21 Fla. L. Weekly Supp. 496a
Online Reference: FLWSUPP 2106ROJAInsurance — Personal injury protection — Demand letter — Sufficiency — Demand letter that stated total amount billed and did not account for prior payments by insurer did not satisfy statutory condition precedent
VENUS HEALTH CENTER (A/A/O JOALY ROJAS), Appellant, vs. STATE FARM FIRE & CASUALTY COMPANY, Appellee. Circuit Court, 11th Judicial Circuit (Appellate) in and for Miami-Dade County. Case No. 11-357 AP. L.T. Case No. 10-1659-CC-24. March 13, 2014. An Appeal from the County Court of Miami-Dade County, Florida. Counsel: Marlene S. Reiss, for Appellant. Nancy W. Gregoire, for Appellee.
(Before FINE, EIG and MILLER, JJ.)
The issue presented by this appeal is whether §627.736 (10) Fla. Stat. (2012) requires a claimant’s pre-suit Demand Letter to reflect payment(s) made by an insurer. We answer this question in the affirmative and therefore affirm the summary judgment entered below.
FACTS AND PROCEDURAL HISTORY
On April 17, 2009, State Farm’s insured, Joaly Rojas, was injured in an automobile accident. She was treated at Venus Health Center (“Venus”), to which she assigned her right to recover PIP benefits. Venus treated Rojas between April 23 and June 26, 2009, and Venus billed State Farm a total of $17,580 on a $10,000 PIP Policy. State Farm made a timely payment (or payments) to Venus the amount of which is not reflected in the record on appeal. On May 28, 2010, Venus sent State Farm a pre-suit demand letter which stated that the “Amount Billed” was “$17,580” and that “these charges have not been paid . . . and are therefore overdue.” Venus’s letter does not state the amount that it believes is due or overdue or what invoices are at issue. Rather, the demand letter provides State Farm with a formula stating:“The Amount Due is equal to the amount billed, less any applicable deductible at 100% for PIP + MedPay or at 80% for PIP without MedPay Coverage, less any prior payments.” All HCFA Forms were attached to the demand letter.
State Farm, alleging the demand letter was invalid, failed to respond to it. Venus then filed a complaint against State Farm, which alleged that the Clinic had billed $17,580 for the dates of treatment, but now the “amount at issue is believed to be less than $15,000.” In pertinent part, after the trial court denied State Farm’s Motion to Dismiss, State Farm filed an Affirmative Defense alleging that the Clinic failed to submit a “valid and statutorily compliant pre-suit letter.” In November 2010, State Farm moved for Summary Judgment on said affirmative defense relying on Fla. Stat. 627.736(10). State Farm argued that Venus’ demand letter was invalid because it lacked an itemized statement, the attached HCFAs did not reflect any amounts already paid by the insurance company, and as a result, State Farm could not determine how much the Clinic claimed was owed or which dates of service were at issue, particularly given the Clinic’s Complaint alleging that it was owed something “under $15,000.”
Between December 28, 2010 and January 31, 2011, Venus filed two identical Motions for Summary Judgment on the Demand Letter issue. Despite admitting in its Motion that State Farm had “paid for some of the services rendered” within 30 days of receipt of the HCFAs and issued reimbursement for others at 200% of the Medicare fee schedule,” Venus argued that its pre-suit demand letter complied with subsection (10) and that it did not have the “burden of adjusting the claim.” On May 6, 2011, the trial court entered an Order granting State Farm’s Motion on the basis of GEICO v. Open MRI of Miami-Dade, Ltd., 18 Fla. L. Weekly. Supp. 337a (Fla. 11th Jud. Cir., Feb. 16, 2011). Venus appeals the final judgment in favor of State Farm.THE LAW
Fla. Stat. §627.736(10) makes a specific demand a condition precedent:
(a) As a condition precedent to filing any action for benefits under this section, the insurer must be provided with written notice of an intent to initiate litigation. Such notice may not be sent until the claim is overdue, including any additional time the insurer has to pay the claim pursuant to paragraph (4)(b).
(b). The notice required shall state that it is a “demand letter under s. 627.736(10)” and shall state with specificity:
3. To the extent applicable, . . . an itemized statement specifying each exact amount, the date of treatment, service, or accommodation, and the type of benefit claimed to be due. A completed form satisfying the requirement of paragraph (5)(d) . . . may be used as the itemized statement.
