25 Fla. L. Weekly Supp. 11a
Online Reference: FLWSUPP 2402LPERInsurance — Personal injury protection — Exhaustion of policy limits — Trial court erred in finding that insurer that initially improperly reduced provider’s charge by using Medicare Part B fee schedule could not later assert exhaustion of benefits as an affirmative defense in provider’s action against it — Absent bad faith, insurer’s liability ended at policy limits — Court rejects provider’s argument that it can recover nominal damages when underlying claim has been obviated by exhaustion of benefits
PROGRESSIVE EXPRESS INSURANCE COMPANY, Appellant, v. GABLES INSURANCE RECOVERY, INC., a/a/o Leyanis Morales Perez, Appellee. Circuit Court, 11th Judicial Circuit (Appellate) in and for Miami-Dade County. Case No. 2014-146-AP. L.T. Case Nos. 2013-198-SP 24; 2013-199-SP 24 (consolidated). July 5, 2016. On appeal from the County Court for Miami-Dade County, Florida, Rodolfo Ruiz, Judge. Counsel: Douglas H. Stein and Stephanie Martinez, Bowman and Brooke, LLP, for Appellant. G. Bart Billbrough, Billbrough & Marks, P.A., for Appellee.
[Lower court order published at 21 Fla. L. Weekly Supp. 578a.]
(Before WALSH, DE LA O, and MILLAN, JJ.)
(MILLAN, J.) Appellant, Progressive Express Insurance Company (“Progressive”) appeals the trial court’s denial of its Motion for Final Summary Judgment on Exhaustion of Benefits. For the reasons explained below, we reverse and remand for the entry of a final judgment consistent with this opinion.
Leyanis Morales Perez and Allan Morales were injured in a car accident on August 15, 2008. Both sought medical services from All X-Ray Diagnostic Services, Inc. (“All X-Ray”), and assigned their right to recover PIP benefits to the company. All X-Ray submitted its bills to Progressive, and Progressive reduced the claim by applying the Medicare Part B fee schedule. Subsequently, All X-Ray reassigned the benefits to Gables Insurance Recovery, Inc. (“Gables”), who filed suit against Progressive on or about January 29, 2013. At the time the suit was filed, the PIP benefits were exhausted.
Prior to trial, the parties filed competing motions for summary judgment on the issue of exhaustion of benefits. Gables argued Progressive should be exposed beyond its policy limit because Progressive erroneously reduced the claim. On the other hand, Progressive argued absent bad faith, Gables was not entitled to recover an amount in excess of the policy limit. Progressive also argued there is no requirement that an insurance company set aside a reserve fund for claims that are reduced or denied. The trial court entered an order granting Gables’ Motion for Partial Summary Judgment and Denying Progressive’s Motion for Final Summary Judgment. The trial court ruled that when an insurer “wrongfully or improperly” reduces a charge by using the Medicare Part B fee schedule, the insurer cannot later assert exhaustion of benefits as an affirmative defense to escape liability. The case later proceeded to jury trial and the trial court entered a final judgment in Gables’ favor.
We review the trial court’s ruling on the motion for summary judgment de novo. See Interested Underwriters v. SeaFreight Line, Ltd., 971 So. 2d 892, 894 (Fla. 3d DCA 2007) [32 Fla. L. Weekly D2829a].
Following the trial court’s ruling in this case, the Third District Court of Appeal entered its opinion in Geico Indem. Co. v. Gables Ins. Recovery, Inc. a/a/o Rita M. Lauzan, 159 So. 3d 151 (Fla. 3d DCA 2014) [39 Fla. L. Weekly D2561a], which is binding on this Court. In Lauzan, the insured was involved in a car accident then sought treatment from a medical provider. Id. at 152-53. The insured assigned her policy benefits to the medical provider who later re-assigned the benefits to the plaintiff. Id. at 153. Thereafter, the medical provider submitted its bills to the insurance company, and the insurance company reduced the claim based on the Medicare Part B fee schedule. Id. The plaintiff then sued the insurance company alleging breach of contract for failure to pay PIP benefits. Id. The insurance company argued its liability was limited to the fee schedule in Section 627.736(5)(a)2.f, and regardless of the fee schedule, the insured’s PIP benefits were exhausted. Id. Subsequently, the trial court entered a final judgment in favor of the plaintiff. Id.
On review, the Third District Court of Appeal reasoned an insurer is not required to “set aside” funds in anticipation of litigation over the unpaid claim in order to avoid the risk of paying more than its coverage limits. Id. at 154. As a result, the court held absent a showing of bad faith, the insurer cannot be held liable for benefits above the statutory limit. Id. at 155. Further, other district courts of appeal have also addressed this issue. See Simon v. Progressive Express Ins. Co., 904 So. 2d 449, 450 (Fla. 4th DCA 2005) [30 Fla. L. Weekly D1156b] (declining to create a requirement that an insurance company set aside a reserve fund for claims that are reduced or denied); Progressive Am. Ins. Co. v. Stand-Up MRI of Orlando, 990 So. 2d 3, 4 (Fla. 5th DCA 2008) [33 Fla. L. Weekly D1746a] (holding a PIP insurer is not liable for benefits once benefits have been exhausted unless there has been a showing of bad faith); Northwoods Sports Med. & Physical Rehab., Inc. v. State Farm Mut. Auto. Ins. Co., 137 So. 3d 1049, 1057 (Fla. 4th DCA 2014) [39 Fla. L. Weekly D491a] (clarifying that exhaustion of benefits extinguishes the provider’s right to further payments, as long as the exhaustion is prior to the establishment of the amount to which the medical provider is entitled under PIP).
In the instant case, the facts are identical to the facts in Lauzan. Gables received an assignment from the insureds’ medical provider, All X-Ray. Once All X-Ray submitted its bill to Progressive, they also reduced the amount of the claim based on the Medicare Part B schedule, like the insurance company in Lauzan. When the trial court heard the summary judgment motions, the trial court was aware the PIP benefits were exhausted. At that hearing, the trial court confirmed that Gables was not asserting bad faith. Consequently, Progressive’s liability ended at the policy limit because there were no allegations of bad faith. As a result, Progressive was entitled to final summary judgment based on the exhaustion of benefits.
Despite Gables’ concession that this Court is bound by Lauzan, Gables argues for the first time on appeal that it is entitled to nominal damages. No district court has addressed whether the insured, or their assignees, can recover nominal damages when the underlying claim has been obviated by the exhaustion of benefits. Nevertheless, this Court is guided by Sheldon v. United Servs. Auto. Ass’n, 55 So. 3d 593 (Fla. 1st DCA 2010) [36 Fla. L. Weekly D23a], where a medical provider sought to maintain a lawsuit to pursue interest, penalties and/or attorneys’ fees even though the underlying PIP benefits were exhausted. In Sheldon, the Fifth District Court of Appeal explained once an insurer has paid out the policy limit, the insurer has fulfilled its contractual obligation and may not be held liable for any disputed benefits. Id. at 595-96. Here, Gables’ nominal damages argument is analogous to the medical provider’s argument that was rejected by the court in Sheldon. Since the benefits are exhausted, in this case Progressive may not be held liable, not even for a nominal amount. Therefore, in light of the analysis in Sheldon, Gables cannot maintain this suit for the entry of a nominal damages award.
Because the summary judgment issue is dispositive, we decline to address the remaining issues raised by the parties. This case is REVERSED and REMANDED for entry of a final judgment consistent with this opinion. (WALSH and DE LA O, JJ., concur.)
