22 Fla. L. Weekly Supp. 365a

Online Reference: FLWSUPP 2203MILEInsurance — Personal injury protection — Coverage — Exhaustion of policy limits — Where insurer conducted no investigation to determine claim number missing from MRI provider’s bill, and evidence shows that insurer would have been able to locate claim number from information provided on bill within 30 days of receipt of bill had it conducted any investigation, insurer is liable for claim despite exhaustion of benefits — Insurer violated provider’s right to priority payment by denying bill without reasonable proof and continuing to make payments to other providers until benefits were exhausted — Fact that resubmitted bill with correct claim number was not resubmitted within 35 days was not legitimate basis for denying payment — 35-day requirement is not applicable to resubmitted bills

NEW SMYRNA IMAGING, LLC, as assignee of Chiemi Miles, Plaintiff, v. GARRISON PROPERTY AND CASUALTY INSURANCE COMPANY, Defendant. County Court, 7th Judicial Circuit in and for Volusia County. Case No. 2011 20853 CONS, Division 71. July 17, 2014. Honorable Robert A. Sanders, Judge. Counsel: Brett Sahm, Bradford Cederberg, P.A., Orlando, for Plaintiff. Karen Walker, Rock Law Group, P.A., Maitland, for Defendant.

Final Summary Judgment affirmed. 23 Fla. L. Weekly Supp. 891a]ORDER

THIS CAUSE came before this Court on April 30, 2014, after due notice to the parties, on Defendant’s Motion for Final Summary Judgment. Having heard arguments of counsel and being otherwise fully advised in the premises, this Court orders as follows:

I. FACTUAL BACKGROUND

On June 29, 2010, Defendant’s¹ insured, Ms. Chiemi Miles was injured in a motor vehicle accident². The accident was reported to the Defendant on the date of the crash. On the day following the date of the accident, Ms. Miles visited the Emergency Room at Halifax Medical Center, where she was treated for head and back injuries resulting from the accident. On July 2, 2010, Defendant assigned adjuster, Ms. Lani Khounvixny, to handle Ms. Miles’ PIP claim. On July 20, 2010, Ms. Miles began an ongoing course of treatment for her injuries with Dr. Amanda Prokop, D.C., of New Smyrna Beach Chiropractic Clinic. After twelve visits to New Smyrna Beach Chiropractic Clinic, Dr. Prokop referred Ms. Miles to Plaintiff’s facility for an MRI of the spine.

On August 19, 2010, Plaintiff conducted the MRI of Ms. Miles’ lumbar spine. Subsequently, Plaintiff issued a bill for the MRI to Defendant — addressed to USAA PIP³ — which contained: the insured’s name, the insured’s date of birth, the insured’s address, the insured’s phone number, Plaintiff’s name, Plaintiff’s physical address, Plaintiff’s billing address, the signature of Plaintiff’s physician, the license number of Plaintiff’s physician, a diagnosis code, a proper CPT code, a charge amount associated with the CPT code, and an identification number provided to Plaintiff by the insured. Defendant received Plaintiff’s bill within 35 days of the date that Ms. Miles received the MRI at Plaintiff’s facility. By the time Defendant received Plaintiff’s bill, Defendant knew that Ms. Miles was receiving an ongoing course of treatment for injuries she suffered in the June 29, 2010 accident.

Instead of conducting any type of investigation or inquiry into Plaintiff’s bill, Defendant simply forwarded Plaintiff’s bill on to a third-party vendor, Auto Injury Solutions (“AIS”) for processing. After AIS received Plaintiff’s bill from the Defendant, AIS issued a form letter to Plaintiff. The undated, unaddressed form letter stated that AIS was unable to process Plaintiff’s bill because it could not locate a claim in its system that matched the information provided by Plaintiff on the bill. AIS did not deny Plaintiff’s claim, it simply stated that it could not match Plaintiff’s bill to a claim number. The form letter listed several types of information that Plaintiff should provide in order for AIS or Defendant to locate the insured’s claim, including: (i) patient name; (ii) patient address; (iii) patient date of birth; (iv) claim number; (v) date of loss; (vi) address where treatment was rendered; (vii) name of provider; (viii) ICDM-9 diagnosis code; and (ix) CPT code. Plaintiffs bill contained 7 out of the 9 types of information. Moreover, AIS never communicated with Defendant about Plaintiff’s bill, and Ms. Khounvixny never communicated with AIS about the status of processing Plaintiff’s bill.

Since Plaintiff was not paid for its services within the 30 days set forth under the PIP statute, it issued a Notice of Intent to Initiate Litigation (the “First Demand Letter”) to Defendant on October 13, 2010. The information provided by Plaintiff to the Defendant in the First Demand Letter included: the insured’s name; the identification number that was provided by the insured to Plaintiff — the same number which Plaintiff set forth on its bill; the date of service; CPT code billed; the amount charged for the CPT code; Plaintiff’s name; and the Assignment of PIP Benefits executed by the insured when she received the MRI at Plaintiff’s facility. Despite the fact that the First Demand Letter contained less information than the Plaintiff’s bill, Defendant’s representative was, in fact, able to locate Ms. Miles PIP claim file. Defendant’s response to the First Demand Letter specifically listed the Defendant’s internal claim number⁴. Ultimately, Defendant did not pay Plaintiff in response to the First Demand Letter. Instead, despite the fact that Defendant directly received Plaintiff’s bill and date stamped it, Defendant demanded that Plaintiff prove that it mailed the bill within 35 days of the date that Plaintiff rendered services to Ms. Miles.

