23 Fla. L. Weekly Supp. 287a
Online Reference: FLWSUPP 2303MCWAInsurance — Personal injury protection — Coverage — Medical expenses — Exhaustion of policy limits — Where insurer chose to pay bills that exhausted policy limits solely as “business decision” to avoid litigation and without making any determination that services billed were reasonable, related or medically necessary or attempting to settle claims, genuine issues of material fact as to whether payments were for valid claims and whether insurer acted in bad faith prevents entry of summary judgment in favor of insurer
HEALTH DIAGNOSTICS OF FORT LAUDERDALE, LLC, d/b/a STAND-UP MRI OF FORT LAUDERDALE, a/a/o Paul McWaynson, Plaintiff, vs. UNITED AUTOMOBILE INSURANCE COMPANY, Defendant. County Court, 17th Judicial Circuit in and for Broward County. Case No. CONO11-011380(70). April 21, 2015. John D. Fry, Judge. Counsel: Andrew J. Weinstein, Weinstein Law Firm, Coral Springs, for Plaintiff. Lara Edelstein, United Automobile Insurance Company, Miami, for Defendant.
Editor’s note: Final judgment in this case was affirmed 1-18-2018. (United Automobile Ins. Co. v. Health Diagnostics, etc., 17 Jud. Cir., CACE15-009527)
ORDER ON DEFENDANT’S MOTION FOR FINALSUMMARY JUDGMENT RE: EXHAUSTION OFBENEFITS AND REQUEST FOR § 57.105 SANCTIONS
THIS CAUSE having come on to be heard on April 01, 2015, on Defendant’s Motion for Final Summary Judgment re: Exhaustion of Benefits and Request for § 57.105 Sanctions, and the Court having heard argument of counsel, having reviewed the Court file, and being otherwise advised in the Premises, it is hereupon,
ORDERED AND ADJUDGED as follows:FACTUAL BACKGROUND
1. This is a lawsuit for unpaid PIP benefits in the amount of $1,280.
2. The assignor, Paul McWaynson, was involved in a motor vehicle accident on April 13, 2009.
3. Mr. McWaynson was given a prescription for a cervical MRI, which he obtained at Plaintiff’s facility on June 30, 2010.
4. According to the PIP payment ledger that Defendant filed in support of its motion for final summary judgment, Defendant received thirty-five separate bills from seven different medical providers for treatment rendered to Mr. McWaynson.
5. None of these bills were paid by Defendant within 30 days of receipt.
6. The first bill that Defendant chose to pay was Plaintiff’s bill for the date of service at issue in this lawsuit (i.e., 06/30/2010). Defendant tendered a draft in partial payment, on December 20, 2010, in the amount of 80% of 200% of the Medicare Part B fee schedule. This payment was in response to a demand letter sent by Plaintiff.
7. Plaintiff did not cash the check because the payment was not unconditional.1 Defendant later ordered a stop payment.
8. As of the date that Plaintiff filed the instant lawsuit, Defendant made no other payments on any of the other thirty-four bills that Defendant received.
9. It was not until December 29, 2011 — 17 days after attending the pre-trial conference in this lawsuit — that Defendant decided to revisit previously submitted bills and issue payment in order to exhaust benefits.
10. Defendant merely processed payment (in the order that bills were received) and made no effort to attempt to settle as many claims as possible prior to exhausting.
11. Specifically, on December 29, 2011 — 895 days after the claimant’s treatment with this provider concluded — Defendant, as a “business decision”, paid $6,473.70 to Michael L. Douglas DC PA.
12. This payment was made to Douglas Chiropractic Center despite the fact that this same provider voluntary dismissed its lawsuit for PIP benefits against Defendant, on October 04, 2010, and despite the fact that this same provider made no attempts whatsoever to collect on any bills after it dismissed its lawsuit.
13. On December 29, 2011 — 534 days after the claimant’s treatment with this provider concluded — Defendant, as a “business decision”, also paid $966.40 to Orthopedic Center of South Florida PA despite the fact that no demand letter had been sent, there had been no follow-up to collect this bill by the medical provider, and there was no threat of litigation.
14. Lastly, on December 29, 2011, Defendant submitted payment to Plaintiff in the amount of $2,560 for a May 6, 2009 date of service, which date of service was not a part of the instant lawsuit2 and Plaintiff has made no attempt to collect other than timely sending the initial bill.
