28 Fla. L. Weekly Supp. 398a
Online Reference: FLWSUPP 2805DANY
Insurance — MedPay — Subrogation — Declaratory action brought by insureds against whom insurer is asserting claim of subrogation for repayment of MedPay benefits from proceeds of settlement with tortfeasor — Where contractual subrogation language does not expressly, clearly, and unequivocally address priority of reimbursement between insurer and insureds, common law made whole doctrine applies and preserves insureds’ right of priority over insurer — Insurer may not recover MedPay benefits paid on insureds’ behalf from settlement proceeds until insureds are made whole — Insureds are not entitled to final summary judgment where they have not proven that they have not been made whole — No merit to claim that claimants in third-party insurance case can never be made whole as matter of law
JOHN DANYLAK and BARBARA DANYLAK, Plaintiffs, v. ALLSTATE FIRE AND CASUALTY INSURANCE COMPANY, Defendant. Circuit Court, 12th Judicial Circuit in and for Sarasota County. Case No. 2018-CA-5874-NC, Division E. June 25, 2020. Rehearing denied July 10, 2020. Hunter W. Carroll, Judge. Counsel: Joseph Bryant, Morgan & Morgan, Tampa, P.A., Tampa, for Plaintiffs. John W. Bustard, Shutts & Bowen, LLP, Miami; and Emily Silver and Benjamin S. Thomas, Martinez Denbo, LLC, St. Petersburg, for Defendant.
ORDER (1) GRANTING IN PART AND DENYING IN PART PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT;AND (2) DENYING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT
BEFORE THE COURT in this declaratory judgment action are competing motions for summary judgment and responses in opposition [DINs 34, 38, and 43]. At their core, those motions address the viability of the common law “made whole doctrine” to Allstate’s contractual subrogation claim against Plaintiffs (its insureds, the Danylaks) relating to MedPay benefits Allstate paid on the Danylaks’ behalf. After oral argument, the Court requested the parties submit any judgments from other courts addressing the issue and invited the parties to comment on any analysis contained in those judgments [DIN 47]. The parties responded, which the Court appreciates [DINs 48-52]. There were, however, no judgments actually entered that directly addressed the issue.
Allstate has a clear contractual right of subrogation for those MedPay benefits from the Danylaks, and Danylaks have a contractual duty to protect Allstate’s subrogation right. Allstate’s subrogation contractual language, however, does not expressly, clearly, and unequivocally address the priority of reimbursement between it and the Danylaks. Therefore, the common law made whole doctrine continues to apply to this policy which preserves the Danylaks’ common law right of priority over Allstate. Allstate may not recover under its contractual subrogation right the MedPay benefits it paid on Plaintiffs’ behalf from the settlement proceeds the Danylaks received from the tortfeasor until the Danylaks are made whole.
Because the Danylaks did not meet their initial burden on summary judgment to demonstrate the nonexistence of Allstate’s affirmative defenses, the Court cannot grant them final summary judgment at this time but can award them partial summary judgment. The Court also denies Allstate’s summary judgment motion.
Facts
The relevant material facts are few, and they are uncontested.
The Plaintiffs are John Danylak and Barbara Danylak. The Danylaks’ automobile insurance company is Defendant Allstate. A third-party tortfeasor caused an automobile crash, injuring the Danylaks. The Danylaks made a claim with Progress insurance, the tortfeasor’s insurance carrier. The Danylaks settled their claim against the tortfeasor without the need of filing a lawsuit against the tortfeasor.
The Danylaks purchased optional MedPay coverage from Allstate for an additional premium at the same time they purchased their Allstate automobile policy. Following the crash, Allstate paid more than $4,000 in MedPay due to the injuries the Danylaks sustained in the crash. PIP benefits were not exhausted. During the Danylaks’ medical treatment — and certainly before any settlement — Allstate sent the Danylaks’ attorney letters invoking its contractual right of subrogation and demanding repayment of MedPay benefits provided by Allstate on the Danylaks’ behalf. Separately, Allstate sent Progressive a notice of intent to assert subrogation against Progressive’s insured, the tortfeasor.
The Danylaks responded in writing months before they settled with the tortfeasor, rejecting outright Allstate’s claim of subrogation as being in contravention of Florida common law and public policy. In that correspondence, the Danylaks affirmatively advised Allstate that an insured “can never be made whole where one has incurred costs and attorney fees to secure the settlement.” As such the Danylaks announced that they would not protect Allstate’s subrogation right.
