15 Fla. L. Weekly Supp. 1147b

Insurance — Personal injury protection — Standing — Assignment — Error to find that assignment is invalid because it was not executed by medical provider where clause requiring execution by provider refers only to agreement to arbitrate, not entire assignment, and is without effect because it lacks consideration — Assignment is unilateral contract that became binding when provider furnished medical services — Moreover, insurer with no privity to assignment has no standing to challenge its validity — Equitable assignment — Even if contract creating assignment were deficient as legal matter, where intent of parties to enter into assignment is clear, equitable assignment was created

DIGITAL MEDICAL DIAGNOSTICS, Appellant, vs. ALLSTATE INS. CO., Appellee. Circuit Court, 11th Judicial Circuit (Appellate) in and for Dade County. Case No. 07-028 AP. L.C. Case No. 02-13430 SP 23. October 2, 2008. An Appeal from the County Court for Miami-Dade County. Counsel: Marlene S. Reiss, for Appellant. Jacqueline G. Emanuel, for Appellee.

[Editor’s note: Lower court decision published at 14 Fla. L. Weekly Supp. 668b]

(Before DRESNICK, FIRTEL, ECHARTE, JJ.)

(DRESNICK, Judge.) Allstate attacks the validity of the assignment that granted Digital Medical Diagnostics the right to pursue this Personal Injury Protection (PIP) case. On various grounds, we find the assignment valid and reverse the decision of the lower court. More specifically, we find: (1) the clause that purportedly nullifies the assignment refers only to the agreement to arbitrate, not the entire assignment; (2) the offending clause lacks consideration and therefore is without force; (3) the assignment was a unilateral contract which became binding when Digital provided medical services; (4) Allstate has no standing to challenge the assignment; and (5) an equitable assignment was created regardless of the legal validity of the original contract.

Midlyne Rosier was injured in a car accident. She sought treatment from Digital, and assigned her insurance benefits to Digital. Based on this assignment, Digital pursued payment for PIP medical benefits from Allstate. When Allstate refused to pay, Digital brought the instant law suit against Allstate.

Allstate asserts that Digital failed to obtain a valid assignment because Digital never bothered to execute the assignment from Rosier. The issue stems from language which allegedly indicates that the assignment would not be valid until Digital had signed and dated the document. That language reads: “As part of this assignment of rights and benefits, which only becomes binding upon the insurance carrier [sic] receipt of said assignment after it having been executed and dated by the Health Care Provider.”

Allstate interprets this language to mean that the assignment does not become valid until Digital has signed and dated the contract. This is the central issue because, although Rosier signed and dated the assignment, Digital did not.

The trial court applied contract interpretation principles to the issue and found that Digital did not have standing to sue because the document was never executed as required by the above quoted clause. Digital filed this appeal, asserting a litany of reasons why the assignment is valid under Florida law. We agree with Digital.

The first issue is that the paragraph requiring Digital to execute the contract before it takes effect refers only to the provisions of that paragraph, and not the entire assignment. Ireland v. Craggs, 56 F.2d 785 (5th Cir. 1932) (whether a contract is entire or divisible depends upon the intention of the parties); Reserve Life Ins. Co. v. Lomolino, 474 So. 2d 1210, 1211 (Fla. 4th DCA 1985) (“Whether the parties intended a section to be severable may be determined ‘by a fair construction of the terms and provisions of the contract itself, and by the subject matter to which it has reference.’ ”).

The assignment contract is written in three paragraphs. The first paragraph deals with the actual assignment and also specifies that the insured will pay the cost of any copays or deductibles not covered under the insurance policy. The second paragraph goes into the details of what is being assigned, and also contains superfluous language that Digital may select its own attorney.

The third paragraph, which contains the troublesome clause, specifies that if the insurer disputes the medical charges then the amount in question will be set aside pending resolution of that dispute. The clause requiring Digital’s execution refers to this specific issue, not the entire contract. This is the clause we refer to as “the agreement to arbitrate.”