15. Defendant chose to pay this bill “based on the litigation file already open” “meaning that at the moment that [Defendant] processed payment [Defendant] already had a lawsuit open.”3
16. Defendant chose to pay the other medical providers’ bills at 80% of the amount charged without making any determination that the services billed for were reasonable in amount, related, or medically necessary.4
17. The sole reason that Defendant made any payment in this case was to “avoid litigation”.
LEGAL ANALYSIS AND CONCLUSION
18. The law pertaining to summary judgment is well settled in Florida5: First, summary judgment cannot be granted unless the pleadings, depositions, answers to interrogatories, and admissions on file together with affidavits, if any, conclusively show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.6 Second, the burden is upon the party moving for summary judgment to show conclusively the complete absence of any genuine issue of material fact.7 Third, the trial court must draw every possible inference in favor of the party against whom summary judgment is sought.8 Fourth, if the evidence raises any issues of material fact, or if it is conflicting, or if it will permit different reasonable inferences, or if it tends to prove the issues, summary judgment cannot be granted.9 Fifth, once the moving party meets its burden of showing conclusively the complete absence of any genuine issue of material fact, the burden shifts to the non-moving party.10
19. The issue before the Court in this case is whether the fact that Defendant has paid the full $10,000 PIP policy limits, under the facts and circumstances of this case, relieves the Defendant of having to potentially pay the Plaintiff’s bill for the date of service at issue in this lawsuit.
20. This Court is well aware of the authoritative decisions set forth in Simon,11 Progressive v. Stand-up MRI of Orlando,12 Sheldon,13 and Northwoods14 and the general rule that once an insurance company has paid PIP bills up to the limits of the insurance policy, the insurance company has fulfilled its obligation under the policy and any remaining bills would likely become the responsibility of the insured directly.
21. However, the Court recognizes that there are exceptions to this general rule where an insurance company may be responsible for payment in excess of the policy limits.
22. The Court begins its analysis by looking at Northwoods. In that case, the Fourth District Court of Appeals held that “[o]nce the PIP benefits are exhausted through the payment of valid claims, an insurer has no further liability on unresolved, pending claims, absent bad faith in the handling of the claim by the insurance company.” (Emphasis added).
23. Unquestionably, this allows an insurance company to legitimately exhaust PIP benefits, absent bad faith, by paying valid bills that a medical provider timely submits for services continuing to be rendered. In other words, the claimant is still treating with a medical provider and that medical provider is submitting those bills for payment.
24. However, that is not the case here. In this case, the claimant finished treatment years ago, there were no bills being submitted for continued treatment, and the insurance company exhausted benefits by deciding to pay previously submitted bills for treatment rendered years ago.
25. When exhausting benefits, there are two requirements that an insurance company must satisfy before they are “off the hook” as to unresolved, pending claims: First, any payment that an insurance company makes, which counts against the PIP policy limits, must be for “valid claims”; and second, the insurance company must not have acted in “bad faith” in the handling of the claim.
26. This requires the Court to first address the question of what constitutes a “valid claim”.
27. For purposes of addressing this question, based on the issues presented in this case, the Court turns to Derius v. Allstate Indemnity Co.,15 where the Fourth DCA essentially defined what a valid PIP claim was: “Section 627.736(1), Florida Statutes . . . requires an insurer to provide personal injury protection (PIP) benefits for ‘loss sustained . . . as a result of bodily injury . . . arising out of the ownership, maintenance, or use of a motor vehicle.” The Court further explained that “Under this statute, an insurer is not liable for any medical expense to the extent that it is not a reasonable charge for a particular service or if the service is not necessary.”
28. Applying this definition to the issue presented in the case at bar, the Court finds that it is axiomatic that an insurance company should not pay medical bills and be permitted to apply those payments against the PIP policy limits without first making a determination that the bills are for services that are medically necessary, related to the subject motor vehicle accident, and reasonable in amount.
29. To hold otherwise would allow insurance companies to arbitrarily favor and pay certain medical providers over others in a manner that best benefited the interests of the insurance company rather than the interests of the insured.
30. Since the Defendant in this case chose to pay all the bills solely as a “business decision” to avoid litigation and without making any determination that the services billed for were reasonable in amount, related, or medically necessary, there remains a genuine issue of material fact as to whether the bills that were paid by the Defendant to other medical providers were for “valid claims”.