The Danylaks settled their tort claim against the third-party tortfeasor for less than the tortfeasor’s policy limits. From the tortfeasor’s settlement, the Danylaks repaid a health insurance lien, paid costs advanced by their attorney, and paid their attorney a contingent attorney fee. The Danylaks did not advise Allstate of the settlement prior to disbursing the settlement proceeds. The Danylaks did not tender any settlement proceeds to Allstate for repayment of MedPay benefits Allstate paid pursuant to the MedPay policy. Allstate never advised the Danylaks that Allstate waived its contractual right of subrogation under the Danylaks’ policy.
After Allstate learned of the settlement, it continued to assert that it is entitled to recover the MedPay benefits it paid on behalf of the Danylaks — from the Danylaks, its insureds. Allstate reminded that MedPay benefits constitute a collateral source pursuant to section 768.76(2)(a)2., Florida Statutes. Allstate further contended that it provided notice of its claimed subrogation right pursuant to section 768.76(7); as such, Allstate contended it has a statutory right of subrogation under section 768.76.
The Allstate policy has language that purports to grant it a contractual right of subrogation for the MedPay benefits it paid. Florida’s Office of Insurance Regulation approved the applicable policy language.
The parties report this MedPay subrogation issue continues to percolate throughout Florida’s court system without resolution. The Danylaks filed this declaratory judgment to resolve this issue.
Analysis
The Court applies the summary judgment standard to these cross motions for summary judgment. Estate of Githens ex rel. Seaman v. Bon Secours-Maria Manor Nursing Care Center, Inc., 928 So. 2d 1272, 1274 (Fla. 2d DCA 2006) [31 Fla. L. Weekly D1482a]. The Court reminds the parties that the movant is required to come forward in the first instance with admissible summary judgment evidence showing there is no genuine issue of any material fact and that the movant is entitled to judgment as a matter of law. The Court must view every possible inference in favor of the party against whom summary judgment is sought. The movant must demonstrate the nonexistence of any genuine issue of material fact — which, in the case of the Danylaks, includes Allstate’s affirmative defenses.
The main issue the parties seek resolution is whether the made whole doctrine applies to Allstate’s contractual right of subrogation for MedPay benefits. While the Court can — and does — resolve that main legal issue, the Court may not grant summary judgment at this time because neither party met their initial burden on summary judgment showing that they are entitled to judgment as a matter of law. Please note, though, the denial of summary judgment is because neither party met the initial burden, and it is not based on a disputed issue of material fact.
Without question, the Allstate MedPay policy contains standard subrogation language: “When we pay, an insured person’s rights of recovery from anyone else becomes ours up to the amount we have paid. The insured person must protect these rights and help us enforce them.” (Emphasis in original). The policy, however, is silent concerning Allstate’s priority vis-à-vis its insured where its insured is not made whole following the insured’s injury. As will be explained, this omission controls the continued viability of the made whole doctrine as against this Allstate policy. A brief review of the common law collateral source rule and made whole doctrine is necessary to understand why.
The common law recognized the “collateral source rule,” which was both a rule of damages as well as a rule of evidence. Smith v. Geico Casualty Co., 127 So. 3d 808, 813 (Fla. 2d DCA 2013) [38 Fla. L. Weekly D2477a]. As an evidentiary rule, collateral source payments under the collateral source rule are not admissible before a jury “because such evidence may confuse the jury with respect to both liability and damages.” Joerg v. State Farm Mutual Auto. Ins. Co., 176 So. 3d 1247, 1249 (Fla. 2015) [40 Fla. L. Weekly S553a]. The evidentiary collateral source rule remains largely intact. Id. at 1250. The evidentiary rule, though, is not the focus of this case and no further reference is made to it.
Under the damages portion of the collateral source rule, the common law prohibited a set-off of collateral source benefits. Hurtado v. Desouza, 166 So. 3d 831, 836 (Fla. 4th DCA 2015) [40 Fla. L. Weekly D891a]. The Legislature abrogated the damages portion of the collateral source rule by its adoption of section 768.76, Florida Statutes. Joerg, 176 So. 3d at 1249. The Legislature’s change to the collateral source damage rule was intended to reduce insurance costs and prevent plaintiffs from receiving windfalls. Id. The Legislature has not substantively amended section 768.76 in nearly three decades.
