16 Fla. L. Weekly Supp. 100a

Insurance — Personal injury protection — Coverage — Summary judgment — Insurer disclaiming reliance on peer review and independent medical examination obtained prior to denial of claim and opposing motion for summary judgment based on peer review obtained only days before summary judgment hearing — Affidavit and peer review prepared solely for purpose of litigation, to defeat motion for summary judgment, is untrustworthy and inadmissible — Alternatively, affidavit and peer review are stricken because peer review was not obtained before denying PIP claim — While insurer may obtain valid report in support of denial of benefits more than thirty days after receipt of claim, insurer may not wait until after it has denied claim to obtain report — Summary judgment granted in favor of medical provider

ERIC G. FRIEDMAN, D.C., P.A., as Assignee for NEMOURS JEAN BAPTISTE, Plaintiff, v. UNITED AUTOMOBILE INSURANCE COMPANY, Defendant. County Court, 11th Judicial Circuit in and for Miami-Dade County. Case No. 06-10706CC 23, Division 05. November 19, 2008. Lisa Walsh, Judge. Counsel: Steven M. Singer, Law Offices of Steven M. Singer, P.A., Miami. Stephanie Vo.

ORDER GRANTING FINAL SUMMARY JUDGMENT FOR PLAINTIFF

This cause came before this Court on Plaintiff’s Motion for Summary Judgment. After a full hearing and review of all relevant motions and responses, the contents of the file and authorities, this Court GRANTS Final Summary Judgment for the Plaintiff and makes the following findings of fact and conclusions of law:

This is an action for breach of contract under Florida’s motor vehicle bodily injury insurance or “PIP” statutes, involving a policy written by defendant insurer, United Automobile Insurance Company (“United”).

Prior to the filing of any action by the Plaintiff, the Defendant United hired Dr. Joseph Marfisi, a Chiropractor, to conduct an independent medical examination (“IME”) and a peer review of the medical care provided to the insured. The Defendant United denied payment of the claim.

On May 30, 2006, the Plaintiff served its Complaint, alleging that the assignee, Plaintiff Eric G. Friedman, D.C., P.A., treated the insured for injuries sustained in a car accident, and that the Defendant denied payment for timely submitted bills.

In the Answer, the Defendant stated that the medical care provided by the Plaintiff was not reasonable, related to the accident or medically necessary, based upon the independent medical examination (“IME”) and peer review conducted by Dr. Marfisi.

The Defendant United subsequently withdrew the peer review and IME reports prepared by Dr. Marfisi. United, without elaborating on its reasons, has informed this Court that it will no longer rely upon Dr. Marfisi’s reports or testimony, and Dr. Marfisi will have no involvement in this case.

Because the Defendant has disclaimed the use of Dr. Marfisi and his reports, the Plaintiff filed a motion for summary judgment alleging that the Defendant denied the claim without obtaining a valid report, pursuant to Section 627.736(7)(a), Florida Statutes. See § 627.736(7)(a), Fla. Stat; Bermudez v. State, 980 So. 2d 1213 (Fla. 3d DCA 2008); United Automobile Ins. Co. v. Viles, 726 So. 2d 320 (Fla. 3d DCA 1998).

After the motion for summary judgment was filed and just days before the hearing on the motion, the Defendant filed an affidavit and peer review prepared by Dr. Randy Schulman, D.C. Dr. Schulman is hitherto unknown in this case. He was not mentioned in the Defendant’s Answer or listed in any of the discovery. Dr. Schulman was apparently hired shortly before the hearing on Plaintiff’s motion for summary judgment.

The Plaintiff moved to strike the affidavit and peer review of Dr. Schulman, because it is untrustworthy, because it was prepared in anticipation of litigation and not for the purpose of investigating or denying a claim. This Court strikes the affidavit and peer review of Dr. Schulman and grants final summary judgment for the Plaintiff for the following reasons.

This Court finds that the affidavit and peer review prepared by Dr. Schulman are inherently untrustworthy and thus inadmissible. See Garrido, D.C., P.A. v. United Automobile Insurance Co., 12 Fla. L. Weekly Supp. 372a (Fla. 11th Jud. Cir. 2005) (finding that affidavit obtained by Defendant in anticipation of summary judgment hearing was untrustworthy and inadmissible where it was prepared for the sole purpose of litigation); citing McElroy v. Perry, 753 So. 2d 121, 126-27 (Fla. 2d DCA 2000).

