16 Fla. L. Weekly Supp. 864b
Online Reference: FLWSUPP 169BRIGA
Insurance — Personal injury protection — Attorney’s fees — Proposal for settlement — Where nominal offer of settlement was made without knowledge of exhaustion of benefits defense on which insurer prevailed, but instead was based on other defenses on which medical provider prevailed, offer bore no relationship to realistic assessment of liability under facts known to insurer’s counsel at time offer was made and was not made in good faith — Motion for attorney’s fees and costs denied
PEMBROKE PINES MRI, INC., Wendy Brigante, Plaintiff, vs. USAA CASUALTY INSURANCE COMPANY, Defendant. County Court, 17th Judicial Circuit in and for Broward County. Case No. 08-175-COCE-54. June 29, 2009. Lisa G. Trachman, Judge. Counsel: Harley N. Kane, Kane & Kane, P.A., Boca Raton. Miriam Merlo, Coral Gables.
[Final Summary judgment published at 16 Fla. L. Weekly Supp. 470a.]
Order Denying Attorney Fees Pursuantto a Proposal for Settlement
This action was heard on June 17th, 2009 on the Defendant’s Motion for Entitlement to Attorney Fees and Costs. Upon consideration, it is
ORDERED and ADJUDGED that:
The Defendant’s Motion for Entitlement to Attorney Fees and Costs is hereby DENIED.
The Defendant seeks fees and costs pursuant to a nominal proposal for settlement it served upon the plaintiff that the plaintiff did not accept within thirty days of receiving the proposal. The Court finds that under the unique circumstances of this case that the proposal was not “a good faith offer” as described by F.S. §768.79. The Court exercises its discretion pursuant to F.S. §768.79(7)(a) to disallow attorney fees and costs in this case. The underlying matter was disposed of when the Court granted the Defendant’s motion for summary judgment on the issue of exhaustion of benefits. The issue of exhaustion of benefits was not raised by the Defendant until long after the expiration of the proposal for settlement in this cause.
Underlying facts and procedural aspects
The Court bases its decision on the following facts which were without dispute.
The underlying matter involves the failure of the Defendant to pay for a medically necessary MRI because the plaintiff failed to include a professional license number in box 31 of the CMS-1500 claim form (this issue is undisputed) and the claim that the Plaintiff did not submit a disclosure and acknowledgement form to the Defendant (this issue is disputed). The matter eventually concluded in the defendant’s favor on the issue of exhaustion of policy benefits.
The defendant was served with a statutory demand letter prior to the filing of the instant litigation. On September 10th, 2007, the defendant responded to the demand letter claiming the bill was not paid because box 31 did not contain the provider’s professional license number and the billing was submitted without the required standard disclosure and acknowledgment form. The response to the demand did not mention exhaustion of benefits.
Subsequent to the demand response the plaintiff instituted this litigation. Shortly after counsel for the Defendant’s appearance in this matter, on February 18th, 2008, the plaintiff sent interrogatories specifically asking what defenses the Defendant was raising to the plaintiff’s bills. Those interrogatories were not answered within thirty (30) days and no motion for extension was filed within that time frame.
In its answer to the plaintiff’s complaint which was filed on March 31st, 2008, the defendant again indicated it is defending because of the “box 31” and “disclosure and acknowledgement” issues. There is no mention of exhaustion of benefits in the defendant’s initial answer or affirmative defenses.
On May 14th, 2008 the Defendant served the proposal for settlement under which it now seeks fees and costs. The statutory time period in which to accept the proposal (including an additional five days for mailing) ran on June 18th, 2008. The plaintiff did not accept the nominal offer within that time frame. The proposal states:
DEFENDANT’S PROPOSAL FOR SETTLEMENT PURSUANT TO Fla.R.Civ.P. 1.442 AND OFFER OF JUDGMENT PURSUANT TO F.S. §768.79
Defendant, UNITED SERVICES AUTOMOBILE ASSOCIATION, through undersigned counsel, files this Proposal for Settlement Pursuant to Fla.R.Civ.P. 1.442 and Offer of Judgment Pursuant to F.S. §768.79 to Plaintiff, PEMBROKE PINES MRI, INC., Wendy Brigante, for all claims against Defendant, UNITED SERVICES AUTOMOBILE ASSOCIATION that are the subject matter of the within cause. This proposal is intended to induce or influence Plaintiff to settle any and all claims in this litigation, to avoid unnecessary delay and the needless increase in the costs of litigation, and to obviate the necessity of trial.
Defendant, UNITED SERVICES AUTOMOBILE ASSOCIATION, offers the total sum of ONE AND NO/100 DOLLARS ($1.00), in full and final settlement of all claims against said Defendant, including benefits, lost wages, interests, attorney fees and costs of litigation.
On June 20th, 2008, the Defendant filed answers to the plaintiff interrogatories. Those answers indicated that the Defendant was defending the plaintiff’s bills on the “box 31” and “disclosure and acknowledgment” issues. There was no mention of exhaustion of policy benefits.
