23 Fla. L. Weekly Supp. 513a

Online Reference: FLWSUPP 2306LOCKInsurance — Personal injury protection — Coverage — Medical expenses — Emergency services — Exhaustion of policy limits — Insurer was required to hold in reserve beyond 30 days that portion of a emergency provider’s claim that was disputed and remained unpaid at end of 30-day reserve period — Exhaustion of benefits is not defense to payment of disputed portion of emergency provider’s claim

AUTO-OWNERS INSURANCE COMPANY, Appellant, v. FLORIDA EMERGENCY PHYSICIANS KANG & ASSOCIATES, M.D., P.A., a/a/o Nicole Lockeywerner, Appellee. Circuit Court, 9th Judicial Circuit (Appellate) in and for Orange County. Case No. 2014-CV-000067-A-O. L.C. Case No. 2013-SC-001644-O. January 7, 2016. Appeal from the County Court, for Orange County, A. James Craner, County Judge. Counsel: Carri S. Leininger and Jessica L. Saltz, Williams, Leininger & Cosby, P.A., North Palm Beach, for Appellant. Dean A. Mitchell, Ocala, for Appellee.

(Before MURPHY, LAUTEN, and LEBLANC, J.J.)

(PER CURIAM.)ORDER GRANTING MOTION FOR REHEARINGAND AFFIRMING TRIAL COURT

THIS MATTER comes before the Court on Appellee’s Motion for Rehearing, filed on September 23, 2015. We grant the motion for rehearing, withdraw the prior Order entered on September 1, 2015, and substitute this Order in its place.

Appellant, Auto-Owners Insurance Company, timely appealed the trial court’s order granting summary judgment in favor of Appellee, Florida Emergency Physicians Kang & Associates, M.D., P.A., as assignee of the insured, Nicole Lockeywerner, and the order denying its motion for rehearing or, alternatively, motion to vacate the judgment. This Court has jurisdiction pursuant to section 26.012(1), Florida Statutes, and Florida Rule of Appellate Procedure 9.030(c)(l)(A). We dispense with oral argument. Fla. R. App. P. 9.320.Summary of Facts and Procedural History

On August 2, 2012, Lockeywerner was injured in an automobile accident. She had insurance with Auto-Owners consisting of $10,000 in personal injury protection (“PIP”) and $2,000 in medical payments coverage. On that same date, Florida Emergency Physicians provided emergency care to Lockeywerner for her injuries. Florida Emergency Physicians obtained an assignment of the insurance benefits from Lockeywerner and submitted a claim in the amount of $987.00 to Auto-Owners for the services rendered. On September 7, 2012, Auto-Owners paid Florida Emergency Physicians’ claim in the amount of $903.68 (reducing the original claim amount by $83.32), allegedly based on the usual and customary charges in the community. Auto-Owners also paid claims from other medical providers, reaching the full amount of the PIP limits and resulting in an exhaustion of benefits.

Ultimately, on December 21, 2012, Florida Emergency Physicians sent Auto-Owners a pre-suit demand letter for payment of $83.32, the disputed unpaid portion of the claim. Auto-Owners did not pay. In February 2013, Florida Emergency Physicians filed suit against Auto-Owners. In response, Auto-Owners alleged that it paid the claim in accordance with the applicable statute, case law, and per the insurance policy language, and that it was not obligated to pay the disputed unpaid portion of the claim because the benefits were exhausted.

Auto-Owners filed a Motion for Summary Judgment based on the exhaustion of benefits defense. Florida Emergency Physicians filed its own Motion for Final Summary Judgment asserting that Auto-Owners failed to honor the statutorily-mandated set aside of $5,000 for payment to emergency providers per section 627.736(4)(c), Florida Statutes, by not keeping in reserve the disputed unpaid portion of the claim. Florida Emergency Physicians concluded that Auto-Owners should not have exhausted the policy limits to unprotected providers because the disputed claimed amount should not have been released from the reserve.