The circumstances under which the affidavit and peer review of Dr. Schulman were prepared and submitted show a lack of trustworthiness. Dr. Schulman’s affidavit and peer review were filed on September 12, 2008, just days before the summary judgment hearing and almost three years after this medical claim was submitted to the insurance company. Dr. Schulman states that he conducted his peer review on September 11, 2008, the day before the Defendant filed the affidavit and report with this Court. The peer review report is inadmissible because the record in question was prepared in anticipation of litigation, rather than as a part of the maker’s business practices. See § 90.803(6), Fla. Stat. (2007) (setting forth admissibility of business records “unless the sources of information or other circumstances show lack of trustworthiness.”); McElroy, 753 So. 2d at 125 (reports of IME doctors “more properly characterized as forensic or advocacy reports”). It is clear that the affidavit and peer review were sought and prepared solely for the purpose of litigation, to defeat the motion for summary judgment and not as a basis to determine whether or not to deny the PIP claim.

Alternatively, this Court strikes Dr. Schulman’s affidavit and peer review because the peer review was obtained by the Defendant in violation of Section 627.736(7)(a), Florida Statutes. There is no factual dispute in this case that the Defendant sought and obtained a peer review report from Dr. Schulman, a new expert, years after the insurer denied the claim, years after a lawsuit was filed, the Defendant answered the complaint and a motion for summary judgment was filed. This Court concludes that the failure of the insurer to obtain a peer review — its chosen proof that treatment was not reasonable, related or medically necessary — before denying the claim violates Section 627.736(7)(a).

In 2001, the Legislature made a number of changes to the PIP statute. Chapter 2001-271 amended seven sections of 627.736, including amendments to both Section 627.736(4)(b) and Section 627.736(7)(a), Florida Statutes.

Section 627.736(4)(b), Florida Statutes, provides that payments are overdue if not made within 30 days of the submission of a claim. The Legislature amended Section 627.736(4)(b) as follows:

(4) BENEFITS; WHEN DUE —

* * *

(b) . . . . This paragraph does not preclude or limit the ability of the insurer to assert that the claim was unrelated, was not medically necessary, or was unreasonable or that the amount of the charge was in excess of that permitted under, or in violation of, subsection (5). Such assertion by the insurer may be made at any time, including after payment of the claim or after the 30-day time period for payment set forth in this paragraph.

Ch. 2001-271, § 6, at 8-9, Laws of Fla.

The Legislature found that the purpose of the No-Fault law — to deliver medically necessary and appropriate care “without undue litigation or other associated costs” — was being frustrated by a number of factors, including charging for unnecessary or overused procedures by a small number of health care providers. Ch. 2001-271, § 1, at 1, Laws of Fla. The change to Section (4)(b) of the No-Fault statute would help ensure that insurers pay only for services for which they are required to pay, services which are reasonable, related and medically necessary. Before the amendment, once a payment was “overdue,” the insurer was required to pay regardless of the validity of the PIP claim.

Chapter 2001-271 also amended Section 627.736(7)(a) as follows:

(7) MENTAL AND PHYSICAL EXAMINATION OF INJURED PERSON; REPORTS —

(a) . . . . An insurer may not withdraw payment of a treating physician without the consent of the injured person covered by the personal injury protection, unless the insurer first obtains a valid report by a physician licensed under the same chapter as the treating physician whose treatment authorization is sought to be withdrawn, stating that treatment was not reasonable, related or necessary. A valid report is one that is prepared and signed by the physician examining the injured person or reviewing the treatment records of the injured person and is factually supported by the examination and treatment records if reviewed and that has not been modified by anyone other than the physician. The physician preparing the report must be in active practice, unless the physician is physically disabled. Active practice means that during the 3 years immediately preceding the date of the physical examination or review of the treatment records the physician must have devoted professional time to the active clinical practice of evaluation, diagnosis, or treatment of medical conditions or to the instruction of students in an accredited health professional school or accredited residency program or a clinical research program that is affiliated with an accredited health professional school or teaching hospital or accredited residency program.

Ch. 2001-271, § 6, at 14-15, Laws of Fla. This language was added to section 627.736(7)(a) “in an effort to clarify the requirements of physician reports created for the purpose of withdrawing PIP benefits.” United Automobile Ins. Co. v. Bermudez, 980 So. 2d. 1213, 1215 (Fla. 3d DCA 2008). In Bermudez, the court referred to a Senate staff analysis opinion that the purpose of this section was to eliminate “paper IMEs,” prepared by a physician who does not examine the patient. 980 So. 2d at 1215.

