15 Fla. L. Weekly Supp. 1211a

Insurance — Personal injury protection — Explanation of benefits — Failure to provide — Where no damages arose from insurer’s failure to timely provide EOB, insured cannot prevail on breach of contract claim seeking damages for that inaction — Where legislature has not provided remedy for failure to comply with statutory mandate to provide EOB, court is barred from implying one

ANA CARDOSO, Plaintiff, v. STATE FARM FIRE AND CASUALTY COMPANY, a foreign corporation authorized to do business in the State of Florida, Defendant. County Court, 13th Judicial Circuit in and for Hillsborough County, Civil Division. Case No. 07-CC-15461, Division M. September 26, 2008. Paul L. Huey, Judge. Counsel: Helen Stratigakos, Tampa. Steven D. Manno, Andrews & Manno, P.A., Tampa.

ORDER DENYING PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT

Ana Cardoso’s (Cardoso) Motion for Partial Summary Judgment, having come on for hearing on August 27, 2008, and the Court being advised of the voluminous record and pleadings, having heard argument of the parties and researched applicable law, FINDS, ADJUDGES and DECREES:

This is a PIP case. It is essentially an action to recover on allegedly dozens of unpaid dates of service. Rather than just seeking payment, however, Cardoso also sought to have her rights declared under several theories, all of which have been previously dismissed by the Court. The current complaint seeks different damages in several counts. As has become customary in PIP litigation, there is always the issue of the day, pursuant to which able counsel seeks to recover damages, not because the insurer withheld benefits, but rather for some failure to satisfy some jot or tittle of the PIP statute, often at the inadvertent invitation of the less than fastidious last minute drafting of the legislature. Such is the situation here where Count III of the complaint seeks not payment of doctor bills, but rather some unknown and unidentifiable “damages” for failure of State Farm Fire and Casualty Company (State Farm) to provide a statutorily mandated “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 claim].”§ 627.736(4)(d), Fla. Stat. (2006). Often parties generically refer to such itemized specification as an “explanation of benefits” or “EOB.” Correctly, Cardoso reminds the Court that the PIP statute is incorporated in all of its detail into her PIP contract with State Farm. Thus, the argument goes, any failure of the insurance company to follow 4(b) is a “breach” of the contract. Alas, if it were only so simple.

It is critical to understand the relief sought and the legal analysis required to determine the issue. Because this is a breach of contract claim, it must be fully assessed within that framework. As a new lawyer, my wonderful mentor, John R. Bush,¹ taught me to analyze contract cases from back to front. As will be evident, doing so here focuses one on the sole material issue, rather than multiple irrelevant ones.

For Cardoso to prevail on her breach of contract claim, she must prove (1) formation of a contract;² (2) performance of her contractual duties;³ (3) failure of State Farm to perform its contractual duty;⁴ and (4) damages. See, e.g., Business Litigation in Florida (Fifth Edition 2007), §15.8 Breach of Contract Jury Instructions. Starting from the back — damages — it is undisputed that none arose from State Farm’s failure to timely provide an itemized specification. The referenced jury instructions provide, in part:

If you find for (defendant), you will not consider the matter of damages. But, if you find for (claimant), you should award (claimant) an amount of money that the greater weight of the evidence shows will fairly and adequately compensate [him] [her] [it] for damages caused by (defendant’s) failure to perform. (Claimant) is entitled to recover damages that will put [him] [her] [it] in the same position [he] [she] [it] would have been in if (defendant) had performed [his] [her] [its] duties under the contract. However, (claimant) is entitled to recover only those damages that the parties reasonably could have anticipated, at the time they entered into the contract, probably would result from (defendant’s) failure to perform. (emphasis added) (citations omitted).

As is clear from the jury instructions, a breach of contract case is a four-legged stool. Leg four, damages, is not a severable afterthought. Although a judge is clearly within his or her purview when ruling on a motion for summary judgment to find one fact or another as uncontroverted (Rule 1.510(d), Florida Rules of Civil Procedure), he or she is not allowed to find a “breach” without finding “damages.”

As will be shown, Cardoso could not have reasonably anticipated or expected to be damaged by State Farm’s alleged misdeed. Florida’s seminal case on contract damages is unforgettably named Beefy Trail, Inc. v. Beefy King International, Inc., 267 So.2d 853 (Fla. 3d DCA 1972).

[1] The judicial remedies available against one who has committed a breach of contract are damages, restitution and specific performance. . . .⁵

. . . .

[2, 3] If a party seeks the remedy of damages, two alternative methods for determining recovery are available: (1) he may prove the gains he would have made had the defendant performed in full as the contract required subtracting therefrom the costs of the operations necessary to realize those gains, i.e., the injured party may seek lost profits and in such case the interest he seeks to protect is his “expectation interest”; (2) he may omit an attempt to show lost profits and prove instead his actual expenditures made before the repudiation or nonperformance by the defendant insofar as those expenditures were reasonably to have been forseen, i.e., expenditures made in preparation for performance or in part performance and in such case the interest the plaintiff seeks to protect is his “reliance interest.”. . . .