Generally speaking, section 768.76(1) requires courts post-trial to reduce awards “by the total amount of all amounts which have been paid for the benefits of the claimant, or which are otherwise available to the claimant, from all collateral sources.” Id. quoting § 768.76(1), Fla. Stat. This subsection, though, contains an exception that provides that “there shall be no reduction for collateral sources for which a subrogation or reimbursement right exists.” § 768.76(1), Fla. Stat.
The Florida Supreme Court previously held that MedPay benefits are considered a collateral source under section 768.76(1). Allstate Ins. Co. v. Rudnick, 761 So. 2d 289, 291 (Fla. 2000) [25 Fla. L. Weekly S329d]. In another decision released the same day as Rudnick, the court discussed the nature of MedPay benefits, explaining that MedPay benefits are “first-party benefits for which the insured has paid a separate premium.” Rollins v. Pizzarelli, 761 So. 2d 294, 300 (Fla. 2000) [25 Fla. L. Weekly S331a] (opinion on rehearing).
Besides historical context, Rudnick and Pizzarelli offer little guidance to the current situation except this: assuming the validity of the contractual subrogation provision, the set-off exception of section 768.76(1) would apply to MedPay benefits. In other words, had the Danylaks sued the tortfeasor, gone to trial, and prevailed, in entering judgment the Court would not set-off MedPay benefits paid because of the existence of Allstate’s contractual right of subrogation — assuming, of course, that such right of subrogation were valid.
In the post-trial situation just described, Allstate would have had at least two rights in that trial to allow Allstate the ability to protect its contractual subrogation right: (1) a limited right to intervene in that lawsuit; and (2) the right to be heard prior to the distribution of any judgment or settlement proceeds. Union Cent. Life Ins. Co. v. Carlisle, 593 So. 2d 505, 508 (Fla. 1992). As the Second District has recognized, an insurance carrier with a right of subrogation has a “direct and immediate interest” to protect its subrogation right. Houston Specialty Ins. Co. v. Vaughn, 261 So. 3d 607, 611 (Fla. 2d DCA 2018) [43 Fla. L. Weekly D1828a].
Here, of course, there was no lawsuit; instead, this was a claim settled pretrial. Allstate’s ability to protect its subrogation interest, though, is not be impacted just because the Danylaks settled before they filed a lawsuit against the tortfeasor. It still has a direct and immediate interest in protecting its contractual subrogation right.
It is correct to assert that under another tenant of common law an insurance company had no right of subrogation against its own insured for medical expenses recovered by the insured from the tortfeasor unless the insured collected all of the insured’s damages. Humana Health Plans v. Lawton, 675 So. 2d 1382, 1384 (Fla. 5th DCA 1996) [21 Fla. L. Weekly D1299g] (emphasis added). Equity, however, also provided that where an insured is made whole by full recovery, any payments to the insured over and above the insured’s actual damages may be viewed as a “double recovery” that equitably entitles the carrier to subrogation against its insured’s recovery. Id. This is the “made whole doctrine.” The Florida Supreme Court just a few years ago explained the made whole doctrine thusly:
Subrogation is the substitution of one person in the place of another with reference to a lawful claim or right. Florida recognizes two types of subrogation: conventional subrogation and equitable or legal subrogation. Conventional subrogation arises or flows from a contract between the parties establishing an agreement that the party paying the debt will have the rights and remedies of the original creditor. Since subrogation is an offspring of equity, equitable principles apply, even when the subrogation is based on contract, except as modified by specific provisions in the contract. In the absence of express terms to the contrary, the insured is entitled to be made whole before the insurer may recover any portion of the recovery from a tortfeasor.
The “made whole doctrine” provides, absent a controlling contractual provision that states otherwise, that the insured has priority over the insurer to recover its damages when there is a limited amount of indemnification available. Martin and the subsequent cases involving the “made whole doctrine” all deal with the insured’s primary right to recover before the insurance carrier. We have acknowledged the application of the made whole doctrine in Florida.
Intervest Construction of Jax, Inc. v. General Fidelity Ins. Co., 133 So. 3d 494, 504 (Fla. 2014) [39 Fla. L. Weekly S75a] (quotations, citations, and parentheticals omitted; bolded italics emphasis added). Without a doubt, then, the Florida Supreme Court reminded that the common law made whole doctrine continues to apply in Florida.