31. If the Court were to end its analysis here, Defendant’s motion for summary judgment could be denied on this basis alone. However, the Court is troubled by the Defendant’s conduct in the processing of payments and method of exhausting benefits in this case and will now address the second requirement of Northwoods, which is the insurance company must not have acted in bad faith.
32. Based on Farinas v. Florida Farm Bureau General Ins. Co.,16 Plaintiff argued that the Defendant owes a fiduciary duty to the insured to act in the insured’s best interest, which among other things, requires the insurance company to, at a minimum, fully investigate all the claims at hand to determine how to best limit the insured’s liability and to attempt to settle as many claims as possible within the policy limits.
33. In Farinas, the Fourth DCA explained the history of insurance good-faith law and how insurers are placed in a fiduciary relationship with their insureds because of the fact that insurers routinely act on behalf of the insured and that the insureds are dependent on the acts of the insurers. Because of the power that insurance companies are given, they owe a duty to their insureds to refrain from acting solely on the basis of their own interests in settlement.
34.The Court in Farinas cited to the Florida Supreme Court case of Boston Old Colony Ins. Co. v. Gutierrez,17 where the Florida Supreme Court set forth the following standard for insurer good faith:
The general standard of care that the insurer must exercise when handling claims against the insured is “the same degree of care and diligence as a person of ordinary care and prudence should exercise in the management of his own business.” Id. at 785 (citation omitted). Because the insured has relinquished control of all decisions regarding claims to the insurer, the insurer’s standard of care requires the insurer to act “in good faith and with due regard for the interests of the insured.” Id. (citation omitted). The extent of this good faith duty is explicitly defined in detail by the court:
This good faith duty obligates the insurer to advise the insured of settlement opportunities, to advise as to the probable outcome of the litigation, to warn of the possibility of an excess judgment, and to advise the insured of any steps he might take to avoid the same. The insurer must investigate the facts, give fair consideration to a settlement offer that is not unreasonable under the facts, and settle, if possible, where a reasonably prudent person, faced with the prospect of paying the total recovery, would do so. Id. (citations omitted). The determination of whether an insurer has satisfied this standard is one for the jury. (Emphasis added).
35. The Court in Farinas reasoned as follows:
[The insurance company] was required by Boston Old Colony to fully investigate all the claims at hand to determine how to best limit the insured’s liability. Additionally, based on Davis, [the insurance company] should have sought to settle as many claims as possible within the policy limits. Finally, based on Shuster, [the insurance company] had the duty to avoid indiscriminately settling selected claims and leaving the insured at risk of excess judgments that could have been minimized by wiser settlement practice. Whether Farm Bureau satisfied each of these requirements, are questions for a jury to decide. (Emphasis added).
36. Plaintiff pointed out that in Simon v. Progressive Express Ins. Co.,18 the Fourth District Court of Appeals quoted Farinas in the PIP context: “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].”
37. This Court finds that Plaintiff’s argument is well taken and that there is a correlation between Farinas and the facts of this PIP case.
38. Defendant’s litigation adjuster testified at deposition, as set forth below, that it made no attempts to settle as many claims as possible and never reached out to the medical providers to whom payment was issued to see if they would accept less than the amount owed so more bills could be paid within the policy limits.
Page 57, Lines 1-17:
Q. Did you ever call Michael Douglas to see if he wouldn’t accept an amount less than what you paid in order to pay other medical providers for payment?
A. That didn’t happen. I don’t know. I cannot testify about that.
Q Okay. Did you ever call anybody and attempt to see if they would accept less in order pay other bills that were received?
A No.
Q And you never made any attempt at all to try to settle the May 6th, 2009 and the December — I’m sorry, the June 30th, 2010 bill with my client, did you?
A No, because we pay up to benefits exhausted according to what we received.
Page 67, Lines 18-21:
Q. And are you aware of whether you are obligated to contact all of the medical providers to try to make settlement?
A No, we’re not obligated to do that.
39. After reviewing the summary judgment evidence presented in this matter, the Court finds that a jury could reasonably determine that Defendant acted in bad faith in this case.
