27 Fla. L. Weekly Supp. 71a
Online Reference: FLWSUPP 2701DRAPInsurance — Personal injury protection — Application — Misrepresentations — PIP policy application requesting “names of all drivers in household, names of all children and all persons that use vehicles” is ambiguous — Where insured did not list household resident who has never been driver of vehicle, but did place insurer on notice of unlisted household resident by electing deducible for named insured and dependent resident relatives, insurer cannot rely on omission to rescind policy — Insurer breached policy where it notified medical provider of coverage investigation under section 627.736(4)(i) but failed to pay claim within allotted additional 60 days — Rescission — Policy was not properly rescinded where insurer returned premiums 120 days after it learned of alleged misrepresentation but did not return policy fees until 694 days later and never paid interest on premiums and fees
COLONIAL MEDICAL CENTER, INC., as assignee of Daunte Draper, Plaintiff, v. CENTURY-NATIONAL INSURANCE COMPANY, Defendant. County Court, 9th Judicial Circuit in and for Orange County. Case No. 2016-CC-013154-O, Division 72. March 1, 2019. Faye Allen, Judge. Counsel: Keith Petrochko, Davila Law Group, Deland, for Plaintiff. William McFarlane, Coral Springs, for Defendant.
ORDER ON PLAINTIFF’S MOTIONFOR SUMMARY JUDGMENT
THIS CAUSE having come before the Court on February 6, 2019 upon Plaintiff’s Motion for Summary Judgment, and the Court having considered the Motion, having heard argument of counsel, having reviewed the Court record, and being otherwise fully advised in the premises, it is hereby ORDERED and ADJUDGED as follows:
I. BACKGROUND
Daunte Draper (“Draper”), the Assignor, is a Century-National Insurance Company omnibus insured; Shelly Richie (“Richie”) is the named policy holder. The policy was in full force and effect at all pertinent times. Draper was involved in a motor vehicle accident on March 3, 2016; shortly thereafter he sought and received treatment for his injuries from the Plaintiff, Colonial Medical Center, Inc. The Plaintiff provided medical care in exchange for an Assignment of Benefits and submitted medical bills to the Defendant, Century-National Insurance Company, pursuant to the same. The Defendant notified the Plaintiff, as well as Draper and Richie, that the Personal Injury Protection (“PIP”) reimbursement requests were being withheld while the policy was investigated in accordance with Florida Statute § 627.736(4)(i).
The Plaintiff was later advised that PIP reimbursement would not be provided as the policy was rescinded void ab initio due to a material misrepresentation made by Richie in the policy application process. Indeed, the Defendant claims to have first learned of the material misrepresentation giving rise to the policy rescission in a recorded statement which took place March 8, 2016.1 The policy premiums were refunded on July 7, 2016 and the policy fees were fully returned June 1, 2018 (694 days after the premium refund).
Plaintiff posits that the insurance application is ambiguous, and that even if the Court found the policy to be free from ambiguities, that neither the named insured nor the omnibus insured have knowingly omitted, concealed, or misrepresented any material fact or circumstance related to any risk insured by the policy. Plaintiff further argues that, if the court were to find that a knowing material misrepresentation exists, the insurance company has otherwise waived its ability to rescind the policy by failing to timely return all premiums and fees; by failing to pay interest on the policy premiums and fees; by failing to act in accordance with the policy’s cancelation provision; by failing to abide by the Florida No-Fault Statute; and by failing to act in accordance with the Innocent Insured Doctrine.
Defendant argues that the policy was rescinded do to a material misrepresentation, and not a fraudulent insurance act, thus Florida Statute § 627.736(4)(i) is irrelevant; the policy premiums were returned timely; interest is not a requirement to rescind a policy of insurance; and the Innocent Insured Doctrine is inapplicable as the policy language is sufficient to impute a material misrepresentation to an innocent third-party.