In reliance on Intervest Construction and the Eleventh Circuit Court of Appeals’ decision in Cagle v. Bruner, 112 F.3d 1510 (11th Cir. 1997), Judge Kovachevich writing for the Middle District of Florida succinctly explained the correct application of the made whole doctrine: “The made-whole doctrine is a default rule that is read into insurance contracts, except where it is explicitly excluded.” Summit Contractors, Inc. v. Crum & Forster Specialty Ins. Co., 76 F. Supp. 3d 1381, 1386 (M.D. Fla. 2015) (internal quotation omitted), aff’d sub nom. Summit Contractors, Inc. v. Crum & Forster Specialty Ins. Co., 633 F. App’x 785 (11th Cir. 2016).
The Danylaks take a legally incorrect position when it contends that the subrogation portion of the Allstate MedPay policy contravenes the common law. It does not. The parties retain the ability to contract for a different rule. The true issue is whether the Allstate subrogation contract language alters the default, common law made whole doctrine. Applying the analysis of Intervest Construction, the answer to that question for this Allstate MedPay policy is in the negative.
The Intervest Construction court’s roadmap requires an analysis of the contact language used to determine if such language expressly, clearly, and unequivocally addresses the priority issue. In Intervest Construction, the court explained that the subrogation provision was “clear” but then noted that the contractual language gave “no guidance as to the priority to recover when the indemnity amount is insufficient to ‘make whole’ both parties.” 133 So. 3d at 503. As such, the court held that the absence of express language addressing the priority of reimbursement meant that insurance policy “[did] not abrogate the made whole doctrine, thereby preserving [the insured’s] right of priority.” Id. at 506. Stating the Intervest Construction rule of law directly in the context of this case — and consistent with Judge Kovachevich’s articulation — unless the express text of the policy states otherwise, the made whole doctrine continues to apply in Florida to preclude an insurance carrier from proceeding against its own insured on the carrier’s contractual subrogation right to recover the MedPay benefits it paid on its insured’s behalf until its insured is made whole.
The Allstate policy language here is functionally the same as the contract language in Intervest Construction. Comparison those provisions confirms this. The Intervest Construction policy language provided:
8. Transfer Of Rights Of Recovery Against Others To Us
If the insured has rights to recover all or part of any payment we have made under this Coverage Part, those rights are transferred to us. The insured must do nothing after loss to impair them. At our request, the insured will bring ‘suit’ or transfer those rights to us and help us enforce them.
133 So. 3d at 503. The provision here provided:
Subrogation Rights
When we pay, an insured person’s rights of recovery from anyone else becomes ours up to the amount we have paid. The insured person must protect these rights and help us enforce them.
(Emphasis in original).
Like the contractual subrogation language in Intervest Construction, here, the contractual subrogation provision is clear. Like the absence of contract language addressing the priority of reimbursement in Intervest Construction, here, there is no contractual provision expressly addressing the priority of reimbursement. Thus, the conclusion here must be the same as it was in Intervest Construction — the made whole doctrine continues to apply that suppresses Allstate’s ability to recover under its contractual subrogation provision from the Danylaks until they have been made whole.
Allstate’s contention that the approval by Florida’s Office of Insurance Regulation — an executive branch agency — somehow alters the common law is meritless. Even before statehood, the then legislative authority — the Legislative Council of the Territory of Florida — adopted the common law as the law of Florida. See §1 of Act of Nov. 6, 1829. To this day, the Florida Legislature continues to direct the applicability of the common law. § 2.01, Fla. Stat. Allstate has cited no case where an executive branch agency may alter the common law by executive action. Given Florida’s separation of powers provision, see art. II, § 3, Fla. Const., and the constitutional vesting of the legislative power of the state in the Legislature, see art. III, § 1, Fla. Const., the Court would not expect to see such a case.
Even with the continued viability of the made whole doctrine as a default rule, the Court does not rule that the Allstate policy language violated the common law. It does not. The Florida Supreme Court in Intervest Construction teaches that the parties may contract for a different priority rule than the common law supplied made whole doctrine. The Court here simply holds that the common law made whole doctrine continues to apply to this Allstate MedPay policy to require the Danylaks be made whole before Allstate may attempt to recover under its contractual right of subrogation. This is critical because Allstate still retains the contractual right of subrogation, and the Danylaks still undertook the contractual duty to protect that subrogation right.