At the hearing addressing both summary judgment motions, Auto-Owners’ counsel confirmed with the trial court that the only pending issue was exhaustion of benefits. The trial court granted Florida Emergency Physicians’ motion for summary judgment and denied Auto-Owners’ motion for summary judgment. The trial court subsequently denied Auto-Owners’ motion for rehearing, or alternatively, motion to vacate judgment.Standard of Review

The standard of review for summary judgment is de novo. Krol v. City of Orlando, 778 So. 2d 490, 491 (Fla. 5th DCA 2001) [26 Fla. L. Weekly D577a]. Accordingly, an appellate court must determine if there is any genuine issue of material fact and whether the moving party is entitled to judgment as a matter of law. Id. at 491-92 (citing Fla. R. Civ. P. 1.510(c)). The standard of review for a trial court’s interpretation of a statute which involves a question of law and the denial of a motion for rehearing that addresses only issues of law is also de novo. J.D.S. v. Dep’t of Children & Families, 864 So. 2d 534, 537 (Fla. 5th DCA 2004) [29 Fla. L. Weekly D198b]; Randall v. Walt Disney World Co., 140 So. 3d 1118, 1119-20 (Fla. 5th DCA 2014) [39 Fla. L. Weekly D1316a].Analysis

This Court finds that there are no genuine issues of material fact and all of the issues before it are resolved based on the answer to the question of whether exhaustion of benefits is a defense available to an insurer if it failed to reserve the entire amount of a timely claim from an emergency service provider under the reserve requirement in Florida Statute section 627.736(4)(c). We hold that an exhaustion of benefits defense is not available in this situation.

Section 627.736(4)(c), which was enacted in 2008, requires an insurer to set aside in reserve $5,000 of PIP benefits for thirty days from the date it is notified of the accident to pay claims from certain emergency services providers to the insured person, but only for those claims that are submitted to the insurer within the thirty-day period. After the thirty-day period, any amount of the reserve for which the insurer has not received notice of such claims may be used by the insurer to pay other claims. § 627.736(4)(c), Fla. Stat. (2012).¹

While case law addresses section 627.736, there is no controlling case law that specifically addresses subsection (4)(c), as it relates to the unpaid disputed portion of a claim and exhaustion of benefits.

There are cases that hold that the insurer is not required to set up a reserve fund, but they were decided before the enactment or applicability of section 627.736(4)(c). In Dr. Robert D. Simon, M.D., P.A. v. Progressive Express Insurance Co., 904 So. 2d 449, 450 (Fla. 4th DCA 2005) [30 Fla. L. Weekly D1156b], the Fourth District Court of Appeal held that a physician who accepted partial payment of PIP benefits did not have a priority claim against the undisbursed funds that the insurer committed to another health care provider. The Fourth District explained that the insurer was not required to set aside a reserve fund for claims that were reduced or denied where the physician did not contend that the denial or reduction of its claim was done in bad faith, or that the insurer had manipulated or acted improperly in reducing the claim. Id. at 450. See also Progressive Am. Ins. Co. v. Stand-Up MRI of Orlando, 990 So. 2d 3, 5-7 (Fla. 5th DCA 2008) [33 Fla. L. Weekly D1746a] (holding there was no legal requirement that an insurer set aside a reserve fund for claims which are reduced or denied absent a showing of bad faith or wrongdoing on behalf of the insurer).

In Sheldon v. United Services Automobile Ass’n, 55 So. 3d 593, 595-96 (Fla. 1st DCA 2010) [36 Fla. L. Weekly D23a], the First District applied Simon and Stand-Up MRI in holding that when an insurer has paid out the policy limits, it cannot be held liable on a claim for disputed benefits because it has already fulfilled its contractual obligation to pay a given amount; thus, it cannot be required to pay more than it agreed to pay under the policy. See also Northwoods Sports Med. & Physical Rehab., Inc. v. State Farm Mut. Auto. Ins. Co., 137 So. 3d 1049 (Fla. 4th DCA 2014) [39 Fla. L. Weekly D491a] (affirming the trial court’s finding that the medical provider was precluded from collecting benefits from the insurer when PIP benefits were exhausted while the claim’s reasonableness was still in dispute and there was no bad faith in processing the claim); Geico Indem. Co. v. Gables Ins. Recovery, Inc., 159 So. 3d 151 (Fla. 3d DCA 2014) [39 Fla. L. Weekly D2561a] (holding no liability for any additional PIP benefits after exhaustion of benefits where there was no finding of bad faith).

