19 Fla. L. Weekly Supp. 588a

Online Reference: FLWSUPP 1907MITEInsurance — Personal injury protection — Coverage — Medical expenses — Exhaustion of policy limits — Where medical provider timely filed claim for reasonable, related and medically necessary MRI covered under PIP policy, insurer failed to pay claim within 30 days, and, after paying later-received claims, insurer made partial payment to provider that exhausted policy limits, insurer deviated from statutorily mandated order of payment and is required to pay balance of provider’s bill — Where provider gave notice of assignment and claim against policy before subsequent assignees gave notice, payments to subsequent assignees are erroneous and gratuitous payments that cannot count against insured’s PIP benefits

VIRTUAL IMAGING SERVICES, INC., Aurora Mitev, Plaintiff, vs. USAA Casualty Insurance Company, Defendant. County Court, 11th Judicial Circuit in and for Miami-Dade County. Case No. 07-12468-SP-23 (1). March 12, 2012. Honorable Myriam Lehr, Judge.

FINAL SUMMARY JUDGMENT FOR PLAINTIFF

On October 11, 2011 the Court heard cross motions for summary judgment. It is undisputed that the Plaintiff (“Virtual”) is an independent diagnostic testing center that provided medically necessary, related MRI testing services to Defendant’s (“USAA”) covered insured on March 15, 2006. It is also undisputed that, the MRI testing was subject to the mandatory fee schedule as it existed under the 2006 version of the no-fault act.

Virtual timely submitted a properly completed claim for those services that USAA received April 21, 2006. When these services were rendered the allowable amount for MRI services was regulated by law that limited the amount to 200% of the 2001 Medicare Part B Participating Physicians Fee Schedule with certain annual consumer price level adjustments. On April 21, 2006, and 30 days thereafter, the available benefits were sufficient to pay the claim at the full statutorily allowed amount. USAA did not process the bills in accordance with F.S. 627.736. (See depo of Jeannie Hopwood at p. 16). USAA cannot explain why Plaintiff’s bill was not processed for payment within 30 days of its receipt, and Defendant did not pay the bills in the order that they were received. (See depo of USAA adjuster Christine Kimbell at p. 15-16); (See depo of Jeannie Hopwood at p. 17.) Instead, Virtual’s bill was not paid until July 10, 2006 — and only $135.20 was paid on that date. (See depo of Christine Kimbell at p. 19). According to USAA, the $135.20 payment exhausted the insured’s PIP benefits. USAA admits that after Virtual’s bill was received, USAA received, processed and paid bills from other providers which reduced the insured’s PIP benefits down to the $135.20 that was available on July 10, 2006. (See depo of Christine Kimbell at p.); (See depo of Jeannie Hopwood at p. 17.) Ms. Kimbell testified that she did not know why the bills were not paid in the order that they were received. (See depo of Christine Kimbell at p. 15-16). Ms. Hopwood testified to the following at her deposition:

10 There had been a lot of confusion on this

11 claim, because we were originally told that Miss Mitev

12 did not have any other coverage available. Then we

13 were told that she did have coverage available through

14 United Auto Insurance Company, which is a different

15 company then USAA. So we weren’t going to pay any of

16 the bills because her own PIP, through her own company,

17 would have been primary.

18 Then we found out later that United Auto was

19 denying coverage to Ms. Mitev for this loss because she

20 had failed to report for two scheduled EUOs.

21 Q. So ultimately USAA afforded coverage for this

22 claim.

23 A. So ultimately, we did. And some of the bills

24 were not paid in order because of all this confusion.

25 But again, this bill should not have been paid because

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1 it did not contain the license number in Box 31.

2 Q. Okay. But although you state that it

3 shouldn’t have been paid, part of this bill was paid

4 though, correct?

5 A. Part of it was, yes.

(See depo of Jeannie Hopwood at p. 17-18.) (Emphasis added).

Nevertheless, USAA only paid $135.20 on July 10, 2006 asserting that was all the remaining benefits left. USAA paid $2,911.20 to other medical providers for bills it received by after it received Virtual’s bill.

USAA asks this Court to declare that even though Virtual did everything correctly and USAA admits it did not pay in accordance with the no-fault act, that nevertheless USAA should not be held accountable because it paid out benefits equaling its policy limits. USAA essentially argues it can pay whoever it wants, whenever it wants, with no consequence to a provider who accepted an assignment and did everything properly.

The Court declines to punish Virtual (where it did nothing wrong), in the form of non-payment of its bill, because USAA failed to apply the correct law to Virtual’s bill which was timely received, medically necessary, related to the motor vehicle accident, reasonable in price and covered by the subject insurance policy.

USAA’s refusal to pay Virtual’s claim is in derogation of Virtual’s vested property rights which may not be divested or impaired without due process of law. Mahood v. Bessemer Properties, 154 Fla. 710, 18 So. 2d 775 (Fla. 1944); Campus Communications, Inc. v. Earnhardt, 821 So. 2d 388 (Fla. 5th DCA 2002) [27 Fla. L. Weekly D1595a]. In the instant matter, Virtual’s property rights became vested when USAA breached the insurance contract by failing to make payment to Virtual within 30 days of receipt of Virtual’s bill. L. Ross, Inc. v. R.W. Roberts Const. Co., Inc., 466 So. 2d 1096 (Fla. 5th DCA 1985), decision approved, 481 So. 2d 484 (Fla. 1986) (Substantive rights and obligations created by statutes do not vest with respect to particular persons until a cause of action accrues giving rise to those rights and obligations in a specific situation); State Farm Mut. Auto. Ins. Co. v. Lee, 678 So.2d 818 (Fla. 1996) [21 Fla. L. Weekly S335a] (A PIP cause of action accrues (and therefore the plaintiff’s rights vest) when the insurance contract is “breached” and “an action could have been brought.” In this case, the breach occurs when payment was “overdue.”

