15 Fla. L. Weekly Supp. 174a
Insurance — Personal injury protection — Application — Misrepresentations — Where insured failed to inform insurer of licensed son residing in household, and insurer would not have issued policy at same premium had it known of son, insurer may deny coverage for injuries sustained by son while driving vehicle owned by father and insured by different insurer — No merit to argument that coverage must be extended to son under Innocent Insured Doctrine where son is not unrelated third-party beneficiary of mother’s policy and represents additional risk not reflected in premium — Son should look to insurer of father’s vehicle for coverage
SOUTH FLORIDA INSTITUTE OF MEDICINE, (a/a/o MICHAEL DUNCAN), Plaintiff, vs. PROGRESSIVE AMERICAN INSURANCE COMPANY, Defendant. County Court, 11th Judicial Circuit in and for Miami-Dade County, Civil Division. Case No. 07-5825 CC 05. December 12, 2007. Teretha Lundy Thomas, Judge. Counsel: Kevin Whitehead, for Plaintiff. Reuven T. Herssein, Law Offices of Herssein & Herssein, P.A., Miami Beach, for Defendant.
ORDER ON DEFENDANT’S MOTIONFOR FINAL SUMMARY JUDGMENT
Findings of Fact:
1. On May 14, 2004, Michael Duncan was the driver of a 1996 Mazda 626, owned by his father, Fritz Duncan and insured by Ocean Harbor Casualty Insurance.
2. At the time of the aforementioned accident, Florence Duncan, Michael Duncan’s mother, owned a 1997 Saturn, Vehicle Identification Number 1G8ZH5289VZ217270. Said vehicle was insured by a policy of automobile insurance written by PROGRESSIVE, effective 2/5/2004 through 8/6/2004.
3. Michael Duncan is not a listed driver on Florence Duncan’s insurance policy. In fact, the only named insured on said policy is Florence Duncan herself.
4. At the time Florence Duncan applied for automobile insurance, on 2/5/2004, she failed to list Michael Duncan as a resident household member of driving age. In fact, Ms. Duncan answered positively to a specific question asking whether all household members over the age of fifteen had been reported, and further attested that the answers contained within said application were true.
5. As a result of injuries allegedly sustained by Michael Duncan in the aforementioned accident, he received treatment at the South Florida Institute of Medicine, from 5/19/2004 through 8/24/2004.
6. The charges for said treatment were submitted to PROGRESSIVE for payment under the PIP provisions of Florence Duncan’s insurance policy.
7. On 1/10/2005, Michael Duncan appeared for an Examination Under Oath as requested by PROGRESSIVE and as part of its coverage investigation into the claim.
8. During the Examination Under Oath, Michael Duncan testified that he was driving his father’s vehicle at the time of the subject accident.
9. Michael Duncan further admitted to having resided with his mother, Florence Duncan, for over one year prior to the time of the subject accident.
10. The General Provisions of Florence Duncan’s automobile insurance policy states, in pertinent part: FRAUD OR MISREPRESENTATION.
This policy was issued in reliance upon the information provided on your insurance application. We may void this policy if you or an insured person:
1. made incorrect statements or representations to us with regard to any material fact or circumstance;
2. concealed or misrepresented any material fact or circumstance. . . We may deny coverage for an accident or
loss if you or an insured person have knowingly concealed or misrepresented any material fact or circumstance. . .
11. Based on its coverage investigation, PROGRESSIVE determined that had Florence Duncan been candid about the existence of an additional driver, her auto insurance premium would have increased.
12. Due to Florence Duncan’s lack of candor and material misrepresentation in her application for insurance, combined with the fact that there would have been an increased premium for an additional driver, PROGRESSIVE voided the policy and returned the unused premiums.
13. As a result, the charges submitted by the Plaintiff for medical treatment rendered to Michael Duncan were denied in full due to the material misrepresentation in the policy of insurance.
14. The Court also notes that because Michael Duncan was driving his father’s vehicle at the time of loss, the insurer of Fritz Duncan’s vehicle, Ocean Harbor Casualty Insurance, would be the correct entity to provide coverage to Michael Duncan in conformance with Florida Statutes section 627.736 (2003).
Findings of Law:
15. Florida Statute section 627.409(1)(b) (2003) provides that an insured’s misrepresentation may prevent recovery if the insurer would not have issued the policy at the same premium rate had the true facts been known.
16. An insurer is entitled, as a matter of law, to rely upon the accuracy of the information contained in the application (for insurance) and has no duty to make additional inquiry. Independent Fire Insurance Co. v. Arvidson, 604 So.2d 854 (Fla. 4th DCA 1992) (citing New York Life Ins. Co. v. Nespereira, 366 So.2d 859 (Fla. 3d DCA 1979)).
17. At the time Florence Duncan applied for a policy of automobile insurance with PROGRESSIVE, she was asked in questionnaire format whether all household residents fifteen years of age and older were listed. In direct response to this question, Florence Duncan answered in the affirmative. Florence Duncan also attested to her answers within the policy application as being true and correct. As such, Ms. Duncan was issued a policy of insurance that listed only herself as a named insured, and at a premium calculated to reflect the same.
