15 Fla. L. Weekly Supp. 383b

Insurance — Personal injury protection — Coverage — Medical expenses — Exhaustion of policy limits — Insurer has no duty to escrow funds pending resolution of contested claim — Insured cannot maintain action to recover PIP benefits when insured’s benefits have been exhausted after medical provider filed suit against insurer and there is no evidence that insurer acted in bad faith in exhausting benefits

NORTH PALM NEUROSURGERY, P.L., Plaintiff, vs. PROGRESSIVE AMERICAN INSURANCE COMPANY, Defendant. County Court, 15th Judicial Circuit, Civil Division, in and for Palm Beach County. Case No. 502006SC011792 XXXXMB, Division RB. February 5, 2008. Ted Booras, Judge.

AMENDED ORDER GRANTING DEFENDANT’S SUMMARY JUDGMENT AND DENYING PLAINTIFF’S MOTION FOR REHEARING

THIS CAUSE originally came before the Court upon Defendant’s Motion for Summary Judgment based on an exhaustion of benefits claimed defense. This case is again before the Court upon Plaintiff’s Motion for Rehearing. For reasons set forth below, the original Summary Judgment is hereby replaced with this Order, and Plaintiff’s Motion for Rehearing is hereby denied.

The undisputed facts are that at the time this action was filed, PIP benefits were not yet exhausted. That at some time after the filing of this action, Defendant made subsequent payments to other health care providers which exhausted the benefits under the policy limits.

An insurer has an obligation to settle as many claims as possible, and has discretion, subject to the requirement of good faith, in how it elects to settle claims, even if the ability to settle certain claims to the exclusion of others. Trapana v. Progressive, 14 Fla. L. Weekly Supp. 869 (Fla. Broward Cty. Ct. 2007).

Florida law is very clear that an insurer has no duty to escrow funds pending the resolution of a contested claim. Simon v. Progressive, 904 So.2d 449 (Fla. 4th DCA 2005); Chambers Medical Group v. Progressive, 13 Fla. L. Weekly Supp. 367 (Fla. 13th Jud.Cir. 2005); Trapana v. Progressive, 14 Fla. L. Weekly Supp. 869 (Fla. Broward Cty. Ct. 2007). Absent a showing of bad faith, a provider can not be held liable for reduction of benefits after benefits were exhausted. Simon v. Progressive, 904 So.2d 449 (Fla. 4th DCA 2005); and, Progressive v. Diblasio, 14 Fla. L. Weekly Supp. 534 (Fla. 15th Jud.Cir. 2007) (Although holding that benefits were exhausted prior to suite being filed).

In Simon, supra, the Court specifically held that the automatic application of a “reserve” or “hold” provision to funds available at the time a claim is submitted 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. Id. at 450. Additionally, Florida’s “No-Fault” law has no provision allowing funds to be placed in escrow or reserve for contested claims. The failure of the legislature and the courts to recognize a duty on behalf of an insurer to reserve funds pending the litigation of a contested PIP claim leaves this Court to conclude that the right to contest the denial of a PIP claim, absent a showing of bad faith, can be extinguished through an exhaustion of benefits by the insured after the claim has been submitted.

Contrary to the Court’s ruling herein, some courts have held that the insured can maintain a cause of action to recover PIP benefits when the insured’s benefits were exhausted after the medical provider filed suit against the insurer. Progressive v. South Florida Institute of Medicine, 14 Fla. L. Weekly Supp. 520 (Fla. 11th Jud.Cir. 2007)(Holding 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.”); and, D’Eramo v. State Farm, 13 Fla. L. Weekly Supp. 840 (Fla. Seminole Cty. Ct. 2006).

This Court cannot accept the logic of Progressive v. South Florida Institute of Medicine, supra, wherein it found that the payment of additional benefits while a case was pending was “gratuitous”. As the dissent therein correctly pointed out, the majority’s opinion violated the Fourth’s holding in Simon, supra. Additionally, the majority’s holding would lead to an absurd result¹ and construction of the PIP statute; in that, it would result in the unreasonable exposure of an insurer and would be to the detriment of the insured and other providers.

