15 Fla. L. Weekly Supp. 1005a
Insurance — Personal injury protection — Coverage — Exhaustion of policy limits — In absence of bad faith, medical provider cannot maintain cause of action for unpaid portion of reduced medical bills where policy limits have been exhausted, even where exhaustion occurred after suit was filed — Insurer is not required to reserve funds for disputed claims
RUSS TANNENBAUM, D.C., P.A., a/a/o VICTOR MADDOX, Plaintiff, v. PROGRESSIVE EXPRESS INSURANCE COMPANY, Defendant. County Court, 11th Judicial Circuit in and for Miami-Dade County. Case No. 07-20114-SP-05 (01). July 28, 2008. Shelley Kravitz, Judge. Counsel: Maury L. Udell, Beighley, Myrick & Udell, P.A., Miami. Gregg Pessin.
FINAL ORDER
THIS CAUSE came upon to be heard on Plaintiff’s Motion for Partial Summary Judgment and Defendant’s Motion for Final Summary Judgment on the issue of exhaustion of benefits, and the Court having heard argument of counsel, and after reviewing the record and all memoranda and submitted case law, and being otherwise fully advised in the premises, it is hereby
ORDERED AND ADJUDGED as follows:
FACTUAL BACKGROUND
The following facts are undisputed:
1. This is a Personal Injury Protection (PIP) case arising out of an accident that occurred on December 21, 2006.
2. Plaintiff, RUSS TANNENBAUM, D.C., P.A., submitted medical bills to Defendant, PROGRESSIVE EXPRESS INSURANCE COMPANY, based on a policy of insurance that the insured, Victor Maddux, had with Defendant.
3. Pursuant to the policy of insurance, Defendant paid the insured’s medical bills in the order in which they were received, including Plaintiff’s medical bills, at a reduced rate, pursuant to the terms of the policy.
4. The instant case was filed on November 7, 2007.
5. There was no allegation nor any proof of bad faith by the insurer, that benefits were improperly paid, or not that benefits were not paid for covered losses of the insured pursuant to the policy of insurance.
6. The insured’s $10,000 in benefits were exhausted on February 18, 2008 after this suit was filed.
QUESTION PRESENTED
The question presented to the Court is whether an assignee/medical provider can maintain a cause of action for breach of an insurance contract where the policy limit has been exhausted for covered losses for the benefit of the insured, even after litigation has commenced.CONCLUSIONS OF LAW
The basic legal principle in Florida is that the scope and extent of insurance coverage is defined by the language and terms of the policy. See e.g., Union Am. Ins. Co. v. Maynard, 752 So.2d 1266, 1268 (Fla. 4th DCA 2000); United States Fire Ins. Co. v. Morejon, 338 So.2d 223, 225 (Fla. 3d DCA 1976). An insurance policy governs the rights and obligations of the parties thereto, and the policy must be construed in terms of its plain meaning where the policy is unambiguous. Florida Residential Prop. & Cas. Joint Underwriting Ass’n v. Kron, 721 So.2d 825 (Fla. 3d DCA 1998); American Mfrs. Mut. Ins. Co. v. Horn, 353 So.2d 565 (Fla. 3d DCA 1977), cert. denied, 366 So.2d 885 (Fla.1978). The insurance policy in this case is a contract between Progressive and the insured which sets forth the benefits to which the insured is entitled. The insured is limited in its recovery by the terms of this contract. Plaintiff, as assignee of the contract insurance, is entitled to only those rights and benefits set forth in the policy.