Next, Plaintiff made a third attempt to get paid for its services. Plaintiff issued a corrected bill to the Defendant on December 9, 2010. The Defendant received the corrected bill on December 18, 2010. The corrected bill contained the exact same information as the initial bill except for that which was set forth in Box la (insured’s I.D. number). Rather than including the identification number that the insured provided, Plaintiff included the claim number set forth on Defense response to the First Demand Letter in box la of the CMS-1500 form. Upon reviewing the corrected bill, Ms. Khounvixny testified that, if she saw proof of mailing the original bill in the file she would have vaid Plaintiff’s claim. Since she did not locate proof of mailing in the file, however, Defendant’s adjuster denied payment for Plaintiff’s charge. Defendant’s Explanation of Reimbursement (“EOR”) indicates that the only reason behind the denial was that “[m]edical bills not submitted within 35 days of the date of services are not reimbursable” under section 627.736(5)(c)1., Florida Statutes. The EOR was sent by Defendant to Plaintiff on January 6, 2011.

After the denial, Plaintiff provided Defendant with a fourth and final opportunity to issue payment for the MRI. On February 28, 2011, Plaintiff issued Defendant a second Notice of Intent to Initiate Litigation (the “Second Demand Letter”). By this time, Defendant possessed a report from an independent chiropractor which stated that all diagnostic testing performed prior to November 1, 2010, was related to Ms. Miles’ 6/29/10 accident, and was medically necessary. Nevertheless, Defendant upheld the denial of payment for Plaintiff’s services. Defendant’s response to the Second Demand Letter indicates that payment was, once again, denied because the corrected bill was not submitted within 35 days of the MRI and because Plaintiff did not supply it with proof of mailing the initial bill in August 2010.

As a result of the denial, Plaintiff filed the instant lawsuit to obtain payment for the MRI. In Defendant’s Answer, filed in June 2011, Defendant’s First Affirmative Defense states, “to the extent that policy limits have been paid and benefits have exhausted, there is no obligation to pay further (Emphasis supplied).” However, benefits remained available for payment until August 2011.

II. ARGUMENTS AT SUMMARY JUDGMENT HEARING

Defendant cited three cases in support of its Motion for Summary Judgment based on Exhaustion of Benefits: (i) Simon v. Progressive Express Ins. Co., 904 So. 2d 449 (Fla. 4th DCA 2005) [30 Fla. L. Weekly D1156b]; (ii) Progressive American Ins. Co. v. Stand-Up MRI of Orlando, 990 So. 2d 3 (Fla. 5th DCA 2008) [33 Fla. L. Weekly D1746a]; and (iii) Northwoods Sports Medicine and Physical Rehabilitation, 2014 WL 837091 (Fla. 4th DCA, March 5, 2014) [39 Fla. L. Weekly D491a]. Defendant contends that it did not act in bad faith because it “did not save any money” by virtue of denying Plaintiff’s bill. Specifically, Defendant contends that since it paid up to the policy limit, it is relieved of any further payment obligation under the policy.

In opposition, Plaintiff contended that Defendant’s actions constituted bad faith in two separate ways. First, Defendant acted in bad faith in the traditional sense by failing to conduct any investigation into coverage for Plaintiff’s bill when, under Florida law, it was placed on sufficient notice of a covered loss. Second, case law demonstrates that an insurer acts in bad faith when an insurer improperly infringes upon the provider’s right to priority payment. Plaintiff contends that its bill became overdue because Defendant never had reasonable proof to support a denial. Once a bill becomes overdue, benefits accrue to the provider and the provider obtains a vested property right in such benefits. Thus, since Plaintiff’s right to payment became vested when benefits remained available under the policy, Plaintiff asserts that Defendant could not exhaust benefits to other providers with funds which were supposed to be paid to Plaintiff. Since Plaintiff’s bill is overdue by virtue of Defendant’s breach, Plaintiff contends that it is entitled to judgment as a matter of law on its breach of contract action because there are no facts in dispute.

Plaintiff distinguishes Simon Stand-Up MRI of Orlando, and Northwoods by contrasting the insurer’s reasons for denying or reducing payment in those cases with the insurer’s decision in the instant matter. In Simon, the insurer reduced payment to the provider to an amount it determined to be reasonable. At the time of the insurer’s reduction, there was only one payment methodology under the PIP statute: the insurer would determine if the provider’s charge was reasonable, and if the insurer paid an amount below 80% of the charged amount and the provider brought suit, the issue would ultimately be determined by a jury at trial. Eventually, benefits became exhausted before the provider’s lawsuit went to trial. The Fourth District held that the insurer was not required to reserve benefits for the provider pending the outcome of the lawsuit because the provider did not have a priority claim to the benefits under the English Rule. In other words, since the insurer acted in accordance with then-existing law when it issued a reduced payment, it possessed “reasonable proof” to support the reduction and, thus, the bill never became overdue. If the bill never becomes overdue, the benefits do not accrue to the provider and the insurer can continue to pay other claims as they come in.

