20 Fla. L. Weekly Supp. 174a
Online Reference: FLWSUPP 2002ARANInsurance — Personal injury protection — Coverage — Exhaustion of policy limits — Affirmative defenses — Exhaustion of benefits is not affirmative defense that is waived if not affirmatively pled by insurer — Absent evidence of bad faith or gratuitous payment of bills, insurer is not liable for benefits once policy limits have been exhausted — Questions certified: 1) Did Simon v. Progressive Insurance Company abrogate the English rule of priorities as announced by the Florida Supreme Court in Boulevard National Bank of Miami v. Air Metal Industries, Inc., and applied to PIP cases in State Farm Casualty Company v. Ray? and 2) In an action by an assignor for No Fault Insurance benefits founded on a claim for breach of contract, does a post-suit exhaustion of benefits absolve the insurer from any responsibility to pay an otherwise valid claim where the exhaustion occurred after the insured: (a) paid an amount that the provider claims is less than required by contact; (b) was served with a filed complaint; (c) had no basis to reduce or otherwise underpay the bills when it first received them; and (d) withdrew all of its defenses for underpayment or failed to present any defense for the underpayment (other than exhaustion)?
MILLENNIUM RADIOLOGY, LLC, A/A/O YESENIA ARANGO, Plaintiff v. STATE FARM MUTUAL AUTOMOBILE INSURANCE CO., Defendant. County Court, 11th Judicial Circuit in and for Miami-Dade County. Case No. 10 11846 SP 05 (06). October 31, 2012. Gladys Perez, Judge.
ORDER GRANTING PLAINTIFF’S MOTION FORREHEARING OR ALTERNATIVELY MOTION TOCERTIFY QUESTION OF GREAT PUBLIC IMPORTANCEAND GRANTING DEFENDANT’S FINAL SUMMARYJUDGMENT AND FINAL JUDGMENT FOR DEFENDANT
[Original Opinion at 19 Fla. L. Weekly Supp. 1090a]
THIS CAUSE came before the Court on August 10, 2012, for hearing on the Defendant’s Motion for Summary Judgment and on October 12, 2012 on Plaintiff’s Motion for Rehearing on Defendant’s Motion for Summary Judgment or Alternatively Motion to Certify Questions of Great Public Importance to the Third District Court of Appeal. The Plaintiff was represented by Charles L. Vaccaro, The Vaccaro Law Firm, and the Defendant was represented by Mark J. Rose and Michael A. Rosenberg, Roig, Tutan, Rosenberg & Zlotnick, P.A. The Court, having reviewed the motions and entire Court file, heard arguments of counsel, reviewed relevant legal authority, and being otherwise advised in the premises, makes the following findings of fact and conclusions of law:Amended Order Granting Defendant’s Motion for SummaryJudgment and Amended Final Judgment for DefendantFindings of Fact:
The material facts in this case are not in dispute. Yesenia Arango was involved in a motor vehicle accident on October 19, 2009. At the time of the accident, Ms. Arango was insured under a personal automobile insurance policy issued by State Farm Automobile Insurance Company (“State Farm”) for personal injury protection (PIP) benefits.
As a result of injuries sustained in the accident, Ms. Arango received treatment from two medical providers, one of which is the Plaintiff herein, and received two MRIs corresponding to two different areas of the body. Ms. Arango continued treating with the second medical provider, which State Farm reimbursed under the PIP policy.
The following procedural events are also relevant to this case:
-On May 3, 2010, State Farm received a demand letter from Plaintiff;
-On July 12, 2010, Plaintiff filed suit;
-On September 28, 2010, Defendant filed its Answer and Affirmative Defenses;
-On October 15, 2010, State Farm issued a $202.58 payment to the second provider, exhausting PIP benefits;
-On September 22, 2011, the Defendant filed Amended Affirmative Defenses to include exhaustion of benefits; and
-On March 20, 2012, this Court granted the Plaintiff’s Motion for Summary Judgment, finding that the services at issue were reasonable, related, and medically necessary.
It is important to note that there it no dispute that benefits had not been exhausted at the time the suit was filed. They were exhausted more than three months after the filing of the suit. There is also no allegation that State Farm acted in bad faith in paying the second provider.
