17 Fla. L. Weekly Supp. 35a
Online Reference: FLWSUPP 1701RIVE
Insurance — Personal injury protection — Coverage — Policy issued during statutory gap period — Where reenacted PIP statute provided that reenacted law was effective January 1, 2008, and expressly provided that any PIP policy in effect on or after that date would be deemed to incorporate provisions of reenacted law, insurer properly paid claim for treatment that occurred after January 1, 2008, at 80% of 200% of Medicare fee schedule as provided for in reenacted statute — Change in reimbursement fee schedule did not amount to unconstitutional impairment of contract because new law had been enacted, although it was not yet effective, when policy was executed, and policy contemplated that it would incorporate applicable changes in no-fault law
RIVERO DIAGNOSTIC CENTER, INC., (a/a/o Leonardo Fernandez), Plaintiff, v. U.S. SECURITY INSURANCE COMPANY, Defendant. County Court, 11th Judicial Circuit in and for Miami-Dade County. Case No. 08-11108 SP 25. August 31, 2009. Lawrence D. King, Judge. Counsel: Alina Palacios-Hart, Miami, for Defendant.
FINAL SUMMARY JUDGMENT
The defendant, U.S. Security Insurance Company, moves for the entry of final summary judgment. There is no dispute that U.S. Security paid personal injury protection (PIP) benefits to the plaintiff, Rivero Diagnostic Center, Inc., in accordance with the statutory fee schedules set forth in §627.736(5)(a)2., Fla. Stat. The issues presented are whether U.S. Security was entitled to do so, and if so whether the application of the statutory amendment introducing the fee schedule option violates the constitutional prohibition against impairment of contracts. See Art. I, § 10, Fla. Const. (“No bill of attainder, ex post facto law or law impairing the obligation of contracts shall be passed”).
The record reflects that the insured, Leonardo Fernandez, was insured by an automobile insurance policy that was issued by U.S. Security on December 14, 2007 with effective dates of coverage from December 14, 2007 through June 14, 2008. Mr. Fernandez was involved in an automobile accident on February 5, 2008. He received diagnostic medical services from Rivero Diagnostic Center for injuries allegedly arising out of the accident and assigned benefits to the provider.
All of these events occurred after the date the statutory amendment was enacted. Pursuant to legislation enacted in 2003, Florida’s Motor Vehicle No-Fault law was repealed on October 1, 2007. See Ch. 2003-411, Laws of Fla. Instead of extending the law before its repeal, the Legislature allowed the No-Fault Act to sunset. Therefore, on October 1, 2007, Florida reverted to a fault-based tort automobile insurance system. In early October 2007, the Legislature held a special session during which it was able to work out a bill that re-enacted and revived the No-Fault law with significant reforms. On October 11, 2007, the Governor signed the bill, the relevant provisions of which went into effect on January 1, 2008. Ch. 2007-324, Laws of Fla., §§21, 23.
The legislative history reflects that the Legislature was concerned with rampant fraud, excessive litigation and costs that plagued the No-Fault system. The new legislation addresses the issues of fraud and excessive litigation and costs, in part, through the implementation of new allowable fee schedules that limit payments to medical providers and eliminates excessive litigation over reasonableness of charges. See Ch. 2007-324, Laws of Fla., § 19; § 627.736(5)(a)2, Fla. Stat. Section 21(2) of the bill, provides: “Any personal injury protection policy in effect on or after January 1, 2008, shall be deemed to incorporate the provisions of the Florida Motor Vehicle No-Fault Law, as revived and amended by this act.” Codified at § 627.7407, Fla. Stat. (2008).
The U.S. Security insurance policy was issued in December 2007, during the “gap” period in which the No-Fault Act was not in effect. However, the policy was issued after the new legislation was enacted. The policy provides in relevant part: “The Company will pay, in accordance with the Florida Vehicle No Fault Law, as amended. . .”
