16 Fla. L. Weekly Supp. 439a
Online Reference: FLWSUPP 165JOSEP
Insurance — Personal injury protection — Explanation of benefits — Failure to provide — Neither insurer’s letter advising that claim is under investigation nor failure to remit payment within 30 days of receipt of claim were rejections of claim triggering requirement to provide EOB — Rather, insurer’s response to demand letter is clear rejection that triggered EOB requirement — Where response to demand letter stated that entire claim was denied, no further detail was required to satisfy EOB requirement of providing itemized specification
TAMPA CHIROPRACTIC CENTER, a/a/o WADHEN JOSEPH, Plaintiff, vs. DIRECT GENERAL INSURANCE COMPANY, Defendant. County Court, 9th Judicial Circuit in and for Orange County. Case No. 2007-CC-0013649-O. March 5, 2009. Antoinette D. Plogstedt, Judge. Counsel: Crystal Eiffert, Eiffert & Associates, P.A., Orlando. Timothy S. Kazee, Vernis & Bowling of Central Florida, Deland.
ORDER GRANTING DEFENDANT’S MOTION FOR PARTIAL SUMMARY JUDGMENT AS TOCOUNT II OF PLAINTIFF’S FIRST AMENDED COMPLAINT AND DENYING PLAINTIFF’S MOTION FOR FINAL SUMMARY JUDGMENT AS TO COUNT IIOF PLAINTIFF’S FIRST AMENDED COMPLAINT
THIS MATTER came before the Court on Defendant’s and Plaintiff’s Motions for Partial Summary Judgment on Count II of Plaintiff’s First Amended Complaint, Breach of Contract for Failure to Provide an Itemized Specification, and upon hearing arguments by counsels for Plaintiff and Defendant and otherwise being fully advised in the premises the Court ORDERS, ADJUDGES, and DECREES as follows:
FINDINGS OF FACT
1. That Direct issued to Caleb Paul a policy of insurance, which included personal injury protection (PIP) benefits.
2. That on March 13, 2007, Caleb Paul was involved in a motor vehicle collision.
3. That Direct received an Application for “No Fault” Benefits for Joseph Wadhen, an alleged passenger of Caleb Paul’s during the March 13, 2007 collision.
4. That Joseph Wadhen made a valid assignment of his PIP benefits under the policy to the Plaintiff, TAMPA CHIROPRACTIC CENTER (“Tampa Chiropractic”).
5. That Direct received medical bills from Tampa Chiropractic for services allegedly rendered to Joseph Wadhen from March 14-April 30, 2007.
6. That on April 17, 2007, Direct sent a letter to Tampa Chiropractic stating, in pertinent part:
THIS IS NOT A DENIAL OF PAYMENT
* * *
This loss is currently under investigation by our Special Investigation Unit. Therefore, we will be unable to process payment of your medical bills at this time.
Should coverage be cleared and our payment exceeds the thirty (30) day time frame, we will issue our payment with the appropriate interest due.
7. That on June 19, 2007, Tampa Chiropractic sent to Direct a statutory demand letter demanding PIP benefits for services allegedly rendered by the clinic to Joseph Wadhen from March 14-April 30, 2007.
8. That on June 20, 2007, Direct sent to Joseph Wadhen a letter denying the claim in its entirety, stating in part:
Our investigation of this claim has revealed that [address omitted by the Court] is that of an “addressing or letter service” business, not that of a residence. Therefore, we are denying this claim as we were given false and misleading information which materially affects the coverage relating to this claim.
9. That on June 29, 2007, Direct timely responded to Tampa Chiropractic’s demand letter, stating that the “[c]laim has been denied,” and enclosing the June 20, 2007 letter addressed to Joseph Wadhen.
