15 Fla. L. Weekly Supp. 936b
Insurance — Personal injury protection — Coverage — Exhaustion of policy limits — In absence of bad faith, manipulation, or other improper conduct, medical provider cannot sustain action for PIP benefits once benefits have been exhausted in payment of other claims while coverage investigation regarding provider’s claim was pending — Prior order denying motion to amend complaint is withdrawn as to amendment to allege bad faith and improper conduct, but reaffirmed as to requested substantive amendment by interlineation and untimely request to amend complaint to allege that insurer has adopted improper reimbursement method — If exhaustion of benefits eliminates recovery of PIP benefits, it also eliminates recovery of interest, penalties, and attorney’s fees to which provider would otherwise be entitled due to wrongful denial of claim
FORT LAUDERDALE CENTER FOR CHIROPRACTIC CARE, INC. (a/a/o Jerome McCain), Plaintiff, vs. PROGRESSIVE EXPRESS INSURANCE COMPANY, Defendant. County Court, 17th Judicial Circuit in and for Broward County. Case No. 06-14491 COCE 53. July 10, 2008. Robert W. Lee, Judge. Counsel: Harley Kane, Boca Raton, for Plaintiff. Christopher Kirwan, Fort Lauderdale, for Defendant.
ORDER DEFERRING RULING ON DEFENDANT’S MOTION FOR SUMMARY JUDGMENT
THIS CAUSE came before the Court on June 24, 2008 for hearing of the Defendant’s Motion for Summary Judgment, and the Court’s having reviewed the Motion and entire Court file, heard argument; reviewed the relevant legal authorities; and been sufficiently advised in the premises, the Court finds as follows:
Background. The Plaintiff is a health care provider who claims to have rendered treatment to Jerome McCain for injuries sustained in a motor vehicle accident in November 2005. At the time of the accident, McCain had a policy of insurance issued by Progressive which provided $10,000 in personal injury protection benefits, with a $1,000 deductible.
The Plaintiff claims to have provided treatment in December 2005, and further to have properly and timely submitted the health insurance claim forms to Progressive. The insurer responded with an explanation of benefits noting that “Progressive has a pending coverage investigation that must be resolved prior to making a reimbursement decision.” Progressive did not elaborate on the nature of the coverage dispute.
Subsequently, Progressive asserts that benefits under the policy were exhausted on May 31, 2006 when the insurer paid other claims while still having Plaintiff’s claim unresolved. Between the time of the original submission of the bills and the time of the exhaustion of benefits, the parties continued to engage in a dispute of the submitted claims. The insurer did not pay the claim. On September 13, 2006, the Plaintiff filed this suit for unpaid PIP benefits.
On May 17, 2007, the Defendant filed its Motion for Summary Judgment, asserting that it “has paid out the maximum amount due under the terms of the contract,” and therefore no additional benefits are due.
Conclusions of Law. For purposes of this Motion, the question for the Court is whether an insurer can be liable for a timely submitted claim when it pays nothing on the claim and subsequently exhausts benefits by paying other claims.
The Plaintiff contends that when an insurer reduces or denies a claim, it does so at its own peril, and if it is subsequently shown that those claims should have been paid, then the insurer should face the consequences of having taken that risk. If such a situation arises, the Plaintiff argues, the insurer does not necessarily have to pay over its policy limits; the insurer could seek reimbursement of funds that were erroneously paid to another provider.
While the Plaintiff cites authority to support its position, the bulk of that authority pre-dates the controlling decision in Simon v. Progressive Express Ins. Co., 904 So.2d 449 (Fla. 4th DCA 2005). In that case, the appellate court held as follows:
We decline to create a requirement that an insurance company set aside a “reserve” fund for claims that are reduced or denied. [The provider] does not contend that the denial or reduction of its claim was in bad faith, or that [the insurer] had manipulated, or acted improperly, in reducing it.
Id. at 450. In reaching its decision, the appellate court explained its rationale:
If we were to accept [the provider’s] theory that a “reserve” or “hold” provision must be automatically applied to any available funds at the time a claim is submitted, it would result in unreasonable exposure of the insurance company and would be to the detriment of the insured and other providers with properly submitted claims. Under such a theory, all potential payments to a service provider that were denied, or were subject to a reduction, would have to be held in reserve until the statute of limitations period expired or a suit was filed and concluded. This would delay and reduce availability of funds for the payment of claims to other providers and would be inconsistent with the PIP statute’s “prompt pay” provisions. (Citation omitted.) It is the obligation of insurance companies to attempt to settle as many claims as possible. (Citation omitted.) It is also a prerogative of insurance companies to pay, reduce, or deny claims.
Id.