. . . .

There is a marked distinction between a recovery of damages and restitution. The purpose of damages is to put the injured party in as good a position as he would have occupied had the contract been fully performed. In this context the injured party is considered to be “affirming” the contract. The purpose of restitution, however is to require the wrongdoer to restore that which he has received and thus tend to put the injured party in as good a position as he occupied before the contract was made; in this context the injured party may be said to have considered the contract as “terminated” or “ended.”. . . .

[8] To constitute a vital or material breach a defendant’s nonperformance must be such as to go to the essence of the contract; it must be the type of breach that would discharge the injured party from further contractual duty on his part. Corbin, supra, § 1104. A defendant’s failure to perform some minor part of his contractual duty cannot be classified as a material or vital breach. Corbin [on Contracts] § 1104, pp. 562-565 (emphasis added).

Beefy Trail, 267 So.2d at 856, 858.

Here, Cardoso allegedly seeks to protect her “expectations interest,” as opposed to seeking “reliance” damages, restitution or specific performance. Thus, what expectations does subsection 4(b) allow Cardoso to have? Does it provide a remedy for State Farm’s alleged nonperformance? No. To the contrary, it clearly states not once, but three times, that failure of the insurer to comply does not preclude or limit its ability to defend the claim: “(1) provided that this shall not limit introduction of evidence at trial;” (2) “However, 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;”⁶ and (3) “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).” (emphasis added). The Court’s position is buttressed by the Florida Supreme Court’s findings in its seminal PIP decision: United Insurance Company v. Rodriguez, 808 So.2d 82 (Fla. 2001). There, the insurer queried whether it could contest the claim because it had failed to pay within the statutorily mandated 30 days and, then, had no reasonable proof to support its denial. The Rodriguez court stated the issue as follows: “If the payment of benefits for a PIP claim is “overdue” under §627.736, Florida Statutes (1997), are the penalties set forth in Florida Statutes the only penalties that may be levied against the insurer, or is the insurer also forever barred from contesting the claim. Both United Automobile. . .[and State Farm]. . .contend that the statutory sanctions are the only penalties approved by the Legislature. We agree.” (emphasis added). Rodriguez, 808 So.2d at 85.

Applying that here, Cardoso had no expectation when she entered into her PIP policy that State Farm would ever be liable to her for more damages than what the PIP statute provided. Simply, no damages other than the amount of the overdue claim, plus interest and the statutory penalty of 10% or $250, whichever is greater. §§ 627.736(4)(c), (11)(d), Fla. Stat. (2006).

Also, to constitute a breach, the alleged misdeed or omission must be material. Because Cardoso never had any expectation or anticipation to collect damages for State Farm’s failure to comply with section 627.736(4)(b) in and of itself, State Farm’s omission is not material as a matter of law. Furthermore, it is undisputed that, prior to sending her statutory demand letter, Cardoso was in the position of having had her claim denied by State Farm when the doctor initially billed for services. After State Farm failed to respond, Cardoso was in the exact same position. Thus, again, by definition, no “damages” arose.

Also, Paragraph 8 of Beefy Trail requires in this context that for it to be “material,” State Farm’s omission must have discharged Cardoso from her duties. Cardoso admits that is not the situation here because she acknowledges that she must prove her entitlement to payment of her bills — the essence of the contract. Without a doubt, the purpose of PIP is “to provide swift and virtually automatic payment so that the injured insured may get on with his life without undue financial interruption.” GEICO v. Gonzalez, 512 So.2d 269, 271 (Fla. 3d DCA 1987). See, also, Ivey v. Allstate Insurance Co., 774 So.2d 679 (Fla. 2000). PIP’s purpose is not to ensure that EOB’s are timely provided.

Cardoso also claims that attorneys’ fees expended or necessary to get State Farm to follow the law constitute damages. The Florida Supreme Court rejected that theory in Cheek v. McGowan Electric Supply, Inc., 511 So.2d 977 (Fla. 1987).

Cardoso also contends that if State Farm complied with subsection 4(b), then, maybe, Cardoso could have corrected any billing deficiency and then, maybe, State Farm would have paid the revised bill. Maybe, maybe not. What if rather than doing nothing within 30 days, State Farm authored a detailed five-page response, to which Cardoso responded with a ten-page point by point rebuttal. If State Farm again declined to pay, would Plaintiff be entitled to file a second lawsuit? What about a third time? Fourth time? Fifth time? You get the point. The only “damages” suffered by Cardoso is that her bills did not get paid, and that was not the result of State Farm’s failure to provide an itemized specification many weeks after it first refused to pay her physician’s bills.

The law is abundantly clear that it is not for judges to use the term “nominal damages” as a catch-all, a plug, a fail safe to do justice or a weapon to right a wrong when there has been no material omission or commission by the PIP carrier. Contract damages are limited solely to recompensing the plaintiff only for the legally viable damages that he or she has sustained arising directly from a material act of commission or omission. They cannot be used to punish (or encourage a personal view of right or wrong) because the sole purpose of compensatory damages is to compensate, not to punish defendants or bestow a windfall on plaintiffs. See, e.g., MCI Worldcom Network Services, Inc. v. Mastec, Inc., 2008 WL 2678024, 28 (Fla. 2008) [33 Fla. L. Weekly S473a], quoting Cooperative Leasing, Inc. v. Johnson, 872 So.2d 956, 958 (Fla. 2d DCA 2004).