Florida Circuit and County Courts vary in their interpretation of the specificity required by §627.736(10). In GEICO, supra, the claimant’s pre-suit demand letter failed to acknowledge and deduct prior payments made by the insurer to the claimant. Therefore, the court held that the demand letter was ambiguous as to the amount the claimant was seeking from the insurer, and the Court held the letter did not comply with §627.736(10):
The claimant’s failure to take the defendant’s previous payments into account caused the demand letters to be ambiguous to such an extent that they were meaningless. From the information that [the claimant] gave [the defendant], there was no way for [the defendant] to ascertain whether [the claimant] was again seeking the amounts originally billed even though it had already received partial payments, whether it was seeking the amounts of the original bills minus what it had received, or whether it was seeking some other amounts altogether.
Similarly, the courts in Urgent Care Center v. Progressive Exp. Ins. Co., 12 Fla. L. Weekly Supp. 932b (Fla. Broward Cty. Ct. 2004) and T&R Rehabilitation Professional Corp. v. Ins. Co. of N.Y., 12 Fla. L. Weekly Supp. 1085a (Fla. Miami-Dade Cty. Ct. 2005) held that merely attaching HCFAs or CMS-1500 forms, which do not contain a calculation of the ultimate “exact amount due” to the demand letter, do not comply with the Statute’s requirements. In both cases, attached to the pre-suit demand letters were the required HCFA and CMS-1500 forms. However, the attached forms did not account for the amounts applied to the deductible, the amounts reduced to reasonable charges, or any other partial payments made. Consequently, both courts found that the demand letters were not statutorily compliant. See also Wide Open MRI v. Mercury Ins. Group, of Fla., 16 Fla. L. Weekly Supp. 513b (Fla. 17th Cir. Ct. 2009)1.
The court in Progressive Exp. Ins. Co. v. Polynice, 12 Fla. L. Weekly Supp. 1015b (Fla 9th Cir. Ct. 2005) held that when a provider’s demand letter places the insurer on notice of the precise claim that was owed and unpaid, it complies with the mandates set forth in the Statute. According to the court, providing the exact amount due is necessary to the fulfillment of the legislature’s intent behind the demand letter requirement, which is to put the insurance company on notice of an intent to initiate litigation on a PIP claim submitted as overdue so the insurance company can pay and avoid being sued. The court reasoned that, without providing an exact amount due, the insurer is left to guess what it owes, and accordingly is not given a sufficient opportunity to accurately decide whether or not to pay or go to court.
In MRI Assoc. of America, LLC (a/a/o Ebba Register) v. State Farm Fire and Cas. Co., 61 So.3d 462, 465 (Fla. 4th DCA 2011) [36 Fla. L. Weekly D960b] the court held that “the statute requires the same precision in a 627.736(5)(d) health insurance claim form — ex. HCFA form or CMS-1500 form — as it does in a [demand letter].” According to the court, “this requirement of precision in medical bills discourages gamesmanship on the part of those who might benefit from confusion and delay.”
ANALYSIS
Here, Venus’ pre-suit demand letter does not comply with §627.736(10) because it failed to clearly communicate to State Farm the amount it was seeking so that State Farm could accurately assess its decision to pay or go to court. Venus’ demand letter failed to state an exact amount that it claimed to be due. Rather, the $17,500 total in the demand letter was the total amount that Venus billed; was $7,500 greater that the total amount due under the policy, and did not account for any prior payments that State Farm had made. Adding to the confusion, Venus, in its Complaint stated that the “amount owed” was “something under $15,000.” How is State Farm to know which amount to pay?
It seems obvious that the Demand Letter requirement serves not only to put the insurer on notice that a lawsuit will be filed, as EBM and Horizon suggest, but also to notify the insurer as to the amount for which it will be sued if it does not meet the terms of the demand. If the intent of §627.736(10) is to reduce the burden on the courts by encouraging the quick resolution of PIP claims, it makes sense to require the claimant to make a precise demand so that the insurer can pay and end the dispute before wasting the court’s and the parties’ time and resources. If the provider simply includes in its demand letter a statement of all the charges incurred — as Venus did here — without even deducting the amount the insurer already paid then it is not stating an exact amount that the insurer owes. If the PIP insurer must guess at the correct amount and is wrong, then the provider sues and exposes the insurer to attorney’s fees. Before being subject to suit and attorney’s fees, the insurer is entitled to know the exact amount due as fully as the provider’s information allows. The GEICO line of cases supports this proposition, furthers the legislative intent of §627.736(10), and accordingly controls in this case.