Similarly, in Stand-Up MRI of Orlando, the insurer denied payment for two CPT codes based upon an IME report received from an independent physician which stated that the CPT codes were not medically necessary. Notwithstanding the fact that the insurer possessed the IME report to support the denial, the lower court granted the provider summary judgment, holding that the insurer violated the provider’s right to priority payment over subsequent providers. The Fifth DCA reversed, holding that the provider never obtained the right to priority payment because benefits never became overdue. Importantly, the Court acknowledged that the English Rule is applicable to “compensable” PIP claims, i.e. when a bill becomes “overdue.” However, since the insurer had the IME reports to support the denial, it had the requisite “reasonable proof” under section 627.736(4)(b), Fla. Stat. As a result, benefits would only become overdue, if at all, after trial on the issue of medical necessity. Thus, the insurer could properly exhaust benefits by paying other providers.

In the pertinent portion of the Northwoods opinion, the Fourth DCA considered whether exhaustion of benefits could preclude a provider’s action when the insurance adjuster had an objectively reasonable belief under then-existing law to process the bill in the manner he/she did. In the Wellness Associates portion of the Northwoods opinion, the insurer paid the provider pursuant to the schedule of maximum charges (“fee schedule”) set forth under Section 627.736(5)(a)(2), Fla. Stat. (2008) when the fee schedule was not set forth in the policy of insurance. Importantly, however, at the time the adjuster processed the bills for payment in 2008, there was no binding precedentthat held for the proposition that the insurer could not pay at the fee schedule amount irrespective of what was set forth in the policy. Simply put, since Kingsway Amigo Ins. Co. v. Ocean Health, Inc., 63 So. 3d 63 (Fla. 4th DCA 2011) [36 Fla. L. Weekly D1062a], had not yet been decided, the insurer reasonably believed that reasonableness was still a question of fact for a jury. As a result, the insurer had reasonable proof that the reduced amount was not overdue because the insurer reasonably believed that compensability would not be established until trial. Since the insurer possessed reasonable proof, the bill never became overdue, and exhaustion of benefits was a viable defense to plaintiff’s action.

The significance of Northwoods is that the Court adopted the holdings and rationale of several county and circuit court opinions, three of which are specifically referenced in the opinion: (i) Virtual Imaging Svcs., Inc. a/a/o Yudi Vigoreaux v. United Svcs. Auto. Ass’n, 18 Fla. L. Weekly Supp. 491a (Fla. 11th Jud. Cir., Miami-Dade County Court, February 2, 2011); (ii) Pembroke Pines MRI, Inc. a/a/o Brian Schoedinger v. USAA Casualty Ins. Co., 17 Fla. L. Weekly Supp. 479a (Fla. 17th Jud. Cir., Broward County Court, March 29, 2010); and (iii) Wellness Assoc. of Fla., Inc. a/a/o Daniel North v. USAA Casualty Ins. Co., 18 Fla. L. Weekly Supp. 1056a (Fla. 15th Jud. Cir., Palm Beach County Court, July 26, 2011). The foregoing opinions all stand for the proposition that an insurer does not act in bad faith when it processes the plaintiff’s bill in accordance with then-existing law. If an insurer has an objectively reasonable basis under Florida law for reducing or denying the provider’s charge(s) in the manner that it did, then it possesses the reasonable proof that is necessary under subsection (4)(b). Conversely, if the insurer does not have an objectively reasonable basis under then-existing law to support the denial or reduction, the insurer does not have reasonable proof to support the denial or reduction. In such instances, not only does the provider’s bill become overdue (and property rights to benefits vested), but the case law holds that the insurer acts improperly by denying payment without a reasonable basis and, thus, engages in a form of bad faith.⁵

For example, Plaintiff cites three cases that at first blush appear similar to Northwoods, but the key distinguishing factor is the date on which the insurer processed the provider’s bill for payment. In Northwoods, the adjuster processed the bill for payment and responded to the Plaintiff’s demand letter, in 2008, prior to the release of the Kingsway opinion. At that time, the adjuster reasonably believed that a bill would not become overdue, if at all, until after trial — when the jury determined what constituted a reasonable amount. As a result, the insurer could properly pay benefits to other providers up to the policy limits because the provider’s bill was not overdue. In Geico Indemnity Co. v. Gables Ins. Recovery, Inc. a/a/o Rita Lauzan, 20 Fla. L. Weekly Supp. 862a (Fla. 11th Jud. Cir. (Appellate), June 25, 2013); Y.H. Imaging, Inc. a/a/o Iris Gomez v. Allstate Prop. & Cas. Ins. Co., 21 Fla. L. Weekly Supp. 445a (Fla. 17th Jud. Cir., Broward County Court, November 7, 2012), and Y.H. Imaging, Inc. a/a/o Ricardo Bordes v. Liberty Mut. Ins. Co., 21 Fla. L. Weekly Supp. 362a (Fla. 17th Jud. Cir., Broward County Court, October 28, 2013), the insurer made a decision to process the provider’s bill for payment under the fee schedule — after the Kingsway opinion was released — despite the fact that the fee schedule was not set forth in the insurance policies. In each of the foregoing instances, the court held that the insurer violated existing precedent. Not only was exhaustion of benefits not a viable defense, but the provider was granted judgment as a matter of law.