The Defendant withdrew its challenge to the Plaintiff’s standing as well as to the reasonableness of the subject charges, relatedness of the injury to the event giving rise to the claim, and the necessity of treatment. Thus, the only issue before the Court was Plaintiff’s challenge to the policy rescission.
II. ANALYSIS
A. AMBIGUITY IN THE INSURANCE APPLICATION
It is well established in Florida jurisprudence that ambiguities in insurance clauses should be construed in favor of the insured. See Union American Ins. Co. v. Maynard, 752 So. 2d 1266, 1268 (Fla. 4th DCA 2000) [25 Fla. L. Weekly D648a]; Southeast Farms, Inc. v. Auto-Owners Ins. Co., 714 So. 2d. 509 (Fla. 5th DCA 1988); Progressive Ins. Co. v. Estate of Wesley, 702 So. 2d 513, 514 (Fla. 2nd DCA 1997) [22 Fla. L. Weekly D2277c]; National Merchandise Co., Inc. v. United Ser. Auto. Ass’n, 400 So. 2d 526, 530 (Fla 1st DCA 1981); Travelers Ins. Co. v. Smith, 328 So. 2d 870, 872 (Fla. 3d DCA 1976). Because insurance policies are often viewed as adhesion contracts, the ambiguities should be construed against the insurance carrier and in favor of the insured. See Pasteur Health Plan, Inc. v. Salazar, 658 So. 2d 543, 544 (Fla 3d DCA 1995) [20 Fla. L. Weekly D1083a] and Graham v. Lloyd’s Underwriters at London, 964 So. 2d 269, 274 (Fla. 2d DCA 2007) [32 Fla. L. Weekly D2212c].
Florida courts have also consistently held that “an insurance company has the right to rely on an applicant’s representations in an application for insurance and is under no duty to further investigate.” N. Miami Gen. Hosp. v. Cent. Nat’l Life Ins. Co., 419 So.2d 800, 802 (Fla. 3d DCA 1982). However, the Florida Supreme Court has held that constructive notice of facts requiring further inquiry is tantamount to actual knowledge of facts justifying the forfeiture of an insurance policy. Johnson v. Life Insurance Company, 52 So. 2d 813 (Fla. 1951). Here, the application for automobile insurance requested/stated “Driver Information: Names of all drivers in household, all children and all persons that use the vehicles. Coverage is provided only for the drivers listed below.” There is no record evidence that Draper has ever been a driver of the vehicle, as such the failure of Richie to list Draper in this section is not tantamount to a knowing material misrepresentation.2 Further, a $1,000.00 PIP deductible was elected for the “Named Insured and Dependent Resident Relatives.” Therefore, no further inquiry is needed; although the insurer may not have known the name of the resident relative, Richie did put the Defendant on notice of at least one resident relative in the household.
As described in the above, the policy application is ambiguous in its intentions. Further, Richie, within the policy application, placed the Defendant on notice of an unlisted household resident. Therefore, Richie did not knowingly omit, conceal, or misrepresent any material fact or circumstance related to any risk insured by the policy.3 The Defendant had actual knowledge that additional individuals lived within Richie’s household. As such, the alleged omission cannot be relied upon to rescind the subject policy.
B. FLORIDA STATUTE § 627.736(4)(i)
Florida Statute § 627.736(4)(i) is a clear and unambiguous section of the No-Fault Act, as such, it must be implemented through its plain meaning without judicial interpretation. The Legislature’s purposeful inclusion of specific constraints into the No-Fault Act clearly and unambiguously prescribe that insurers have the absolute right to investigate and thwart fraudulent insurance acts; however, the duration of the investigation must not prevent undue financial interruption to the claimant. The plain meaning of the language “no later than 90 days after the submission of the claim, the insurer must deny the claim or pays the claim …” is unmistakable, thus the Court need not attempt any further interpretation of the same.
