18 Fla. L. Weekly Supp. 301a

Online Reference: FLWSUPP 1803DEFR

Insurance — Personal injury protection — Coverage — Fee schedule in 2008 version of PIP statute is inapplicable where policy was issued prior to effective date of 2008 PIP statute, and plain language of policy required defendant to pay 80% of reasonable expenses rather than limiting payment in accordance with permissive language of 2008 PIP statute

DEFRAN MEDICAL ASSOCIATES CORP., a Florida Corporation (assignee of Arellano, Mario) Plaintiff, v. STATE FARM FIRE AND CASUALTY COMPANY, Defendant. County Court, 11th Judicial Circuit in and for Miami-Dade County. Case No. 08-35744 CC 23 (1). November 1, 2010. Myriam Lehr, Judge.

ORDER GRANTING PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT

THIS CAUSE came before the Court for hearing on November 1, 2010 on Plaintiff’s Motion for Partial Summary Judgment and the Court, having reviewed the motion; entire Court file; and relevant legal authorities and heard argument of counsel finds as follows:

Background: This is a P.I.P. case. Mario Arellano received medical treatment from Plaintiff beginning February 1, 2008 for injuries sustained in an automobile accident on January 23, 2008. The applicable policy was issued on August 18, 2007. Defendant maintains that it properly paid Plaintiff’s claim according to the reimbursement limitations set forth in F.S. s. 627.736 (“2008 fee schedule”). The Plaintiff has moved for partial summary judgment asserting that Defendant’s payment pursuant to the 2008 fee schedule was improper as: (1) the policy in question was issued in 2007 (prior to the effective date of the 2008 fee schedule) and, as such, the 2008 fee schedule may not be retroactively applied and (2) even if the 2008 fee schedule is permitted to be applied to a policy first issued in 2007, the Defendant is bound by the plain language of its policy and cannot rely on the permissive language in the 2008 no-fault act rather than the contractual language of its policy.

Legal Conclusions: The Court bases its current decision off of its previous ruling in Virtual Imaging Services, Inc. v. Geico General Ins. Co., Case No.: 2009-24923-SP-23 (Miami Dade County, Judge Myriam Lehr, 2010) and the decision of the Florida Supreme Court in Louis R. Menendez, Jr., Et Al. v. Progressive Express Ins. Co. Inc., (Florida Supreme Court, Case No. SC08-789, February 4, 2010) [35 Fla. L. Weekly S581a], which held that the pre-suit notice provision of the P.I.P. statute (section 627.736(11), Florida Statutes (2001)), could not be applied retroactively to insurance policies issued prior to the effective date of the statute because it, “as a whole, is a substantive statute.”

The Menendez Court found as follows:

In our analysis, we look at the date the insurance policy was issued and not the date that the suit was filed or the accident occurred, because “the statute in effect at the time an insurance contract is executed governs substantive issues arising in connection with that contract.”

Louis R. Menendez, Jr., Et AL v. Progressive Express Ins. Co., Inc., (Florida Supreme Court, Case No. SC08-789, February 4, 2010) [35 Fla. L. Weekly S581a] citing Hassen v. State Farm Mut. Auto. Ins. Co. 674 So. 2d 106, 108 (Fla. 1996) [21 Fla. L. Weekly S102c]; see also Lumbermens Mut. Cas. Co. v. Ceballos, 440 So. 2d 612, 613 (Fla. 3d DCA 1983) (holding that a liability policy is governed by the law in effect at the time the policy is issued, not the law in effect at the time a claim arises); Hausler v. State Farm Mut. Auto. Ins. Co., 374 So. 2d 1037, 1038 (Fla. 2d DCA 1979) (holding that the date of the accident does not determine the law that is applicable to a dispute).

The Court recognizes the Defendant’s argument that the legislative intent was to apply the statute retroactively. However, the Supreme Court has plainly set constitutional limits on when a court may apply a statute retroactively.¹ Specifically, the Court has stated that

“Even where the Legislature has expressly stated that a statute will have retroactive application, this Court will reject such an application if the statute impairs a vested right, creates a new obligation, or imposes a new penalty.”

Menendez, (Fla.,Case No. SC08-789, February 4, 2010) citing State Farm Mut. Auto Ins. Co. v. Laforet, 658 So. 2d 55, 61 (Fla. 1995) [20 Fla. L. Weekly S173a].

In the instant case, the Court finds that the rights under the policy of insurance at issue are substantive and that these rights vested at the time the insured purchased the policy on August 18, 2007 as the policy that the insured was issued “had a ‘present fixed right of future enjoyment’ of a certain level of benefits which is diminished by the statutory amendment.” Glenn Corkins, D.C. PH.D., P.A. d/b/a Advanced Spine Center of the Palm Beaches (Yamileth Rodriguez) v. GEICO Indemnity Co., Case No.: 08-15105 (Broward County Court, Judge Robert W. Lee, 2009) [16 Fla. L. Weekly Supp. 1185a].

On the second point, the Court is bound to follow State Farm v. Nichols, 21 So.3d 904 (Fla. 5th DCA 2009) [34 Fla. L. Weekly D2275b]. In Nichols, the insurer argued that it was entitled to pay in accordance with the limitation language in a statute that was not specifically mentioned in the policy, while at the same time the policy provided a means to determine payment. The Fifth DCA, however, considered the “may limit” language appearing in the sinkhole statute to be permissive. Id. at905. Similarly, the language “may limit” appears in the new PIP statute. In both Nichols and this matter, the insurer failed to reference the permissive language in the policy and indicated that it would pay as follows: “We will pay in accordance with the No-Fault Act. . . medical expenses: 80% of the reasonable charges incurred for necessary medical. . .services.”

As a result, the Court concludes, consistent with Nichols, that the Defendant is obligated to pay “80% of medical expenses” as required by the plain language of its policy regardless of the limitation permitted by the statute.

Accordingly, it is hereby:

ORDERED AND ADJUDGED that the Plaintiff’s Motion for Partial Summary Judgment is GRANTED. The Defendant was not permitted to apply the permissive fee limitation set forth in the 2008 P.I.P. statute to the Plaintiff’s claim because the policy was issued in 2007, before the effective date of the 2008 PIP statute. The Defendant was required to issue payment according to the plain language of the policy, which provides payment to be made at 80% of the medical expenses, rather than limit payment in accordance with the permissive language of the 2008 PIP statute.

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¹The parties each dispute the legislative intent, i.e., whether the legislature intended to apply the statute retroactively, however, the Court need not reach this issue.