In general, an insurer is required to process all bills in the order in which they are received. Boulevard Nat. Bank of No. Miami v. Air Metal Industries, Inc., 176 So.2d 94 (Fla. 1965) (The “English Rule” provides: that between assignees of the same accounts receivable, the assignee who first gave notice of his claim to debtor is preferred and has prior right.) This is part of the procedure required by F.S. § 627.736 (4). The only exception to an insured’s obligation to pay a claim within 30 days of its receipt is the tolling provision contained in that subsection. It provides “notwithstanding the fact that written notice has been furnished to the insurer, any payment shall not be deemed overdue when the insurer is not responsible for the payment.¹” USAA’s unexplained failure to address this claim in the order in which it was received violated existing Florida law and violated the Plaintiff’s right to due process and its vested property rights.

USAA’s purported defense that it never received “notice of a covered loss” and had no obligation to “pay as loss accrues” was never triggered as a matter of law as this legal argument has been overwhelmingly rejected by the Fourth District Court of Appeal. USAA Cas. Ins. Co. v. Pembroke Pines MRI, Inc. (a/a/o Megan Cahill), 31 So.2d 234 (Fla. 4th DCA 2010) [35 Fla. L. Weekly D613b]. As a matter of law, the Cahill ruling must be applied as of the time USAA received this claim. Hendeles v. Sanford Auto. Auction, Inc. 346 So.2d 467 (Fla. 1978) (Courts must apply the law in effect at the time of the disposition of the dispute).

USAA did not trigger the tolling provision of F.S. § 627.736 (4)(b) because it did not have “reasonable proof” it is not responsible for Virtual’s claim (or a portion of the claim which the insurer declined to pay). Thus, USAA was required to pay the bills it received from medical providers in the order in which they were received. USAA deviated from the procedure proscribed by F.S. § 627.736 (4)(b) by paying benefits to medical providers who submitted bills after the date of Virtual’s bill. Such subsequent payments were made in error and do not count against the insured’s benefits because they were gratuitous. Coral Imaging Services v. Geico Indemnity Ins. Co., 955 So2d 11 (Fla. 3d DCA 2006) [31 Fla. L. Weekly D2478a]; Progressive Express Ins. Co. v. South Florida Institute of Medicine, Inc., 14 Fla. L. Weekly Supp. 520a (Fla. 11th Jud. Cir. 2007).

It is undisputed that Virtual gave notice of its assignment and claim against the insured’s policy before subsequent assignees’ gave notice. The Court holds that USAA’s payment to these subsequent assignees was in violation of the plaintiff’s vested rights as these erroneous payments were made with benefits which should have been paid, at least in part, to Virtual. Because these payments gratuitous, they do not count against the insured’s PIP benefits.

An insurer is not permitted to apply the payments in any manner it chooses and to exhaust benefits so as to deny payment to medical providers who are not “favored.” Pinnacle Medical, Inc. d/b/a Iso Data Diagnostics v. Allstate Insurance Co; Case No. 97-12340 (18), L.T. Case No. 96-6203 (17th Cir., Broward County, April 23, 1998) [5 Fla. L. Weekly Supp. 663a]; Physicians Diagnostics & Rehab, Inc. v. State Farm Mutual Automobile Insurance Co., Case No. 96-5431 (56) (17th Cir., Broward County, July 8, 1998). As between competing assignees claiming an interest in a single fund, the first to notify the debtor has priority over the other. Boulevard National Bank of Miami v. Air Metal Industries, Inc., 176 So.2d 94 (Fla. 1965). In Boulevard, the Supreme Court adopted the “English Rule” of priority between successive assignees of an account receivable. Id. at 99. Furthermore, in State Farm Fire and Casualty Co. v. Ray, 556 So.2d 811 (Fla. 5th DCA 1990), the Court recognized that the English Rule adopted in the Boulevard case would be applicable to a suit for PIP benefits. In addition to the factual differences between the instant matter and Simon and Stand-Up MRI, neither of those case abrogates the law of priority of assignees required by Boulevard National Bank of Miami v. Air Metal Industries, Inc., 176 So.2d 94 (Fla. 1965). The fact that Simon and Stand-Up MRI do not require an insurer to set aside a reserve fund does not affect the extent of USAA’s liability. The breach in this case occurred when ample benefits were available to pay the claim in full. Virtual does not contend USAA is liable to pay in excess of its policy limits. Rather, Defendant must pay Virtual’s claim in the statutorily mandated order required by F.S.§627.736(4)(b). USAA failed to properly pay bills in the order received to the prejudice of Virtual and took a legal position that failed. That is a risk USAA took, not a risk taken by the Virtual. Virtual did absolutely nothing wrong. USAA did.

It is ordered and adjudged that Virtual have final summary judgment in its favor in the statutory amount of $1,269.67 ($1,404.87 minus USAA’s $135.20 payment) plus pre-judgment interest from April 21, 2006 in the amount of $613.36.² Final summary judgment for principal and interest is awarded in the total sum of $1,883.03 as of January 31, 2012, for which let execution issue. Interest accrues after January 31, 2012 on the total amount of judgment at 4.75% per annum. The Plaintiff is entitled to an award of reasonable attorneys fees and costs for which jurisdiction is reserved.

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¹This statutory tolling provision is the basis for the exception to the “English Rule” of Priorities as described in Simon and Stand-Up.

²Determined at the following rates per year: 2006 (9%), 2007 (11%), 2008 (11%), 2009 (8%), 2010 (6%), 2011 (6% to 10/1/11 and 4.75% thereafter to date)

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