10. That on September 20, 2007, this lawsuit was filed with the Court.
CONCLUSIONS OF LAW
The parties agree, as does this Court, that Plaintiff’s cause of action for an alleged failure to provide an “itemized specification” as contemplated by F.S.627.736(4)(b) lies, if at all, as an action for breach of contract. This is because the provisions of F.S.627.736 et seq., commonly referred to as Florida’s PIP Statute, became part of the insurance contract between the parties. See Grant v. State Farm Fire & Casualty Co., 638 So. 2d 936, 938 (Fla. 1994). Accordingly, at issue in this litigation is whether Direct materially breached a contractual obligation to provide to Tampa Chiropractic an itemized specification, as contemplated by F.S.627.736(4)(b), and resulting in any legally recognizable damages.
As it is undisputed by the parties that there exists a valid contract for insurance, the Court turns to the allegation that Direct breached the contract by failing to provide Tampa Chiropractic with an itemized specification. The PIP statute provides, in pertinent part:
When an insurer pays only a portion of a claim or rejects a claim, the insurer shall provide at the time of the partial payment or rejection an itemized specification of each item that the insurer had reduced, omitted, or declined to pay and any information that the insurer desires the claimant to consider related to the medical necessity of the denied treatment or to explain the reasonableness of the reduced charge, provided that this shall not limit the introduction of evidence at trial. . . .
F.S. 627.736(4)(b) (2007). It has been held, and this Court agrees, that this provision is clear on its face and it must therefore be given its plain and obvious meaning. See Kelly Purvin v. Progressive Express Insurance Company, 12 Fla. L. Weekly Supp. 1104c (18th Jud. Cir., August 2005).
Tampa Chiropractic contends that it is entitled to summary judgment because Direct’s April 17, 2007 letter constitutes a “rejection” of the claim and the letter does not constitute an itemized specification.
On the other hand, Direct agrees that the April 17, 2007 letter is not an itemized specification, but, according to Direct, that letter was not a “partial payment or rejection” of the claim and so an itemized specification was not yet due. Instead, Direct argues that it satisfied any contractual duty to provide an itemized specification with its timely response to Tampa Chiropractic’s pre-suit demand letter. According to Direct, this letter, dated June 29, 2007, is the only “rejection” of the claim, and the letter clearly provides an itemized specification in the form of total claim denial.
The Court finds that the April 17, 2007 letter is not a “rejection,” as contemplated by F.S.627.736(4)(b). The clear and bolded font language of this letter does not suggest “rejection.” To the contrary, this letter to the provider plainly explains that the claim is under investigation, which does not denote “rejection.” It would be contrary to reason for this Court to conclude that a claim has been “rejected” in the face of a letter clearly advising the provider that the claim is under investigation. Therefore, no itemized specification was due at that time.
Tampa Chiropractic next contends that Direct’s failure to remit payment within 30 days of receipt of the bills constitutes a “rejection.” In this case, Direct received seven sets of medical bills for the dates of service spanning March 14 through April 30, 2007. Under this argument, it is implied that the insurer committed seven breaches of contract for failing to provide seven separate itemized specifications.
In response, Direct contends that neither the claim nor the bills were automatically “rejected” 30 days after receipt of the bills. The Court agrees that there was no automatic “rejection” 30 days after the insurer received each set of bills. First, as previously stated, an active investigation does not equate rejection. Secondly, under the clear and unambiguous statutory scheme of F.S.627.736(4)(b), an insurer is not automatically liable for charges not paid within the 30 day payment period; instead, the bills become “overdue” (not rejected) and the insurer runs the risk of accruing interest, statutory penalty, and attorney fees if it is ultimately found liable for those charges by the trier of fact. Accordingly, the bills were not automatically “rejected” after the expiration of 30 days from their receipt. F.S.627.736(4)(b); Gulf Coast Injury Center North, L.L.C. d/b/a Gulf Coast Injury Center a/a/o Albizar v. United Automobile Insurance Company, 15 Fla. L. Weekly Supp. 929b (13th Jud. Circuit, July 2008).