This language, as both parties recognize,¹ is a holdover from former section 627.736(5), Florida Statutes, which mandated that an agreement to arbitrate be included in any contract that assigned the benefits of a PIP claim to a medical provider. This arbitration requirement was held unconstitutional in Nationwide Mutual Fire Insurance Co. v. Pinnacle Medical, Inc., 753 So. 2d 55 (Fla. 2000), but Digital apparently never updated its standard assignment contract.

All reasonable indications, based on a fair construction of the terms and provisions of the contract itself, are that the offending clause refers only to the arbitration paragraph² and not the rest of the contract. Furthermore, since each paragraph is severable from the whole, the nullification of the arbitration clause (which is superfluous and obsolete anyway) does not render the entire document a nullity.

Separately, the clause is without effect because it is unsupported by consideration. “The consideration required to support a contract need not be money or anything having monetary value, but may consist of either a benefit to the promisor or a detriment to the promisee.” Real Estate World Fla. Commercial, Inc. v. Piemat, 920 So. 2d 704, 706 (Fla. 4th DCA 2006). As stated above, the third paragraph contains obsolete language that has no bearing on whether the assignment was valid. Allstate is not a party to the contract and the detriment to Digital is without any benefit flowing to it, unless providing medical care to Allstate’s insured without payment could be considered a benefit. Furthermore, because this is a unilateral contract as will be set out below, the consideration is Digital’s performance of medical services to the assignor in exchange for the assignment. There is nothing flowing from Allstate to either of the parties to the contract.

Allstate also asserts that there was no contract because, without a signature, there was no acceptance. Hornbook law teaches that a signed document is not the only way to create a binding contract.

A unilateral contract is a contract that becomes binding upon an agreed upon performance by the promisee. McGill v. Cockrell, 101 So. 199 (Fla. 1924). “A promise lacking mutuality at its inception becomes binding upon the promisor after performance by the promisee. These contracts are sometimes called ‘unilateral contracts.’ Proof of assent is not necessary on the part of the promisee. It is sufficient if the required act is performed by him.” Plumb v. Campbell, 129 Ill. 101, 18 N.E. 790, Ill. 1888 (citations omitted). See also Polk v. BHRGU Avon Properties, 946 So. 2d 1120 (Fla. 2d DCA 2006); City Of Hollywood v. Petrosino, 864 So. 2d 1175 (Fla. 4th DCA 2004); Schlosser v. Perez, 832 So. 2d 179 (Fla. 2d DCA 2002).

We reiterate for clarity that this assignment does not depend on “mutual promises” as the dissent insists. Instead, it is a unilateral contract and therefore becomes binding upon performance by the promisee, which in this case was Digital’s provision of medical services. Ballou v. Campbell, 179 So. 2d 228 (Fla. 1965). Therefore, even though Digital did not sign the document, it accepted the terms of the assignment through performance of its obligations, i.e., providing medical services.³

Further complicating Allstate’s position is the fact that, without privity, it has no standing to challenge the assignment contract between Ms. Rosier and Digital. “A person not a party to nor in privity with a contract has no right to enforce it.” Gallagher v. Dupont, 918 So. 2d 342 (Fla. 5th DCA 2005). “It is elementary that a person not a party to nor in privy with a contract does not have the right to sue for its breach.” White v. Exchange Corp., 167 So. 2d 324 (Fla. 3d DCA 1964). The two parties to this assignment contract were Ms. Rosier, the beneficiary, and Digital, the medical provider. These are the only two parties that may contest the validity of the contract.

For example, when Digital filed suit, Ms. Rosier might have decided to contest the validity of the assignment so she could pursue the benefits for herself. Alternatively, if she had originally filed this cause of action, Digital could challenge that lawsuit by enforcing the terms of the assignment contract so they could pursue the benefits for themselves. But that is not the situation this Court faces. Instead, Allstate attacks the assignment contract’s validity but has no privity — and therefore no standing — to do so.

