6 Fla. L. Weekly Supp. 335a
Insurance — Personal injury protection — Attorney’s fees — Where insured brought action against insurer for balance of medical bills which had not been paid because they allegedly exceeded usual and customary charges, and insurer filed third-party complaint against medical services providers which was dismissed when providers agreed to write off the balance due and to refrain from seeking payment from insured, insurer’s motion to dismiss insured’s complaint was prematurely granted on basis of mootness because controversy over insured’s entitlement to attorney’s fees was still live — If assignments were properly executed and in effect at time suit was filed, insured lacked standing because a statutory procedure for binding arbitration controlled the dispute — If there were no assignments in existence at time complaint was filed, insured would be entitled to attorney’s fees because subsequent agreements between medical providers and insurer were, in effect, a settlement of the dispute over the alleged overcharged bills
BETTY J. SHACKELFORD, Appellant, vs. OLD DOMINION INSURANCE COMPANY, Appellee. 20th Judicial Circuit in and for Lee County. Appeal Case No. 95-3311 AP. Lower Case No. 93-1439 CC. Opinion filed January 20, 1999. Appeal from the County Court for Lee County; John W. Dommerich, Judge. Counsel: Mark Norden, P.A., Fort Myers, for Appellant. Cora Cisneros Molloy, Troy & Yeslow, P.A., Fort Myers, for Appellee.
This cause came before the court on appeal from a final order granting Old Dominion Insurance Company’s Motion to Dismiss. The Appellant, Shackelford, had a policy of insurance for no-fault personal injury protection with the Appellee, Old Dominion Insurance Company (hereinafter ODIC). On November 13, 1992, during the policy period, Shackelford was in an automobile accident in which she sustained injuries. On May 24, 1993 Shackelford filed a Complaint against ODIC in which she alleged medical payments were overdue and that ODIC had wrongfully denied and refused to pay personal injury protection (PIP) benefits. The Complaint further alleged that ODIC had breached its duty under the contract of insurance to pay benefits and asked the court to award Shackelford prejudgment interest, costs and attorney’s fees.
The overdue payments were the result of reductions made by ODIC in medical bills submitted by Neurology Associates, Emergency Physicians of Lee Memorial Hospital, and Stevenson Physical Therapy. ODIC claims that the medical bills were properly reduced because the charges were in excess of the reasonable, customary and usual charges for the medical services provided. See, Section 627.736(5) Fla. Stats. (1992) .
At the request of ODIC, Shackelford underwent an Independent Medical Examination on June 2, 1993. The Doctor concluded that Shackelford did not require any additional treatment and had reached maximum medical improvement. Based on this report, ODIC terminated PIP benefits for medical bills incurred after June 28, 1993, more than a month after the Complaint was filed.
Despite the report, Shackelford continued to submit claims for lost wages and medical treatment rendered after June 28, 1993. PIP benefits were subsequently reinstated and paid to Shackelford up to the $10,000 policy limit, although the overdue medical payments sued upon in the Complaint were never paid by ODIC. Shackelford never amended or revised her Complaint to present an additional claim for the termination of PIP benefits which had occurred after the Complaint was filed.
ODIC subsequently filed a Third-Party Complaint against the above mentioned medical providers. The trial court granted leave to file the Third-Party Complaint based upon the authority of American Vehicle Ins. Co. v. Alessi, No. 93-1558-CI-88A, Slip Op. (Fla. 6th Cir. Ct. Nov. 15, 1993). In Alessi, the court stated that according to section 627.736(5), if a medical provider has agreed to accept assignment of personal injury protection benefits, he thereby agrees to submit to binding arbitration with an insurer if a dispute arises regarding the amount billed for treatment. Id. The court stated it was the defendant insurance company’s responsibility to file a Third-Party Complaint against the medical providers or move to join the medical providers as an indispensable party. Id.
After the Third Party Complaint was filed, affidavits were filed on the behalf of Neurology Associates and Stevenson Physical Therapy wherein it was stated that the amounts previously reduced would be waived and written off and that payment would not be sought from Shackelford. Lee Memorial Hospital filed a motion to dismiss in which the same intentions were expressed. Based on this, the lower court dismissed the Third Party Complaint. ODIC then moved for dismissal, arguing that the issues presented in Shackelford’s Complaint were rendered moot. The trial court determined that all issues in the Complaint had been rendered moot and that there were no further issues regarding reductions and the reasonable and necessary nature of the medical treatments to be determined by the jury. The trial court also stated there was no valid cause of action for the termination of PIP benefits at the time the Complaint was filed and that Shackelford could not now recover on a cause of action that might have accrued after the institution of the original suit. The Final Judgment dismissed the action with prejudice to all parties including the (3) Third-Party Defendants and stated that Betty J. Shackelford shall take nothing in this action.
Shackelford seeks to have the dismissal reversed in order to be awarded attorney’s fees. See, Section 627.428 Fla. Stats. (1991). The Supreme Court has construed Section 627.428 to award attorney’s fees where an insurer agrees to settle a disputed case prior to judgment and pays the claim. Wollard v. Lloyd’s and Cos. of Lloyd’s, 439 So.2d 217 (Fla. 1983). An insurer’s payment of a claim has been deemed the functional equivalent of a confession of judgment or a verdict in favor of the insured. Id. ODIC argues that it has not paid the amounts which were reduced and which were the subject of the Complaint, nor has it settled any claims raised in the Complaint.