These cases described above are inapposite, however, because they either involved the previous version of section 627.736(4)(c), before it was amended in 2008, or they did not implicate subsection (4)(c), which expressly requires insurers to reserve funds for emergency service providers. Simon and Stand-Up MRI rest on the premise that there was no legal requirement to create a reserve fund. In 2008, that changed when section 627.736(4)(c), became effective and did require the insurer to reserve funds for emergency services providers.

Section 627.736(4)(c), in addition to requiring insurers to set aside $5000 to pay emergency service providers, states, “After the 30-day period, any amount of the reserve for which the insurer has not received notice of a claim from a physician or dentist who provided emergency services and care or who provided hospital inpatient care may then be used by the insurer to pay other claims.” (Emphasis added.) The emphasized language specifically instructs insurers that only the amount in the reserve that has not been claimed may be used to pay other claims after the thirty days has run. The corresponding action is that the amount in the reserve that has been “claimed” (not necessarily paid out), within the thirty days, may not be used to pay other claims. If the insurer were not required to hold the disputed portion of a claim submitted within the thirty days in reserve, then the emphasized language would be unnecessary. Using “claim” indicates that it is the claimed amount that is held in reserve, not an undisputed amount or an amount that the insurer deems reasonable.

In this case, Florida Emergency Physicians claimed $987.00 within thirty days. Because Auto-Owners had notice of that $987.00 claim, the $987.00, does not fall into the provision that it could be released from the reserve to pay other claims. Auto-Owners was thus required to hold the difference between the amount it paid Florida Emergency Physicians and Florida Emergency Physicians’ claimed amount in the reserve under section 627.736(4)(c). Because it did not, Auto-Owners now owes Florida Emergency Physicians the once-disputed portion of the claim. The exhaustion of benefits defense is unavailing because the benefits would not have been exhausted before paying the amount owed Florida Emergency Physicians if Auto-Owners had complied with the statute.

Although there are several public policy considerations that militate against this interpretation of section 627.736(4)(c), they are for the Legislature to address, not the Court. State v. Rife, 789 So. 2d 288, 292 (Fla. 2001) [26 Fla. L. Weekly S226a] (“[I]t is not this Court’s function to substitute its judgment for that of the Legislature as to the wisdom or policy of a particular statute.”).

Based on the foregoing, it is hereby ORDERED AND ADJUDGED:

1. Florida Emergency Physicians’ Motion for Rehearing is GRANTED.

2. The trial court’s “Order on Cross Motions for Summary Judgment” that entered Final Judgment in favor of FLORIDA EMERGENCY PHYSICIANS, and the trial court’s Order denying Defendant’s Motion for Rehearing are AFFIRMED.

3. Florida Emergency Physicians’ Motion for Appellate Attorney’s Fees is GRANTED, and the assessment of those fees is REMANDED to the trial court.

4. Auto-Owners’ Amended Motion to Tax Appellate Attorney’s Fees is DENIED. (LAUTEN and LEBLANC, JJ., concur.)

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¹Section 627.736(4)(c) (2012), states, in its entirety:

Upon receiving notice of an accident that is potentially covered by personal injury protection benefits, the insurer must reserve $5,000 of personal injury protection benefits for payment to physicians licensed under chapter 458 or chapter 459 or dentists licensed under chapter 466 who provide emergency services and care, as defined in s. 395.002(9), or who provide hospital inpatient care. The amount required to be held in reserve may be used only to pay claims from such physicians or dentists until 30 days after the date the insurer receives notice of the accident. After the 30-day period, any amount of the reserve for which the insurer has not received notice of a claim from a physician or dentist who provided emergency services and care or who provided hospital inpatient care may then be used by the insurer to pay other claims. The time periods specified in paragraph (b) for required payment of personal injury protection benefits shall be tolled for the period of time that an insurer is required by this paragraph to hold payment of a claim that is not from a physician or dentist who provided emergency services and care or who provided hospital inpatient care to the extent that the personal injury protection benefits not held in reserve are insufficient to pay the claim. This paragraph does not require an insurer to establish a claim reserve for insurance accounting purposes.