5 Fla. L. Weekly Supp. 25a

Insurance — Contracts — Arbitration — Action by health care provider as assignee of benefits from insured involved in motor vehicle accident — Statute mandating that insurers include in policy for PIP benefits a provision for binding arbitration not unconstitutional — Health care provider, as assignee of insured, may be compelled to submit to binding arbitration, as lack of privity of contract is insignificant where provider voluntarily accepted assignment of benefits — Statute requires mandatory binding arbitration — Questions certified: Whether F.S. 627.736(5), which provides for arbitration of claim disputes between an insurer and a health care provider, is an unconstitutional infringement on a litigant’s right of access to the courts as guaranteed under Article I, Section 21 of the Florida Constitution? — Whether the arbitration provision of F.S. 627.736(5) mandates arbitration in the absence of a voluntary agreement between the parties? — Whether the arbitration provision of F.S. 627.736(5) requires an insurer and a health care provider to submit to mandatory binding arbitration if a dispute arises?

TAMPA BAY CHIROPRACTIC, INC. as Assignee of STEPHANIE ROMAIN, Plaintiff, vs. ALLSTATE INSURANCE COMPANY, an insurance company authorized to do business in Florida, Defendant. In the County Court in and for Hillsborough County, Civil Division. Case No. 97-8610SC, Division H. August 13, 1997. James M. Barton, II, Judge.

ORDER OF DISMISSAL, REFERRAL TO ARBITRATION AND CERTIFICATION OF GREAT PUBLIC IMPORTANCE

THIS CAUSE coming before the Court on Plaintiff’s Complaint to Compel Arbitration, or, in the Alternative, for Damages and the Court, having considered the record, heard argument of counsel, including Defendant’s objection to arbitration, and having determined that this Order be certified as one of great public importance, pursuant to Fla. R. App. P. 9.160,¹ makes the following

FINDINGS OF FACT

1. The instant case involves a dispute over payment of personal injury protection (PIP) benefits pursuant to a motor vehicle insurance policy held by Stephanie Romain with Defendant.

2. On December 5, 1996 Stephanie Romain was involved in a motor vehicle accident and sought medical care from Plaintiff.

3. Plaintiff, a Medical Services Provider, accepted an Assignment of Benefits from Ms. Romain, the insured, on December 18, 1996.

4. Plaintiff submitted bills totaling $1,188.40 to Defendant, which Defendant did not pay.

5. Plaintiff requested binding arbitration, pursuant to F.S. 627.736(5) (1995), by mail on April 24, 1997. Defendant rejected this request by mail on May 16, 1997.

6. Plaintiff’s complaint seeks an Order compelling binding arbitration, or, in the alternative, an award of damages for PIP benefits.

Based on the foregoing, the Court makes the following

CONCLUSIONS OF LAW

1. Access to the Courts

F.S. 627.736(5) (1995), states in part:

“Every insurer shall include a provision in its policy for personal injury protection benefits for binding arbitration of any claims dispute involving medical benefits arising between the insurer and any person providing medical services or supplies if that person has agreed to accept assignment of personal injury protection benefits.”

Since October 1, 1990, courts have reached different results in determining the constitutionality of the above-quoted statute. Article I, Section 21 of the Florida Constitution provides “the Courts shall be open to every person for redress of any injury, and justice shall be administered without sale, denial or delay.” The decision in Kluger v. White, 281 So.2d 1 (Fla. 1973) articulates the standard for permissible elimination of rights under the law. As long as a reasonable alternative to protect rights to redress injuries is available or the legislature shows some overpowering public necessity, the legislature may abolish the right. Arbitration has been found a reasonable alternative to the court system, as evidenced in case law and the Arbitration Code, CHAPTER 682, Florida Statutes (1995). See, Roe v. Amica Mutual Insurance, 533 So.2d 279 (Fla. 1988) (agreeing arbitration is a favored form of dispute resolution).

While no case to date has found the provision unconstitutional on its face or as applied, parties have argued that the statutory mandate, in the absence of a written agreement by the parties, functions as an unconstitutional denial of access. See, Advanced Orthopedic v. Bankers 3 Fla. L. Wkly. Supp. 673, 675 (Fla. 13th Cir. Ct. 1995) (declining to rule on constitutional question because decided on other grounds). As the Advanced Orthopedic decision states, while arbitration is a reasonable alternative where the parties have chosen together to arbitrate and therefore forego the relief available in litigation, the underlying policy favoring arbitration disappears when the conscious choice to arbitrate has not been made by the parties.

