19 Fla. L. Weekly Supp. 1087a
Online Reference: FLWSUPP 1913HOOKInsurance — Personal injury protection — Coverage — Medical expenses — Exhaustion of policy limits — Insurer is not responsible for disputed amounts after exhaustion of policy limits where there is no evidence of bad faith, improper conduct, or improper manipulation by insurer
PEMBROKE PINES, MRI, INC., Dorothy Hook, Plaintiff, v. USAA CASUALTY INSURANCE COMPANY, Defendant. County Court, 17th Judicial Circuit in and for Broward County, Civil Division. Case No. 07-11152 COCE 51. September 7, 2012. Honorable Martin R. Dishowitz, Judge. Counsel: Harley N. Kane, Kane & Kane, P.A. Boca Raton, for Plaintiff. Miriam R. Merlo, Gaebe, Mullen, Antonelli & DiMatteo, Coral Gables, for Defendant.
FINAL JUDGMENT FOR DEFENDANT
This case was as heard on May 16, 2011, on the motion of Defendant for summary judgment on the benefits exhaust issue which was granted by Order of June 3, 2011. The Court also considered the Plaintiff’s Motion for Rehearing which was denied by Order of August 10, 2012. Final Judgment is hereby entered in favor of Defendant and against the Plaintiff.
In support of this Judgment, the Court makes the following factual Findings. Plaintiff, a provider of MRI services, submitted a CMS-1500 form to the Defendant for MRI services. The CMS-1500 form was received by USAA on January 29, 2007. Plaintiff did not include a professional license number in Box 31 of the CMS-1500 form. Based upon this, Defendant denied payment of the bill and on February 10, 2007, sent its Explanation of Reimbursement (EOR) which states that “CMS 1500 form needs to be submitted with Box 31 completed pursuant to Florida PIP Statute 627.736. Box 31 should contain the name of the provider or supplier who rendered the service and their professional license number.” Subsequent to the receipt of Plaintiff’s bills Defendant received additional bills which were paid and which exhausted the PIP benefits on July 26, 2007.
On April 3, 2007, Plaintiff submitted its demand letter to USAA for payment of the MRI services. USAA responded on April 19, 2007, advising that payment was denied because of the failure to include a professional license number in Box 31. Plaintiff filed suit on July 13, 2007. On September 10, 2007, Defendant served its Answer and Affirmative Defenses, asserting that policy benefits were exhausted on July 23, 2007.
There are three District Court of Appeal cases that are dispositive of the benefits exhaust issue in connection with PIP claims. In Simon v. Progressive Express Ins. Co., 904 So. 2d 449 (Fla. 4th DCA 2005) [30 Fla. L. Weekly D1156b], the Court affirmed summary judgment in favor of Progressive Express, and held that an insurer is not required to set aside a reserve fund for disputed claims that are reduced or denied. The record evidence in this case clearly shows that the Plaintiff’s bill was disputed and denied because of the absence of a professional license number. The Simon Court suggests that there are exceptions to finding liability in excess of policy limits but those exceptions are if an insurer acted in bad faith, or had manipulated or acted improperly in reducing or denying a bill. There is no evidence in the record that USAA acted in bad faith, improperly or otherwise manipulated the benefits. Nor is there such an allegation in the pleadings filed with the Court. Indeed, the Simon Court explained its rationale that:
If we were to accept Simon’s theory that a ‘reserve’ or ‘hold’ provision must be automatically applied to any available funds at the time a claims is submitted, it would result in unreasonable exposure of the insurance company and would be to the detriment of the insured and other providers with properly submitted claims. Under such a theory, all potential payments to a service provider that were denied, or were subject to a reduction, would have to be held in reserve until the statute of limitations period expired or a suit was filed and concluded. This would delay and reduce availability of funds for the payment of claims to other providers and would be inconsistent with the PIP statute’s ‘prompt pay’ provisions.
Another appellate decision on the issue of exhausted benefits is Progressive American Insurance Co. v. Stand-up MRI of Orlando, 990 So.2d 3 (Fla. 5th DCA 2008) [33 Fla. L. Weekly D1746a]. Relying upon Simon, the Court held that there is no legal requirement to set aside a reserve for disputed claims and further, that a PIP insurer is not liable for benefits once benefits have been exhausted in the absence of a showing of bad faith. There has been no allegation or showing of bad faith in the record in this matter. Moreover, the Stand-Up MRI Court rejected the application of the English Rule to PIP claims, when it stated that:
Applying the English Rule to PIP claims results in the very outcome that the court in Simon sought to prevent. Holding funds in reserve until the completion of litigation is detrimental to everyone except the provider(s) who is keeping the funds tied up. It subjects the insurer to unreasonable exposure, is detrimental to other providers with properly submitted claims, and detrimental to the insured who is entitled to both prompt treatment and prompt payment for that treatment. Furthermore, it is contrary to the legislative intent to have these bills quickly paid. See Ivey v. Allstate Ins. Co., 774 So.2d 679, 683-84 (Fla. 2000) [25 Fla. L. Weekly S1103a] (“Without a doubt, the purpose of the no-fault statutory scheme is to ‘provide swift and virtually automatic payment so that the injured insured may get on with his life without undue financial interruption.”).
If allowed to stand, the circuit court’s ruling would require insurers to pay insurance benefits in excess of the stated policy limit even after the insurer fully complied with the to its insured. This outcome is not supported by the statute and violates every principle of law governing insurance contracts. Nor can the circuit court’s opinion be justified on bad faith or wrongdoing on behalf of Progressive American. As the circuit court stated:
“The Defendant[s] did nothing wrong here. They were under a contract to the insured for a limited amount of benefits. They paid that amount in total. They are not responsible for the insured’s over-use of this policy. The Defendant did not gain anything out of their actions. They fully performed their contract with the insured. It is to the insured that the assignees should look for any additional payments.”
Finally, the third appellate decision on the benefits exhaust issue is Sheldon, D.C. v. United Services Automobile Association, 55 So.3d 593 (Fla. 1st DCA 2011) [36 Fla. L. Weekly D23a] and also dispositive of the issue in this case. The First District found in that case that Florida courts have established that, once an insurer has paid out the policy limits to the insured (or to various providers as assignees), it is not liable to pay any further PIP benefits, even those that are in dispute.
The Court finds that the undisputed record shows that benefits are exhausted under the policy1 and that there is no evidence in the record of bad faith, improper conduct or improper manipulation by USAA. Accordingly, final summary judgment is entered in favor of Defendant and against the Plaintiff. The Court reserves jurisdiction to award attorney fees and costs, if appropriate.
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1The Court acknowledges that benefits were exhausted 13 days after the filing of the lawsuit. However, this issue has also been resolved by a Broward County Circuit Appellate opinion, holding that exhaustion is a complete bar to recovery, even when the exhaustion occurs after a lawsuit to recovery has been filed. See: B&D Chiropractic Ctr., Inc. v. Progressive Express Ins. Co., 15 Fla. L. Weekly Supp. 334a (Fla. 17th Cir. App. 2007).
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