28 Fla. L. Weekly Supp. 328a

Online Reference: FLWSUPP 2804GARL

Insurance — Personal injury protection — Answer — Amendment — Motion to amend answer to raise allegations of upcoding and deficient record-keeping is denied where proposed amendment is contrary to legislative intent to have those issues addressed and resolved prior to suit, medical provider will be severely prejudiced by amendment that would deprive it of opportunity to cure deficiencies in records and coding prior to suit, amendment would be futile, and insurer waived defenses and abused privilege to amend by failing to plead defenses known to it prior to suit during six years of litigation

SILVERLAND MEDICAL CENTER, LLC., a/a/o Joeanna Garland, Plaintiff, v. UNITED AUTOMOBILE INSURANCE COMPANY, Defendant. County Court, 11th Judicial Circuit in and for Miami-Dade County. Case No.2014-002599-CC-25, Section CG03. May 12, 2020. Patricia Marino Pedraza, Judge. Counsel: Majid Vossoughi, Majid Vossoughi, P.A., Miami, for Plaintiff. Sherria Williams, House Counsel for United Auto. Ins. Company, Miami Gardens, for Defendant.

ORDER DENYING DEFENDANT’S MOTION TO FILE AMENDED ANSWER

THIS CAUSE came before the Court on May 7, 2020 on Defendant’s Motion to File Amended Answer.

The parties were represented by counsel at the hearing who presented arguments to this Court. Sherria Williams, Esq. appeared on behalf of the Defendant, and Majid Vossoughi, Esq. appeared on behalf of the Plaintiff.

The Court having reviewed Defendant’s motion, Plaintiff’s Amended Memorandum of Law in Opposition to Defendant’s Motion to File Amend Answer, the entire Court file, the relevant legal authorities, and having heard argument from counsel and being otherwise fully advised in the premises, hereby enters this Order DENYING Defendant’s Motion to File Amended Answer and makes the following factual findings and conclusions of law.

BACKGROUND & FACTUAL FINDINGS

Plaintiff rendered treatment to the claimant from August 9, 2011 through November 28, 2011 in relation to an automobile accident and submitted a claim for payment of Personal Injury Protection (“PIP”) benefits to Defendant.

On February 21, 2014, Plaintiff filed the instant lawsuit alleging breach of contract and seeking payment of unpaid PIP benefits. The recommended resolution standard for this action is eighteen (18) months. Fla. R. Jud. Adm. 2.250(a)(1)(B).

On June 6, 2014 Defendant served its Answer and Affirmative Defenses to Plaintiff’s Complaint alleging payment and a failure on the part of Plaintiff to timely notify Defendant as defenses to Plaintiff’s Complaint.

On April 22, 2015 Defendant secured a peer review report from Michael Weinreb, D.C. pursuant to Fla. Stat. 627.736(7)(a).

On May 15, 2015 Defendant served its Motion to File Amended Answer. This motion sought to raise allegations of deficiencies within Plaintiff’s “medical records” and/or “treatment records” (“record keeping defense”) as well as an allegation that Plaintiff has “up coded” CPT code 97032 (“upcoding defense”).

Defendant did not set its Motion to File Amended Answer for a hearing until year 2020; that is, Defendant sat on its hands for five (5) years before bringing its motion before the Court.

Defendant argues that its motion to amend ought to be granted due to Florida’s liberal policy in favor of granting amendments. Defendant also argues that since this matter has not been set for trial there is no prejudice to Plaintiff in allowing the amendment.

Plaintiff argues that given the nature of Defendant’s proposed defenses, as applied to the PIP statute, Defendant’s motion to amend ought to be denied. Plaintiff argues prejudice, futility, abuse of the privilege to amend, and waiver in support of its argument that Defendant’s motion should be denied.

LEGAL ANALYSIS

Florida Rule of Civil Procedure 1.190 (a) provides that “[l]eave of court shall be given freely when justice so requires.” Interpreting this rule, Florida precedent provides that a denial of a motion is warranted where (1) the amendment would be futile, (2) the privilege to amend the pleading has been abused, or (3) the amendment would prejudice the opposing party. Yun Enterprises, LTD. v. Graziani, 840 So. 2d 420 (Fla. 5th DCA 2003) [28 Fla. L. Weekly D781a].