It is the Court’s finding that Direct’s June 29, 2007 response to the demand letter is the clear “rejection” that triggered any duty to provide an itemized specification. This letter clearly states that the claim is denied because the insurer was given “false and misleading information which materially affects the coverage relating to this claim.” The remaining issue, then, is whether this letter constitutes an itemized specification, as contemplated by F.S.627.736(4)(b).
According to Direct, the itemized specification of the June 29, 2007 correspondence is obvious: all items are rejected. Tampa Chiropractic argues that the letter is not specific because the letter does not state, for example, what CPT codes were rejected or why.
After extensive argument on this issue, the Court finds that Direct’s timely response to the pre-suit demand letter is an itemized specification. The letter clearly states that the entire claim is denied, which unquestionably includes each item the provider billed. Further, there is no legal requirement that an itemized specification provide detail as to why the items are rejected. Instead, the statute unambiguously allows the insurer to specify “any information that the insurer desires the claimant to consider related to the medical necessity of the denied treatment or to explain the reasonableness of the reduced charge,” F.S.627.736(4)(b) (emphasis added). While the insurer may provide any information it wishes the claimant to consider, there is no legal requirement to provide any further information.
Nevertheless, Direct’s June 29, 2007 letter does specify the exact reason why it rejected the entire claim (i.e. false and misleading information relating to the claimant’s address). Tampa Chiropractic does not dispute that it had this information prior to filing this lawsuit. The Court finds that Direct’s June 29, 2007 letter satisfies any contractual duty to provide an itemized specification, as contemplated within F.S.627.736(4)(b).
Tampa Chiropractic contends that a failure to provide an itemized specification is a material breach of contract warranting, at a minimum, nominal damages. On the other hand, Direct argues that any failure to provide an itemized specification is not a material breach of contract implicating any legally recognizable damages.
In Ana Cardoso v. State Farm and Casualty Company, 15 Fla. L. Weekly Supp. 1211a (13th Jud. Cir., September 2008), the issues of breach materiality and contractual damages in the context of itemized specifications were examined. In that case, the court concluded that a failure to provide an “itemized specification” was not a material breach of contract warranting any damages because the contracting parties could not have reasonably anticipated or expected to be damaged by any such failure. See Id. In addressing the issue of damages, the Cardoso court specifically rejected numerous prior cases awarding “nominal damages,” stating: “[t]he law is abundantly clear that it is not for judges to use the term ‘nominal damages’ as a catch-all, a plug, a fail safe to do justice or a weapon to right a wrong when there has been no material omission or commission by the PIP carrier.” This Court agrees.
In this case, Tampa Chiropractic acknowledges having received the claim rejection, and the exact reasons for rejection, well before the time it filed this litigation. Accordingly, Direct did not materially breach any contractual duty warranting an award of damages.
This legal conclusion is consistent with the policy and intent behind the itemized specification espoused in the statewide decisions submitted by the parties, which is to encourage prospective litigants to be informed pre-suit to minimize needless and baseless filings, Dade Injury Rehabilitation Center a/a/o Taylor v. United Automobile Insurance Company, 14 Fla. L. Weekly Supp. 1157b (17th Jud. Cir., September 2007), and to allow the claimant to make “informed decisions” in order to prevent “unnecessary litigation” and “having to sue when it is in the dark,” Mandell Chiropractic and Rehab Center a/a/o Roosevelt v. United Automobile Insurance Company, 12 Fla. L. Weekly Supp. 396a (17th Jud. Cir., September 2004). In this case, while Tampa Chiropractic may disagree with the reasons for rejection, there was no material breach of a contractual duty to provide an itemized specification resulting in any damages.
In light of the June 29, 2007 letter, Tampa Chiropractic’s legal recourse was to file a lawsuit for recovery of PIP benefits for the alleged medical services, which it has done.
WHEREFORE, Direct’s Motion for Partial Summary Judgment as to Count II of Plaintiff’s First Amended Complaint is GRANTED, and Tampa Chiropractic’s Motion for Final Summary Judgment as to Count II of Plaintiff’s First Amended Complaint is hereby DENIED.