There is one additional consideration which is whether an equitable assignment was created. The primary question is the intent of the parties. “No particular words or form of instrument is necessary to effect an equitable assignment and any language, however informal, which shows an intention on one side to assign a right or chose in action and an intention on the other to receive, if there is a valuable consideration, will operate as an effective equitable assignment.” Giles v. Sun Bank, N.A., 450 So. 2d 258, 260 (Fla. 5th DCA 1984).

In Boulevard National Bank of Miami v. Air Metal Industries, 176 So. 2d 94, 97 (Fla. 1965), the Court explained that “[f]ormal requisites of such an assignment are not prescribed by statute and it may be accomplished by parol, by instrument in writing, or other mode, such as delivery of evidences of the debt, as may demonstrate an intent to transfer and an acceptance of it.”

The intent of the parties seems clear. Digital’s intent to accept the assignment is clear because it provided Ms. Rosier medical treatment, and also because it filed this law suit based on the assignment. Ms. Rosier’s intent is clear, not only because she signed the contract, but also because this lawsuit has been in litigation for over five years, and Ms. Rosier has yet to challenge its validity. Thus, we disagree with our colleague’s well written dissent, and conclude that even if the contract creating the assignment were deficient as a legal matter, the parties did create an equitable assignment.

For the above stated reasons, we REVERSE. Appellate attorney’s fees are awarded to Appellant Digital, pursuant to section 627.428(1), Florida Statutes and Florida Rule of Appellate Procedure 9.400. (FIRTEL, J., concurs.)

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(ECHARTE, J., dissents.) I disagree with the majority and would affirm the trial court.

The Appellant, Digital Medical Diagnostics, a health care provider, sued Allstate for personal injury protection benefits owed by Allstate to its insured, Midlyne Rosier. Digital’s only claim was brought pursuant to a document captioned “Assignment of Benefits/Policy Rights” (hereinafter “contract”). Digital did not assert any other basis to support its claimed entitlement to the PIP benefits other than this contract which contains the following clause:

As part of this assignment of rights and benefits, which only becomes binding upon the insurance carrier [sic] receipt of said assignment after it having been executed and dated by the Health Care Provider. I hereby instruct the insurance carrier that in the event the subject medical benefits are disputed for any reasons, including medical reasonableness and or necessity that the amount of benefits claimed by Digital Medical is to be set aside and disbursed until the dispute is resolved. (Emphasis added).

Below, Allstate moved for summary judgment on the grounds that Digital did not have standing to bring any claim against it because the contract was never “executed and dated” by Digital as required and, therefore, was not a valid assignment of Rosier’s PIP benefits. Thus, whether Digital had standing pursuant to that contract was the only issue before the trial court and it was the only issue the trial court decided.

On the question of standing, there were no genuine issues of material fact and the undisputed facts were that Digital prepared the contract and Rosier signed it, but Digital did not execute or date it.⁴ Thus, because the contract was never executed or dated by Digital, on its face the assignment was not “binding upon the insurance carrier”. As a result, Digital did not have a valid assignment of benefits and only Rozier had standing to bring the claim for PIP benefits against Allstate. See Oglesby v. State Farm Mut. Auto. Ins. Co., 781 So. 2d 469, 470 (Fla. 5th DCA 2001) (“only the insured or the medical provider ‘owns’ the cause of action against the insurer at any one time”); Progressive Express Ins. Co. v. McGrath Cmty. Chiropractic, 913 So. 2d 1281, 1285 (Fla. 2d DCA 2005) (holding that if on the date the health care provider files the complaint it does not have a valid assignment of benefits, then only the insured has standing to bring an action against the insurer). See also Garcia v. State Farm Mut. Auto. Ins. Co., 766 So.2d 430 (Fla. 5th DCA 2000); Livingston v. State Farm Mut. Auto. Ins. Co., 774 So.2d 716 (Fla. 2d DCA 2000). Because there were no genuine issues of material fact and Allstate was entitled to the judgment as a matter of law, the trial court was correct when it granted Allstate’s motion for summary judgment.