Fla. Stat. 627.736(7)(a), under title “MENTAL AND PHYSICAL EXAMINATION OF INJURED PERSON; REPORTS”, allows an insurance company to obtain reports from medical professionals opining on reasonableness, relatedness, and medical necessity of treatment rendered to its insured.

Fla. Stat. 627.736(6)(b),¹ under title “DISCOVERY OF FACTS ABOUT AN INJURED PERSON; DISPUTES”, provides an insurer with an express statutory mechanism for obtaining medical records and/or information from a medical provider so as to authenticate a claim prior to making payment. Once such a request is made the claim of the medical provider is not “overdue” until it has complied with the request. This is commonly referred to as a (6)(b) request.

Fla. Stat. 627.736(5)(b)(1)(e),² under title “CHARGES FOR TREATMENT OF INJURED PERSONS”, also provides an insurer with an express statutory mechanism for addressing coding issues prior to making payment. The statute permits an insurer to make coding changes but requires the insurer to first contact the medical provider so as to discuss the reasons for the insurer’s change and the medical provider’s reason for the coding or have documented in its claim file that it made a reasonable good faith effort to do so.

“As always, legislative intent is the polestar that guides a court’s inquiry under the No-Fault Law, including the PIP Statute.” Geico General Ins. Co. v. Virtual Imaging Services, Inc., 141 So. 3d 147, 154 (Fla. 2013) [38 Fla. L. Weekly S517a]. “Such intent is derived primarily from the language of the statute. Where the wording of the Law is clear and amenable to a logical and reasonable interpretation, a court is without power to diverge from the intent of the Law.” Id.

In the present case, in addition to its statutorily prescribed purpose, Defendant seeks to utilize the report it obtained from Michael Weinreb, D.C. pursuant to Fla. Stat. 627.736(7)(a), so as to raise affirmative defenses relating to Plaintiff’s medical records and coding.

Setting aside whether Defendant is permitted to utilize a report obtained under Fla. Stat. 627.736(7)(a) so as to attack the medical records and coding of a medical provider post-suit, it is clear that the plain language of the PIP statute reflects a legislative intent and mechanism for medical records and coding issues to be addressed and resolved by an insurer at the claims stage and prior to the institution of litigation. This is so since the statute provides that a claim is not “overdue” until a provider complies with a (6)(b) request and further conditions any changes to a provider’s coding by requiring communications with the provider prior to effectuating any such changes.

In the present case, to allow Defendant’s proposed amendment flies in the face of the legislative intent to have issues pertaining to medical records and/or coding addressed and resolved prior to suit.

“Under Rule 1.190, a test of prejudice to the [party opposing an amendment] is the primary consideration in determining whether a motion for leave to amend should be granted or denied”. Lasar Mfg. Co. v. Bachanov, 436 So.2d 236, 237-38 (Fla. 3d DCA 1983); Leavitt v. Garson, 528 So.2d 108, 110 (Fla. 4th DCA 1988); Newman v. State Farm Mut. Auto. Ins. Co., 858 So.2d 1205, 1206 (Fla. 4th DCA 2003) [28 Fla. L. Weekly D2590a].

As more fully set forth below, this Court finds that Plaintiff will be severely prejudiced by Defendant’s belated proposed amendment given the statutory scheme outlined above, as applied to the facts of this case.

Defendant did not make a (6)(b) request or raise any issues with Plaintiff’s medical records prior to institution of this action. Likewise, Defendant did not contact the Plaintiff to discuss any coding issues prior to suit. In sum, the facts of this case reflect that Defendant did not take advantage of the statutory mechanisms established by the legislature for addressing any purported medical record and/or coding issues prior to suit. Instead, Defendant sought to raise these issues only after obtaining a peer review report post-suit.

The statutory scheme reflects that the legislature has provided the insurer with a remedy to obtain and/or address any issues pertaining to medical records and/or coding issues prior to suit. In doing so, it has also provided the medical provider with an equal opportunity to cure any alleged deficiencies pertaining to medical records and/or coding issues. These mechanisms were created by the legislature to facilitate “swift and automatic” payment of PIP benefits.