At issue here is the following. If an insurer intends to rely upon a peer review as its proof that medical treatment was not reasonable, related and necessary, how long may that insurer wait until it obtains the “valid report?”¹ Specifically, was the insurer United in compliance with section 627.736(7)(a), when it obtained a peer review report by Dr. Schulman shortly before a hearing on summary judgment, years after the claim was denied, and after suit was filed and answered?

The plain language of Section 627.736(7)(a), the legislative history and intent and the interpreting caselaw support the conclusion that a “valid report” must be obtained by the insurer before the claim is denied, withdrawn or reduced.

The plain language of Section 627.736(7)(a) supports the conclusion that an insurer must obtain its “valid report” before electing to deny the claim. Section (7)(a) plainly states that “an insurer must first obtain the referenced report before electing to withdraw payment.” (emphasis added) To allow the insurer to wait until the conclusion of litigation to obtain its valid report would ignore the clear language of the statute.

Decisions from the Third District Court of Appeal further support this conclusion. In Viles, the Third District Court of Appeal held that the insurer United “was required to first obtain a physician’s report before refusing to pay further medical bills.” 726 So. 2d 320, 321. The court in Viles characterized the requirement as a “procedural hurdle,” and explained that “[i]f the insurer were to act without complying with such a procedural requirement, termination of payment would be ineffective.” Viles, 726 So. 2d at 321. Thus, it appears clear that failure to obtain a valid report before an insurer denies a claim (as happened here) precludes the insurer from denying the claim on the ground that treatment is not RRN.

In Bermudez, the Third District reaffirmed its holding in Viles, “that a valid report is required where an insurer attempts to reduce, withdraw or deny PIP benefits on grounds of reasonableness, necessity, or relationship.” 980 So. 2d 1213, 1216. The Third District in Bermudez drew no distinction between an insurer withdrawing or denying PIP benefits. Simply put, an insurer must first obtain a valid report before the insurer denies a claim for PIP benefits on the grounds that the benefits are not reasonable, related or medically necessary.

Confusion arises about how long an insurer may wait to obtain a report under Section (7)(a) when decisions interpreting section (7)(a) are synthesized with decisions interpreting section (4)(b). In United Automobile Ins. Co. v. Rodriguez, 808 So. 2d 82, 87 (Fla. 2002), the Supreme Court of Florida held that under section 627.736(4)(b), an insurer may obtain reasonable proof to establish that the insurer is not responsible for the payment outside of 30 days.

The Rodriguez decision has been interpreted to mean that if an insurer relies upon a peer review to deny claim, the peer review may be obtained at any time. However, that an insurer may obtain its “reasonable proof” more than 30 days from receipt of the bills does not mean that the insurer can wait forever — even after litigation is well underway. This interpretation would effectively nullify Section 627.736(7)(a), in contravention to the legislative purpose and the plain language of the statute.

Two recent appellate decisions from this Circuit filed after Bermudez have addressed the interplay between sections (4)(b) and (7)(a). In United Automobile Ins. Co. v. Partners in Health, Inc. (A/A/O Neocles Lebrun), 15 Fla. L. Weekly Supp. 776b (Fla. 11th Cir. Ct. June 5, 2008), the court concluded that under 627.736(4)(b), “[t]here is no requirement that a peer review report (or other evidence constituting “reasonable proof”) be obtained within 30 days following receipt of a notice of loss, where the insurer is contesting the reasonableness, relatedness or necessity of the treatment.” It should be noted, however, that while the peer review in Partners in Health, Inc. was obtained more than 30 days from the date of receipt of the bills, it was obtained in 2004, one year before suit was filed. In contrast, here, United obtained its peer review long after the complaint was filed, answered and the suit was fully litigated in discovery. The proverbial cart, therefore, has been placed before the horse. The claim was denied first, without any “reasonable proof.”

The decision in United Automobile Ins. Co. v. Hollywood Injury Rehab (a/a/o Menendes, R.), 15 Fla. L. Weekly Supp. 1052a (Fla. 11th Cir. Ct. September 11, 2008) supports this Court’s conclusion that the valid report must be obtained before the claim is denied. In Hollywood Injury Rehab, the court concluded that withdrawal or denial of PIP insurance benefits must be based upon a valid report.