The majority’s opinion improperly reverses the trial court on a number of grounds which were not developed, litigated or decided by the trial court. In Kirchheiner v. Kirchheiner, 278 So. 2d 639, 640 (Fla. 3d DCA 1973), the court stated that “[u]ntil the trial judge has had occasion to go to the merits of the issue and to take a decisive action on the matter, there is no action by the trial court that is the proper subject of our appellate scrutiny and we will not substantively determine the issue as a court of original jurisdiction.” Thus, the majority erred when it reversed the trial court on each of these new, never heard and never decided issues.

Without explanation, the majority refers to the previously quoted ‘execute and date’ requirement as a “troublesome clause” and an “offending clause”.⁵ They then conclude that the ‘execute and date’ “offending clause refers only to the arbitration paragraph and not the rest of the contract”. Contrary to the majority’s assertion, the contract does not mention arbitration and contains no “arbitration paragraph”.⁶

The majority’s conclusion that the ‘execute and date’ clause “refers only to the arbitration paragraph” appears to be the result of circular reasoning. On the one hand, the majority claims the ‘execute and date’ requirement is a “holdover from former section 627.736(5), Florida Statutes, which mandated that an agreement to arbitrate be included in any contract that assigned the benefits of a PIP claim to a medical provider”. Thus, by calling the ‘execute and date’ requirement a “holdover” from a former statute requiring arbitration, the majority is suggesting, without any record support, that a mandatory agreement to arbitrate, as mandated by the former statute, was once in this contract.⁷ If this is true and since there is nothing about arbitration in this contract now, Digital must have updated its contract to redact the arbitration requirement that the ‘execute and date’ clause supposedly “refers” to.⁸

Then, on the other hand, and also without any evidentiary support, the majority claims that the ‘execute and date’ clause is still in the contract because “Digital apparently never updated its standard assignment contract”. If the contract has not been “updated”, then the arbitration provision that the ‘execute and date’ provision “refers” to would still be in the contract, but it is not.

In any event, because this contract has no arbitration provision now, the only possibilities are either the contract never had an arbitration provision, or it once had an arbitration provision and the contract was “updated” to remove it. If the contract never had any arbitration requirement, then the ‘execute and date’ clause can not possibly “refer” to it. Likewise, if the contract was “updated” to remove an arbitration requirement, then, ‘execute and date’ still cannot “refer” to the arbitration provision Digital intentionally removed from its contract. Furthermore, Digital must have intended to keep the ‘execute and date’ language in the contract, since that is still in the contract after it was presumably updated to redact the arbitration provision.⁹

Updated or not, on this record it is not reasonable to conclude the ‘execute and date’ provision “refers” to arbitration. Nevertheless, we need not engage in speculation about whether the contract was or was not updated and we should focus on the contract itself which never mentions arbitration, but does require Digital to execute and date it. This ‘execute and date’ requirement, by its terms, refers only to whether the assignment is binding on the insurance carrier and not to a nonexistent and/or intentionally redacted arbitration provision. The actual language used in the contract is the best evidence of the intention of the parties and the plain meaning of that language controls. Anthony v. Anthony, 949 So.2d 226 (Fla. 3rd DCA 2007); Bradley v. Sanchez, 943 So.2d 218 (Fla. 3rd DCA 2006); Beans v. Chohonis, 740 So.2d 65 (Fla. 3rd DCA 1999); Acceleration Nat’l Service Corp. v. Brickell Fin. Services Motor Club, Inc., 541 So.2d 738 (Fla. 3rd DCA 1987). In addition, as stated by the court in Barco Holdings, LLC v. Terminal Inv. Corp., 967 So.2d 281, 291 (Fla. 3d DCA 2007), “[w]here contractual provisions are clear and unambiguous, the court is bound by the plain meaning of those terms and has no discretion to re-write the agreement between the parties.” Here, there is no evidence that the clause “refers” to arbitration and the majority is simply wrong to conclude that it does. The majority cannot re-write the contract and its reversal on this never litigated ground is inappropriate.