On August 28, 2008, the deposition of the Defendant’s adjuster took place. Following that deposition, on September 11th, 2008 the Defendant filed its motion for leave to amend affirmative defenses which stated:
3. On August 28, 2008, the litigation adjuster’s deposition was taken and the undersigned learned for the first time that the benefits allowed under the subject PIP insurance policy were exhausted on July 10, 2007.
4. In its Answer and Affirmative Defenses previously filed, Defendant failed to assert exhaustion of benefits as an Affirmative Defense.
This Court granted the motion for leave to amend on January 9th, 2009. On February 19th, 2009, the Court granted the plaintiff’s request to amend its complaint to allege bad faith and improper manipulation relating to the issue of exhaustion. On that date, the Court also heard the parties’ cross-motions for summary judgment. The parties essentially presented three issues: “Box 31”, “disclosure and acknowledgment”, and “exhaustion”. The Court ruled for the plaintiff on the “Box 31” and “disclosure and acknowledgement” issues and for the defendant on the “exhaustion” issue.Analysis
“Attorney fees awarded pursuant to the offer of judgment statutes are sanctions. These fees are awarded as sanctions for unreasonable rejections of offers of judgment.” Sarkis v. Allstate Ins. Co., 863 So.2d 210 (Fla.2003). The Court must consider whether to sanction the plaintiff for unreasonably rejecting a nominal ($1.00) offer of judgment made more than three months prior to any mention or disclosure of its “exhaustion of policy benefits” defense. The Court notes that the defendant did not reissue its proposal or make any other “safe harbor” provision after the disclosure of its “exhaustion defense”. In Gurney v. State Farm Mut. Auto. Ins. Co., 889 So.2d 97 (Fla. 5th DCA 2004), the Court held that:
The obligation of good faith merely insists that the offeror have some reasonable foundation on which to base an offer.”). The good faith inquiry requires a trial court to review the facts and circumstances known to the offeror at the time it made the offer. See Fox v. McCaw Cellular Communications of Fla., Inc., 745 So.2d 330, 333 (Fla. 4th DCA 1998). Whether an offer is made in good faith is a matter of discretion with the trial court after considering the circumstances at the time the offer was made. Fox.
The Defendant’s counsel by her own admission did not know that benefits were exhausted at the time of the making of the offer and therefore the exhaustion defense cannot be utilized in determining whether the nominal offer of judgment was made in good faith. State Farm Mut. Auto. Ins. Co. v. Sharkey, 928 So.2d 1263 (Fla. 4th DCA 2006) discusses when a nominal offer is made in good faith:
Offers are not suspect merely because they are nominal. See Eagleman v. Eagleman, 673 So.2d 946 (Fla. 4th DCA 1996). Offers, nominal or otherwise, must bear a reasonable relationship to the amount of damages or a realistic assessment of liability. Id. at 948. “The rule is that a minimal offer can be made in good faith if the evidence demonstrates that, at the time it was made, the offeror had a reasonable basis to conclude that its exposure was nominal.” Connell v. Floyd, 866 So.2d 90, 94 (Fla. 1st DCA 2004).
The $1.00 offer of judgment was made without any knowledge of the exhaustion defense. At the time of the offer, the only defenses to the plaintiff’s bill were the failure to put a professional license number in box 31 and a factual dispute regarding the receipt of the disclosure and acknowledgement form. The defendant has consistently litigated the box 31 defense. As far back as 2006, the defendant has lost the issue. See Virtual Imaging v. USAA Casualty Insurance Company, 14 Fla. L. Weekly Supp. 85a (Fla. 11th Jud. Cir. County 2006). Indeed, this Court, in the past, has ruled against USAA on this point. See Oakland Park MRI, Inc. v. USAA Cas. Ins. Co., Case No. 07003233-COCE-54 (June 2008) [15 Fla. L. Weekly Supp. 847a], and Oakland Park MRI, Inc. v. USAA Cas. Ins. Co., Case No. 07-06767-COCE-54 (June 2008) [15 Fla. L. Weekly Supp. 1225a].
It is clear that the $1.00 offer bore no relationship to any realistic assessment of liability to the facts known to USAA’s counsel at the time of the offer. The fact that USAA’s counsel discovered the “exhaustion” issue later cannot legitimize the offer made without that knowledge or disclosure. The Supreme Court in Sarkis indicates that the awards under F.S. § 768.79 are sanctions for the unreasonable rejection of the offer of judgment. Where the ultimate basis of the Court’s ruling and USAA’s defense is not disclosed to the plaintiff in its response to the demand letter, in its answer and affirmative defenses, or in its answers to interrogatories, the Court cannot find that the offer of settlement was unreasonably rejected. USAA’s offer was not made is good faith and fees and costs are disallowed pursuant to F.S. § 768.79(7)(a).