Venus’s demand letter does not comply with §627.736(10) because: (1) it did not take into account the amounts already paid by the insurer and (2) was inconsistent with the amount claimed in the lawsuit.2
AFFIRMED. (FINE, and EIG, Judges. MILLER, J., dissents, with written opinion.)
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1Other Courts have taken a different path. See EBM Internal Medicine (a/a/o Bernadette Dorelien) v. State Farm Mut. Auto. Ins. Co., Case No. 16-2011-CC-003572-XXX-MA (Cty. Ct. in and for Duval County, Feb. 8, 2012) [19 Fla. L. Weekly Supp. 410a], and Horizon Med. Group, Inc. (a/a/o Monique Williams) v. United Auto. Ins. Co., 15 Fla. L. Weekly Supp. 823a (Cty. Ct. in and for Miami-Dade County, April 16, 2008).
2It is not clear from the record whether the information regarding the policy deductible or reimbursement rate was reported to the provider by the insurance company.
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(MILLER, dissenting.) Does §627.736 (10) require that a claimant’s pre-suit Demand Letter provide an insurer with the exact amount of PIP benefits “claimed to be due”? This dissent would answer in the affirmative and find the subject Demand Letter complies with the statutory requirement and therefore the summary judgment entered below should be reversed.FACTS
On April 17, 2009, State Farm’s insured, Joaly Rojas, was injured in an automobile accident. She was treated at Venus Health Center (“Venus”), to which she assigned her right to recover PIP benefits. Venus treated Rojas between April 23 and June 26, 2009, and Venus sent their bills to State Farm a total of $17,580 subject to adjustment by the insurance company based on information solely within the knowledge of the carrier. On May 28, 2010, Venus sent State Farm a pre-suit demand letter which stated the amount that it claimed to be due and attached the subject invoices (see HCFA forms attached to the subject demand letter). The demand letter provided State Farm with an exact mathematical formula stating, “The Amount Due is equal to the amount billed, less any applicable deductible at 100% for PIP + MedPay or at 80% for PIP without MedPay Coverage, less any prior payments.” Other than one prior payment, there has been no showing that Venus had the offset information which is always found on the insurance companies PIP payout log and policy declarations page. The provider, in this case Venus (as opposed to the insured assignor) could not, as a matter of law, have obtained this information even if requested. See Southern Group Indemnity Inc. v Humanitary Health Care 975 So. 2d 1247 (Fla 3rd DCA 2008) [33 Fla. L. Weekly D752a]. It is worth mentioning here again that State Farm refused to give this information to Venus even though it was requested in the demand letter.
State Farm totally failed to respond to the demand letter by either tendering a quick no fault payment as intended by Florida law, (the total billed minus any deductible and prior payments made to any other claimants) or tendering the PIP payout log and insurance policy declarations page requested by Venus so it could do its own math. Venus’s only recourse was to file a complaint against State Farm. State Farm filed a Motion to Dismiss which was denied. State Farm then filed its Answer and an Affirmative Defense alleging that the Clinic failed to submit a “valid and statutorily compliant pre-suit letter.” State Farm thereafter filed its Motion for Summary Judgment as to Fla. Stat. 627.736(10).
The Motion claimed Venus’ demand letter was invalid because it lacked an itemized statement, however, the attached HCFAs would never reflect any amounts already paid by the Clinic because they are by their very nature bills not account statements. State Farm could easily done its adjusting work by using the information solely within in its file, and which it kept to itself, to determine how much the Clinic claimed was owed. There is nothing in the record that shows Venus had, or could have had, the knowledge of the appropriate deductible and prior payment (to others) information.
Venus asserted that its pre-suit demand letter was in full compliance with sub-section (10) and that it did not have “the burden of adjusting the claim”. This Court agrees and reverses the trial court’s May 6, 2011 Order granting State Farm’s Motion on the basis of EBM Internal Medicine (a/a/o Bernadette Dorelien) v. State Farm Mut. Auto. Ins. Co., Case No. 16-2011-CC003572-XXX-MA (Cty. Ct. in and for Duval County, Feb. 8, 2012) [19 Fla. L. Weekly Supp. 410a]„ and Horizon Med. Group, Inc. (a/a/o Monique Williams) v. United Auto. Ins. Co., 15 Fla. L. Weekly Supp. 823a (Cty. Ct. in and for Miami-Dade County, April 16, 2008).