18. Three months after the inception of the subject policy, Florence Duncan’s son, Michael Duncan was involved in a car accident. At the time of loss, Michael Duncan was driving a vehicle registered to his father, Fritz Duncan. Michael Duncan received medical treatment from the Plaintiff for his alleged injuries. The Plaintiff then submitted claims to PROGRESSIVE for PIP benefits under Florence Duncan’s insurance policy for the medical charges incurred therewith.
19. Since Michael Duncan was an unlisted driver on the subject policy, PROGRESSIVE proceeded to undertake an investigation into whether or not Michael Duncan was afforded coverage. Florence Duncan’s application for insurance was reviewed. It was confirmed that Florence Duncan had failed to inform the insurance agent and PROGRESSIVE of the existence of her son, Michael Duncan. As a result, the policy was issued to include only one named insured, that being Florence Duncan herself.
20. The facts before this Court are directly on point with those found in Martinez v. General Insurance Company, 483 So.2d 892 (Fla. 3d DCA 1986).
21. In Martinez, the named insured failed to tell her insurance company that her son was a licensed driver and lived in her house. When the son was involved in an automobile accident, coverage was denied in accordance with Florida Statutes §627.409(1) due to the mother’s material misrepresentation. The Court explicitly stated that the omission of the son’s name was sufficiently material to the insurer’s acceptance of the risk to warrant a denial of coverage, even if the omission was unintentional. Martinez at 893 (referring to Continental Assurance Co. v. Carroll, 483 So. 2d 406 (Fla. 1986); Life Insurance Co. of Virginia v. Shifflet, 201 So.2d 715 (Fla. 1967)). The Court further reasoned that a failure to list the son precluded coverage only for a claim arising out of the son’s actions; the named insured, his mother, was still covered under the policy. To conclude otherwise would create a windfall for the insured — coverage for nothing.
22. The holding of Martinez was further exemplified by the Eleventh Circuit Court in United Automobile Ins. Co. v. Miami Chiropractic Assocs. wherein the Court explained that an insurer retains the right to assert material misrepresentation as a defense against a claim by the unlisted household member who was actually involved in the accident. 14 Fla. L. Weekly Supp. 360b (11th Cir. Miami-Dade Cty. February 20, 2007).
23. It is immaterial whether Florence Duncan’s failure to disclose her son’s residency was intentional or otherwise. The policy issued to Florence Duncan was based on a premium that inherently covered the risk for unrelated third-parties making a claim for benefits against the policy. What the premium did not account for was the situation involving Michael Duncan — a claim by an unlisted and undisclosed household member. Affording coverage to him would create the windfall alluded to by the Martinez court, and provide coverage for nothing.
24. Furthermore, there is nothing to say that Florence Duncan herself would not be afforded coverage for her involvement in any automobile related accident during the policy effective period. Florence Duncan paid the premium for her own risk. What she did not pay for was her son’s risk.
25. §627.409 Fla. Stat. (2003) clearly states that an insurer may deny coverage for an omission where, had the true facts been known, the insurer would not have issued the policy at the same premium rate.
26. Had Florence Duncan indicated her son was a household member of driving age, Progressive determined that her policy premium would have increased by $211.20.
27. This Court notes and disagrees with the Plaintiff’s argument that coverage must be extended to Michael Duncan, who is an “innocent insured” and cannot be penalized for his mother’s misrepresentations.
28. In support of this argument, the Plaintiff points to Ernesto Vasquez v. Mercury Casualty Company, 947 So.2d 1265 (Fla. 5th DCA 2007). In Vasquez, the Court held that the fraudulent actions of a person who is neither the presenter nor settler of a claim made by an unrelated third-party will not bar recovery by the unrelated third-party. Id. In interpreting the specific policy provision allowing for denial of coverage, the Vasquez Court reasoned that to deny coverage to Vasquez under the presenting set of facts would run afoul of the PIP statute and Florida public policy. The Court further cited to the “Innocent Insured Doctrine” providing that fraud committed by a co-insured will not void the coverage of an innocent co-insured unless clearly stated in the policy. It made no difference to the Court that Vasquez was not a “co-insured,” as the focus of the doctrine was on innocence. Additionally, the Court noted that Florida Statute §627.736(4)(g) allows for denial of PIP benefits only where the one seeking benefits is the person who has committed the fraud.
29. However, one needs only to review the underlying facts of Vasquez to conclude that it does not apply to the claim being made on behalf of Michael Duncan. Vasquez involved a completely unrelated third-party injured while working on the insureds’ vehicle. During the insurer’s coverage investigation, both named insureds lied about their knowledge of who Vasquez was and about the occurrence of the accident. Later, during their deposition, their false statements were recanted. As a result, the insurer denied Vasquez’s claim based upon the misrepresentations of both insureds and in accordance with a specific policy provision allowing for denial based on the same.
