18 Fla. L. Weekly Supp. 3a
Online Reference: FLWSUPP 1801HENR Insurance — Personal injury protection — Coverage — Medical expenses — Exhaustion of policy limits — Reallocation to Med Pay — No error in finding that insured can request reallocation of payment for medical expenses to Med Pay part of policy to allow for maximum coverage even after exhaustion of PIP benefits and that insured’s policy does not prohibit retroactive reallocation — Demand letter — Pre-suit demand letter that was not in strict compliance with statute is not fatal to insured’s claim where demand would have been futile given that insurer had announced that it would pay no further benefits
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellant, v. CINDY PHILLIPS HENRY, Appellee. Circuit Court, 5th Judicial Circuit (Appellate) in and for Lake County. Case No. 2009 AP-12. L.C. Case No. 2008 SC 4997. October 4, 2010. Appeal from the County Court, Lake County, Honorable Richard W. Boylston, Judge. Counsel: Nancy W. Gregoire, Fort Lauderdale; John L. Morrow and Matthew J. Corker, Orlando, for Appellant. Ronald H. Watson, Eustis, for Appellee.
OPINION
(SEMENTO, L., Judge.) State Farm challenges a summary final judgement in Henry’s favor. Since the trial court properly interpreted the contract, statutes and applicable law, the final judgment must be affirmed.
In 2008, Henry was involved in an automobile accident. She was covered under an insurance policy issued by State Farm. The policy contained both Coverage P, No-Fault, and Coverage C, Medical Payments provisions. Henry claimed benefits for lost wages and medical expenses. After the $10,000.00 in no-fault benefits provided under the personal injury protection (PIP) part of her policy was exhausted, Henry requested State Farm to reallocate payments for her medical expenses to the medical payments part of her policy. When State Farm declined, Henry filed suit. Since there were no material factual disputes, each party filed a motion for summary judgment. The trial court denied State Farm’s motion, and granted Henry’s, finding that the contract and applicable law required State Farm to reallocate the payments.
State Farm asserts that the final judgment is improper as a matter of law, for two reasons which are affirmatively alleged; the insurance policy prohibits reallocation under these circumstances, and Henry failed to comply with the statutory pre-suit notice requirements.
As to the first issue, Henry correctly argues that Bennett v. State Farm Mut. Auto. Ins. Co., 580 So.2d 217 (Fla. 2d DCA 1991) controls. According to Bennett, an insured can request reallocation of benefits to allow maximum coverage even after the exhaustion of the no-fault benefits. Although State Farm argues that the policy here clearly prohibits retroactive reallocation, it does not. The trial court’s interpretation of the insurance contract and applicable law are correct as a matter of law.
As to the second issue, Section 627.736(10), Florida Statutes, requires a specified pre-suit demand as a condition precedent to the filing of an action for PIP benefits. Henry made a written demand, but it was not in strict compliance with the statute. Henry correctly asserts that a demand would have been futile, given that State Farm announced that it would pay no further benefits. See, e.g., Peachtree Cas. Ins. Co. v. Walden, 759 So.2d 7 (Fla. 5th DCA 2000)[ 25 Fla. L. Weekly D555d]. The trial court had an opportunity to review the undisputed evidence and determined, as a matter of law, that the lack of proper notice is not fatal to Henry’s claim. The trial court did not err in drawing that legal conclusion.
Summary judgment was properly granted in Henry’s favor. As a matter of law, the trial court’s decision must be affirmed.
Each party made a claim for an award of appellate attorney’s fees. Henry is the prevailing party in this appeal. Thus, Henry’s motion for an award of appellate attorney’s fees is granted, and this matter is remanded to the trial court for a determination of the amount of fees. State Farm’s motion for an award of appellate attorney’s fees is denied.
AFFIRMED. (MERRITT, D., SR. concurs.) (LAMBERT, B.J. dissents with opinion.)
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(LAMBERT, B.J., Dissenting.) While I believe that summary judgment in this case is proper, in my opinion, the trial court erred in entering summary judgment in favor of the Appellee and not the Appellant, State Farm.
The material facts of this case, as framed by both the pleadings, argued at the summary judgment hearing and as set forth in the statement of facts submitted in the briefs are not in dispute. The Appellee, who was the Plaintiff below, was insured by the Appellant, State Farm, at the time she was involved in a motor vehicle accident. She had coverage under both the personal injury protection (PIP) and medical payments (“Med Pay”) provisions of her policy. There is no apparent dispute that State Farm received medical bills from either the insured or her assignees for treatment Appellee received arising out of the motor vehicle accident and promptly paid the bills until the full $10,000 in PIP coverage was exhausted. Thereafter, Appellee made a claim with State Farm for lost wages in the amount of $1,267.20. State Farm declined the payment, advising that the PIP benefits under Appellee’s policy were previously exhausted. Appellee then filed suit demanding that State Farm be ordered to pay her the $1,267.20 in lost wages under the “no fault” provisions of her policy. In Paragraph 8 of her Complaint, Appellee alleged that, pursuant to Bennett v. State Farm Mutual Auto Insurance Co., 580 So.2d 217 (Fla. 2d DCA 1991), she requested that the Defendant (State Farm) reallocate payments previously made for medical expenses under PIP to the Med Pay provisions of her policy to allow maximum coverage but State Farm refused. In its Answer, State Farm affirmatively asserted that it had discharged its obligation under the PIP provision of the policy by paying all benefits prior to receiving Appellee’s wage loss claim and prior to suit being filed.