III. FINDINGS OF FACT AND LAW

A. Since Plaintiff’s Initial Bill Was Substantially Complete, Defendant Was Placed on Notice of a Loss and Had a Non-Delegable Duty to Investigate; Defendant’s Failure to Investigate, and Failure to Either Affirm or Deny Coverage in a Timely Manner, Constitute Predicate Acts of Bad Faith Under Florida Law Which Prevent Defendant from Utilizing an Exhaustion of Benefits Defense

Upon receiving notice of a claim and medical bills, a PIP insurer has thirty days to make payment. See Section 627.736(4)(b), Florida Statutes (2010). Indeed, an insurer must either pay, or obtain reasonable proof that the bill is not owed, within 30 days of receipt of a bill. See Palmer v. Fortune Ins. Co., 776 So. 2d 1019, 1021-22 (Fla. 5th DCA 2001) [26 Fla. L. Weekly D278a] (“[a]lthough incomplete or erroneous information makes verification of a claim more difficult, the statutory burden remains with the insurer to make a decision on coverage within 30 days.”); see also Superior Insurance Co. v. Libert, 776 So. 2d 360, 363-64 (Fla. 5th DCA 2001) [26 Fla. L. Weekly D381a] (since the provider supplied the insurer with the insured’s contact information, it was the insurer’s responsibility to contact the insured to obtain any additional information it needed to process the provider’s claim.). The insurer has a non-delegable dutyto do what it deems necessary to investigate, authenticate, and pay a claim within the 30-day period set forth under section 627.736(4)(b), Fla. Stat. (2010). State Farm Mut. Auto. Ins. Co. v. McLean, 11 Fla. L. Weekly Supp. 290a (Fla. 9th Jud. Cir. (Appellate), November 17, 2003). The burden is on the insurer to authenticate a claim within 30 days under the PIP prompt payment statute. Palmer, supra.

Adjusters of Florida PIP claims must adhere to a Code of Ethics which requires the insurance adjuster to: (i) upon undertaking the handling of a claim, the adjuster shall act with dispatch and due diligence to achieve a proper disposition of the claim; and (ii) fully and thoroughly investigate a claim before making an adjustment decision. See Section 626.878, Florida Statutes; Fla. Admit Code Rule 69B-220.201(3)(d) and (f). A breach of either of the foregoing Code of Ethics provisions, the insurer commits “an unfair claims settlement practice” violation — i.e. an act of bad faith. See Rule 69B-220.201(1)(b); see also Section 624.155, Fla. Stat. (the “Bad Faith Statute” provides that unfair trade settlement practices are one type of predicate for insurer bad faith); see also Sections 626.9541(1)(i)(3)(a)-(h), Fla. Stat. (other unfair claims settlement practices which constitute acts of bad faith include: (i) failing to adopt and implement standards for the proper investigation of claims; (ii) denying claims without conducting reasonable investigations based upon available information; (iii) failing to affirm or deny full or partial coverage of claims; and (iv) failing to promptly notify the insured of any additional information necessary for the processing of the claim.); see also Chalfonte Condominium Apartment Ass’n, Inc. v. QBE Ins. Corp., 695 F.3d 1215, 1224 (plaintiff’s allegations regarding an insurer’s failure to adjust, investigate, and pay claim are those of bad faith.). Two exceptions to the exhaustion of benefits defense are when: (i) the insurer commits an act of bad faith; and (ii) the insurer acts improperly. See Simon, M.D., P.A. a/a/o Eric Hon v. Progressive Exp. Ins. Co., 904 So. 2d 449, 450 (Fla. 4th DCA 2005) [30 Fla. L. Weekly D1156b].

Recently, the Ninth Judicial Circuit Court, acting in its appellate capacity, considered facts remarkably similar to those in this action. See United Svcs. Auto. Ass’n v. Emergency Physicians of Central Fla. LLP a/a/o Barbara Maughan, Case No. 2012-AP-1 (Fla. 9th Jud. Cir. (Appellate) January 30, 2014). In Maughan, the medical provider submitted a bill to AIS which contained an incorrect claim number. There were still PIP benefits available under the insured’s policy at the time the provider issued its bill to AIS. Upon receiving the bill, AIS sent the provider a form letter to the provider which stated that AIS could not locate a PIP claim for the insured who was listed on the provider’s bill. The provider then re-sent a bill containing identical information. This time, the insurer was, in fact, able to locate the insured’s PIP claim. Rather than paying the provider, the insurer stated that insured’s benefits were exhausted.

The provider filed a lawsuit, contending that PIP benefits became overdue thirty days after the insurer received the provider’s initial bill and at a time in which PIP benefits were available. The insurer moved for summary judgment, contending that the exhaustion of benefits precluded plaintiff’s action. In opposing the motion, the medical provider contended that its bill sufficiently placed the insurer on notice of a claim and, as a result, the insurer possessed the burden of authenticating and investigating the claim.