To allow Defendant to now raise its purported defenses serves to circumvent the express statutory scheme put in place by the legislature. More importantly, allowing the Defendant to circumvent the statutory scheme is prejudicial to the Plaintiff since it has been deprived of a legislatively crafted opportunity to cure any deficiencies in its medical records and/or coding prior to suit, thereby securing “swift and automatic” payment of PIP benefits.

The Court also finds that Plaintiff will be prejudiced by Defendant’s belated amendment as it has now expended time and resources prosecuting this matter and rejected a prior offer of judgment served by the Defendant premised on the issues as framed by the pleadings. See e.g. Saunders v. Goulard, 569 So.2d 1305, 1306-07 (Fla. 5th DCA 1990).

Furthermore, this Court finds that there is merit to Plaintiff’s argument that Defendant’s belated proposed amendment should be denied as futile. “A proposed amendment is futile if it is insufficiently pled or is insufficient as a matter of law.” Armiger v. Associated Outdoor Clubs, Inc., 48 So.3d 864, 871 (Fla. 2d DCA 2010) [35 Fla. L. Weekly D2194a].

Defendant’s “upcoding defense” is futile since the facts of this case reflect that the Defendant failed to contact the Plaintiff to discuss any coding issues as otherwise required by the statute to avail itself of the defense. In fact, Defendant neither alleges compliance with the statutory pre-requisites nor can same be alleged since the defense is premised upon the post-suit peer review of Michael Weinreb, D.C.

Defendant’s “record keeping” defense is likewise futile. Defendant’s proposed defense states merely a legal conclusion alleging a failure to comply with certain administrative requirements without setting forth any factual basis in support of same. “Certainty is required when pleading affirmative defenses and pleading conclusions of law unsupported by allegations of ultimate fact is legally insufficient.” Cady v. Chevy Chase Sav. & Loan, Inc., 528 So. 2d 136, 138 (Fla. 4th DCA 1988); see also Zito v. Washington Federal Savings & Loan Assoc. of Miami Beach, 318 So. 2d at 176 (stating that “the requirement of certainty will be insisted upon in the pleading of a defense”).

Finally, “[a]ffirmative defenses required to be defensively pleaded under Rule 1.110(d) are waived if not timely raised by motion to dismiss or responsive pleading.” See Florida Civil Procedure, 2006 Edition, Bruce J. Berman, 140.11[1][d]; Fla. R. Civ. Pro. 1.140(h)(1) (“A party waives all defenses . . . that the party does not present either by motion . . . or, if the party has made no motion, in a responsive pleading . . .”) (emphasis added); See Mangum v. Susser, 764 So.2d 653, 654-55 (Fla. 1st DCA 2000) [25 Fla. L. Weekly D1216a]; see also Wolowitz v. Thoroughbred Motors, Inc., 765 So.2d 920, 923 (Fla. 2d DCA 2000) [25 Fla. L. Weekly D2033a] (defense of accord and satisfaction waived pursuant to R. 1.140(h) since not pled as a defense as otherwise required under R. 1.110(d)); Fisher v. Fisher, 613 So.2d 1370 (Fla. 2d DCA 1993) (defense of laches waived pursuant to R. 1.140(h) since not pled as a defense as otherwise required under R. 1.110(d)); Miami Elec. Ctr., Inc. v. Saporta, 597 So.2d 903 (Fla. 3d DCA 1992) (defense of illegality waived pursuant to R. 1.140(h) since not pled as a defense as otherwise required under R. 1.110(d)); Kersey v. City of Rivera Beach, 337 So.2d 995 (Fla. 4th DCA 1976) (defense of estoppel waived pursuant to R. 1.140(h) since not pled as a defense as otherwise required under R. 1.110(d)); St. Paul Fire & Marine Ins. Co. v. Walsh, 501 So.2d 54 (Fla. 4th DCA 1987) (holding that settlement is an affirmative defense that ought to be pled or waived pursuant to R. 1.140(h)).

Binding decisional precedent holds that waiver is “the voluntary and intentional relinquishment of a known right or conduct which implies the voluntary and intentional relinquishment of a known right”. Raymond James Financial Services v. Steven W. Saldukas, 896 So. 2d 707 (Fla. 2005) [30 Fla. L. Weekly S115a].