The legal issue, as I see it, is whether an insurer, having exhausted the available PIP coverage by properly paying medical bills submitted, can be required, as a matter of law, to reallocate previously paid PIP payments to the “Med Pay” provisions of the policy when the insurer had never received prior notice from its insured to reserve available PIP funds to pay a loss wage claim. The Appellee and the majority believe that Bennett, supra, supports this position. I respectfully disagree.
At the outset, I do not dispute that an insured can request that his or her insurer make specific apportion of benefits available under the PIP and Med Pay provisions of a policy to afford the insured maximum benefits under the policy. In Holloway v. State Farm Mutual Auto Insurance Co., 370 So.2d 452 (Fla. 4th DCA 1979), the insured did just that. The Holloways made a claim for lost income under their PIP coverage issued by State Farm and specifically requested that State Farm either pay no medical expenses at all or pay medical expenses out of their Med Pay coverage. State Farm ignored these instructions and applied all of the remaining PIP to the payment of medical bills and then denied any further claim for lost wages or income because the PIP coverage had been exhausted. Id. at 453. In reversing summary judgment entered in favor of State Farm, the 4th DCA held that the Holloways had the right to have their claims for lost income paid out of their PIP coverage before having any medical bills paid out of such coverage so as to secure the maximum benefits available. Id. at 454.
The next case that apparently dealt with this issue is the aforementioned case of Bennett v. State Farm. The majority cites to this case for the proposition that because an insured has the right to apportion his or her claim so as to obtain the maximum benefits available under the insurance policy, they can do so even after the exhaustion of the no fault benefits. I do not believe that Bennett should be read so broadly.
In Bennett, much like the present case, the insured had two coverages available to her under the policy issued by State Farm, namely, PIP and Med Pay. Bennett’s attorney submitted her claims to State Farm, along with a letter requesting State Farm to make payments under Bennett’s PIP and Med Pay benefits. State Farm applied the payments to medical bills in the manner it chose and, in doing so, exhausted the PIP benefits before using up the medical payment benefits, thereby leaving no further PIP benefits available to cover Bennett’s claim for lost wages. Id. at 218. In Bennett, however, much like in Holloway, it appears the insured initially had both a lost wage and medical expense claim and State Farm unilaterally chose to exhaust the PIP benefits by paying medical expenses and not pay any of the lost wage claim.
Some five years after Bennett, the Fourth District Court of Appeal again addressed the issue of State Farm’s alleged failure to properly apportion payments between the PIP and Med Pay provisions of a policy. In Howell-Demarest v. State Farm Mutual Automobile Insurance Co., 673 So.2d 526 (Fla. 4th DCA 1996) [21 Fla. L. Weekly D1040a], after being involved in a motor vehicle accident, the insured, as she was entitled to do, requested that State Farm pay her medical bills from her Med Pay coverage, not her PIP coverage, in order to maximize her benefits for lost wages under her PIP coverage. State Farm did not comply. Id. at 527. The insured sued for the PIP benefits and also made a statutory punitive damage claim. The trial court granted State Farm’s motion for summary judgment, apparently concluding that the allegations against State Farm were not sufficiently egregious to give rise to a punitive damage claim under §624.155(4), Fla. Stat. While the 4th DCA reversed and remanded the case for further proceedings, the court did discuss both the Holloway and Bennett cases. The court noted that in its Holloway decision, while holding that an insured has the right to have benefits allocated upon request, it did not go so far as to hold that State Farm had a duty to do so automatically because the PIP statute, §627.736(4), Fla. Stat., made PIP coverage both “primary” as did State Farm’s policy. In Howell-Demarest, the court thereafter quoted portions of the Bennett decision (which have been successfully argued by the Appellee in the instant case), however, the Howell-Demarest court specifically stated:
Notwithstanding the fact that an insured pays a separate premium for PIP and medical pay coverage, this court did not, in Holloway, require that benefits automatically be paid by the insurer in a manner which would give the insured full benefit of the PIP coverage. We held that the insurer was required to allocate only after being requested to do so. Id. at 529.
Lastly, Progressive American Insurance Co. v. Stand-Up MRI of Orlando, 990 So.2d 3 (Fla. 5th DCA 2008) [33 Fla. L. Weekly D1746a], the 5th DCA, though not in the specific context of the present issue, addressed whether a PIP insurer can be liable for PIP benefits after the full extent of the available PIP coverage has been paid. The court found that there was no requirement that an insurer set aside a reserve for disputed claims, and, in the absence of a showing of bad faith, a PIP insurer is not liable for benefits once benefits have been exhausted. Id. at 4.
In the instant case, there is no argument by Appellee that State Farm acted in “bad faith” nor does the record support such an argument. It is undisputed that the PIP benefits were exhausted before State Farm was ever served with the Complaint. Given the language of the policy, I do not see what State Farm did wrong in the instant case. When being presented with medical bills by either its insured or its insured’s assignee, State Farm apparently promptly paid these medical bills as it is required to do by statute so as to avoid possible statutory sanctions for untimely payment. I do not believe that the law requires State Farm, when presented with timely claims to pay these proper medical expenses, to confer with or inquire of its insured as to whether its insured wants the insurer to set up a reserve, under PIP, in case there is also a lost wage claim. To me, it is the obligation of the insured to timely put the insurer on notice of the request for allocation of PIP towards a lost wage claim, Howell-Demarest at 529 f.n. 4, and, if having timely done so and had State Farm thereafter refused the request for reapportionment, then Holloway, Bennett, and Howell-Demarest would provide ample support to the Appellee for appropriate remedy.
I would reverse and remand this case back to the trial court with directions to vacate the final judgment in favor of the Appellee and to enter final summary judgment in favor of State Farm. Therefore, I respectfully dissent.