The lower court considered whether a bill containing the incorrect claim number nevertheless placed the insurer on notice of a covered loss. See Emergency Physicians of Central Fla., LLP a/a/o Barbara Maughan v. United Svcs. Auto. Ass’n, 19 Fla. L. Weekly Supp. 746a (Fla. 9th Jud. Cir., Osceola County Court, March 20, 2012). Despite containing the incorrect claim number, the bill listed the insured’s name, address, phone number, and date of birth. Ultimately, the County Court, citing Palmer and Libert, held that the bill was sufficient to place AIS and the insurer on notice of a claim, and that it was the insurer’s burden to investigate and verify the provider’s claim. By failing to conduct any investigation relative to the provider’s bill, (a) the insurer breached its duty to investigate, (b) plaintiff’s bill became overdue, and (c) exhaustion of benefits was not a valid defense to the provider’s action. As a result the County Court granted Plaintiff summary final judgment.

In affirming the trial court’s ruling, the Circuit Court found it “disconcerting” that AIS could not locate the correct claim number after receiving the initial bill, but that the insurer was able to locate the claim number after obtaining identical information in the resubmitted bill. The Circuit Court found that bill was substantially complete notwithstanding the fact that it contained the incorrect claim number. See also State Farm Mutual Auto. Ins. Co. v. Emergency Physicians of Central Fla. a/a/o Frank Mercatante, Case No. 2012-CV-000017-A-O (Fla. 9th Jud. Cir. (Appellate), April 23, 2014) (Ninth Circuit Court, acting in its appellate capacity, affirmed trial court’s ruling that the insurer was placed on sufficient notice of a claim even when box for auto accident was marked “no,” and when there was no date of accident listed on the bill. As a result, the 30 day time period for payment of the bill began running when the insurer received the provider’s bill).

This Court holds that the Defendant and AIS acted improperly under Florida law. See Town of Palm Beach v. Palm Beach County, 460 So. 2d 879, 881-82 (Fla. 1984) (where facts are undisputed, the legal effect of those facts is a question of law.) Plaintiff sent its bill directly to Defendant’s PIP department, not AIS. At the time Defendant received the Plaintiff’s bill, Defendant’s adjuster was assigned to the insured’s PIP claim. Defendant had received bills and medical records from other providers prior to receiving Plaintiff’s bill. Thus, Defendant knew that the insured was receiving ongoing treatment related to an auto accident. Instead of conducting any sort of investigation into Plaintiff’s bill, the Defendant merely forwarded the bill on to AIS. Interestingly, AIS could not locate a claim number associated with Plaintiff’s bill despite the fact that the bill contained seven out of the nine pieces of information that AIS stated it could use to locate an insured’s claim. However, when Plaintiff submitted even less information to the Defendant with the Demand Letter, Defendant’s employee was able to pull up the insured’s PIP claim.

This Court finds that Maughan (Case No. 2012-AP-1), is directly on point. The Defendant simply cannot contend that Plaintiff’s form was defective when Defendant was able to locate the insured’s PIP claim with even less information than that which was originally furnished to AIS. As the Ninth Circuit Court appropriately stated, Defendant’s/AIS’ actions are “disconcerting”. In the instant case, for Defendant to receive the claim form, send it to AIS, and now argue the form was not received is akin to a proverbial shell game. Defendant and AIS simply did not communicate with one another at any point in time throughout the 30-day period. Conveniently, when Plaintiff submitted a corrected bill, Defendant claimed ignorance as to AIS’ actions (or lack thereof), and denied payment based on its position that the corrected bill was issued outside of the time period within which Plaintiff was required to issue its bill for the MRI. Defendant’s sleight of hand cannot shield it from Plaintiff’s action.

There was simply no investigation of Plaintiff’s bill conducted in the statutorily-prescribed time period. The evidence shows that Defendant would have been able to locate a claim number had it actually looked for the claim number within the 30-day period. As a result, Defendant’s adjuster and/or the AIS representative committed a breach(es) of the Adjuster’s Code of Ethics by failing to conduct any investigation, whatsoever, related to Plaintiff’s bill. Such a breach is per se an act/omission of bad faith pursuant to the Code. As a result, Defendant’s Motion for Summary Judgment based on Exhaustion of Benefits is hereby DENIED.

B. Defendant Violated Plaintiff’s Right to Priority Payment By Denying Plaintiff’s Bill Without Reasonable Proof to Support the Denial; When an Insurer Does Not Possess Reasonable Proof at the Time it Denies the Bill, the Bill Becomes Overdue and Plaintiff Obtains Property Rights in the Benefits and, as Such, the Insurer Cannot Use Plaintiff’s Benefits to Pay Other Providers