Defendant has been in possession of Plaintiff’s medical record and bills for the subject treatment since year 2011. Thus, Defendant had all the documents it needed to have previously asserted the defenses prior to this action even being filed. Nevertheless, Defendant failed to raise its “record keeping” and “coding” defenses at inception of this case as is otherwise required by the applicable rules of procedure. Defendant declined to utilize the mechanisms provided in Fla. Stat. 627.736(6)(b) and Fla. Stat. 627.736(5)(b)(1)(e) thereby preventing Plaintiff from having the opportunity to address and cure any issues with its “record keeping” and/or “coding” prior to suit. Moreover, although Defendant filed its motion to amend and peer review with the Court in 2015, Defendant did not bring its motion before the Court for the next five (5) years instead continuing to travel under the issues as originally framed by the pleadings.

Based on the foregoing, this Court finds that Defendant, by its own conduct, has waived its right to raise its proposed defenses in this case.

For similar reasons, the Court finds that Defendant has abused the privilege to amend since “the amendment [was] sought extremely late in the proceedings, without justification for the delay, [and] the facts were long known” to the Defendant. See Florida Civil Procedure, 2006 Edition, Bruce J. Berman, 190.3[3][b] (noting that there appears to be two kinds of circumstances that fall under the “abuse of privilege to amend” category: “one, where a party has already been given numerous, and arguably sufficient, opportunities to amend; and another, where the amendment is sought extremely late in the proceeding, without justification for the delay, as where the facts were long known to the party belatedly seeking leave”); see also Wooten v. Wooten, 213 So.2d 292 (Fla. 3d DCA 1968) (denied proposed amendment to complaint seeking to add cause of action at late stage of proceedings where plaintiff knew of underlying facts before the complaint was even filed); Horacio O. Ferrea N. Am. Div., Inc. v. Moroso Performance Prod., Inc., 553 So.2d 336 (Fla. 4th DCA 1989) (denied leave to add setoff defense three days before trial where previously known to defendant and prejudicial to plaintiff); United States v. State, 179 So.2d 890 (Fla. 3d DCA 1965) (denied impleader amendment where the movant knew for more than two years that the party sought to be impleaded had an interest); Aydelott v. Greenheart (Demerara) Inc., 162 So.2d 286 (Fla. 2d DCA 1964) (proposed counterclaim “was not seasonably filed” since “the matters attempted to be raised by the tardy counterclaim were essentially within the knowledge of the defendant at the time he filed his answer”); Mrmich v. Switzer, 553 So.2d 1308, 1309 (Fla. 3d DCA 1989) (affirming denial of amendment and finding no abuse of discretion where “the action had been pending nearly five years” and that “no valid excuse was offered below for waiting this long period”).

Therefore, based on this Court’s analysis set forth above, it is

ORDERED AND ADJUDGED that Defendant’s Motion to File Amended Answer is DENIED.

__________________

¹Fla. Stat. 627.736(6)(b) provides in pertinent part:

Every. . .clinic. . .providing. . .services. . .shall, if requested to do so by the insurer. . .furnish forthwith a written report of the history, condition, treatment, dates, and costs of such treatment of the injured person and why the items identified by the insurer were reasonable in amount and medically necessary, together with a sworn statement that the treatment or services rendered were reasonable and necessary with respect to the bodily injury sustained and identifying which portion of the expenses for such treatment or services was incurred as a result of such bodily injury, and produce forthwith, and permit the inspection and copying of, his or her or its records regarding such history, condition, treatment, dates, and costs of treatment

. . .

If an insurer makes a written request for documentation or information. . .the amount or the partial amount which is the subject of the insurer’s inquiry shall become overdue. . .within 10 days after the insurer’s receipt of the requested documentation or information. . .

²Fla. Stat. 627.736(5)(b)(1)(e) provides in pertinent part:

To facilitate prompt payment of lawful services, an insurer may change codes that it determines to have been improperly or incorrectly upcoded or unbundled, and may make payment based on the changed codes, without affecting the right of the provider to dispute the change by the insurer, provided that before doing so, the insurer must contact the health care provider and discuss the reasons for the insurer’s change and the health care provider’s reason for the coding, or make a reasonable good faith effort to do so, as documented in the insurer’s file.