Fla. Stat. §627.736(10) makes a specific demand a condition precedent:
(b) As a condition precedent to filing any action for benefits under this section, the insurer must be provided with written notice of an intent to initiate litigation. Such notice may not be sent until the claim is overdue, including any additional time the insurer has to pay the claim pursuant to paragraph (4)(b).
(b). The notice required shall state that it is a “demand letter under s. 627.736(10)” and shall state with specificity:
3. To the extent applicable, . . . an itemized statement specifying each exact amount, the date of treatment, service, or accommodation, and the type of benefit claimed to be due. A completed form satisfying the requirement of paragraph (5)(d) . . . may be used as the itemized statement
In EBM, the claimant’s demand letter attached the required CMS-1500 forms, but the demand letter did not reference prior payments made by the insurer, nor did it attempt to compute the exact amount owed by the insurer. Rather, the claimant attached all relevant bills to its Demand Letter and gave the insurer various formulas for the insurer to compute the exact amount owed. The court held that the claimant’s pre-suit demand letter was compliant with the Statute, even though it did not state an “exact amount owed,” because a strict construction of the statute only says that a pre-suit demand must specify “to the extent applicable . . . an itemized statement specifying each exact amount . . . .”, The court concluded that the responsibility to adjust the claim is on the insurer, not the provider because the insurer has access to certain necessary information that the provider does not — i.e. application of the deductible, the order in which bills were received from various medical providers, whether the claimant purchased a MedPay provision in the policy. The court held that the intent of the pre-suit demand letter requirement was satisfied here because it put the insurer on notice that a lawsuit was going to be filed, and it afforded the insurer a second opportunity to review the charges at issue.
In Horizon, the claimant’s pre-suit demand letter included a copy of the CMS-1500 claim form representing the services rendered, the date the services were rendered, and an assignment of benefits form. However, the demand letter did not specifically include the amount claimed at 80% or take into consideration the policy deductible, and it did not reflect credits for payments received subsequent to the initial submission of the billing, nor did it reflect interest that had accrued. In this case, the insurer made no prior payments. The court nonetheless held that the mere fact that the CMS-1500 form stated an amount in excess of the “exact amount claimed to be due” did not render the pre-suit demand letter defective. The court’s holding relied on a very literal reading of the Statute; because there is no specific language in the Statute that requires the claimant to make “such calculations” in the demand letter, and the insurer “retains records as to amounts paid, the total amount of bills received, the order in which bills have been received, the manner in which bills have been applied to the deductible, and the remaining insurance benefits,” the insurer is possessed of greater knowledge with regard to any given PIP claim as to a medical provider to determine the amount which remains payable or may be payable under the insurance policy. The court held that the intent of the pre-suit demand letter requirement was satisfied here simply because the demand letter put the insurer on notice that a lawsuit was going to be filed.ANALYSIS
Here, Venus’ pre-suit demand letter “to the extent applicable” complied with the specifications of §627.736(10) because it clearly communicated an exact formula to determine the amount it was “claiming” so that State Farm could quickly and easily make its decision to pay or go to court. Venus’ demand letter stated the exact amount that it claimed to be due subject to exact numerical reductions solely within State Farm’s file/knowledge. The demand letter very clearly stated the total amount that Venus billed minus any deductible and prior payments that State Farm had made to others (if any). State Farm “knew” exactly what was being claimed by using the formula provided by Venus subject to numbers only State Farm knew.
If the intent of §627.736(10) is to reduce the burden on the courts by encouraging the quick resolution of PIP claims, it makes complete sense to require the claimant to make a precise demand so that the insurer can adjust the bills and pay up and end the dispute before wasting the court’s and the parties’ time and resources. If the PIP insurer is wrong in its adjustment of the claim, then the provider sues and exposes the insurer to attorney’s fees. Before being subject to suit and attorney’s fees, the insurer is entitled to know the exact amount claimed as fully as the provider’s information allows.
Consequently, Venus’s demand letter complies with §627.736(10) because it sent State Farm the exact bills due and asked the carrier to adjust the claim to an exact amount to be paid by reducing payment using the amounts known to State Farm but unknown to Venus. The Summary Judgment should be reversed and this matter is remanded to the County Court for further proceedings consistent with this opinion.
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