40. The Court bases this determination on the following:
a. The fact that out of the hundreds of cases that Defendant is litigating in front of this Court, neither the Court nor Defense counsel can think of one single case where Defendant did not argue that it was entitled to pay the bills based on 80% of 200% of Medicare Part B fee schedule, yet Defendant conveniently chose to pay 80% of the medical bills in this case in order to exhaust benefits quicker.
b. The fact that the Defendant appears to have waited until suit was filed, and for no other reason than because a lawsuit was filed, decided to go back and pay bills just to exhaust benefits and avoid having to pay out for the only lawsuit that was pending regarding services rendered to its insured.
c. The fact that the Defendant appears to have strategically exhausted benefits for the sole purpose of denying this claim and extinguishing Plaintiff’s right to attorneys’ fees and costs based on Fla. Stat. § 627.428.
d. The fact that Defendant made payments and exhausted benefits as a “business decision”, without fully investigating all the claims at hand, and for the sole reason to avoid litigation, which could be inferred to have been done with the purpose of limiting the exposure to the Defendant, not the insured.
e. The fact that had Defendant followed the law as set forth in Farinas, it could have limited its insured’s exposure by attempting to settle as many claims as possible — especially claims already in litigation — before exhausting benefits.
f. The fact that by settling the claims the way that Defendant did in this case — by failing to comply with the requirements set forth in the Farinas case — it has now exposed its own insured to having to pay for bills that possibly could have been settled within the policy limits.
41. For the reasons set forth above, this Court finds that the summary judgment evidence that was before the Court does not conclusively show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.
42. Since Defendant has failed to meet its burden to show conclusively the complete absence of any genuine issue of material fact, Defendant’s motion is hereby DENIED.
__________________
1Defendant’s letter accompanying the check stated that “Having notified you of our ongoing claims investigation, the enclosed draft(s) are hereby tendered as advanced consideration for unverified treatments. Any payment for medical treatment that is excessive, unrelated, unreasonable, unnecessary or unlawful is an unintended overpayment and expressly disputed. Any such disputed overpayment is not intended to be gratuitous in nature and subject to reimbursement.”
2See Fla. Stat. § 627.736(15) (2008), which provides, in pertinent part, as follows: “In any civil action to recover personal injury protection benefits brought by a claimant pursuant to this section against an insurer, all claims related to the same health care provider for the same injured person shall be brought in one action, . . .”
3Deposition transcript p. 36, lines 11-17.
4Deposition transcript p. 14, lines 22-25; p. 15, lines 1-25; p. 16, lines 1-6.
5See Albelo v. Southern Bell, 682 So. 2d 1126 (Fla. 4th DCA 1996) [21 Fla. L. Weekly D2165a].
6Fla. R. Civ. P. 1.510(c); See Volusia County v. Aberdeen at Ormond Beach, L.P., 760 So. 2d 126, 130 (Fla. 2000) [25 Fla. L. Weekly S390a].
7See Holl v. Talcott, 191 So. 2d 40, 43 (Fla. 1996).
8Moore v. Morris, 475 So. 2d 666 (Fla. 1985) (“A summary judgment should not be granted unless the facts are so crystallized that nothing remains but questions of law”).
9McDonald v. Florida Dep’t of Transp., 655 So. 2d 1164 (Fla. 4th DCA 1995) [20 Fla. L. Weekly D1141a].
10See Holl, 191 So. 2d at 43-44.
11Simon v. Progressive Express Ins. Co., 904 So. 2d 449 (Fla. 4th DCA 2005) [30 Fla. L. Weekly D1156b].
12Progressive American Ins. Co. v. Stand-up MRI of Orlando, 990 So. 2d 3 (Fla. 5th DCA 2008) [33 Fla. L. Weekly D1746a].
13Sheldon v. United Services Auto. Association, 55 So. 3d 593 (Fla. 1st DCA 2010) [36 Fla. L. Weekly D23a].
14Northwoods v. State Farm Mutual Auto. Ins. Co., 137 So. 3d 1049 (Fla. 4th DCA 2014) [39 Fla. L. Weekly D491a].
15723 So. 2d 271 (Fla. 4th DCA 1998) [23 Fla. L. Weekly D1383a].
16850 So. 2d 555 (Fla. 4th DCA 2003) [28 Fla. L. Weekly D1023b].
17386 So. 2d 783 (Fla. 1980).
18904 So. 2d 449 (Fla. 4th DCA 2005) [30 Fla. L. Weekly D1156b].