It is a well-established principle of law that an assignee is bound where his assignor would be bound. See Cadle Co. II, Inc. v. Stamm, 633 So.2d 45, 46 (Fla. 1st DCA 1994). “As to all defenses, he stands in the shoes of the former.” See Einstein’s Sons v. Shouse, 24 Fla. 490, 500 (Fla. 1888). An assignment does not change the rights and benefits available under the policy, and does not invest in the assignee any right of action or defense which before the assignment, the assignor did not have. In Union Indemnity Co. v. City of New Smyrna 100 Fla. 980, 130 So. 453 (Fla. 1930), the Court held that the assignee of a contract could acquire no greater right through assignment than that which the assignor himself might assert. Thus, the Plaintiff in this case can gain no greater rights than the insured. See also Chrysler Credit Corporation v. United Services Automobile Association, 625 So.2d 69 (Fla. 1st DCA 1993) (the assignee took the assignment subject to the specific language in the policy); Resolution Trust Corp. v. Broad & Cassel, P.A., 889 F. Supp. 475 (M.D. Fla. 1995); Sans Souci v. Division of Florida Land Sales & Condominiums, 448 So.2d 1116 (Fla. 1st DCA 1984); Dubbin v. Capital National Bank, 264 So.2d 1 (Fla. 1972); Alderman Interior Sys., Inc. v. First Nat’l-Heller Factors, Inc., 376 So.2d 22, 24 (Fla. 2d DCA 1979) (“Under Florida Law, an assignment gives the assignee no greater rights against the principle debtor, or its guarantor, than those held by the assignor.”).
It appears that in the instant case, Plaintiff in its breach of contract suit, seeks benefits beyond the contractual amount set forth by the policy. There are numerous cases where an appellate court has reduced the amount of the judgment rendered by a jury because it exceeds the policy limits. For example, in Stella v. Craine, 281 So.2d 584, 585-86, (Fla. 4th DCA 1973) the 4th DCA held that relief was pursuant to rule 1.540(b) available where a judgment was entered against an insurance company for an amount in excess of the policy limits. Allowing recovery beyond the policy limits would render the terms of the policy meaningless. Florida courts have long held that insurance contract provisions may not be construed as meaningless. See, e.g., Premier Ins. Co. v. Adams, 632 So.2d 1054 (Fla. 5th DCA 1994).
Progressive’s actions of continuing to pay the bills as submitted, and not setting aside monies to satisfy potential disputes, satisfies the purpose and design of the PIP statute, and allowed the insured to continue receiving medical treatment for his injuries. The seminal case on the issue is Dr. Robert Simon v. Progressive Express Insurance Company, 904 So.2d 449 (4th DCA, 2005) rev. denied, 919 So.2d 436 (Fla. 2005). In Simon, Dr. Simon, a medical provider, accepted a reduced payment for services rendered to an insured. Dr. Simon cashed the check without protest and made no allegation that the claim was reduced or denied improperly and never requested Progressive set aside any disputed funds. Subsequently, Progressive paid the remainder of the insured’s bills in the ordinary course of business and exhausted the $10,000 in benefits. Simon filed suit, claiming that he had a priority claim against the remaining funds at the time his claim was reduced and/or denied. However, the Fourth District held that “applying Simon’s theory would delay and reduce the availability of funds for the payment of claims to other providers and would be inconsistent with the PIP statute’s ‘prompt pay’ provisions.” Id. at 450.
Clearly, under Simon, an insurer is under no obligation to set aside a reserve fund for claims that are reduced or denied. Id. at 450. The Simon Court’s rationale was as follows:
If we were to accept Simon’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. See §§ 627.613 and 627.662(7), Fla. Stat. (provision established to expedite payment to service providers).
Id. at 450.
It is undisputed that Defendant, as in Simon, paid the insured’s claims as they were received and attempted to settle as many claims as possible with the limited amount of money and time available. See Farinas v. Florida Farm Bureau General Ins. Co. 850 So.2d 555, 560 (Fla. 4th DCA 2003).
Plaintiff did not possess an absolute assignment from the insured, as the insured assigned her rights to other medical providers as well as Plaintiff. Progressive was obligated to continue paying the bills received from other providers, even after the Plaintiff filed suit. There is no principle of Florida law which imposes a duty owed to a medical provider, which is not owed to the insured — To hold otherwise would alter the terms of the insurance contract entered into by the parties. Courts should not rewrite a contract of insurance extending coverage afforded beyond that plainly set forth in contract. United States Fire Ins. Co. v. Morejon, 338 So.2d 223 (Fla. 3d DCA 1976).