Shackelford never amended her Complaint to include the facts of the subsequent termination of PIP benefits by ODIC. “The general rule is that the right of a complainant to the relief prayed must be determined according to the facts existing at the time the original bill was filed.” Merideth v. Long, 119 So. 114, 115 (Fla. 1928). If a plaintiff had no valid cause of action on the facts existing at the time of filing suit, the defect cannot ordinarily be remedied by the acquisition or accrual of one while the suit is pending. Id. Every action of a civil nature shall be deemed commenced when the complaint or petition is filed. Fla. R. Civ. P. 1.050.
ODIC reinstated PIP benefits, which would be a confession of judgment but for the fact that PIP benefits were not terminated until after the suit was filed. Therefore, the reinstatement of PIP benefits was not a confession of judgment on the Complaint based on the facts in existence at the time it was filed. Shackelford cannot recover attorney’s fees on a cause of action that accrued after the institution of the suit, which was never amended to reflect the subsequent termination of PIP benefits. The appellate court will only look at issues presented by the facts in evidence that had accrued prior to the filing of the complaint.
The medical provider’s agreements to waive the disputed amounts is the only action on which attorney’s fees could be awarded. The Florida Supreme Court has stated that Section 627.428 is meant to discourage insurance companies from contesting valid claims and to reimburse successful insures for their attorney’s fees when they are compelled to defend or to sue, to enforce their rights under the insurance policy. Insurance Co. Of North America v. Lexow, 602 So.2d 528 (Fla. 1992). The settlement of the dispute between the Third Party defendants and ODIC was tantamount to a settlement of Shackelford’s claim, which was only accomplished through a suit that she was compelled to bring to enforce her rights under the insurance policy.
The trial court determined that all issues in the Complaint had been rendered moot. “An issue is moot when the controversy has been so fully resolved that a judicial determination can have no actual effect.” Godwin v. State, 593 So.2d 211, 212 (Fla. 1992). “A case is `moot’ when it presents no actual controversy or when the issues have ceased to exist.” Id. But, “an otherwise moot case will not be dismissed if collateral legal consequences that affect the rights of a party flow from the issue to be determined.” Id.
The matter of attorney’s fees is a collateral legal consequence that affects the rights of the Appellant. Because this issue is still at controversy and was never resolved, the Motion to Dismiss on grounds of mootness was erronous. The Appellant still has a “live” issue to be determined and has a legally cognizable interest in the outcome. See, Powell v. McCormack, 395 U.S. 486 (1969).
In order for the attorney’s fees issue to be resolved a determination has to be made as to whether there was an actual case and controversy in existence when Shackelford filed her Complaint. If assignments were properly executed and in effect, then Shackelford did not have standing to sue for payment of the reduced benefits because a statutory procedure for binding arbitration controlled the dispute. See, Section 627.736(5) Fla. Stats. (1992). If Shackelford never originally had standing to sue for the payment of benefits, then she has no right to attorney’s fees. If there were no assignments in existence at the time the Complaint was filed, then Shackelford should be awarded attorney’s fees because the subsequent agreements made between her medical providers and ODIC were in effect a settlement of the dispute over the alleged overcharged bills.
In order for Shackelford’s argument to succeed her Complaint must have set forth a valid cause of action for breach of contract at the time it was filed. To determine this, an actual case and controversy had to have existed at that time. In other words, there had to have been assignments in existence at the time the Complaint was filed. If there were assignments, then a cause of action for breach of the insurance contract did not exist, because the proper statutory procedure would have been for the (3) medical providers and ODIC to go to arbitration. See, Section 627.736(5). Fla. Stats. (1992). So, even if the Complaint is adequate to encompass the subsequent breach, it still was not valid at the time it was filed and the case should have been dismissed.
Accordingly this cause is reversed and remanded for further proceedings as provided below:
A Motion to Dismiss was granted prematurely and there are factual matters that need to be determined by the trial court.
On remand, if the trial court should determine that assignments were executed and in full force and effect at the time the complaint was filed, then the dispute was not between Shackelford and ODIC but rather between ODIC and the third party health care providers. If so, then Section 627.736(5) Fla. Stat. would require arbitration of the dispute and Shackelford would have no standing to assert a claim for reduction of benefits. If the trial court comes to this conclusion, then the trial court is advised to reach the same conclusion as the lower court, although for a different reason.
On the other hand, if the trial court determines assignments were not in effect at the time the complaint was filed then Shackelford had standing to sue and counsel is entitled to attorney’s fees based on the subsequent settlement of the dispute. The actions of the third party health care providers and ODIC were tantamount to a settlement of Shackelford’s claim and the attorney is entitled to fees for bringing the action under section 627.428 Fla. Stat.
The judgment is REVERSED and REMENDED for proceedings consistent with this opinion. (McIVER, GERALD, and BAKER, JJ., concur.)
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