27 Fla. L. Weekly Supp. 392a

Online Reference: FLWSUPP 2704BLOOInsurance — Personal injury protection — Coverage — Denial — Waiver — Insurer waived the ability to investigate or deny claim based on insured’s alleged material misrepresentation because defendant violated PIP statute by failing to pay or deny the claim within 30 days and did not invoke the additional time limitation under section 627.736(4)(i)

HALIFAX CHIROPRACTIC AND INJURY CLINIC, INC., a/a/o Rantanen Bloodworth, Plaintiff, v. CENTURY-NATIONAL INSURANCE COMPANY, Defendant. County Court, 9th Judicial Circuit in and for Orange County. Case No. 2016-CC-007170-O. January 16, 2018. David P. Johnson, Judge. Counsel: Matthew Quattrochi, MCQ Law, Longwood, for Plaintiff. William McFarlane, for Defendant.

AFFIRMED. FLWSUPP 2801BLOOAMENDED ORDER ON PLAINTIFF’SMOTION FOR FINAL SUMMARY JUDGMENT

This cause having come before this court on Plaintiff’s Motion for Final Summary Judgment, and the Court having reviewed the file and being fully advised in the premises, it is

ORDERED and ADJUDGED as follows:

That the Plaintiff’s Motion for Final Summary Judgment is GRANTED and the Defendant’s competing Motion for Summary Judgment on this same issue is therefore DENIED.

FACTUAL BACKGROUND

The issue in this case is whether or not the Defendant properly rescinded the policy after learning of an alleged material misrepresentation. In October of 2015 the assignor, Rantanen Bloodworth, executed an insurance application with an independent insurance agent of Insurance World in Sanford, Florida. Insurance World also maintains an office in Deland, Florida as discussed further herein. On the application, Ms. Bloodworth was required to list the “names of all drivers in the household, all children and all persons that use the vehicle.” Ms. Bloodworth did not list any other drivers or persons that used her vehicle.

On November 1, 2015, Ms. Bloodworth was involved in a motor vehicle accident and subsequently received medical treatment from the Plaintiff for injuries she sustained as a result of the crash. After rescinding her policy, as required by Florida law, the Defendant sent a report of the rescission to the Florida Office of Insurance Regulation on March 15, 2016 indicating that claim number: PG151630 was filed on November 1, 2015. Ms. Bloodworth was treated for injuries sustained in the motor vehicle accident with service beginning on November 3, 2015. All bills for the treatment were sent to the Defendant within 35 days of the treatment date indicating that the first bill for treatment was mailed no later than December 8, 2015 and would have been overdue under Fla. Stat. §627.736(4)(b) or Fla. Stat. §627.736(4)(b)(1) on January 7, 2016. Given that all bills for treatment were sent within 35 days of the service and those bills would be overdue 30 days later, the last date of treatment that would have been overdue by March 18, 2016 was January 13, 2016. Ms. Bloodworth was treated 17 times by the Plaintiff between November 3, 2015 and January 12, 2016. During this time, and prior to March 18, 2016, the Plaintiff received at least one explanation of benefits from the Defendant indicating the amount that would be paid for the bills received.

On March 18, 2016 the Defendant sent two identical letters to Ms. Bloodworth and the Plaintiff. The letter notifies Ms. Bloodworth and the Plaintiff that they had received medical bills for “date (sic) of service 02/16/2016 through 02/18/2016.” The letter does not reference any dates of service other than the aforementioned dates that indicate the last date of service being February 18, 2016 that is coincidentally 29 days prior to the letter. The letter invokes Fla. Stat. §627.736(4)(i) and states very clearly that the Defendant has a “reasonable belief that a fraudulent insurance act was committed” and further states that a decision regarding the claim would be made within the 90 day time limitation from the date of submission provided for in Fla. Stat. §627.736(4)(i). March 18, 2016 was a Friday and three days later, on Monday, March 21, 2016, the Defendant sent letters to Ms. Bloodworth, her attorneys: Chanfrau & Chanfrau, Florida Hospital, Emergency Medicine Professionals P.A., Halifax Injury Physicians, Daytona MRI and the Plaintiff announcing that the Defendant has completed its investigation into the claim submitted November 1, 2015 and that they were rescinding the policy due to a “material misrepresentation” by Ms. Bloodworth on her application for insurance and goes on to reference Fla. Stat. §627.409 that governs representations in applications and warranties. The aforementioned letters were not the only certified mail sent on Monday, March 21, 2016. On that day, the Defendant also sent a certified letter to the Florida Office of Insurance Regulation that included a “REPORT OF RESCINDED POLICY.” Fla. Stat. §627.409 requires no such report to be filed with the Office of Insurance Regulation, however, Fla. Stat. §627.736(4)(i) does.¹ Two days later, on March 23, 2016 the Defendant sent a letter to Ms. Bloodworth c/o her attorneys stating that they were refunding her entire premium pursuant to Fla. Stat. §627.409 and included a check for the full amount of her premium. Finally, on March 25, 2016, the Defendant sent identical letters to Ms. Bloodworth and the Plaintiff putting them on notice that “pursuant to Fla. Stat. §627.736(4)(i),” they had a reasonable belief that a fraudulent insurance act had been committed and they would make a decision regarding the claim within 90 days.

