17 Fla. L. Weekly Supp. 92a

Online Reference: FLWSUPP 1702DEXT

Insurance — Personal injury protection — Private cause of action for violation of section 627.736 — Legislature did not intend for violations of PIP statute to give rise to private cause of action — Trial court erred in denying motion to dismiss with prejudice and imposing fines for violation of PIP statute

UNITED AUTOMOBILE INSURANCE COMPANY, Appellant, v. COUNTY LINE CHIROPRACTIC CENTER A/A/O ANASA DEXTER, Appellee. Circuit Court, 17th Judicial Circuit (Appellate) in and for Broward County. Case Nos. 08-14841 (26), 08-29172 (13). L.T. Case No. 03-11010 COCE 54. December 11, 2009.OPINION

(Charles M. Greene, J.) THIS CAUSE comes before the Court, sitting in its appellate capacity upon the consolidated appeals by Appellant, United Automobile Insurance Company, of the trial court’s final judgment in favor of Appellee, County Line Chiropractic Center, which awarded Appellee $45,000.00 in statutory fines, pursuant to section 626.9521, Florida Statutes (1992), together with an order awarding Appellee attorneys’ fees and costs.

Appellant issued a policy of insurance to insured, Anasa Dexter, which provided personal injury protection (PIP) benefits. On August 27, 2002, while this policy was in effect, Ms. Dexter was involved in a motor vehicle accident and received medical treatment from Appellee. In turn, Ms. Dexter assigned her right to PIP benefits to Appellee. After Appellant advised Appellee that PIP benefits would not be paid, Appellee filed a two-court complaint against Appellant. Appellee subsequently amended its complaint adding three claims for statutory violations under section 627.736(4)(f), (6)(b) and (11)(f), Florida Statutes (2001), and for unfair or deceptive practices under section 626.9541, Florida Statutes (2002).¹ Appellee sought pre-judgment interest, attorneys’ fees and costs, along with the imposition of fines under section 626.9521, Florida Statutes (1992), for each nonwillful and willful statutory violation.

Appellant responded by filing a motion to dismiss Counts III, IV and V arguing that Appellee was not the appropriate party to bring a civil action against Appellant for the alleged statutory violations. Appellant also argued that Appellee’s cause of action was encompassed in section 624.155, Florida Statutes, commonly referred to as Florida’s “Bad Faith Statute.” However, Appellee was barred from filing any such action under section 624.155 due to its failure to comply with the condition precedent to bringing such an action because Appellee failed to provide the department and the insurer with 60 days’ written notice of any such violation to allow the insurer an opportunity to cure any violation. See §624.155(2)(a), Fla. Stat. (1997). Appellant argued that since Appellant lacked standing to bring a private cause of action on the alleged statutory violations, no legitimate claim in controversy between the parties and Appellee’s claims for statutory violations should be dismissed with prejudice.

The trial court disagreed with Appellant and denied its motion to dismiss. Based on that order, the trial court entered a second order overruling Appellant’s objections to Appellee’s discovery requests which sought discovery relevant to Counts III, IV and V, and ordered Appellant’s compliance within 30 days.

Thereafter, Appellant submitted a confession of judgment as to Counts I and II of Appellee’s amended complaint and filed its second motion to dismiss the remaining counts. In addition, Appellant moved for a stay of the on-going discovery matters and sought emergency relief from the trial court’s discovery orders compelling disclosure of documents relevant to Counts III, IV and V.

Following a hearing on Appellant’s second motion to dismiss and Appellee’s motion for discovery sanctions seeking enforcement of the trial court’s prior discovery order, the trial court first ruled on Appellee’s motion for discovery sanctions. Finding discovery violations, the trial court struck Appellant’s pleadings and entered a default against the Appellant finding that Appellant “routinely violated F. S. 627.736 (4)(f) and (6)(b) and (11)(f),” and that “these violations occurred with such frequency asto constitute a general business practice & these violations were willful.” The trial court also denied Appellant’s second motion to dismiss finding it moot “based on the Court’s striking of pleading & entry of default.”