The court finds that all relevant persons were on notice of the statutory amendment before any legally relevant events occurred. The policy commenced in December 2007, two months after the new legislation was enacted. Hence, the insured was on notice that the amended statute, with its fee schedule option, would apply to the policy beginning on January 1, 2008. The insured was notified of this by virtue of the statutory amendment stating that any PIP policy in effect on or after January 1, 2008 would be subject to the provisions of the new statute. In addition, the contract itself provided that payment of PIP benefits would be made “in accordance with the Florida Vehicle No Fault Law, as amended,” thereby placing the insured on notice that amendments to the PIP statute would apply. The accident and the medical treatment occurred after the statutory amendment was enacted and after it took effect on January 1, 2008. Therefore, the medical provider was on notice of the statutory amendment before it accepted assignment of benefits and before it commenced providing medical services to the insured.
“Determining whether [a] new statute violates Article I, section 10 of Florida’s Constitution, depends on whether the new statute attaches new legal consequences to events completed prior to its enactment.” Progressive Express Ins. Co., Inc. v. Menendez, 979 So. 2d 324, 330 (Fla. 3d DCA 2008). “[S]tatutes which do not alter contractual or vested rights but relate only to remedies or procedures are not within the general rule against retrospective operation. . .” Id. [citations omitted]. “As a general rule, the statute in effect at the time an insurance contract is executed governs the substantive issues arising in connection with that contract.” Id. [citations omitted]. “Additionally, when a law affects substantive rights, liabilities and duties, that law is presumed to apply prospectively.” Id. [citations omitted]. “The policy rationale underlying this presumption is that ‘the retroactive operation of statutes can be harsh and implicate due process concerns.’” Id. [citations omitted].
The court finds there is no unfairness in applying the statutory amendment to the facts of this case. No one was prejudiced, since everyone knew the fee schedule option would apply after January 1, 2008. The court would be inclined to conclude that the statutory amendment in question was a substantive change in the law. However, the law was not applied retrospectively under the facts of this case. It did not alter any preexisting contractual obligations or other vested rights that arose before the enactment of the statute. Therefore, the court concludes that the application of the statute does not offend the constitutional prohibition against impairment of contracts.
In reaching this conclusion, the court notes that it is unnecessary to reach the question that arose in Menendez, supra, as to whether the statute was substantive or procedural. Menendez involved the application of the presuit notice requirement of the PIP statute to a policy that was issued and an auto accident that occurred before the statutory requirement was enacted. Hence, the court was faced with the question of whether the statute altered substantive rights that arose before the statute’s enactment. Here, by contrast, the statutory amendment was enacted before the contract was formed and before the accident occurred, and therefore before any legal relationships between the parties were formed and before any substantive rights arose.
The court agrees with Rivero Diagnostic Center that, as a general proposition, the law in effect at the time the contract was executed controls. However, that general proposition merely prevents a new statute from operating in a manner that changes the material provisions of a previously executed contract. Here, the new law was enacted before the policy was issued and it did not change any of its material provisions. The policy itself contemplated that it would incorporate applicable changes in the no-fault law. The statutory amendment, by its unambiguous terms, applied to this contract which was in effect on January 1, 2008. Therefore, the contract incorporated the new law as of January 1, 2008.
In summary, the conclusion reached by the court is compelled by the plain terms of the statutory amendment and the policy, and by the timing of the enactment of the statute in relation to the legally significant events that followed. The legislature intended to improve the PIP statute by bringing an end to litigation over the reasonableness of charges for medical services, and it clearly expressed its intent that this remedial legislation should be applied to all contracts in effect on or after January 1, 2008. Under the facts of this case, the application of the statute in the manner plainly intended by the Legislature does not unconstitutionally impair vested contract rights.
Accordingly, the court finds that there are no genuine issues of material fact and U.S. Security is entitled to the entry of final summary judgment, as a matter of law. Final judgment is entered in favor of U.S. Security. The plaintiff, Rivero Diagnostic Center, Inc., shall take nothing by this action, and the defendant, U.S. Security Insurance Company, shall go hence without day.