Thus, under the relevant caselaw following the Third District’s decision in Bermudez, it is clear that to comply with both section (4)(b) and section (7)(a) of the PIP statute, if the insurer is relying upon a “valid report,” that report must be obtained before the insurer denies, withdraws or reduces payment of a claim.

Finally, the legislative history and intent behind the 2001 amendments support this Court’s conclusion that the report is required before the rejection of the claim. In construing two related sections of a statute, “ ‘[t]he doctrine of in pari materia requires that statutes relating to the same subject or object be construed together to harmonize the statutes and to give effect to the Legislature’s intent.’ ” McDonald v. State, 957 So. 2d 605, 610 (Fla. 2007) (harmonizing separate sections of the 10-20-LIFE statute) (quoting Zold v. Zold, 911 So. 2d 1222, 1229-30 (Fla. 2005)) (harmonizing sections of the alimony statute to give effect to legislative intent concerning alimony).

As noted above, in Chapter 2001-271, Laws of Florida, the Legislature chose to simultaneously amend both sections (7)(a) and (4)(b) of the PIP statute, which evinces a clear intent to give effect to both changes to the statute.

Harmonizing sections (7)(a) and (4)(a) under the doctrine of in pari materia, an insurer must first obtain a valid report before the insurer elects to deny a claim on the ground that the treatment was not reasonable, related to the accident or medically necessary. While the insurer may obtain the report after 30 days have elapsed, the insurer may not wait to obtain the report — its required proof in order to deny a claim — until after it has denied the claim. To focus solely upon the language in section (4)(b) and allow an insurer to obtain “reasonable proof” right up until the point of trial is to ignore the clear legislative intent evinced by the simultaneous amendments to both (7)(a) and (4)(b).

This interpretation comports not only with the plain language of Section 627.736(7)(a), the caselaw and legislative intent, but also with sound public policy. Section (7)(a) was designed to ensure that if a claim is denied on the ground that the treatment was not reasonable, related or medically necessary, the denial should be based upon the opinion of a medical expert — expert medical knowledge, rather than lay opinion.

Remaining is the question of when a claim is deemed to be denied. A claim may be deemed denied after the demand letter is sent pursuant to Section 627.736(11), Florida Statutes. See, e.g., Progressive Express Ins. Co. v. Menendez, 979 So. 2d 324, 328-29 (Fla. 3d DCA 2008) (finding disputed material fact precluding summary judgment where claimant failed to submit demand letter and insurer did not “refuse” to pay claim). Here, there is no factual dispute that the claim was denied before a “valid report” was obtained. A demand letter was sent, suit was filed, and the Defendant answered and proceeded to litigate for several years. There is no dispute that the insurer denied the claim without obtaining a valid report.

Finally, it should be noted that United has not claimed that it complied with the statute by timely obtaining Dr. Marfisi’s peer review and IME reports. Although Marfisi’s reports were timely obtained, United has disclaimed any reliance upon Marfisi’s reports or upon Dr. Marfisi himself.

Because the insurer denied the claim in violation of the statute, the peer review obtained days before the summary judgment hearing is stricken.

Absent Dr. Schulman’s affidavit and peer review, there is no disputed issue of material fact in this case. Final Summary Judgment in favor of the Plaintiff is granted. This Court further incorporates into this order all oral orders and findings made on the record at proceedings on September 19, 2008.

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¹Whether or not the report is a “valid report” within the meaning of the statute has not been argued or addressed by the parties. This Court assumes for the sake of argument that the peer review of Dr. Schulman was a valid report, or a report prepared following an independent examination by a physician other than the treating physician. What complicates this case is that United has disassociated itself from the prior peer review and IME reports prepared by Dr. Marfisi, yet its brand new peer review report prepared by Dr. Schulman purports to rely upon Dr. Marfisi’s examination. Without knowing why United has disclaimed the use of Dr. Marfisi as a witness in this case, there may or may not be some concern that the Schulman report is based upon the physical examination conducted by Marfisi. See, e.g. United Automobile Ins. Co. v. Hollywood Injury Rehab (a/a/o Menendez, R.), 15 Fla. L. Weekly Supp. 1052a (Fla. 11th Cir. Ct. September 11, 2008) (holding that for valid peer review, physical examination must be performed by a physician under same chapter as treating physician — i.e., not the treating physician); United Automobile Ins. Co. v. Metro Injury and Rehab Center (a/a/o Magda Davis), Case No. 07-437AP; 08-168 AP (Fla. 11th Cir. Ct. November 13, 2008) (same).