Thereafter, the trial court entered a final judgment in favor of Appellee and awarded statutory fines pursuant to section 626.9521, finding that Appellant’s “violations as alleged in Counts II, IV, and V were willful and that the maximum fine of $15,000.00 per count for a total of $45,000.00 shall be imposed.” The trial court reserved jurisdiction to award Appellee reasonable attorneys’ fees and costs. Subsequently, the trial court entered an order awarding attorneys’ fees and costs to Appellee. Appellant’s timely appeals followed.

In the instant appeal, the Court must review the trial court’s denial of Appellant’s motion to dismiss which, in effect, granted Appellee standing to bring a private right of action against the insurer to enforce compliance with certain statutory provisions of section 627.736. As such, it must be determined whether the Florida legislature intended to establish a private right of action under section 627.736, which presents a question of law. Therefore, this appeal is subject to de novo review. See Merkle v. Health Options, Inc, 940 So.2d 1190 (Fla. 4th DCA 2006)(explaining that a ruling on a motion to dismiss is subject to de novo review); see also Maggio v. Florida Dept. of Labor and Employment Sec., 899 So.2d 1074 (Fla. 2005)(holding that statutory construction is a question of law subject to de novo review).

On appeal, Appellant argues that the trial court erred in granting Appellee standing to bring a private cause of action under section 627.736, outside of section 624.155. Appellee counters that the trial court properly recognized a private right of action under section 627.736, and thus, it was properly awarded $45,000.00 in fines under section 626.9521. In support of its argument, Appellee relies on the cases of Lutz v. Protective Life Ins. Co., 951 So. 2d 884 (Fla. 4th DCA 2007) and Isasi v. American Colonial Ins. Co., 863 So. 2d 1240 (Fla. 4th DCA 2003). However, this Court finds that both cases are materially distinguishable as the plaintiffs in Lutz and Isasi were not claiming any private right of action to merely enforce compliance with statutory provisions for alleged violations. Rather, unlike here, the plaintiffs in those cases sought relief under distinct common law theories, i.e. breach of contract and collection of interest on a debt owed. There is nothing to suggest that Appellee’s claims are grounded in any common law cause of action, but rather Appellee’s claims merely seek to enforce compliance with section 627.736. Consequently, its reliance on these cases is unavailing.

The next issue is whether the Florida legislature intended for an insured to have a private cause of action based upon alleged statutory violations of section 627.736. See Murthy v. N Sinha Corp., 644 So. 2d 983 (Fla. 1994); see also Baumstein v. Sunrise Cmty., Inc., 738 So. 2d 420, 421 (Fla. 3d DCA 1999)(holding “[i]t is axiomatic that whether a private right of action exists for a violation of a statute is a matter of legislative intent.”). Absent a specific expression of such intent, a private right of action to do so is not implied. Villazon v. Prudential Health Care Plan, Inc., 843 So. 2d 842 (Fla. 2003).

A statute that does not purport to establish civil liability, but merely makes provision to secure the safety or welfare of the public, will not be construed as establishing a civil liability. Any analysis of the legislature’s intent must begin by examining the explicit purpose of section 627.736, which is codified in section 627.731, Florida Statutes, and provides as follows:

The purpose of ss. 627.730-627.7405 is to provide for medical, surgical, funeral, and disability insurance benefits without regard to fault, and to require motor vehicle insurance securing such benefits, for motor vehicles required to be registered in this state and, with respect to motor vehicle accidents, a limitation on the fight to claim damages for pain, suffering, mental anguish, and inconvenience.

As the purpose of section 627.736 clearly appears to secure the welfare and safety of the public, it is highly probative evidence that the Florida legislature did not intend for the statutory violations alleged here to give rise to any private cause of action. See Horowitz v. Plantation General Hosp. Ltd. Partnership, 959 So. 2d 176, 182 (Fla. 2007).

Further evidence of the Florida legislature’s intent may be found in the 2008 amendment to section 627.736(11), which specifically codifies the Office of Insurance Regulation’s power to enforce statutory compliance and statutory penalties for an insurer’s failure to pay valid claims and unfair or deceptive practices, and which provides as follows:

(11) FAILURE TO PAY VALID CLAIMS; UNFAIR OR DECEPTIVE PRACTICE. —

(a) If an insurer fails to pay valid claims for personal injury protection with such frequency so as to indicate a general business practice, the insurer is engaging in a prohibited unfair or deceptive practice that is subject to the penalties provided in s. 626.9521 and the office has the powers and duties specified in ss. 626.9561-626.9601 with respect thereto.