To date, the most comprehensive interpretation of the statute is the recent decision by the Third District Court of Appeal in Orion Insurance Company v. Magnetic Imaging Systems, 22 Fla. L. Wkly. D1595 (Fla. 3rd DCA 1997) where the Court reasoned that the medical provider’s voluntary acceptance of an assignment of benefits from the insured creates new rights. This new right to seek payment through assignment permits arbitration which would be a reasonable alternative to the judicial process.

2. Privity of Contract

Even assuming the constitutionality of F.S. 627.736(5), the issue remains whether a medical provider, who has neither signed nor drafted any contract providing for the arbitration of disputes with the insurer, may be compelled to submit to binding arbitration. Advanced Orthopedic held that since there existed no evidence of the medical provider’s intent to arbitrate and the policy did not expressly bind the assignees, the medical provider could not be required under the statute to submit to binding arbitration.

State Farm Mutual Automobile Ins. Co. v. Gonnella, 677 So. 2d 1355 (Fla. 5th DCA 1996) held to the contrary. However, the facts of Gonnella involved the insured, who had actually signed the agreement requiring arbitration. Here, the medical provider did not sign any such agreement.

The Court in Orion held that the medical provider was bound by the statute. In the insurance arena medical services providers have been recognized as third party beneficiaries. See Orion, supra at 1596 (citing Pasteur Health Plan Inc. v. Slazar, 658 So.2d 543 (Fla. 3rd DCA 1995) and Vencor Hospitals South Inc. v. Blue Cross and Blue Shield of Rhode Island, 929 F.Supp. 420 (S.D.Fla. 1996)). Arbitration mandates have been binding on third party beneficiaries in other cases, whether the beneficiaries are family members (Terminex v. Ponzio, 693 So.2d 104 (Fla. 5th DCA 1997)) or groups contractually intended to benefit. The legislative intent to bind medical providers does appear clear where the statute provides for the arbitration of disputes between the insurer and a “health care provider.” The fact the statutory provision has been in effect almost seven years further serves as notice to a medical services provider that arbitration is required.

The lack of privity of contract becomes insignificant because the provider voluntarily accepted an assignment of benefits. Orion, supra, at 1597. Advanced Orthopedic specifically rejects this conclusion and indicates that the policy must specifically designate that the assignee will be bound by the arbitration requirement once an assignment has been made. This court is required to follow the Orion decision on this question.

3. Mandatory or voluntary?

The question arises whether voluntary or mandatory arbitration is intended by the statute. Under F.S. 44.303 a court may order non-binding arbitration, while binding arbitration must be expressly agreed to by the parties. Advanced Orthopedic found F.S. 627.736(5) ambiguous as to whether voluntary or mandatory arbitration was required. Advanced Orthopedic, supra, at p. 674. Neither the plain language nor the legislative history indicates a preference by the legislature one way or the other. The Advanced Orthopedic opinion in dicta points out that while the statute requires the insurer to include a provision in the policy for binding arbitration, the statute does not indicate whether voluntary or mandatory binding arbitration is intended. The Court reasoned that requiring mandatory binding arbitration would deny access to the Courts and therefore would be unconstitutional under Article I, Section 21 of Florida Constitution. The Court emphasized that the statute only requires insurers to provide for the arbitration provision in the policy. Consequently, the Court held that the statute did not require binding arbitration, but could only provide for voluntary binding arbitration.

The Orion decision rejects the Advanced Orthopedic decision on this issue and appears to interpret the statute as requiring mandatory binding arbitration. The legislature clearly advocated arbitration as the method of dispute resolution through this provision and the court should therefore comply.

4. Conclusion

Based on the foregoing, the Court finds that F.S. 627.736(5) is constitutional and does not improperly deny access to the courts. The court further concludes that the statute requires mandatory binding arbitration between an insurer and a health care provider/assignee even in the absence of an express agreement between the parties.

For courts in the Second District the issues posed by F.S. 627.736(5) occur often. Faced with contradictory rulings, county and circuit courts have wrestled with the issues considered herein. See, Nationwide Mutual Fire Ins. Co. v. American Spine & Rehabilitation Institute, No. 95-7740 (Fla. 13th Cir. Ct. September 6, 1996).²

The Court orders the parties to binding arbitration, dismisses with prejudice Plaintiff’s claim for damages, and reserves jurisdiction on the issue of attorney’s fees and costs.