Furthermore, Plaintiff’s bill became “overdue,” under Fla. Stat. §627.736(4)(b), thirty days after Defendant received Plaintiff’s bill because Defendant never possessed “reasonable proof” to support a denial. When benefits became “overdue,” the benefits accrued to the Plaintiff as of the date the bill was originally submitted. See Progressive Express Insurance Co. v. So. Fla. Institute of Medicine, Inc. a/a/o Halil Hawkeye, 14 Fla. L. Weekly Supp. 520a (Fla. 11th Jud. Cir. (Appellate), April 11, 2007) (exhaustion of benefits is not a defense when benefits have accrued); see also State Farm Mut. Auto. Ins. Co. v. JRA Diagnostics, Inc., 14 Fla. L. Weekly Supp. 438b (Fla. 9th Jud. Cir. (Appellate), March 8, 2007) (since Florida follows the English Rule, and since the insurer did not have reasonable proof to support a denial of payment, the plaintiff had a right to priority payment over other providers who issued bills after plaintiff. Exhaustion of benefits was not a valid defense because plaintiff’s benefits accrued when benefits were available under the policy). In other words, once benefits became overdue and accrued to Plaintiff, Plaintiff obtained a vested property right to such benefits and, therefore, said benefits could not be used to pay subsequent bills from other providers. See Virtual Imaging Svcs., Inc. a/a/o Aurora Mitev v. USAA Casualty Ins. Co., 19 Fla. L. Weekly Supp. 588a (Fla. 11th Cir., Miami-Dade County Court, March 12, 2012). Indeed, under the Florida PIP statute, payment is first come-first served as long as the provider’s claim is deemed to be compensable. See Progressive American Ins. Co. v. Stand-Up MRI of Orlando, 990 So. 2d 3, 6 (Fla. 5th DCA 2008) [33 Fla. L. Weekly D1746a]. A claim is deemed to be compensable if the insurer does not have reasonable proof to support a denial or reduction within 30 days after receipt of the bill. See Fla. Stat. §627.736(4)(b).

Here, as noted above, Defendant did not have any reasonable proof to support a denial within the statutory period because it failed to conduct any sort of investigation into the bill. While AIS sent out a form letter contending that it could not locate the insured’s claim, it is clear that the Defendant could have found the claim if it had actually performed its due diligence. Therefore, as the Ninth Circuit Court held in Maughan, this Court similarly holds that the exhaustion of benefits cannot be used when: (i) the insurer fails to perform any sort of investigation into the provider’s bill; and (ii) benefits become overdue when benefits are remaining under the policy; in such cases, the provider obtains a vested property right to the benefits, and the provider’s benefits cannot be paid to other providers.

As a result, Defendant’s Motion for Summary Judgment is DENIED. Further, this Court GRANTS Plaintiff judgment as a matter of law. See R & L Const. Inc. v. Cullen, 557 So. 2d 931, 932 (Fla. 5th DCA 1990) (a court may properly grant summary judgment to a non-movant if there is no genuine issue of material fact.) Plaintiff’s action became ripe after 30 days expired from the submission of its bill and when Defendant did not have reasonable proof to support the denial. As such, Defendant breached the contract of insurance as a matter of law, and Plaintiff is entitled to payment.

C. Even if Plaintiff’s Initial Bill was Not Substantially Complete, Ms. Khounvixny’s Decision to Deny Plaintiff’s Bill in December 2010 was in Contravention of Binding Law; Since the Adjuster’s Decision to Deny the Plaintiff’s Charge Was in Clear Violation of Binding Precedent, the Defendant Did Not Possess Reasonable Proof to Support the Denial and Acted in Bad Faith; Plaintiff’s Bill Became Overdue When Benefits Were Still Available and Had a Priority Right to Payment

Subsection 627.736(4)(b), Florida Statutes (2010), provides that an insurer does not have to pay any part of a provider’s claim that is not supported by written notice of the fact of a covered loss. If an insurer denies payment for a provider’s charge, it is incumbent upon the insurer to provide the provider with an “itemized specification” of the rejected charge. The itemized specification must state the reason(s) why the charge was denied, and what is specifically needed to process the claim. See section 627.736(4)(b), Fla. Stat.; see also Fla. Medical & Injury Center, Inc. v. Progressive Express Ins. Co., 29 So. 3d 329, 339-41 (Fla. 5th DCA 2010) [35 Fla. L. Weekly D215b]; see also Stand Up MRI of Boca Raton, P.A. a/a/o Jorge Herrera v. United Auto. Ins. Co., 14 Fla. L. Weekly Supp. 886a (Fla. 17th Jud. Cir., Broward County, July 3, 2007). If the insurer fails to notify the provider that it considers the provider’s statement/bill to be incomplete or deficient — in an Explanation of Benefits or demand letter response — the insurer is estopped from using such a defense in litigation. See Fla. Medical & Injury Center. Inc., 29 So. 3d at 341; see also Altamonte Springs Imaging a/a/o Cara Baldwin v. USAA Casualty Ins. Co., 19 Fla. L. Weekly Supp. 789d (Fla. 9th Jud. Cir. (Appellate), February 22, 2012) (an insurer waives the defective CMS-1500 form defense by processing the bill notwithstanding the purported defect); United Auto Ins. Co. v. Amador, 15 Fla. L. Weekly Supp. 320a (Fla. 11th Jud. Cir. (Appellate), February 15, 2008); Eduardo Ramirez, D.C., P.A. a/a/o Miguel De Armas v. Mapfre Ins. Co. of Fla., 18 Fla. L. Weekly Supp. 1041a (Fla. 11th Jud. Cir., Miami-Dade County Court, June 24, 2011); Medical Rehab and Wellness a/a/o Gilletin Quinn v. United Auto. Ins. Co., 19 Fla. L. Weekly Supp. 659a (Fla 17th Jud. Cir., Broward County Court, March 23, 2011); Douglas Rapid Rehab., Inc. a/a/o Nicole Bowen v. United Auto. Ins. Co., 18 Fla. L. Weekly Supp. 312b (Fla. 17th Jud. Cir., Broward County Court, November 30, 2010).

