20 Fla. L. Weekly Supp. 288b
Online Reference: FLWSUPP 2003RGONInsurance — Personal injury protection — Exhaustion of policy limits — Failure to advise medical provider — Sanctions — Where there is no reasonable explanation for insurer’s failure to notify medical provider and court of exhaustion of policy limits until eight months after exhaustion occurred, insurer acted in bad faith — Motion for sanctions is granted
A-1 OPEN MRI, INC., as assignee of Reinaldo Gonzalez, Plaintiff, vs. UNITED AUTOMOBILE INSURANCE COMPANY, Defendant. County Court, 17th Judicial Circuit in and for Broward County. Case No. 11-05731 CONO 71. November 13, 2012. Louis H. Schiff, Judge. Counsel: Cris Evan Boyar, Boyar and Freeman, P.A., Margate, for Plaintiff. Jennifer Lucy, for Defendant.
ORDER GRANTING PLAINTIFF’SMOTION FOR SANCTIONS
THIS CAUSE, having come before the Court on October 19, 2012 on Plaintiff’s Motion for Sanctions, and the court having reviewed the Plaintiff’s Motion, the Plaintiff’s memorandum of law, the deposition transcript of the adjuster, the court file, having heard argument from counsel, and having been otherwise fully advised in the premises, it is hereby ORDERED and ADJUDGED as follows:
The Plaintiff, an MRI provider, filed suit on June 6, 2011 for $713.36 and alleged that the Defendant, a PIP insurer, failed to pay 80% of the reasonable billed amount for a MRI scan performed on the Defendant’s insured. In August of 2011, two months later, the Defendant exhausted the policy of insurance. However, the Defendant, through its in-house law firm, did not advise the Plaintiff of said exhaustion until the deposition of Defendant’s adjuster that took place on April 16, 2012 (approximately 8 months after the exhaustion). The Defendant served its Motion to Amend the Answer to allege the exhaustion defense on May 31, 2012 (approximately 9 months after the exhaustion). The Plaintiff seeks sanctions due to the time incurred in prosecuting this case during the eight month delay as the Plaintiff would have dismissed its suit in August, 2011 if the exhaustion had been timely reported to Plaintiff.
Background Facts: During the aforementioned eight to nine month window the Plaintiff propounded discovery, filed motions to compel responses to discovery, filed a Motion for Summary Judgment, hired an expert, prepared for and attended the deposition of Defendant’s adjuster, and attended hearings. The Defendant filed its answer on December 15, 2011 which did not include the exhaustion defense, propounded discovery, and attended hearings. The Defendant even filed a Writ of Cert, which was dismissed in June of 2012. It is undisputed that at no time prior to April 16, 2012, did the Defendant advise either the Plaintiff, the trial court, or the appellate court of the exhaustion.
On July 13, 2012, this court heard argument on Defendant’s Motion to Amend its affirmative defenses to include the exhaustion defense. At that time the Plaintiff opposed the Defendant’s motion arguing the Defendant waited too long to seek the amendment and, in the alternative, sought sanctions against the Defendant for failing to raise this defense in a timely fashion. Since this case was not set for trial, the court granted Defendant’s motion and agreed to schedule a hearing on Plaintiff’s Motion for Sanctions at a later date to give the Defendant sufficient time to prepare as requested by the Defendant.
At the hearing on Plaintiff’s Motion for Sanctions on October 19, 2012, the court heard argument of the Defendant as to why the Defendant waited approximately eight months to raise the exhaustion defense. The court reviewed the deposition transcript of the Defendant’s adjuster with most knowledge on this file where she was asked why the Defendant waited eight months to raise this defense and the response from the adjuster was “I don’t know.” (See page 22 of said deposition). When asked when she learned of the exhaustion she stated “today” which was the date of her deposition (See page 22 of said deposition).
Conclusions of law and detailed factual finding: The court finds the Defendant knew or should have known the policy was exhausted at or near the time of the exhaustion. The Defendant issued the checks for PIP benefits that exhausted the policy of insurance. Thus, the Defendant was the only party aware of the exhaustion. At the hearing, the Defendant offered no reasonable explanation for failing to advise the Plaintiff or the court of the exhaustion in a timely fashion. Even if the Defendant’s adjuster did not realize the last payment exhausted the policy of insurance, or that there was a law suit filed by the Plaintiff at the time Defendant exhausted the policy, the Defendant had the opportunity to learn of the exhaustion multiple times during this eight month window when it was preparing for hearings or upon receipt of the various court orders.
For example, the Defendant knew or should have known on September 29, 2011 when it filed its notice of appearance and sought to invoke the Rules of Civil Procedure as the Defendant should have reviewed its file before seeking to invoke the Rules of Civil Procedure, when it received the court’s order invoking the rules of civil procedure and giving the Defendant 20 days to respond to the discovery in October of 2011, when the court entered an order on December 12, 2011 giving the Defendant more time to respond to the discovery, on December 15, 2011 when the Defendant filed its answer as the Defendant would have been obligated to review the file before filing its answer, when it received the Court’s order of January 5, 2012 compelling the Defendant to respond to the discovery, when it received the Court’s order compelling discovery dated February 17, 2012 and, in that order, the court deferred as to sanctions for not complying with earlier orders, on or before the hearing of April 11, 2012 when the court heard a lengthy argument on Plaintiff’s Motion to Compel, or before the deposition of the adjuster which was scheduled to take place on April 16, 2012.
The Court expressly finds the Defendant acted in bad faith as there was no reasonable explanation for the Defendant’s failure to inform the Plaintiff of the exhaustion in a timely fashion. The Defendant’s failure to advise the Plaintiff and the court of the exhaustion in a timely fashion caused the Plaintiff to unnecessarily incur fees and costs. Barnes v. Pro Imaging, 15 Florida Law Weekly Supp. 981b (Fla. 17th Cir. Court 2008).
This Court is aware it has the inherent authority to impose sanctions, even in the absence of statutory authority, and this imposition should be done sparingly and cautiously. Koch v. Koch, 47 So.3d 320 (Fla. 2d DCA 2010) [35 Fla. L. Weekly D2091a]. In this case, the Defendant’s conduct is simply egregious. The Defendant caused an unnecessary waste of time of the Plaintiff, the Court and the Appellate Court. The Defendant knew or should have known about the exhaustion in August of 2011 or some time soon thereafter. There was no reasonable argument or evidence provided by the Defendant to excuse the Defendant from advising the Plaintiff and the Court of this exhaustion or for failing to timely respond to discovery or the orders compelling the discovery. While the Defendant was permitted to amend its answer the Court will compel the Defendant to pay the reasonable fees and costs incurred by the Plaintiff due to the Defendant’s inaction. This court cannot over look the conduct of the Defendant in failing to act reasonably in defending the suit. Each party is obligated to litigate in good faith. As such, the Plaintiff’s Motion is hereby granted.
The Plaintiff shall schedule an evidentiary fee hearing at a later date where the amount of the sanction will be determined by the court. The parties will schedule a fee hearing at a mutually convenient time in the near future.
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