30. In stark contrast to Vasquez, the case before this Court involves a claimant who should have been a named insured on the subject policy from its inception. The same cannot be said of Vasquez who was of no relation to the insureds and did not live with them.
31. The claimant in Vasquez was a third party beneficiary of the named insured’s policy who would never be listed on said policy. Hence, there was no additional risk to assume or increase in premium to consider. Instead, both of these factors were inherent to and built into the named insureds’ policy to address precisely the situation that arose.
32. The purpose of policy application questions is to evaluate risk and determine what premium properly reflects that risk.
33. It is undisputed that Florence Duncan’s policy premium would have increased had Progressive known of the existence of her son, Michael Duncan. The increased premium would then have reflected the risk inherent in Michael Duncan’s driving and the possibility of his involvement in an accident, and further would have provided the coverage he is now seeking.
34. The Court finds that the facts of this case are distinguishable from that of Total Health Care of Florida, Inc. v. United Automobile Insurance Company, 14 Fla. L. Weekly Supp. 570a (11th Cir. Miami-Dade Cty. March 7, 2007). In Total Health, the named insured’s failure to list a son as a household resident was deemed a material misrepresentation by the insurer who then denied coverage and cancelled the policy ab initio. The Court ruled that the PIP statute abrogates an insurer’s ability to cancel a policy ab initio, but did note conflict among the lower courts and certified the issue to the Third District Court of Appeal. However, just like Vasquez one need only review the factual underpinnings of Total Health to find the case highly distinguishable from Michael Duncan’s situation — the case before this Court.
35. Total Health, involved a misrepresentation by a named insured in failing to list a son as a household resident. The important and key distinguishing factor is that the son in Total Health Care was not involved in an auto accident and was not making a claim. Rather, it was a named insured who was injured and claiming PIP benefits. Judge Hague, in holding that the PIP statute supplanted an insurer’s ability to deny coverage under §627.409 Fla. Stat., reasoned that the reporting requirements of §627.736(9)(a) Fla. Stat. do not fall in line with the ability to deny coverage and cancel a policy ab initio under §627.409 Fla. Stat.
36. In the present case, we are simply not dealing with either the fraudulent acts of a co-insured, or a co-insured making a claim, or the rescission of Florence Duncan’s policy ab initio.
37. Rather, there was no coverage for Michael Duncan from the very inception of the policy and where the unearned premiums were refunded. Coverage cannot be created where none existed from the start.
38. Florence Duncan obtained a policy of insurance, paid a premium based upon her own misrepresentations in the policy application, and would be afforded coverage had she been the person injured and making a claim. The premium paid by Florence Duncan simply did not account for the risk of an unlisted and undisclosed household member, namely Michael Duncan.
39. This case is distinguishable and is not like the case of Vasquez, who could never be a listed insured on the policy and could, in fact, be deemed an “innocent insured” due mainly to his stature as a third party beneficiary to the policy. The subject policy in Vasquez was built to account for coverage for third party beneficiaries along with the aptly named insureds.
40. This case is also distinguishable and unlike the case of Total Health whereby named insured was making a claim for benefits albeit having misrepresented the drivers in her household. In Michael Duncan’s case, the subject policy was not built to account for coverage to a person known to the applicant as a household member of driving age. Michael Duncan was not subject to PROGRESSIVE’S initial underwriting since his very existence was not known until he was involved in an automobile accident.
41. Michael Duncan was not, at any point, privy to coverage under Florence Duncan’s policy. PROGRESSIVE is under no duty to provide personal injury protection benefits or pay the medical bills incurred as a result of Plaintiff’s treatment to Michael Duncan. Therefore, there can be no instance of post-accident underwriting for a person who had no coverage from the very start.
42. Lastly, at the time of loss Michael Duncan was driving a vehicle owned by his father, Fritz Duncan. If Michael Duncan is seeking coverage, he should be looking to Fritz Duncan’s insurance policy with Ocean Casualty Insurance. Fla. Stat. § 627.736 (2003) requires that every insurance policy complying with the security requirements of the PIP statute “provide personal injury protection to the named insured, relatives residing in the same household, persons operating the insured motor vehicle, passengers in such motor vehicle, and other persons struck by such motor vehicle…” There is no coverage available to Michael Duncan under Florence Duncan’s insurance policy. Therefore, in compliance with the statute, the accident in which Michael Duncan was allegedly injured in would trigger coverage under Fritz Duncan’s automobile insurance policy.
43. This Court finds that the facts before this Court are directly on point with those found in Martinez v. General Insurance Company, 483 So.2d 892 (Fla. 3d DCA 1986).
ACCORDINGLY, it is ORDERED and ADJUDGED that PROGRESSIVE AMERICAN INSURANCE COMPANY’S Motion for Final Summary Judgment is GRANTED. The Plaintiff, SOUTH FLORIDA INSTITUTE OF MEDICINE, (a/a/o MICHAEL DUNCAN) shall take nothing in this action, and Plaintiff shall go hence without day. The Court reserves jurisdiction to determine reasonable attorney fees and costs.