ANALYSIS

Counsel for the Defendant repeatedly argues that the Defendant did not rescind the policy in this matter, pursuant to Fla. Stat. §627.736(4)(i), rather, the policy was rescinded under Fla. Stat. §627.409 for a material misrepresentation. Contrary to this assertion however, are the documents, filed by the Defendant, that fail to support this claim. As discussed above, the correspondence sent to the insured and her attorneys to put them on notice that they were investigating the claim and invoking their right to investigate for an additional 60 days under Fla. Stat. §627.736(4)(i) not once but twice. By the time the Defendant sent the first letter they were well over the deadline for payment of a number of bills that were sent to them beginning December 8, 2015 under Fla. Stat. §627.736(4)(b). Not only did the Defendant specifically refer to subsection (4)(i), they also invoked the time limitations of that section and sent a report of the rescission to the Florida Department of Insurance Regulation. The statute actually requires a report of any rescission to the Division of Investigative and Forensic Services which is a separate division under the same umbrella of the Florida Department of Financial Services. Notwithstanding the specific department the rescission report was sent to, the significant issue is that Fla. Stat. §627.736(4)(i) requires a report of rescission and Fla. Stat. §627.409 does not and this is more evidence that the Defendant attempted to invoke the additional time limitations under the former statute.

It is the opinion of the Court that, in this case, the statute invoked by the Defendant in rescinding the policy is irrelevant as the threshold issue that must be considered first is whether or not the Defendant was in breach of the policy/contract prior to the election to investigate the claim. This issue has been considered in the Ninth Judicial Circuit and the Court held that a prior breach prohibits an insurer from denying a claim for a breach on the part of the insured. Once the Defendant in the instant case failed to pay or deny the claim within 30 days after receiving bills for services provided by the Plaintiff, they were in breach of the policy, Fla. Stat. §627.736 and the stated purpose for enacting the personal injury protection (PIP) statute in the first place which is swift and automatic payment of claims.

In Central Fla. Chiropractic Care v. GEICO Indemnity Co., 24 Fla. L. Weekly Supp. 152a (Fla. 9th Cir. 2016) Judge Steve Jewett held that where insurer did not request an examination under oath (EUO) until more than thirty days after receipt of a medical provider’s bills and did not invoke the additional time limitation to investigate the claim under Fla. Stat. §627.736(4)(i), the insured’s failure to attend the EUO did not breach PIP policy. This decision was upheld by the Circuit Court of the Ninth Judicial Circuit acting in its appellate capacity. (2016-CV-38-A-O) Judge Jewett relied on Amador v. United Automobile Ins. Co., 748 So.2d 307 (Fla. 3rd DCA 1999) [24 Fla. L. Weekly D2437a] which held that the “burden is clearly on the insurer to authenticate the claim within the statutory time period.” Id. In Central Fla. Chiropractic Care, supra, Judge Jewett held that “Nothing within the statute appears to allow for that statutory time period to be arbitrarily increased by the insurer for an indefinite amount of time. The clearing up of the usage (sic) of an investigative tool as a condition precedent does not change the plain meaning of the Florida PIP statute which is swift and virtual automatic payment.” Finally, Armador clearly states that “ . . . because of the special nature of, and protection afforded by, the PIP statute, upon the expiration of the 30-day period, the insurer is itself in breach of the contract.”

Because the Defendant violated the PIP statue by failing to pay or deny the claim within 30 days and did not invoke the additional time limitation under Fla. Stat. §627.736(4)(i), they waived the ability to investigate or deny the claim for material misrepresentation.

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¹The Court notes that the report required under this section is to be sent to the Division of Investigative and Forensic Services which is a separate division within the Florida Department of Financial Services.