The Danylaks’ also suggests that the Allstate contractual subrogation policy language somehow is contrary to “Public Policy.” Although difficult to follow, the Danylaks public policy argument seems to be constructed on two premises: a violation of section 768.76 and a violation of the uninsured motorist statute. These positions are wholly meritless here.
First, as it relates to MedPay benefits, the Florida Supreme Court two decades ago held that MedPay benefits are subject to section 768.76 as collateral source benefits. The question of set-off is controlled in part by the contractual right of subrogation, which exists in this Allstate policy. Nothing in the Allstate subrogation language violates section 768.76. The Danylaks’ position that Allstate may historically have argued in other cases following bodily injury trials that Allstate should receive an offset for MedPay benefits is of no moment. Perhaps those policies did not have a subrogation right. Perhaps Allstate was legally incorrect in those arguments in those cases. Regardless, those historical arguments are irrelevant here and certainly do not rise to making a mockery of the judicial system such that judicial estoppel would apply here. See Blumberg v. USAA Casualty Ins. Co., 790 So. 2d 1061 (Fla. 2001) [26 Fla. L. Weekly S473a].
Second, the Danylaks continue its violation of section 768.76 argument by pointing to a separate provision in the policy that involves uninsured motorist coverage. The Danylaks argue that the text of the uninsured motorist policy suggests that Allstate seeks to reduce uninsured motorist benefits it pays by the amount Allstate paid in MedPay benefits. Of course, the Danylaks did not seek any uninsured benefits from Allstate due to the tortfeasor’s negligent action, and Allstate neither denied nor paid any uninsured benefits. There is no moment for the Court to address uninsured motorist coverage. The Danylaks failed to demonstrate that the contractual subrogation language in its policy violates any public policy.
Having now determined the common law made whole doctrine applies and there is no violation of public policy, the Court addresses the Danylaks’ “confession of judgment” argument. That portion of the Danylaks’ argument that other insurance carriers have not pursued MedPay subrogation against their insured or that the Morgan & Morgan law firm has some type of “truce” with other carriers is of no legal moment. What one party does in a different case has no relationship to the legal issue under Allstate’s MedPay contract language. For that same reason, even if Allstate has not sought subrogation against other Allstate insureds in prior cases does not constitute a legal waiver in the Danylaks’ case. This argument is meritless.
Before leaving the made whole doctrine, the Court needs to address an argument by Allstate. Allstate contends that the attorney fees and costs the Danylaks’ paid their attorney is really a nonissue because Allstate would be obligated to reduce the subrogated amount due by a pro rata share of attorney fees and costs by the Danylaks in recovering the settlement funds from the tortfeasor. Allstate, though, points to nothing in its policy suggesting a pro rata reduction is appropriate or permitted. Contracting parties are bound by the terms of their contract, “and a court is powerless to rewrite the contract to make it more reasonable or advantageous for one of the contracting parties.” Suess v. Suess, 289 So. 3d 525, 529-30 (Fla. 2d DCA 2019) [44 Fla. L. Weekly D3028b]. Further, Allstate points to no statute authorizing this, either. Allstate’s pro rata reduction contention does not avoid the common law made whole doctrine.
The Court now turns to Allstate’s seven affirmative defenses. In order for the Danylaks to be entitled to summary judgment, they must demonstrate that none of those affirmative defenses preclude summary judgment. The first four defenses — comparative negligence, permanency, set-off for other collateral sources, and failure to mitigate damages — simply are inapplicable to this declaratory judgment action. The Court grants partial summary judgment in the Danylaks’ favor on these affirmative defenses. Affirmative defense six, which provides in total “Defendant would state, pursuant to the Doctrine of Waiver and Estoppel, that Plaintiff is not entitled to recover under the contract” is legally insufficient as it includes no ultimate facts. The Court also grants partial summary judgment as to that defense.
Affirmative defense five alleges that the Danylaks were made whole and therefore are entitled to subrogation. Affirmative defense seven alleges that the Danylaks failed to protect Allstate’s contractual right of subrogation. On these two affirmative defenses, the Court rules that the Danylaks did not meet their initial burden to demonstrate the non-existence of these affirmative defenses. The Court hastens to note, however, that it is not denying summary judgment on the basis of a disputed issue of material fact.
The Danylaks seek to avoid these affirmative defenses by contending, with citation to Travelers Indemnity Ins. Co. of Illinois v. Meadows MRI, LLP, 900 So. 2d 676, 679 (Fla. 4th DCA 2005) [30 Fla. L. Weekly D962c], that an insured can never be made whole as a matter of law. The Danylaks misread that case.