If a provider’s CMS-1500 statement is substantially incomplete, the 30-day payment period set forth under subsection (4)(b) is tolled until such time as the provider resubmits a claim that is properly supported by written notice of the fact of a covered loss. Indeed, subsection (4)(b) provides, “[a]ny part or all of the remainder of the claim that is subsequently supported by written notice is overdue if not paid within 30 days after such written notice is furnished to the insurer.” Section 627.736(4)(b), Fla. Stat. (2010)(Emphasis supplied). Generally, a provider must issue its statement of charges to the insurer within 35 days of the date that the medical service was rendered to the insured. See Section 627.736(5)(c)1., Florida Statutes (2010). Importantly, however, the Legislature contemplated resubmissions of statements when it provided an exception to the 35-day requirement within the plain language of subsection (5)(c)1. See North Fla. Medical Clinic Inc. v. USAA Casualty Ins. Co., 16 Fla. L. Weekly Supp. 323a (Fla. 4th Jud. Cir., Duval County Court, January 30, 2009). The exception to the 35-day requirement is for“past due amounts previously billed on a timely basis (Emphasis supplied).” See section 627.736(5)(c)1., Fla. Stat. (2010); see also Peachtree Cas. Ins. Co. v. Professional Massage Svcs., Inc., 923 So. 2d 548 (Fla. 1st DCA 2006) [31 Fla. L. Weekly D708a] (resubmitted bills, which were originally submitted timely, are not subject to the 35-day requirement for submission and fall within the exception that is expressly enumerated in subsection (5)(c)1., Fla. Stat.). Simply put, if the original CMS-1500 statement is submitted to the insurer within 35-days of the date of service, a provider is able to cure the purported deficiencies on the form at any time before initiating litigation. See United Auto. Ins. Co v. Professional Medical Group. Inc., 26 So. 3d 21, 24-25 (Fla. 3d DCA 2009) [34 Fla. L. Weekly D2500a] (where resubmitted bills were issued outside the 35-day window); See also Fla. Medical & Injury Center, Inc., 29 So. 3d at 341; Universal X-Rays Corp. a/a/o Joselyn Belliard v. State Farm Fire & Cas. Co., 17 Fla. L. Weekly Supp. 990b (Fla. 11th Jud. Cir. (Appellate), June 2, 2010) (resubmitted bills could be issued to insurer outside the timeframe set forth under 5(c)1.); Pain Relief Assoc., Inc. a/a/o Blair Blackard v. USAA Cas. Ins. Co., 16 Fla. L. Weekly Supp. 754a (Fla. 4th Jud. Cir., Duval County Court, June 23, 2009); North Fla. Medical Clinic supra.

Here, there is no dispute that Plaintiff submitted its original bill to Defendant within the 35-day window set forth under section 627.736(5)(c)l. AIS found Plaintiff’s bill substantially incomplete because it did not contain a proper claim number. Importantly, however, once Plaintiff obtained the proper claim number from the Defendant, Plaintiff resubmitted a corrected bill. This time, Ms. Khounvixny did not contend that Plaintiff’s bill was incomplete. In fact, she was able to process Plaintiff’s bill and deny Plaintiff’s charge. The only basis for the denial was that Plaintiff’s resubmitted corrected bill was issued to Defendant outside the 35-day window set forth under section (5)(c)1. Indeed, Ms. Khounvixny admitted that she would have paid Plaintiff’s bill had she seen proof of mailing the original CMS-1500 in the claim file.

Ms. Khounvixny’s decision was made nearly five years after the Peachtree opinion was rendered, and a year after Professional Medical Group was decided. Both of the foregoing opinions are binding District Court decisions. To the extent that Peachtree did not fully inform Defendant about the fact that resubmitted bills are not subject to the 35-day requirement, the Professional Medical Group opinion comprehensively decided the issue. This Court holds that Defendant’s adjuster knew or should have known that her actions were in contravention of then existing binding Florida precedent when she improperly denied payment based on the fact that the bill was not resubmitted within 35 days. Since the insurer’s only defense was an illegitimate one, and given the admission that Defendant would have paid the bill but for the illegitimate defense, Plaintiff’s bill became overdue once the adjuster improperly denied Plaintiff’s charge. Again, a bill becomes “overdue” when an insurer does not have “reasonable proof” to support the denial. See section 627.736(4)(b), Fla. Stat. (2010). An insurer does not have “reasonable proof” to support a denial if the denial is in contravention of the statute and then-existing precedent. Since Plaintiff’s bill became overdue under subsection (4)(b), Fla. Stat. (2010) and Plaintiff was forced to initiate litigation, Plaintiff is now entitled to judgment as a matter of law on its breach of contract claim. As a result, this Court hereby DENIES Defendant’s Motion for Summary Final Judgment, and instead GRANTS Plaintiff judgment as a matter of law.