The Court is persuaded by the Ninth Judicial Circuit cases of Halifax Chiropractic and Injury clinic, Inc., a/a/o Rantanen Bloodworth v. Century-National Insurance Company, 2016-CC-007170-O (Fla., Jan., 2018) (due to the defendant’s violation of the PIP statute by failing to deny the claim within 30 days and not invoking the additional time limitation under Fla. Stat. § 627.736(4)(i) they waived their ability to investigate or deny the claim for material misrepresentation); and Central Florida Chiropractic Care a/a/o David Cherry v. Geico Indemnity Company, 24 Fla. L. Weekly Supp. 152a (Fla., April 22, 2016) (the legislature carved out a way to extend the time of investigation under Section Florida Statute § 627.736(4)(i) for an additional sixty days, but made sure to indicate that the insurer must deny or pay the claim at the end of that additional sixty days. . . Defendant’s argument that they may use an investigative tool at any time beyond the thirty days is inconsistent with a specifically added section that cuts off the time for the insurer to investigate.) The Court is also persuaded by the Seventh Judicial Circuit case of Spine Recovery Clinic, Inc., a/a/o Nicole Cassaro v. Windhaven Insurance Company, 26 Fla. L. Weekly Supp. 225a (Fla., May 8, 2018)(when the statutory investigatory period is at an end the insurer must either deny or pay the claim. Nothing in the PIP statute allows for that statutory time period to be arbitrarily increased by the insurer for an indefinite amount of time.)
As it is undisputed that the Defendant notified the Plaintiff of a coverage investigation specifically undertaken pursuant to Florida Statute § 627.736(4)(i) and that the claim was not paid or denied within the statute’s timeframe, the Court finds that the Defendant has breached the policy by failing to abide by the incorporated statute, which therefore must pay the claim.
C. RETURN OF THE STATUS QUO
When an insured seeks to rescind a voidable policy, it must give notice of the rescission and return all premiums paid by the insured within a reasonable time after discovery of the grounds for the rescission. Leonardo v. State Farm Fire & Case. Co., 675 So. 2d 176 (Fla. 4th DCA 1996) [21 Fla. L. Weekly D1165a]. The insurer must take affirmative steps to place the policyholder back in his original position. Lang v. Horne, 23 So. 2d. 848 (Fla. 1945).
Here, the Defendant returned the premium payment 120 days after the recorded statement was completed. The policy fees were not returned until 753 days after the recorded statement (694 days from the notice of rescission) — well into the pendency of the instant litigation.
The Court concludes that policy premium/fee was not returned timely. Further, as the Defendant withheld Richie’s funds, for the benefit of the Defendant at the expense of Richie, the Court concludes the status quo has not been returned. The Defendant has profited without providing a benefit to Richie. The Court therefore concludes that interest must be returned with the policy premium/fee. As the Defendant has not done so, the policy was not properly rescinded.
D. POLICY CANCELATION
As the policy rescission has been addressed in the above, the Court finds no reason to issue an opinion as to the termination provision’s alleged ambiguity at this time.
E. INNOCENT INSURED DOCTRINE
As the policy rescission has been addresses in the above, the Court finds no reason to issue an opinion as to the applicability of the Innocent Insured Doctrine at this time.
Wherefore, based on the foregoing, this Court finds that no material issues of fact exist which would preclude entry of summary judgment. The insurance company has waived its right to rescind the subject insurance policy. Further, this Court finds that the prior rescission was improper.
THEREFORE, IT IS HEREBY ORDERED: Plaintiff’s Motion for Summary Judgment is hereby GRANTED. Coverage will be provided under the subject policy of insurance.
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1Defendant claims that the failure to list additional household relatives, including Draper, on the policy application was the triggering event which led to the policy rescission
2Had the Defendant intended to communicate to Richie the necessity of listing non-licensed, and/or non-driving resident relatives in the application, the Defendant could have chosen language that would have more clearly communicated that intention.
3The subject policy of insurance builds upon Fla. Stat. § 627.409 in that only a knowing misrepresentation, omission, concealment of fact, or incorrect statement may prevent recovery under the policy.