CERTIFICATION OF ISSUES OF GREAT PUBLIC IMPORTANCE

Based on the foregoing, the Court certifies the following issues as being ones of GREAT PUBLIC IMPORTANCE:

1. “Whether F.S. 627.736(5), which provides for arbitration of claim disputes between an insurer and a health care provider, is an unconstitutional infringement on a litigant’s right of access to the courts as guaranteed under Article I, Section 21 of the Florida Constitution?”

2. “Whether the arbitration provision of F.S. 627.736(5) mandates arbitration in the absence of a voluntary agreement between the parties?”

3. “Whether the arbitration provision of F.S. 627.736(5) requires an insurer and a health care provider to submit to mandatory binding arbitration if a dispute arises?”

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¹The Court is aware of the recent decision in State Farm Mutual Auto. Ins. Co. v. U.S.A. Diagnostics, Inc., 22 Fla. L. WL. D1782 (Fla. 4th DCA 1997) where the Court held that an Order compelling arbitration was not the type of order contemplated by R. 9.160, Fl. R. App. P. which allows certification of non-final orders only in criminal cases. An order which merely determines a party’s entitlement to arbitration is a non-final order. Fl. R. App. P. 9130 (a)(3)(C)(v); Harris v. State Farm Mut. Auto Ins. Co., 283 So. 2d 147 (Fla. 2d DCA 1973).

Notwithstanding the above, the instant order falls within the ambit of Fl. R. App. P. 9.160 because of the dismissal of Plaintiff’s additional claim for damages. The dismissal of Plaintiff’s complaint for damages is a final order which allows the appellate court to review other aspects of the dismissal order. Public Health, etc., v. M.R. Harrison Const., 415 So. 2d 756, ftnote. 1 (Fla. 3rd DCA 1982).

²A copy of the Nationwide decision is attached as Appendix “A”.

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APPENDIX “A”

NATIONWIDE MUTUAL FIRE INSURANCE COMPANY, Appellant, v. AMERICAN SPINE & REHABILITATION INSTITUTE, Appellee. 13th Judicial Circuit in and for Hillsborough County, Civil Division. Case No. 95-7740. September 6, 1996. Sam D. Pendino, Judge. Counsel: Nancy A. Lauten and Gregory L. Evans of Fowler, White, Gillen, Boggs, Villareal & Banker, P.A., Tampa, For Appellant. Wendy Coxhead, Tampa, For Appellee.

ON APPEAL FROM THE COUNTY COURT OF THE THIRTEENTH JUDICIAL CIRCUIT IN AND FOR HILLSBOROUGH COUNTY CASE NO.: 95-8950, JUDGE JAMES M. BARTON, II, PRESIDING

Appellant, Nationwide Mutual Fire Insurance Company [“Nationwide”], seeks review of the County Court’s order referring its dispute with American Spine & Rehabilitation Institute [“American Spine”] to non-binding arbitration. This Court has jurisdiction to review the lower court’s order pursuant to Fla. R. App. P. 9.130(a)(3)(C)(v). For the reasons expressed below, the court’s order is reversed and remanded for entry of an order referring the matter to binding arbitration.

Palma Dodd was injured in an automobile accident. At the time of the accident, Ms. Dodd was insured by Nationwide and was entitled to personal injury protection benefits. American Spine treated Dodd for her injuries, and on November 30, 1994, she executed an Assignment of Cause of Action in favor of American Spine, allowing it to receive direct payment from Nationwide. When a dispute arose between American Spine and Nationwide with respect to payment of outstanding billings, American Spine filed suit, in its own name, against Nationwide. Nationwide filed a Motion to Dismiss and/or Motion to Compel Arbitration and Stay Court Proceedings based on section 627.736(5), Fla. Stat.,¹ and a corresponding provision in the insurance policy.² Nationwide contended that the lower court lacked subject matter jurisdiction over the dispute because American Spine had accepted an assignment of the insured’s rights and benefits under the insuring agreement, and that the policy, as well as section 627.736(5), Fla. Stat., required binding arbitration of any PIP claim dispute between medical providers who accepted an assignment of benefits and Nationwide.