(b) Notwithstanding s. 501.212, the Department of Legal Affairs may investigate and initiate actions for a violation of this subsection, including, but not limited to, the powers and duties specified in part II of chapter 501.

§627.736(11), Fla. Stat. (2008)(emphasis added).

Plainly, matters of statutory violations where an insurer fails to pay valid claims with such frequency as to indicate a general business practice, like those alleged by Appellee, do not rise to any private remedy, and instead, fall under the purview of the Office. See §636.736, Fla. Stat. (2008); §624.05(3), Fla. Stat. (2008) (“(3) “Office” means the Office of Insurance Regulation of the Financial Services Commission.”)

Additionally, in the recent decision in United Auto. Ins. Co. v. A 1st Choice Healthcare Systems, 2009 WL 3616293 (Fla. 3rd DCA 2009) [34 Fla. L. Weekly D2268a], the Third District Court of Appeal was faced with a similar matter where the Court was asked to determine whether section 627.736(4)(b) would afford the insured, or as here, the assignee of the insured, a private right of action against his or her insurer for an insurer’s failure to meet the deadline. Id. at *2. In analyzing the legislature’s intent, the Court explained that where there is nothing in the text of the statutory provision from which one can deduce that the legislature intended an insured to have a private right of action against an insurer for alleged statutory violation, no such right may not be implied. Id. at *4. Accordingly, the Court opined that the county and circuit court appellate division’s rulings which afforded the insured a private right of action to the insured against an insurer under section 627.736(4)(b) constituted a clear departure from the essential requirements of law. Id.

As the Court can find no evidence that the legislature intended any private right of action to merely enforce compliance with the statutory violations alleged by Appellee, the Court now turns to the trial court’s award of fines to Appellee under section 627.9521.

On appeal, Appellee inexplicably ignores the statutory provisions under which it claims entitlement to fines (sections 626.9521 and 626.9561), and instead, asks this Court to analyze the amendments to an entirely different statutory penalty section found in sections 627.011-627.381, Florida Statutes (known as the “Rating Law”). As this matter wasnot raised in the action below, the Court will not entertain the issue on appeal, except to point out that Appellee’s argument overlooks the obvious language and legislative intent of section 626.9561. See e.g., Murphy v. City of Port St. Lucie, 666 So.2d 879, 880 (Fla. 1995)(holding that an issue not raised in action below is unrecognizable on appeal).

The applicable version of section 626.9561, entitled “Power of department,” (amended in 2003, now entitled “Power of department and office), provides as follows:

The department shall have power to examine and investigate the affairs of every person involved in the business of insurance in this state in order to determine whether such person has been or is engaged in any unfair method of competition or in any unfair or deceptive act or practice prohibited by s. 626.9521.

(Emphasis added).

It is clear that it is the Department of Insurance which has the authority to enforce compliance with statutory violations and seek the imposition of fines under section 626.9521(2), Florida Statutes. On the plain language of the statute, there is nothing which allows Appellee a private right of action from which the award of statutory fines here under section 626.9521(2) is appropriate.

Based on the foregoing, the Court finds that the trial court erred, as a matter of law, in denying Appellant’s motion to dismiss with prejudice and reverses the trial court’s final judgment, including the imposition of fines, and the award of attorneys’ fees and costs. Accordingly, it is hereby

ORDERED AND ADJUDGED that the trial court’s final judgment in favor of Appellee, County Line Chiropractic Center awarding $45,000.00 in statutory fines pursuant to section 626.9521, Fla. Stat., is REVERSED and REMANDED for proceedings consistent with this Opinion.

__________________

¹(1) Count III alleged violations of sections 627.736(4)(f) and 626.9541, that Appellant engaged in a business practice not to pay the medical bills submitted by health care providers under the insured’s PIP policies; (2) Count IV alleged violations of sections 627.736(6)(b) and 626.9541, that Appellant routinely requested documentation pertaining to the reasonableness of charges or medical necessity without a reasonable basis for hundreds of claims filed by Appellee and other health care providers; and (3) Count V alleged violations of sections 627.736(11)(f) and 626.9541, that Appellant routinely failed to timely provide payment for hundreds of valid claims submitted by Appellee and other health care providers.