All contracts have risk. The risks in a PIP contract are essentially negotiated by the legislature, rather than the parties. As is often the case, for some misdeeds the legislature provides for damages, for others it does not. When it chooses “not,” it is not for the courts to usurp legislative power by judicial fiat. See, e.g., Fla. Jur (2d), Actions §§36-38.

The primary, if not the only, issue pertinent to the question of whether a private cause of action may be based upon the breach of a statute is whether the Legislature intended that to be the case. See, e.g., Baumstein v. Sunrise Community, Inc., 738 So.2d 420, 87 A.L.R.5th 763 (Fla. Dist. Ct. App. 3d Dist. 1999); City of Sarasota v. Windom, 736 So.2d 741 (Fla. Dist. Ct. App. 2d Dist. 1999).

Absent an expression of legislative intent to create a private right of action to enforce regulatory statutes, a private right of action to do so is not implied. Villazon v. Prudential Health Care Plan, Inc., 843 So.2d 842 (Fla. 2003). For example, the Health Maintenance Organization Act does not specifically provide a private right of action for damages based upon an alleged violation of its requirements, and, absent such a provision, a private right of action is not implied. Villazon v. Prudential Health Care Plan, Inc., 843 So.2d 842 (Fla. 2003). Similarly, a provision of the Act prohibiting unfair methods of competition and unfair or deceptive acts or practices, including the systematic down coding of medical providers’ claims with the intent to deny reimbursement, did not create a private right of action for a provider of medical services against an HMO, as the general scheme of the statute was to empower the Department of Insurance to enforce the statute’s requirements and determine whether the provisions were being complied with or violated, and no provision in the statute expressly or impliedly authorized a private suit brought for the purposes of enforcing or declaring violations of the statute. The Florida Physicians Union, Inc. v. United Healthcare Of Florida, Inc., 837 So.2d 1133 (Fla. Dist. Ct. App. 5th Dist. 2003).

Fla. Jur (2d), Actions §38.

As is evident from the remedy provisions of section 627.736(11)(d), the legislature knows how to create a remedy when it intends to do so. Because the legislature did not include a remedy for the alleged section 627.736(4)(b) violation at issue here, the Court is barred from implying one. Obviously, neither the legislature’s section 627.736(4)(b) language nor this decision is a license for State Farm to disregard its duties under section 627.736(4)(b). Other causes of action and/or action by Florida’s Insurance Commissioner can deal with that. Also, Cardoso is not without a remedy because her Count II for nonpayment of bills remains.

Because the foregoing legal analysis was not addressed in cases such as D. Abeckjeer, D.C. P.A. v. United Automobile Insurance Company, 15 Fla. L. Weekly Supp. 621 (11th Judicial Circuit Case No. 07-15014 CC 23); Primary Care Medical Group, Inc. v. United Automobile Insurance Company, 12 Fla. L. Weekly Supp. 493a (17th Judicial Circuit, Case No. 03-01226 COCE 54); Primary Care Medical Group, Inc. (a/a/o Eliczer Bermudez) v. United Auto. Ins. Co., 12 Fla. L. Weekly Supp. 493 (Fla. Broward Cty. Ct. 2005); United Auto. Ins. Co. v. R.J. Trapana, M.D., P.A. (a/a/o Dudley Mabout), 12 Fla. L. Weekly Supp. 452 (Fla. 17th Cir. Ct. Feb 14, 2005); Spine Rehabilitation Center, Inc. v. State Farm Mutual Auto. Ins. Co., 13th Judicial Circuit, County Court, J. Charlotte Anderson, Order Granting Plaintiff’s Motion For Partial Summary Judgment As To Count III, Oct. 27, 2007, they are distinguished here [15 Fla. L. Weekly Supp. 155e].

State Farm raised many other defenses to Cardoso’s motion. Because of the foregoing findings, there is no need to address those issues now. Should an appellate court disagree with these legal conclusions, the Court makes it clear that it has not ruled on those other issues, which are of record in the briefs and oral argument.

WHEREFORE, Cardoso’s Motion for Partial Summary Judgment is DENIED.

__________________

¹My mentor, friend and former partner passed away as I was writing this opinion. He was a great lawyer, husband and father and a warrior for correct, succinct legal analysis. I hope he would be proud of this opinion.

²Conceded by State Farm.

³Disputed by State Farm for various reasons, none of which need to be resolved here.

⁴The Court finds that State Farm did not comply with its duty to timely provide an “itemized specification.”

⁵Here, Cardoso seeks only damages.

⁶Coincidentally, State Farm has that proof here in the form of Cardoso’s deposition, at which she admitted that many of the services billed were never rendered. This fact is not material to the Court’s decision here, but it perfectly exemplifies why the legislature wrote 4(b) as it did.