It is also important to note that Plaintiff has maintained that the affirmative defense of exhaustion was not properly raised, because State Farm had not sought leave of court to amend its defenses. State Farm argued that, because Plaintiff had not replied to its affirmative defenses, it was allowed to amend its affirmative defenses as a matter of right without leave of court.Conclusions of Law:
The crux of this case is whether an insurance company which issued a PIP policy for $10,000 is legally obligated, absent exceptional and legally defined circumstances, for a greater amount than the policy limits. This court finds that an insurance company is not so obligated.Standard
Summary judgment is proper if no genuine issue of material fact exists and if the moving party is entitled to a judgment as a matter of law. See Volusia County v. Aberdeen at Ormond Beach, L.P., 760 So. 2d 126, 130 (Fla. 2000) [25 Fla. L. Weekly S390a]. “In reviewing a summary judgment, this Court ‘must consider the evidence contained in the record, including any supporting affidavits, in the light most favorable to the non-moving party.’ Tropical Glass & Const. Co. v. Gitlin, 13 So. 3d 156, 158 (Fla. 3d DCA 2009) [34 Fla. L. Weekly D1163a] (quoting Krol v. City of Orlando, 778 So. 2d 490, 492 (Fla. 5th DCA 2001) [26 Fla. L. Weekly D577a]). ‘When the non-moving party has raised affirmative defenses, it is incumbent upon the moving party to disprove the affirmative defenses or establish their legal insufficiency.’ Id. (citing Parker v. Dinsmore Co., 443 So. 2d 356 (Fla. 1st DCA 1983)(quoting Proprietors Ins. Co. v. Siegel, 410 So. 2d 993, 995 (Fla. 3d DCA 1982)). The instant case presents a question purely of law, which is proper for resolution via summary judgment.Policy Language
The policy language herein provides:
The most we pay for each insured for all loss and expense from one accident shall be $10,000 less the amount of any reduction described under When Payments Are Reduced that applies to the insured.
Assignment
It is a general principle of assignment that the assignee stands in the shoes of the assignor. See Allstate Ins. Co. v. Regar, 942 So. 2d 969, 973 (Fla. 2nd DCA 2006) [31 Fla. L. Weekly D2955b]; Lauren Kyle Holdings, Inc. v. Heath-Peterson Const. Corp. 864 So. 2d 55, 58 (Fla. 5th DCA 2003) [28 Fla. L. Weekly D2865b]. The assignee is entitled to all remedies to which the insured would be entitled, but no greater remedies. See Lauren Kyle Holdings, 942 So. 2d at 58. Accordingly, the provider is not entitled to any greater benefit under the insurance contract than the insured. Conversely, the insurer has no greater obligation than that which is provided for in the insurance contract.Analysis
Plaintiff argues that because the policy limits were reached after suit was filed and served upon State Farm (and after this Court determined that the services were reasonable, related, and medically necessary), that State Farm should be required to pay above the $10,000 policy limit. This Court disagrees with Plaintiff’s argument.
The appellate courts of this state, when faced with the issue of requiring payment beyond policy limits, have declined to do so, save for a narrow exception carved out in Coral Imaging Services v. Geico Indemnity Insurance Company, 955 So. 2d 11, 16 (Fla. 3d DCA 2006) [31 Fla. L. Weekly D2478a], which will be discussed below.
The Fourth District, in Simon v. Progressive Exp. Ins. Co., 904 So. 2d 449, 450 (Fla. 4th DCA 2005) [30 Fla. L. Weekly D1156b], stated:
We decline to create a requirement that an insurance company set aside a “reserve” fund for claims that are reduced or denied. Simon does not contend that the denial or reduction of its claim was in bad faith, or that Progressive had manipulated, or acted improperly, in reducing it.
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 claim 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. See §§ 627.613, and 627.662(7), Fla. Stat. (provision established to expedite payment to service providers). It is the obligation of insurance companies to attempt to settle as many claims as possible. Farinas v. Florida Farm Bureau General Insurance Co., 850 So.2d 555, 560 (Fla. 4th DCA 2003) [28 Fla. L. Weekly D1023b; question certified 28 Fla. L. Weekly D1611b]. It is also a prerogative of insurance companies to pay, reduce, or deny claims. Id.
A few years after the Simon decision, the Fifth District Court of Appeal, in Progressive American Insurance Co. v. Stand-Up MRI, 990 So. 2d 3 (Fla. 5th DCA 2008) [33 Fla. L. Weekly D1746a], addressed two issues: “1) whether a PIP insurer is required to set aside a reserve fund for claims that are reduced or denied when other valid health care provider claims continue to be submitted; and 2) whether a PIP insurer can be liable for PIP benefits after the full extent of the available PIP coverage has been paid.” Id. The Fifth District found that no requirement existed which would mandate that the insurer set aside a reserve for disputed claims. Moreover, it concluded that “in the absence of a showing of bad faith, a PIP insurer is not liable for benefits once benefits have exhausted.” The court noted:
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 duties owed to its insured. This outcome is not supported by the statute and violates every principle of law governing insurance contracts.