The lower court granted Nationwide’s motion in part, referring the case to non-binding arbitration. The court, citing Advanced Orthopedic Institute v. Bankers Ins. Co., 3 Fla. L. Weekly Supp. 673 (13th Jud. Cir. June 30, 1995), held that because the Nationwide insurance policy provided that PIP disputes between the insured and insurer should be referred to mediation, not arbitration, “the attempt to require health care provider assignees to submit to binding arbitration is invalid.” The court also held that American Spine’s acceptance of the assignment from Ms. Dodd did not obligate it to proceed to binding arbitration; rather, that assignment merely recognized that in any legal dispute with Nationwide, American Spine had the “right to file suit or engage in arbitration in the name of Plaintiff and/or insured. Such language does not explicitly or implicitly construe an agreement to refer this case to binding arbitration.”

After the lower court entered its order, the Fifth District Court of Appeal issued State Farm Mutual Automobile Ins. Co. v. Gonnella, 21 Fla. L. Weekly D1799 (Fla. 5th DCA Aug. 9, 1996), a case which is virtually on all fours with the instant case. There, the Gonnellas executed an assignment of benefits in favor of Dr. Tan, who had treated them for their injuries, so she would be allowed to receive direct payment from State Farm. Like here, a dispute arose between State Farm and Dr. Tan regarding claims for payment. State Farm ultimately demanded arbitration, but before the arbitration proceedings concluded, the Gonnellas executed a revocation of the assignment of benefits to Dr. Tan. The Gonnellas then filed a suit in county court seeking the amounts allegedly due Dr. Tan. Although the county court dismissed the action, the circuit court, acting in its appellate capacity, ruled that the revocation of the assignment obviated “the requirement for binding arbitration under both section 627.736(5) and the insurance policy.” 21 Fla. L. Weekly at D1800.

On certiorari review, the Fifth District rejected the Gonnellas’ argument that they were entitled to revoke the assignment of benefits and, therefore, “regained the right to sue for those benefits upon execution of the revocation, and that section 627.736(5) and the policy provision requiring arbitration no longer apply.” Id. The court stated:

The legislative intent is clear. Section 627.736(5) requires arbitration to resolve disputes involving medical benefits. Moreover, section 682.02, Florida Statutes (1995), provides that a written agreement to submit a controversy to arbitration is valid, enforceable and irrevocable.” In addition to these statutory directives, by accepting the terms of their policy, the Gonnellas specifically agreed that, once they assigned their personal injury protection benefits to a medical provider, disputes between that provider and State Farm would be resolved by binding arbitration. The Gonnellas’ interpretation would render the statutory and policy provisions requiring arbitration meaningless.

21 Fla. L. Weekly at D1800. See also U.S. Security Ins. Co. v. Magnetic Imaging Systems, 21 Fla. L. Weekly D1852 (Fla. 3d DCA Aug. 14, 1996) (arbitration provision mandated by statute for claims involving medical benefits should be considered part of the insurance policy even though it is not included in the policy as written).

In the present case, as in Gonnella, by accepting the terms of the policy, Ms. Dodd specifically agreed that once she assigned her personal injury protection benefits to a medical provider, any disputes between the provider and Nationwide would be resolved by binding arbitration. Also as in Gonnella, any other interpretation would render the statutory provisions of section 627.736(5) and section 682.02, as well as the policy provisions requiring arbitration, meaningless. Because this Court is bound to follow the Fifth District’s decision, it must therefore reverse the order under review and remand for entry of an order referring the case to binding arbitration. Pardo v. State, 596 So. 2d 665 (Fla. 1992) (decisions of other district courts of appeal are binding on trial court); In re E.B.I., 544 So. 2d 333 (Fla. 2d DCA 1989) (in absence of conflicting appellate decision, circuit courts of this district are obligated to apply the controlling case law announced by another district).

REVERSED and REMANDED for further action consistent with this opinion.

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¹Section 627.736(5) provides in pertinent part:

Every insurer shall include a provision in its policy for personal injury protection benefits for binding arbitration of any claims dispute involving medical benefits arising between the insurer and any person providing medical services or supplies if that person has agreed to accept assignment of personal injury protection benefits. The provision shall specify that the provisions of chapter 682 relating to arbitration shall apply. The prevailing party shall be entitled to attorney’s fees and costs.

²This portion of the insurance policy provides:

Arbitration/Assignment of Benefits

If a dispute arises between us and any person who, as a provider of medical services and supplies, has agreed to accept assignment of Personal Injury Protection benefits, the dispute shall be settled by binding arbitration. The provisions of Chapter 682 relating to arbitration shall apply.

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