In the instant case, Defendant’s failure to pay those additional claims until the pending claim was resolved would have exposed Defendant to multiple lawsuits by other medical providers whose bills would have been placed on hold until the merits of Plaintiff’s pending claim could be resolved. This process would clearly frustrate the intent of the PIP statute to provide for prompt payment of these claims. Nucci v. Progressive, 13 Fla. L. Weekly Supp. 766 (Fla. 6th Jud.Cir. 2006); and, Concept EFL Imaging v. Progressive, 14 Fla. L. Weekly Supp. 647 (Fla. Palm Beach Cty. Ct. 2007).

In Nucci, supra, at the time suit was filed, there were sufficient PIP benefits left to cover the bill. Progressive exhausted the remaining benefits by paying bills submitted by other medical providers. The court affirmed the summary judgment in favor of defendant (Progressive), finding the Simon analysis applicable.

In Concept EFL Imaging v. Progressive, supra, the court found that the language in the Simon opinion indicated that the Fourth contemplated that an insurer would receive claims from providers after a lawsuit was filed and approved the company’s payment of these later claims to other health care providers.

The ruling of this Court is that the Plaintiff (insured) cannot maintain a cause of action to recover PIP benefits when the insured’s benefits were exhausted after the medical provider filed suit against the insurer, and there was no evidence that Defendant (insurer) acted in bad faith in exhausting benefits.

This Court finds that Defendant’s decision to pay other claims submitted on behalf of its insured, absent a showing of bad faith, satisfied its statutory obligation under Florida’s No-Fault law, as well as its contractual obligation to the insured. Nucci v. Progressive, 13 Fla. L. Weekly Supp. 766 (Fla. 6th Jud.Cir. 2006); Trapana v. Progressive, 14 Fla. L. Weekly Supp. 869 (Fla. Broward Cty. Ct. 2007); Concept EFL Imaging v. Progressive, 14 Fla. L. Weekly Supp. 647 (Fla. Palm Beach Cty. Ct. 2007); Abacoa Physical Medicine v. Progressive, 13 Fla. L. Weekly Supp. 1223 (Fla. Palm Beach Cty. Ct. 2006); Simon v. Progressive, 13 Fla. L. Weekly Supp. 501 (Fla. Palm Beach Cty. Ct. 2005); Simon v. Progressive, 13 Fla. L. Weekly Supp. 502 (Fla. Palm Beach Cty. Ct. 2005); and, Fink v. Progressive, 13 Fla. L. Weekly Supp. 178 (Fla. Sarasota Cty. Ct. 2005).

ORDERED AND ADJUDGED that Defendant’s Motion for Summary Judgment is hereby GRANTED. This Order supercedes the original Order of this Court dated January 7, 2008.

IT IS FURTHER ORDERED AND ADJUDGED that Plaintiff’s Motion for Rehearing is hereby DENIED.

IT IS THEREFORE ORDERED AND ADJUDGED that final judgment is hereby entered in favor of the Defendant, Progressive American Insurance Company. The Plaintiff shall recover nothing from this action and the Defendant shall go hence without day.

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¹In State v. Webb, 398 So. 2d 820 (Fla. 1981), the Supreme Court held that courts are prohibited from strictly construing a law so as to produce an absurd result.

It is a fundamental rule of statutory construction that legislative intent is the polestar by which the court must be guided, and this intent must be given effect even though it may contradict the strict letter of the statute. Furthermore, construction of a statute which would lead to an absurd or unreasonable result or would render a statute purposeless should be avoided. To determine legislative intent, we must consider the act as a whole — “the evil to be corrected, the language of the act, including its title, the history of its enactment, and the state of the law already in existence bearing on the subject.

Id. Citing, Foley v. State, 50 So. 2d 179 (Fla. 1951). Laws are created by reasonable people and must be interpreted with reasonable minds and reasonableness.