In B&D Chiropractic Center v. Progressive Express Ins. Co., 17th Judicial Circuit, Appellate, (February 15, 2008), the Broward Circuit Court, ruling in its appellate capacity, addressed the issue of post suit exhaustion of benefits, the Court found that based on Simon, an insurance company is not required to set aside a reserve fund for disputed claims. Additionally, Florida’s “No-Fault” law has no provision allowing funds to be escrowed or reserved for contested claims. The failure of the legislature and the courts to recognize a duty on behalf of an insurance company to reserve funds pending the litigation of a contested PIP claim leads 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, or after the lawsuit has been filed. See also, R.J. Trapana a/a/o Mederos v. Progressive American, 14 Fla. L. Weekly Supp 869a (Fla. 17th Judicial Circuit, June 28, 2007); Rebecca Burress v. State Farm Mutual Automobile Insurance Company, 13 Fla. L. Weekly Supp. 903b (Fla. 13th Jud. Cir. June 16, 2006), Nu-Best Whiplash Injury Center v. Progressive Auto Pro Insurance Company, 13 Fla. L. Weekly Supp. 830c (Fla. 13th Jud. Cir. May 26, 2006). Premier Open MRI, LLC v. Progressive Express Insurance Company, 11 Fla. L. Weekly Supp. 839a (Fla. 13th Jud. Cir. May 26, 2004); Back In Action Health, LLC v. Progressive Express Insurance Company, 11 Fla. L. Weekly Supp. 1092a (Fla. 15th Jud. Cir. September 17, 2004); Comprehensive Physical Services v. The Hartford Insurance Company of Midwest, 12 Fla. L. Weekly Supp. 351a (Fla. 13th Jud. Cir. January 20, 2005); and Dr. Robert D. Simon, M.D., P.A. v. Progressive Express Insurance Company, 13 Fla. L. Weekly Supp. 502a (Fla. 15th Jud. Cir. December 7, 2005).
Recently, in Millennium Diagnostic Imaging Center, Inc. v. Progressive Express Ins. Co., 3D07-2628 (Fla. 3d DCA 2008), in denying Millennium’s petition for certiorari of the 11th Judicial Circuit appellate’s ruling in Progressive Express Ins. Co. v. Millennium Diagnostic Imaging Center, Inc. 14 Fla. L. Weekly Supp. 938a (Fla. 11th Cir. Appellate July 2007) (insurer not required to hold remaining PIP benefits in reserve funds each time claims are reduced or denied), the 3rd District Court adopted the holding in Simon that an insurance carrier has no obligation to reserve PIP benefits.
Lastly, in Progressive American Ins. Co. v. Stand-up MRI of Orlando, 5D07-2495 (Fla. 5th DCA 2008) (July 11, 2008), the 5th DCA held that no requirement exists to set aside a reserve for disputed claims, and, in the absence of showing of bad faith, a PIP insurer is not liable for benefits once benefits have been exhausted. Moreover, the Court states that the filing a “demand letter” does not require an insurer to hold funds in a reserve fund. It merely satisfies section 627.736(11)’s condition precedent that such a letter be sent before filing suit against the insurer.
The fact that litigation has ensued during the pendency of a claim should not alter the dynamic of the parties to the contract or the terms of the insurance policy. To hold otherwise and require insurers to maintain a reserve fund for possible or disputed claims would undoubtedly disrupt the flow of prompt payments to medical providers who provided reasonable, related and medically necessary services to the insureds and unfortunately require the Court system to become the claim adjustment mechanism for the insurance carriers. This is the antithesis of why the No-fault scheme was enacted. See Ivey v. Allstate Ins. Co., 774 So. 2d 679, 683-84 (Fla. 2000) (“Without a doubt, the purpose of the no-fault statutory scheme is to ‘provide swift and virtually automatic payment so that the injured insured may get on with his life without undue financial interruption.’ ”).
Wherefore, for the foregoing reasons, the Court hereby orders and adjudges that:
1. Plaintiff’s Motion for Partial Summary Judgment is DENIED;
2. Defendant’s Motion for Final Summary Judgment is hereby GRANTED;
3. Defendant shall go hence forth without day. The Court reserves jurisdiction to entertain any timely served motions to tax attorney’s fees and costs.