The Plaintiff claims that this holding operates only under circumstances present in Simon: when an insurer reduces a claim, and the provider accepts the partial payment. However, in a controlling circuit appellate decision, Judge Carney held that the Simon holding applied to “disputed claims,” declining to limit the holding of Simon to its specific facts. See B & D Chiropractic Center, Inc. v. Progressive Express Ins. Co., 15 Fla. L. Weekly Supp. 334 (17th Cir. Ct. 2007) (appellate capacity).
Other courts subsequent to Simon have held accordingly. See, e.g., North Palm Neurosurgery, P.L. v. Progressive American Ins. Co., 15 Fla. L. Weekly Supp. 383 (Palm Beach Cty. Ct. 2008); DC Services, LLC v. Progressive Express Ins. Co., 15 Fla. L. Weekly Supp. 394 (Seminole Cty. Ct. 2008); Sarasota Spine Specialist, P.A. v. Progressive Express Ins. Co., Case No. 2007-AP-644 NC (12th Cir. Ct. 2008) (appellate capacity). This Court therefore concludes, in the absence of bad faith, manipulation, or other improper conduct, a provider cannot sustain an action for benefits once benefits have been exhausted. In the instant case, however, this does not completely resolve the matter.
The Plaintiff has raised two additional issues: (1) whether the Defendant’s request for summary judgment is premature because the Plaintiff has not been able to complete discovery; and (2) even if benefits have been exhausted, whether the Plaintiff would still be entitled to interest, penalties, and attorney’s fees due to Progressive’s wrongful denial of the claim.
In July 2007, the Plaintiff filed a motion to amend its complaint by interlineation to add factual allegations asserting that the Defendant acted in bad faith, manipulated or otherwise acted improperly in reducing the Plaintiff’s bills. The motion was heard before the Court on September 6, 2007. The Court denied the motion because, as the Plaintiff concedes in its Memorandum, this type of substantive amendment could not be accomplished by interlineation. Subsequently, the Plaintiff moved to amend its complaint to assert the allegation that Progressive had acted in bad faith, manipulated or otherwise acted improperly in reducing the Plaintiff’s bills, and that Progressive, as a general business practice, has adopted a reimbursement method by use of systematic downcoding and adopting a fee schedule not permitted by the no-fault law. The Plaintiff included this latter request in its Motion for Reconsideration of Order Denying to Amend Complaint by Interlineation. The Court summarily denied the Motion in its entirety on September 14, 2007. Nevertheless, in light of the appellate ruling in Simon, the Plaintiff believes it should be able to pursue the possibility that Progressive acted improperly. To this end, the Plaintiff urges that it has diligently been attempting to take the deposition of the pre-litigation adjuster, Darryl Clark, but through no fault of its own, the Plaintiff has been unable to do so.
Upon further reflection, and having made a more thorough review of the relevant decisional authority, the Court withdraws its Order of September 14, 2007, but only insofar as it pertains to the Motion to Amend Complaint for bad faith and improper conduct. The Court reaffirms that portion of the Order dealing with the issue of interlineation and improper reimbursement method. (As for this latter issue, the Plaintiff simply waited too long to bring this issue to the Court’s attention once it knew or should have known of the possible misconduct.) Until the Court rules on the Motion to Amend Complaint, the issue of outstanding discovery cannot be disposed by the Court. The Court will set the Motion for hearing by separate order.
Next, the Court considers whether the Plaintiff would still be entitled to interest, penalties, and attorney’s fees if benefits under the policy were exhausted subsequent to a properly submitted claim. The Court notes that the benefits in this case were exhausted prior to the Plaintiff’s having filed its Complaint. Under this circumstance, the Court agrees with the more persuasive authority that if the exhaustion of benefits eliminates recovery of PIP benefits, it also eliminates the recovery of interest, penalties, and attorney’s fees. See DC Services, 15 Fla. L. Weekly Supp. at 394; Abacoa Physical Medicine v. Progressive Auto Pro Ins. Co., Order Granting Defendant’s Motion for Final Summary Judgment, ¶¶5-8, Case No. 50 2006 SC 3904 MB RF (Palm Beach Cty. Ct. 2006); Progressive Express Ins. Co. v. Millenium Diagnostic Imaging Center, Inc., Opinion on Appeal, Case No. 06-50 AP (11th Cir. Ct. 2007) [14 Fla. L. Weekly Supp. 938a]; Progressive Auto Pro Ins. Co. v. DiBlasio, Opinion on Appeal, Case No. 50-2006 AP 9 MB (15th Cir. Ct. 2007). Accordingly, it is hereby
ORDERED AND ADJUDGED that the ruling on the Defendant’s Motion for Final Summary Judgment is DEFERRED pending hearing and ruling on Plaintiff’s Motion to Amend Complaint.