Id.
A few years after Progressive American Insurance Co. v. Stand-Up MRI, the First District decided Sheldon v. United Services Automobile Association, 55 So. 3d 593, 595 (Fla. 1st DCA 2010) [36 Fla. L. Weekly D23a]. There, a PIP claim was denied by the insurance company and the provider filed suit. After the suit was filed, but before it was served, the insurance company paid another provider and the benefits under the policy exhausted. The plaintiff recognized it could not recover for the services, but sought to maintain suit for interest, penalties, and attorney’s fees. The Sheldon court held that the suit could not be maintained, reasoning:
Florida’s Motor Vehicle No-Fault Law, which was intended to operate virtually automatically as to payment of benefits, allows for the payment of interest on overdue benefits, as well as an award of attorney fees to an insured or his assignee that is forced to sue to recover those benefits. See § 627.731 Fla. Stat. (2008). As Dr. Sheldon acknowledges, 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. See Simon v. Progressive Express Insurance Co., 904 So.2d 449 (Fla. 4th DCA 2005) [33 Fla. L. Weekly D1746a]. Further, if benefits are exhausted after suit is filed, but before the suit is served on the insurer, the suit for benefits may not go forward, because the insurer has met its obligation under the contract to pay the policy amount. See Progressive American Insurance Co. v. Stand-Up MRI of Orlando, 990 So.2d 3 (Fla. 5th DCA 2008).
Sheldon, 55 So. 3d at 595.
The rationale of the First, Fourth, and Fifth District Courts of Appeal indicate that when an insurance company has fulfilled its contractual obligation to its insured and paid out the policy limits, a provider (as assignee of the insured) may not recover in excess of the policy limits. This rationale holds true, except under the circumstances presented in Coral Imaging Services v. Geico. 955 So. 2d 11.
In Coral Imaging, the Third District held that an insurer may be exposed beyond policy limits where it paid another provider’s untimely submitted claims, thereby prematurely exhausting benefits. The court called such a payment “gratuitous,” as the payment was not permissible under the PIP statute, and, accordingly “should not be considered as having been made against the limits of the PIP policy.” 955 So. 2d at 16. Thus, the narrow exception of Coral Imaging would support finding liability beyond policy limits where the insurer exhausted in bad faith or the insurer improperly paid non-compensable claims. Implicit in this exception is the notion that the insurer’s action in paying another provider improperly exhausted benefits.
This Court finds that absent evidence of bad faith or gratuitous payment of bills, as defined in Coral Imaging, requiring State Farm to pay an amount in excess of the $10,000 policy limit would effectively require this Court to create an unlawful reserve fund and rewrite the terms of the PIP insurance contract that governs the parties’ relationship in this case.
EXHAUSTION NOT AN AFFIRMATIVE DEFENSE
Finally, there was much discussion at the summary judgment hearing as to whether State Farm had waived an exhaustion affirmative defense by not having leave of court to file amended affirmative defenses to include exhaustion. At the time of the hearing, and without the benefit of time to research the issue, this Court found that State Farm had not waived its affirmative defense. This Court made that ruling based upon the procedural arguments raised by counsel.
Upon further deliberation and study, this Court concludes that the ruling was correct, even if the legal reasoning may have been flawed (which this Court is not specifically finding). In Digital Medical Diagnostics v. United Automobile Insurance Company, 958 So. 2d 505, 507 (Fla. 3d DCA 2007) [32 Fla. L. Weekly D1392a], the court denied certiorari because the Eleventh Circuit, sitting in its appellate capacity, had properly found that “the application of the deductible provision of a policy of insurance, as a matter of law, is not an affirmative defense which must be pled affirmatively.” Id. Thus, assertion of the deductible by an insurer is not waived if not plead as an affirmative defense. Id.
Exhaustion of benefits is analogous to the deductible. It is a policy provision, not a matter extrinsic to the parties’ contract. The Digital Medical court held:
The appellate division of the circuit court was correct in reversing the final summary judgments. The application of the deductible provision in a policy of insurance is not a defense which must be raised as an affirmative defense but is, in fact, a basic part of the policy of insurance. See Appalachian Ins. Co. v. United Postal Sav. Ass’n, 422 So. 2d 332, 334 (Fla. 3d DCA 1982)(“a deductible provision, being as much a basic part of the policy as the provision which sets the maximum amount of money recoverable under the policy, is not an affirmative defense which must be proved by the insurer”).
(Emphasis added). Given the reasoning in that case, this Court concludes that exhaustion functions as a limitation on the liability of the insurer, and, thus, should be treated the most analogous limitation — i.e., the deductible. Accordingly, State Farm did not waive the exhaustion defense.
