16 Fla. L. Weekly Supp. 951b

Online Reference: FLWSUPP 1610BALI

Insurance — Personal injury protection — Coverage — Medical expenses — Exhaustion of policy limits — Absent showing of bad faith or irregularity in manner in which bills were processed by insurer, neither insured nor medical provider/assignee can bring claim for benefits, statutory interest, or penalties where policy limits are exhausted and insurer has satisfied its contractual duties to insured — Insurer had no duty to escrow benefits pending resolution of contested claim

[Editor’s note: An Amended Order granting final summary judgment in this case and certifying a question of great public importance was affirmed at 36 Fla. L. Weekly D23a.]

RICHARD A. SHELDON, D.C., as assignee of TRAVIS BALIEL, Plaintiff, v. UNITED SERVICES AUTOMOBILE ASSOCIATION, Defendant. County Court, 1st Judicial Circuit in and for Okaloosa County. Case No. 2008 CC 000435. August 20, 2009. Patricia S. Grinsted, Judge. Counsel: Woodburn S. Wesley, Jr., Fort Walton Beach. Vicki S. Graves, James C. Rinaman, III & Associates, P.A.

ORDER GRANTING DEFENDANT’S MOTIONFOR RECONSIDERATION OF DEFENDANT’S MOTION FOR SUMMARY JUDGMENT BASEDON EXHAUSTION OF BENEFITS AND GRANTINGDEFENDANT’S MOTION FOR SUMMARY JUDGMENT BASED ON EXHAUSTION OF BENEFITS

THIS CAUSE came on to be heard on July 29, 2009, upon Defendant’s Motion for Reconsideration of Defendant’s Motion for Summary Judgment Based on Exhaustion of Benefits. Plaintiff, Richard A. Sheldon, D.C. a/a/o Travis Baliel, appeared through counsel, Woodburn S. Wesley, Jr. Defendant, United Services Automobile Association (USAA), appeared through counsel, Vicki S. Graves.

The Court, having heard and reconsidered the arguments of counsel and the case law submitted in support of each party’s position, and having personally conducted exhaustive legal research on the issues presented, hereby vacates the Order Denying Defendant’s Motion for Summary Judgment, entered in this case on May 18, 2009.

FINDINGS OF FACT

In reaching this conclusion, the court FINDS AS FOLLOWS:

a. When the insured, Travis Baliel, was involved in a motor vehicle accident on July 31, 2007, he had coverage under a policy of insurance with defendant, USAA, that provided him with $10,000 in No-Fault/Personal Injury Protection (PIP).

b. On August 28, 2007, Travis Baliel began to receive chiropractic services from plaintiff, Richard A. Sheldon, D.C., and assigned his rights and benefits under his USAA policy to Dr. Sheldon. Dr. Sheldon submitted bills to USAA for services rendered to Travis Baliel, which were either paid in full by USAA or which USAA asserts were reduced in compliance with Sec. 627.736(4)(b) by sending Explanation of Reimbursement (EOR) forms to plaintiff for all dates of service at issue. In the interim, USAA also paid bills for treatment provided to Mr. Baliel by two other providers whose PIP claims were deemed compensable, on a first come, first served basis.

c. All PIP benefits under the policy of insurance were exhausted by payment to plaintiff on or about January 14, 2008, after this law suit was filed on December 28, 2007. Dr. Sheldon alleges that USAA failed to pay his covered losses within thirty (30) days as required by Sec. 627.736(4)(b) and failed to provide reasonable proof that it was not responsible for payment, so USAA should be held liable for the unpaid PIP benefits, together with statutory interest and penalties on the overdue claims, costs and attorney’s fees. In the alternative, Dr. Sheldon asserts that if it is determined that he is barred from collecting damages for unpaid medical benefits because the $10,000 policy limits have been exhausted, USAA is nonetheless liable for the statutory interest and penalties and attorney’s fees if Dr. Sheldon can prove that USAA improperly and incorrectly reduced his invoices without reasonable proof that it was not responsible for payment.

CONCLUSIONS OF LAW

The issue this Court must determine is whether USAA can be held liable for payment of plaintiff’s claims, including the statutory penalties, interest and attorney’s fees, when the insured exhausted his PIP benefits prior to a determination of USAA’s potential liability for the disputed claims.

1. Dr. Sheldon, as assignee of Travis Baliel, has no greater rights than Mr. Baliel under the contract of insurance with USAA which provided $10,000 in PIP coverage, all of which was paid in this case. USAA should not have to pay more than it was contractually obligated to pay just because the insured kept seeking treatment and assigning benefits to providers who kept accepting the assignments. Progressive American Ins. Co. v. Stand-up MRI of Orlando, a/a/o Eusebio Isaac, 990 So.2d 3, 7 (Fla. 5th DCA 2008); citing Neuro-Imaging Associates, P.A. v. Nationwide Ins. Co. of Florida, 10 Fla. L. Weekly Supp. 738a (Fla 15th Jud. Cir. Ct. January 7, 2002).

2. The insurer had no duty to escrow funds pending the resolution of a contested claim. Progressive American Ins. Co. v. Stand-up MRI of Orlando, a/a/o Eusebio Isaac, at pg. 4. While the reasonableness of USAA’s reduction of Dr. Sheldon’s claim may have presented a justiciable claim at the time the reduced payment was made, it was no longer material after the policy benefits were exhausted. Heartland Rehabilitation Services v. Nationwide Mutual Fire Ins. Co., 12 Fla. L. Weekly Supp. 601a (Fla. 4th Jud. Cir. Ct. April 6, 2005).