In a particularly confusing discussion and without any legal authority to support its position, the majority also decides that “the clause is without effect because it is unsupported by consideration”.¹⁰ The majority’s opinion is unclear and I assume they mean that this clause needed consideration, separate and apart from the consideration (mutual promises) that supported the purported assignment.¹¹ The parties never litigated this and the issue was never decided by the trial court. Whether the clause has, or even needs consideration separate and apart from the mutual promises contained in the assignment is, therefore, not something we should decide for the first time in this appeal and is not a proper basis for reversal.

The majority begins its opinion by stating that “Allstate attacks the validity of the assignment . . .” and they then find that Allstate lacked standing to challenge the assignment. On this issue, the majority has both misapprehended the facts and misapplied the law. Contrary to their assertion, that is not the posture of the case before us. Below, Allstate countered Digital’s claim which was grounded only on the written contract by taking the correct position that the contract, on its face, was not a valid assignment because Digital did not execute or date it. The majority mistakenly relies on authority that stands for the inapplicable proposition that a non-party to a contract does not have standing to enforce that contract.¹² Allstate did not attempt to enforce this assignment; on the contrary, what Allstate did is refuse to recognize the qualified, conditional assignment which, by its very terms, was not binding on Allstate. Absent a valid assignment, Allstate’s contractual PIP benefits are due only to its insured and Allstate is under no more duty to recognize an unsigned and nonbinding assignment than a bank is to recognize an unsigned check. In any event, Allstate’s standing was not litigated by the parties or decided by the trial court and should not be grounds for reversal.

Lastly, the majority finds an equitable assignment in Digital’s favor even though that claim was also never raised, litigated or decided below. The only facts in this case are that the insured signed the contract prepared by Digital, which required that for the assignment to become binding on the insurance carrier, Digital had to — but did not — sign and date the contract. That is what Digital and the insured agreed to and that is what the contract requires.¹³ Now, to support its position that the parties intended something else, the majority concludes that Digital intended to accept the assignment “because it filed this lawsuit based on the assignment” and because the insured never intervened in this suit. First, and without belaboring the point, the fact that a claim has been made or a defense has been raised is not evidence of anything and does not tend to prove or disprove the merits of the claim or defense. I do agree with the majority that it does not take much to create a valid assignment, however, the contract was the only evidence of the parties’ intent and the contract required Digital to execute and date it in order for it to be binding on Allstate. The parties put it in the contract and there is nothing before us to suggest they did not mean it, or that they meant something else. If this was indeed an issue, it should have been litigated and evidence should have been presented. We are not free to ignore provisions in contracts simply because they are “troublesome” or “offending” and the majority should not ignore the terms of the contract in order to find a basis for reversal.

For all the above reasons, I respectfully dissent from the majority opinion and would affirm the trial court’s ruling that Digital had no standing to bring this action pursuant to the contract.

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¹Allstate does not dispute that this was obsolete language referring to a requirement to arbitrate. During the hearing on the motion for summary judgment, the attorney for Allstate said: “And I could tell you why that language is in there, Judge, because for whatever reason the plaintiff maintained an old assignment of benefits [from] back before the case of Pinnacle, when if there was an assignment of benefits you had to go to arbitration if there wasn’t. That’s why that language was in there, so there was a purpose for this language.” (T. at 14, 15). Even without knowledge of the statutory history that lead to the holding in Pinnacle, the language of the paragraph in the assignment was obviously meant to refer to some sort of dispute resolution mechanism not involving a trial. After all, the language of that clause instructs the insurer that “in the event the subject medical benefits are disputed for any reasons [sic], including medical reasonableness and or necessity that the amount of benefits claimed by ________________ is to be set aside and not disbursed until dispute is resolved.”(emphasis added, see the clause quoted in full in footnote 6 of the dissent).

²As the dissent correctly points out, the agreement does not use the words “arbitrate” or “arbitration.” However, as explained in footnote 1, and as asserted by Allstate during the hearing on the motion for summary judgment, the language in question is a holdover from a previous statutory requirement.