Accordingly, it is ORDERED and ADJUDGED, that Defendant’s Motion for Final Summary Judgment is hereby GRANTED. Judgment is hereby entered in favor of the Defendant and Plaintiff shall take nothing by this action and the Defendant shall go hence without day.
IT IS FURTHER ORDERED that this Court reserves jurisdiction with respect to Defendant’s entitlement to award of attorneys’ fees and taxable costs, if any.
IT IS FURTHER ORDERED that Plaintiff’s Motion for Rehearing is hereby GRANTED. The Court has entered the instant Amended Final Judgment and granted Plaintiff’s motion to certify questions as more fully set forth below:
ORDER CERTIFYING TO THE THIRD DISTRICTCOURT OF APPEAL QUESTIONS OF GREAT PUBLICIMPORTANCE AFFECTING THE UNIFORMADMINISTRATION OF JUSTICE PURSUANT TOSECTION 34.017(1)(B) AND FLORIDA RULES OFAPPELLATE PROCEDURE 9.030(B)(4) AND 9.160
1. This Court entered an Order granting Defendant’s Motion for Final Summary Judgment, finding that PIP benefits had been exhausted. This Court has set forth findings of fact and conclusions of law, which are incorporated herein for purposes of certification.
2. Plaintiff motioned this Court of certify two issues presented in this case to the Third District Court of Appeal.
3. Pursuant to section 34.017, Florida Statutes, a county court is permitted to certify a question directly to the district court of appeal in a final judgment if the question may have statewide application, and (a) is of great public importance or (b) will affect the uniform administration of justice.
4. The issue of exhaustion of benefits arises throughout the State in PIP lawsuits. The cases cited in this Court’s final judgment address exhaustion of benefits in the context of PIP. However, those cases differ slightly from the instant case in that the benefits herein exhausted after the suit was filed, the Defendant was served, and it had notice of the pending claim.
5. It is this Court’s understanding that the Fourth District Court of Appeal has accepted jurisdiction of certified questions pertaining to the exhaustion of benefits after the Defendant has been served with the complaint. See Wellness Associates of Florida, Inc. v. USAA Casualty Insurance Company, 19 Fla. L. Weekly Supp 52a (Fla. Cty. Ct. 15th Jud. Cir. Sept. 22, 2011). An opinion has yet to be published.
6. “This issue has been litigated in many county courts and circuit courts with inconsistent rulings PIP suits will continue to be filed throughout the State of Florida until controlling precedent arises from a District Court of Appeal which will be binding in all county and circuit courts. See Progressive Exp. Ins. Co. v. McGrath Comty. Chiropractic, 913 So. 2d 1281, 1287 (Fla. 2d DCA 2005) [30 Fla. L. Weekly D2622b] (recognizing that PIP issues are heavily litigated in county courts and erroneous circuit decisions have “great influence, thus exacerbating the effect of legal error.”).” See Wellness Associates of Florida, Inc. v. USAA Casualty Insurance Company, 19 Fla. L. Weekly Supp 52a (Fla. Cty. Ct. 15th Jud. Cir. Sept. 22, 2011),
7. Because PIP disputes involve amounts within the jurisdictional limits of the county court, appellate review is to the circuit court, which cannot lead to a binding decision on county and circuit courts of the State.
8. The mandatory nature of PIP insurance and the number of PIP insurers throughout the State give rise to a multitude of cases throughout Florida’s 67 counties.
9. Therefore, this Court has taken the extraordinary step of granting Plaintiff’s motion and hereby certifies the following questions to the Third District Court of Appeal:
1. Did Simon v. Progressive Insurance Company, 904 So. 2d 449 (Fla. 4th DCA 2005) [30 Fla. L. Weekly D1156b], abrogate the English rule of priorities as announced by the Florida Supreme Court in Boulevard National Bank of Miami v. Air Metal Industries, Inc., 176 So. 2d 94 (Fla. 1965), and applied to PIP cases in State Farm Casualty Company v. Ray, 556 So. 2d 811 (Fla. 5th DCA 1990)?
2. In an action by an assignor for No Fault Insurance benefits founded on a claim for breach of contract, does a post-suit exhaustion of benefits absolve the insurer from any responsibility to pay an otherwise valid claim where the exhaustion occurred after the insured: (a) paid an amount that the provider claims is less than required by contact; (b) was served with a filed complaint; (c) had no basis to reduce or otherwise underpay the bills when it first received them; and (d) withdrew all of its defenses for underpayment or failed to present any defense for the underpayment (other than exhaustion)?
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