compensation law shall be credited against the benefits provided by subsection (1) and shall be due and payable as loss accrues, upon receipt of reasonable proof of such loss and the amount of expenses and loss incurred which are covered by the policy issued under ss. 627.730-627.7405. (Emphasis added).
The plain language of this statute has been interpreted by various courts to relieve an employee’s PIP carrier of the responsibility to pay benefits where, as in this case, the employer has already paid workers’ compensation benefits in amounts that exceed the employee’s PIP policy limits. See State Farm Mutual Automobile Insurance Co. v. Miller, 865 So.2d 542 (Fla. 1st DCA 2004); Jorglewich v. Lumbermens Mutual Casualty Company, 522 So.2d 114 (Fla. 5th DCA 1988); Diaz v. South Carolina Insurance Company, 397 So.2d 386 (Fla. 3rd DCA 1981).
However, the issue in this case is not whether the employee’s PIP provider could refuse to provide PIP benefits; such benefits were obviously paid in this case. Here, the issue is whether the “shall be credited” language of Section 627.736(4) requires the PIP insurer to apply a credit for employer benefits actually paid to the employee before seeking reimbursement. According to the City, this would insure that any PIP benefits paid would be for actual “expenses and loss incurred which are covered by the [PIP] policy”. Apparently, this issue has never been squarely addressed by the courts of this state.
The City makes several valid policy arguments as to why the plaintiff should be precluded from looking to the City for reimbursement. Under the City’s analysis, Mr. Bridgewater had already been fully compensated. Unless the PIP carrier has a duty to investigate whether employer benefits have been paid before paying a claim, the PIP insurer is able to shift the burden of paying what may be a fraudulent claim to the employer. This would lead to the unfair result of requiring the employer, which has already paid full benefits to its employee, to foot the bill.3 The employer would have no way to prevent the perpetuation of a fraud, yet would be ultimately responsible for the loss. On the other hand, the PIP insurer, which is in the best position to prevent a fraudulent claim from being paid, suffers no loss.
The plaintiff argues that this position overlooks the plain language of Section 627.7405. Section 627.7405 provides:
Notwithstanding any other provisions of ss. 627.730-627.7405, any insurer providing personal injury protection benefits on a private passenger motor vehicle shall have, to the extent of any personal injury protection benefits paid to any person as a benefit arising out of such private passenger motor vehicle insurance, a right of reimbursement against the owner or the insurer of the owner of a commercial motor vehicle, if the benefits paid result from such person having been an occupant of the commercial motor vehicle or having been struck by the commercial motor vehicle while not an occupant of any self-propelled vehicle. (Emphasis added).
The plaintiff points out that Section 627.7405 does not qualify the PIP carrier’s right of reimbursement. By its very terms, it operates “notwithstanding” the extent to which the employer decides to pay benefits to the employee. In short, the plaintiff’s argument is that nothing in Section 627.736(4) or the above cited cases prevents a PIP insurer from honoring its insurance contract with the insured with the expectation that it will have an unqualified right of reimbursement granted by Section 627.7405.
However, having a right to reimbursement presupposes that the underlying claim is valid. In Amerisure Ins. Co. v. State Farm, 897 So.2d 1287, 1291 (Fla. 2005), the Court examined Section 627.7405 and found “nothing in the statute’s language that would foreclose” a challenge to the “reasonableness and necessity of the expenses claimed”. The plaintiff acknowledges this holding, but asserts that this language allows the City to challenge only the type of medical treatment provided or the amount charged or perhaps whether the insured had the ability to work in a lost wage claim.
The plaintiff’s reading of Amerisure is too narrow. The clear import of the court’s holding is to allow a challenge anytime the insurer seeks reimbursement for a claim that should not have been paid under Section 627.736(4). Put another way, one would be hard pressed to argue that the payment of a claim that need not be paid is ever reasonable and necessary. The plaintiff’s contention that it was contractually required to pay the claim is also unavailing. According to the plaintiff’s motion, it is “well established law” that it was required to pay Mr. Bridgewater the amount his settlement was diminished by the satisfaction of the workers’ compensation lien. However, the undisputed facts are that the plaintiff’s liability to Mr. Bridgewater was subject to limits. In this case, even after subtracting the amount Mr. Bridgewater reimbursed to the City, those limits had already been met as a result of the City’s payments. Thus, Mr. Bridgewater had suffered no actual loss covered by his PIP policy such that compensation was due pursuant to Section 627.736(4). The undisputed facts of this case are that Mr. Bridgewater had received in excess of what he was due, and the plaintiff could have denied the claim.4 State Farm Mutual Automobile Insurance Co. v. Miller; Jorglewich v. Lumbermens Mutual Casualty Company; Diaz v. South Carolina Insurance Company, supra. Such payments were, therefore, inherently unreasonable and unnecessary, creating a windfall for the insured and a “gotcha” for the employer.5 Accordingly, the defendant is entitled to a summary judgment as a matter of law.6
ORDERED AND ADJUDGED that the plaintiff’s Motion for Summary Judgment is DENIED. The defendant’s Motion for Summary Judgment is GRANTED. The defendant, City of Vero Beach Court shall provide an appropriate summary final judgment, which may reserve ruling as to the issue of attorneys’ fees.
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1Section 440.39, Florida Statutes.
2Mr. Bridgewater’s PIP policy obligated the plaintiff to pay 80% of medical expenses and 60% of lost wages. Apparently, the $3,250.00 payment was made to reimburse for lost wages. Even if one reduces the amount of workers’ compensation benefits paid to Mr. Bridgewater for lost wages by $3,250.00, the amount paid exceeds the PIP policy limits.
3Indeed, the plaintiff’s argument that it enjoys an unfettered right of reimbursement could have led to an even greater inequity. Presumably, the plaintiff would have paid Mr. Bridgewater the policy limits of $10,000 had a claim for that amount been filed.
4In so holding, the Court is not finding that Mr. Bridgewater committed an intentional act of fraud.
5It should be pointed out that the plaintiff’s interpretation of the term “reasonable and necessary” would render the right to contest the reimbursement meaningless in this case, as the City had already determined the validity of the employee’s claim upon paying workers’ compensation benefits.
6The Court’s ruling causes the other issues raised by the motions to be moot.