The Meadows MRI case involved whether section 627.428(1), Florida Statutes (2003), permitting an award of attorney fees against insurance companies, should be “extended” to a first party claim for appraisal. That case was a first-party insurance claim for property damage due to a malfunctioning MRI machine. In finding that the statute did apply in that context, the court stated: “Were this court to rule otherwise, Meadows would not be made whole as it would have to apply a portion of the policy proceeds to compensate its attorneys.” 900 So. 2d at 679.
The Danylaks conversion of that dicta statement into an inflexible rule of law that a tort claimant can never be made whole in a claim against the tortfeasor’s insurance carrier simply is, putting it mildly, an overly aggressively reading. Nothing in Meadows MRI holds that a tort claimant cannot be made whole as a matter of law.
Because the Danylaks’ thesis that they, as tort claimants, can never be made whole is erroneous, there is no valid legal theory entitling them to judgment as a matter of law. It was incumbent on the Danylaks to submit summary judgment evidence that they contend entitle them to judgment as a matter of law despite Allstate’s affirmative defenses five and seven. This, they did not attempt to do. The evidence before the Court indicates that the Danylaks settled their claim for less than the tortfeasor’s policy limits, which could suggest that they were made whole. The Danylaks are not entitled to summary judgment as to those affirmative defenses. Similarly, Allstate’s existing summary judgment evidence does not demonstrate that it is entitled to judgment as a matter of law. The Court must deny its summary judgment motion.
The Court hastens to note, the Court’s denial of summary judgment to Allstate and partial denial to the Danylaks was based on their failure to bring forth evidence demonstrating an entitlement to summary judgment. It was not based on a disputed issue of material fact. Thus, the parties remain free to seek summary judgment again with the proper summary judgment evidence.
IT IS THEREFORE ORDERED AND ADJUDGED:
1. The Court denies Allstate’s motion for summary judgment.
2. The Court grants in part and denies in part the Danylaks’ motion for summary judgment.
3. The Court declares that the common law made whole doctrine applies to this Allstate MedPay contract for insurance because the Allstate MedPay subrogation language does not expressly, clearly, and unequivocally address the priority of reimbursement between itself and its insured. Notwithstanding that declaration, Allstate does have a valid contractual right of subrogation that the Danylaks must protect; the Danylaks’ right to recover simply takes priority over Allstate’s contractual subrogation right due to the made whole doctrine. Thus, Allstate may recover under its subrogation right only after the Danylaks are made whole.
4. The Court grants the Danylaks partial summary judgment on Allstate’s affirmative defenses 1, 2, 3, 4, and 6.
5. The Court denies the Danylaks partial summary judgment on affirmative defenses 5 and 7.
6. None of the denials of summary judgment in this order are based on a disputed issue of material fact; instead, they are based on the movant’s failure in the first instance to bring forth summary judgment evidence demonstrating as a matter of law movant is entitled to final summary judgment.
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ORDER DENYING THE DANYLAKS’ MOTIONFOR REHEARING AND RECONSIDERATION OF THE
SUMMARY JUDGMENT ORDER ON MEDPAY
BEFORE THE COURT without hearing is Plaintiffs’ Motion for Rehearing and Reconsideration of this Court’s Order Rendered 6/25/2020 [DIN 54]. The Court denies the motion.
Background
This is a declaratory judgment action brought by the Danylaks against Allstate concerning the applicability of a contractual subrogation provision regarding MedPay benefits in Allstate’s policy. The parties filed competing cross-motions for summary judgment. The Court recently released its Order (1) Granting in Part and Denying in Part Plaintiffs’ Motion for Summary Judgment; and (2) Denying Defendant’s Motion for Summary Judgment [DIN 53] (“the MedPay Order”). See Danylak v. Allstate Fire and Casualty Ins. Co., Case No. 2018-CA-005874-NC, 2020 WL 3477354 (Fla. 12th Cir. Ct. Sarasota June 25, 2020) [28 Fla. L. Weekly Supp. 398a]. The ultimate ruling was:
[T]he common law made whole doctrine applies to this Allstate MedPay contract for insurance because the Allstate MedPay subrogation language does not expressly, clearly, and unequivocally address the priority of reimbursement between itself and its insured. Notwithstanding that declaration, Allstate does have a valid contractual right of subrogation that the Danylaks must protect: the Danylaks’ right to recover simply takes priority over Allstate’s contractual subrogation right due to the made whole doctrine. Thus, Allstate may recover under its subrogation right only after the Danylaks are made whole.