³See Restatement (first) of Contracts § 12 (1932) “a unilateral contract is one in which no promisor receives a promise as consideration for his promise. A bilateral contract is one in which there are mutual promises between two parties to the contract; each party being both a promisor and a promisee.” See also Restatement (first) of Contracts § 12 (1932) cmt. b: “In many cases, a promise becomes a contract even though no return promise is made by the promisee. In such cases the legal duty is unilateral, resting on the promisor alone. The correlative legal right is also unilateral, being possessed by the promisee alone.”

⁴It was also undisputed that the contract was never presented to or received by Allstate.

⁵If the majority means that the clause and contract contain misspellings and are, in large part, grammatically infirm, then, I agree.

⁶The entire agreement states:

I, the undersigned patient hereby assign the rights and benefits of insurance of the applicable personal injury protection, medical payments, and/or other insurance to ____ of services and/or supplies rendered for treatment of personal treatment of personal injuries sustained in the accident of _____to the undersigned patient and covered by Personal Injury Protection (PIP) Coverage of other insurance coverage under _____ in accordance with Florida Statue [sic] 627.736(5). The undersigned agrees to pay any deductible or co-payment not covered by the P.I.P. or other insurance coverage. I have read the information herein and is true and to the best of my knowledge.

This assignment includes, but is not limited to, all rights to collect benefits directly from the insurance company for services that I have received; and all rights to proceed against the insurance company obligated to provide benefits in any action including legal suit, if for any reason the insurance company fails to make payment of benefits of which I am due. Specifically, this assignment includes the right to collect payment for the reasonable costs connected with copying and mailing records to the insurer at the insurer’s request and in accordance with Florida Statue [sic] 627.736(6). This assignment also includes any right to recover attorney’s fees and costs for such action brought by the provider as Patient’s assignee. I agree that _____________ may select any attorney he/she/it wishes and understand and agree that the attorney selected by them may be different than the attorney handling my personal injury/bodily injury claim or case.

As part of this assignment of rights and benefits, which only becomes binding upon the insurance carrier [sic] receipt of said assignment after it having been executed and dated by the Health Care Provider. I hereby instruct the insurance carrier that in the event the subject medical benefits are disputed for any reasons [sic], including medical reasonableness and or necessity that the amount of benefits claimed by ______________ is to be set aside and not disbursed until dispute is resolved. As part of this assignment of right [sic] of benefits, I further instruct the insurance carrier to notify the provider immediately of any dispute as to payment so that he/she/it may exercise their legal rights. I understand that any person who knowingly files anything containing any false, incomplete or misleading information with the intent to injure, defraud, or deceive any insurance company is guilty of a felony of the third degree. I have read the information herein and it is true and correct to the best of my knowledge and belief.

⁷There is no evidence in this case that such an arbitration provision was ever in this contract, nor, for that matter, that Digital ever complied with the requirements of any statute.

⁸The majority suggests by implication that such a revision occurred because the statute’s arbitration requirement was declared unconstitutional in Nationwide Mutual Fire Insurance Co. v. Pinnacle Medical, Inc., 753 So.2d 55 (Fla. 2000).

⁹There is absolutely no evidence to suggest that Digital revised this contract in ways it did not intend or that it neglected to make a modification it intended to make when it removed the arbitration requirement.

¹⁰This is, at best, a questionable proposition. See, e.g., Jenkins v. City Ice & Fuel Co., 118 Fla. 795, 160 So. 215 (Fla. 1935)

¹¹The majority found this assignment to be “valid”, thus, the majority must have considered the assignment itself to be supported by adequate consideration.

¹²The majority relies on Gallagher v. Dupont, 918 So.2d 342 (Fla. 5th DCA 2005) and White v. Exchange Corp., 167 So.2d 324 (Fla. 3rd DCA 1964).

¹³Lopez v. Ernie Haire Ford, Inc., 974 So.2d 517, 519 (Fla. 2nd DCA 2008) (citing authority for the proposition that “a party has a duty to learn and know the contents of a proposed contract before he signs and delivers it and is presumed to know and understand its contents, terms and conditions”).