WHEREFORE, Defendant’s Motion for Summary Judgment is DENIED. Plaintiff’s Motion for Final Summary Judgment is hereby GRANTED. Plaintiff is entitled to $1,066.28, plus pre- and post-judgment interest, FOR WHICH SUM LET EXECUTION ISSUE. This Court reserves jurisdiction for an award to Plaintiff of its reasonable attorneys’ fees and costs incurred.

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¹Defendant is a subsidiary of USAA Casualty Insurance Company.

²These facts are taken from the deposition testimony of Defendant’s adjuster, Ms. Lani Khounvixny, along with the authenticated documents attached to the transcript as Exhibits.

³The word PIP is bolded because of its significance in this case. A bill simply would not be sent to a PIP carrier unless the provider and insured believed that the services were related to a motor vehicle accident.

⁴Defendant’s adjuster admitted that it was possible for Defendant to locate a claim simply by obtaining the insured’s name and date of birth.

⁵If an insurer has a reasonable belief under then-existing precedent to support the denial or reduction, the insurer has the requisite reasonable proof necessary to support the denial/reduction. However, when an insurer acts improperly by processing a bill in contravention of then existing Florida precedent, the insurer acts in bad faith and cannot shield itself with an exhaustion of benefits defense. See Progressive Express Ins. Co. v. So. Fla. Institute of Medicine, Inc. a/a/o Halil Hawkeye 14 Fla. L. Weekly Supp. 520a (11th Jud. Cir. (Appellate), April 11, 2007); Geico Indemnity Co. v. Gables Ins. Recovery, Inc. a/a/o Rita Lauzan, 20 Fla. L. Weekly Supp. 862a (11th Jud. Cir. (Appellate), June 25, 2013); USAA Cas. Ins. Co. v. Oakland Park MRI, Inc. a/a/o Antonia Gale, 19 Fla. L. Weekly Supp. 22b (Fla. 17th Jud. Cir. (Appellate), August 31, 2011); Oakland Park MRI, Inc. a/a/o Antonia Gale v. USAA Casualty Ins. Co., 17 Fla. L. Weekly Supp. 477a (Fla. 17th Jud. Cir., Broward County Court, February 22, 2010); Pembroke Pines MRI, Inc. a/a/o Brian Schoedinger v. USAA Casualty Ins. Co., 17 Fla. L. Weekly Supp. 479a (Fla. 17th Jud. Cir., Broward County Court, March 29, 2010); DPI of North Broward, LLC a/a/o John Shutowick v. USAA Casualty Ins. Co., 18 Fla. L. Weekly Supp. 492a (Fla. 17th Jud. Cir., Broward County Court, February 1, 2011); Virtual Imaging Svcs., Inc. a/a/o Yudi Vigoreaux v. United Svcs. Auto. Ass’n, 18 Fla. L. Weekly Supp. 491a (Fla. 11th Jud. Cir., Miami-Dade County Court, February 2, 2011); Pembroke Pines MRI, Inc. a/a/o Gabriel Garcia v. Garrison Prop. & Cas. Ins. Co., 18 Fla. L. Weekly Supp. 558a (Fla. 17th Jud. Cir., Broward County Court, March 22, 2011); Oakland Park MRI, Inc. a/a/o Daniel Wilson v. USAA Casualty Ins. Co., 18 Fla. L. Weekly Supp. 884a (Fla. 17th Jud. Cir., Broward County Court, May 10, 2011); Pembroke Pines MRI, Inc. a/a/o Colleen Carcelli v. USAA, 18 Fla. L. Weekly Supp. 1175a (Fla. 17th Jud. Cir., Broward County Court, June 1, 2011); Wellness Assoc. of Fla., Inc. a/a/o Daniel North v. USAA Casualty Ins. Co., 18 Fla. L. Weekly Supp. 1056a (Fla. 15th Jud. Cir., Palm Beach County Court, July 26, 2011); Pembroke Pines MRI, Inc. a/a/o Nomi Bogrow v. USAA Cas. Ins. Co., 19 Fla. L. Weekly Supp. 413a (Fla. 17th Jud. Cir., Broward County Court, Feb. 16, 2012); Virtual Imaging Svcs., Inc. a/a/o Aurora Mitev v. USAA Cas. Ins. Co., 19 Fla. L. Weekly Supp. 588a (Fla. 11th Jud. Cir., Miami-Dade County, March 12, 2012); Advanced Diagnostic Resources a/a/o Patricia Flynn v. USAA Cas. Ins. Co., 20 Fla. L. Weekly Supp. 934a (Fla. 15th Jud. Cir., Palm Beach County Court, July 1, 2013); Virtual Imaging Svcs. a/a/o Miguel Rodriguez v. United Automobile Ins. Co., 21 Fla. L Weekly Supp. 428b (Fla. 11th Jud. Cir., Miami-Dade County Court, January 31, 2014).

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