Id. at *7. The Danylaks assert four general areas of disagreement with the Court’s ruling, attempting to couch them in terms of the Court allegedly overlooking an argument or case law. The reality is the Danylaks simply disagree with the Court’s reading of Travelers Indemnity Ins. Co. of Illinois v. Meadows MRI, LLP, 900 So. 2d 676, 679 (Fla. 4th DCA 2005) [30 Fla. L. Weekly D962c], and the summary judgment standard the Court must apply.
Analysis
Primarily, the Danylaks argue that the Court misconstrued Meadows MRI. They continue to assert that the Fourth District in Meadows MRI expressly held that where a claimant expends attorney fees to secure a settlement against a carrier, the claimant cannot as a matter of law be made whole. Those words — including synonyms of those words — do not appear in the Meadows MRI case. At all.
The actual holding from Meadows MRI was that section 627.428(1), Florida Statutes, could be extended in a first-party lawsuit seeking to confirm an appraisal where there was an expensive and drawn out appraisal due to the insurance carrier’s disputed valuation estimation involving destroyed property. The property in that case was damaged MRI equipment due to the explosion of a magnet and resulting loss of the magnetic field.
The Danylaks gloss-over the fact that the Meadows MRI case involved a first-party claim for property damage. In contrast, the underlying facts of this case involve a third-party claim for bodily injury where the Danylaks made a claim against a third-party tortfeasor who had Progressive insurance. This claim did not implicate section 627.428(1) at all. Besides paying MedPay benefits for the benefit of the Danylaks, Allstate was not involved in the adjusting of this case — it was Progressive. To be clear, the instant case does not challenge Allstate’s adjusting of those MedPay benefits.
The Court understands the Danylaks’ practical argument that paying attorney fees out of a fixed sum which purportedly is capped at 100% of an individual’s damages means the made whole doctrine will always apply. That practical argument, however, rests on the proposition that — as a matter of law — a tort claimant can never be made whole in a third-party tort claim in any situation. The Meadows MRI decision simply cannot be stretched as far and as aggressively as the Danylaks suggest to manufacture a nonexistence express holding. And the Court is not aware of any case that says what the Danylaks profess that Meadows MRI says. The Court suspects that if such a case existed, it would have been cited here. After all, insurance has been around since prior to Florida’s statehood.
The Court must apply the law and cannot discount the summary judgment standard the Danylaks must meet based on a practical argument. The reality remains that without case law support for the Danylaks’ argument that a tort claimant can never be made whole as a matter of law, to obtain summary judgment, they will need to demonstrate factually in the first instance that they were not made whole. Here, the Danylaks did not attempt to do so on a factual basis because they rested on their erroneous view of Meadows MRI.
Second, the Danylaks contend that the Court did not consider Magsipoc v. Larsen, 639 So. 2d 1038 (Fla. 5th DCA 1994), which case allowed for undifferentiated settlements. That case, though, does not address the issue in this case. Certainly, Magsipoc permits undifferentiated settlements. That is beside the point. Ironically, that case discussed an insurance carrier’s right to a hearing on its subrogation claim. Here, the summary judgment evidence suggests the Danylaks purposefully avoided advising Allstate of the settlement or providing it an opportunity to address its claim of lien. Magsipoc does not apply.
From Magsipoc, the Danylaks suggest having to pay a medical lien somehow can equate to never being made whole. That implication is not appropriate here, as there is no fact in this case suggesting the Danylaks paid the health insurance carrier more than what that carrier expended on the Danylaks’ behalf. Magsipoc’s undifferentiated settlement authorization simply is inapplicable here.
Third, the Danylaks object to the Court’s denial of their summary judgment motion as to Allstate’s affirmative defenses 5 and 7. Recall the Court’s earlier ruling, Allstate may recover under its subrogation right only after the Danylaks are made whole. Danylak, 2020 WL 3477354, *7. In its Fifth Affirmative Defense, Allstate affirmatively alleged that the Danylaks’ actually were made whole through the settlement with the tortfeasor, which entitled it to recover on its contractual subrogation right. In its Seventh Affirmative Defense, Allstate alleged that the Danylaks failed to protect Allstate’s contractual subrogation right. The Court concludes these are affirmative defenses.