3. USAA was statutorily obligated to continue to pay bills submitted on behalf of the insured, even if that resulted in the exhaustion of benefits. Dr. Robert D. Simon, M.D., P.A. a/a/o Eric Hon v. Progressive Express Ins. Co., 904 So.2d 449 (Fla. 4th DCA 2005), rev. denied, 919 So. 2d 436 (Fla. 2005); MTM Diagnostic, Inc. v. State Farm Mutual Automobile Ins. Co., 9 Fla. L. Weekly Supp. 581e (Fla. 13th Cir. Ct. November 20, 2000).

4. Absent a showing of bad faith or some irregularity in the manner in which the bills were processed by USAA, neither the insured nor his assignee can bring a claim for benefits or for statutory interest or penalties if policy limits are exhausted and USAA has fully satisfied its contractual duties to its insured. Progressive American Ins. Co. v. Stand-up MRI of Orlando, a/a/o Eusebio Isaac, at pg. 4.

5. 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 [as it has many of my colleagues] 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 and even after the lawsuit has been filed. To hold otherwise would unfairly subject a PIP insurer to an undeterminable amount of exposure and risk.¹

6. Under Sec. 627.734(4)(d), Fla. Stat., “[i]nterest shall be due at the time payment of the overdue claim is made.” It reasonably follows that no interest is due if the claim, whether or not overdue, is not paid because policy limits are exhausted. Progressive American Ins. Co. v. Stand-up MRI of Orlando, a/a/o Eusebio Isaac, at pg. 4; Allstate Ins. Co. v. Ouida Schall, 778 So. 2d 317 (Fla. 4th DCA 2000).

It is, therefore ADJUDGED that Defendant’s Motion for Summary Judgment Based on Exhaustion of Benefits is GRANTED.

It is further ADJUDGED that plaintiff, RICHARD A. SHELDON, D.C., is not entitled to recover any monies from defendant, UNITED SERVICES AUTOMOBILE ASSOCIATION, and defendant, UNITED SERVICES AUTOMOBILE ASSOCIATION, shall go hence without day.

The Court reserves jurisdiction to determine defendant’s entitlement to attorney’s fees and costs.

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¹See, e.g.: Russ Tannenbaum, D.C., P.A. a/a/o Victor Maddox v. Progressive Express Ins. Co., 15 Fla. L. Weekly Supp. 1005a (Fla. 11th Jud. Cir. Miami-Dade County Ct. July 28, 2008); Rebecca Burress v. State Farm Mutual Automobile Ins. Co., 13 Fla. L. Weekly Supp. 903b (Fla. 13th Jud. Cir. Hillsborough County Ct. June 16, 2006); R. J. Trapana, M.D., P.A. (a/a/o Armando Mederos) v. Progressive American Ins. Co., 14 Fla. L. Weekly Supp. 869a (Fla. 17th Jud. Cir. Broward County Ct. June 28, 2007); Nu-Best Whiplash Injury Center, Inc., a/a/o Sheila Turor v. Progressive Auto Pro Ins. Co., 13 Fla. L. Weekly Supp. 830c (Fla. 13th Jud. Cir. Hillsborough County Ct. May 24, 2006); Premier Open MRI, LLC a/a/o Deborah Braden v. Progressive Express Ins. Co., 11 Fla. L. Weekly Supp. 839a (Fla. 13th Jud. Cir. Hillsborough County Ct. May 26, 2004); Back In Action Health, LLC v. Progressive Express Ins. Co., 11 Fla. L. Weekly Supp. 1092a (Fla. 15th Jud. Cir. Palm Beach County Ct. September 17, 2004); Comprehensive Physician Services a/a/o Allen Wright v. The Hartford Ins. Co. Of Midwest, 12 Fla. L. Weekly Supp. 351a (Fla. 13th Jud. Cir. Ct. January 20, 2005); Dr. Robert D. Simon, M.D., P.A. (James Taffuri) v. Progressive Express Ins. Co., 13 Fla. L. Weekly Supp. 502a (Fla. 15th Jud. Cir. Palm Beach County Ct. December 7, 2005); Heartland Rehabilitation Services v. Nationwide Mutual Fire Ins. Co. 12 Fla. L. Weekly Supp. 601a (Fla. 4th Jud. Cir. April 6, 2005); Lawrence H. Fink, M.D., FACS, P.L., a/a/o Kim Copeland v. Progressive American Ins. Co., 13 Fla. L. Weekly Supp. 718 b (Fla. 12th Jud. Cir. Sarasota County Ct. April 12, 2006); DC Services, L.L.C. a/a/o Kristina Labrie v. Progressive Express Ins. Co., 15 Fla. L. Weekly Supp 394b (Fla. 18th Jud. Cir. Seminole County Ct. February 21, 2008); David A. Libert, M.D. d/b/a First Choice Medical Center, a/a/o Mark McCorkle v. USAA Casualty Ins. Co., 16 Fla. L. Weekly Supp. 364a (Fla. 18th Jud. Cir. Seminole County Ct. December 15, 2008.)