Whether one views Allstate’s affirmative defenses 5 and 7 as true affirmative defenses or simply a denial of the Danylaks’ claim, though, the result is the same: the Danylaks did not attempt to come forward with summary judgment evidence demonstrating that that the Danylaks were not made whole. This failure to bring forward evidence is fatal to the Danylaks request for summary judgment as that was their initial burden. Estate of Githens ex rel. Seaman v. Bon Secours-Maria Manor Nursing Care Center, Inc., 928 So. 2d 1272, 1274 (Fla. 2d DCA 2006) [31 Fla. L. Weekly D1482a] (setting forth the standard); Board of Trustees of Internal Improvement Trust Fund v. Schindler, 604 So. 2d 569, 570 (Fla. 2d DCA 1992) (once an affirmative defense has been raised by a defendant, for a plaintiff to prevail on summary judgment the plaintiff also has the additional burden of either disproving or establishing the legal insufficiency of the affirmative defense).
The Court further notes that within the Danylaks’ summary judgment evidence are the Danylaks’ letters advising Allstate that “we do not honor your purported claim[.]” The Danylaks also told Allstate that “it is not for [Allstate] to decide whether [the Danylaks have] been made whole; hence any request for settlement details will be ignored.” These letters were written on the legally incorrect premise that “one can never be made whole where one has incurred costs and attorney fees to secure the settlement. See Travelers v. Meadows MRI, 900 So. 2d 676 (Fla. 4th DCA 2005) [30 Fla. L. Weekly D962c].” This evidence, of course, implicates these two affirmative defenses. While at trial Allstate will have the burden to demonstrate its affirmative defenses, the Danylaks in their summary judgment have the additional burden of either disproving the affirmative defenses or establishing that they are legally insufficient. E.g. Schindler, 604 So. 2d at 570.
Fourth and finally, the Danylaks contend that the Court did not read the uninsured motorist sections in pari materia with the MedPay section The Court agrees that a contract should be read as a whole. The Court also notes that it must apply the plain meaning of the contract. The MedPay subrogation language provides:
Subrogation Rights
When we pay, an insured person’s rights of recovery from anyone else becomes ours up to the amount we have paid. The insured person must protect these rights and help us enforce them.
(Emphasis in original). That language is unambiguous. The Court respectfully declines the Danylaks’ invitation for the Court to travel to another portion of the Allstate policy that is not implicated by the facts of this case, construe that other language, and use that construction to change or eliminate the plain meaning of the controlling words here.
Conclusion
The Danylaks rhetorical question and flourish best sums up their position:
Clearly, [the Danylaks] herein received an undifferentiated recovery from the tortfeasor, with no allocation as to past or future medical bills, or to intangible damages for pain and suffering. Plaintiffs had to pay their attorneys’ fees, costs, and a valid health care lien from their settlement. How then, as a matter of law and common sense, can the instant Plaintiffs be made whole from the settlement, and how can it be said med pay benefits constitute a double recovery?”
Rehearing motion, p.3, ¶4
The Court understands that the Danylaks disagree with the Court’s construction of the Meadows MRI case. Upon reconsideration, though, the Court continues its view that Meadows MRI does not stand for the proposition that a claimant in a third-party insurance case can never be made whole as a matter of law. Without that legal support providing a foundation for its summary judgment motion, the Danylaks are left with having to demonstrate factually that they were not made whole in their settlement with the third-party tortfeasor/Progressive. They did not attempt to do so in their motion.
As it relates to their expressed disdain for the summary judgment standard, the Court cannot read into the summary judgment standard a “common sense” element; and the Court suspects upon reflection the Danylaks would not suggest a change to the summary judgment standard. Regardless of whether the Danylaks are or are not seeking a change to the summary judgment standard, the Court is duty-bound by apply the standard established by higher courts. Estate of Githens, 928 So. 2d at 1274; Schindler, 604 So. 2d at 570. Like the Court, the Danylaks must comply with that standard if they wish to obtain summary judgment.
Certainly, should the parties wish to expedite this matter to the Second District Court of Appeal, they can enter into a factual stipulation that would permit the Court to enter a final summary judgment allowing for a quick appeal. Without such a stipulation, this case will proceed before this Court in normal fashion.
The Court denies Plaintiffs’ Motion for Rehearing and Reconsideration of this Court’s Order Rendered 6/25/2020 [DIN 54].
