6 Fla. L. Weekly Supp. 661a
Insurance — Personal injury protection — Arbitration — Insurer’s motion to compel arbitration of dispute with health care provider denied — Regardless of whether arbitration is dictated by section 627.736(5), which has been held unconstitutional by district court of appeal, or required by a contract provision that is, in turn, required by the statute, it is the mandatory nature of the arbitration that violates provider’s due process rights — Arbitration provision in instant contract was product of mutual mistake as to the law applicable to the agreement because each party was contracting in accordance with and pursuant to section 627.736(5), which the parties mistakenly assumed was valid — Reformation of agreement to delete arbitration provision is appropriate — Estoppel — Provider not estopped to oppose arbitration by fact that it initially sought to compel arbitration — By initially seeking to compel arbitration under facially valid statute, provider did nothing more nor less than what appeared to be required by statute
THOMAS F. FRAUENHOFER, D.C. d/b/a CROTON CHIROPRACTIC CLINIC, P.A., Plaintiff, v. NATIONWIDE MUTUAL FIRE INSURANCE COMPANY, Defendant. County Court, 18th Judicial Circuit in and for Brevard County. Case No. 97-21508-CC-4. February 16, 1999. David E. Silverman, Judge. Counsel: Douglas Tuttle, for Plaintiff. Eric Gibbs, for Defendant.
ORDER
This cause coming before this Court on the Motion to Compel Arbitration filed by the Defendant and the Court having reviewed the Orders, pleadings and other filings and having considered the arguments of counsel, and having been otherwise advised in the premises, the Court hereby finds as a matter of fact and concludes as a matter of law, the following:
INTRODUCTION
The undisputed pleadings reflect that on or about May 7, 1994, Guido Scarton, a person insured by Defendant, NATIONWIDE MUTUAL FIRE INSURANCE COMPANY, hereinafter the “insurer,” was involved in a motor vehicle accident wherein he allegedly suffered certain injuries. The insured was covered under a personal injury protection policy.
Mr. Scarton sought treatment with the Plaintiff, THOMAS F. FRAUENHOFER, D.C. d/b/a CROTON CHIROPRACTIC CLINIC, P.A., hereinafter the “provider” and executed an “Assignment and Instruction for Direct Payment to Doctor” which assigned his benefits under the policy to the provider and it appears that the provider accepted the assignment. A dispute arose between the provider and the insurer regarding payment for certain medical bills for treatment and, upon the provider filing suit, the insurer moved to compel arbitration.
The policy provided, in pertinent part, that,
“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.”
The applicable law appeared to obligate the parties to arbitrate their disputes and for such provision to be included in the policy. Section 627.736(5), Florida Statutes (1995) provided, 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 shall apply. . .”
The Fifth District Court of Appeal found the mandatory arbitration provision of Section 627.736(5) unconstitutional in Delta Casualty v. Pinnacle Medical, Inc., 721 So.2d 321, 324 (Fla. App. 5th Dist. 1998) wherein the Court stated,
“We agree with the county court below that the compulsory arbitration clause in section 627.736(5), Florida Statutes (1995) violates the due process rights guaranteed to medical providers under Article I, Section 9 of the Florida Constitution.”
Despite the constitutional infirmity of the statute, the insurer argues the provider should be compelled to arbitrate on the grounds that: 1) the policy provision and the provider’s acceptance of it constitute a separate contractual obligation to arbitrate; and, 2) the provider’s prior motion to compel arbitration estops him from denying the obligation to arbitrate.
The provider denies the estoppel and responds that the provider was not contractually bound to arbitrate asserting that the arbitration provision was rendered unenforceable by virtue of: 1) the constitutional grounds cited in the opinion in Delta Casualty, supra; 2) a mutual mistake regarding the validity of the statute; and, 3) the involuntary nature of the agreement to arbitrate.
ARBITRATION
The rationale of Delta Casualty appears to include both the statutory arbitration requirement and related contract obligations, particularly where the arbitration clause was statutorily required to be included in the policy. The language of Delta Casualty seems designed to preclude claims that arbitration may be compelled under a contract that was predicated on the statute.
“The medical provider’s voluntary acceptance of an assignment of benefits does not mean that it voluntarily agrees to arbitrate. The arbitration requirement does not originate in any contractual agreement of the medical provider; it is imposed on the provider by statutory fiat. The compulsory nature of the arbitration requirement is not altered by pointing to the medical provider’s option to reject assignments from insureds. Acceptance of such assignments may well be an economic necessity for the medical provider to engage in medical practice.” Delta Casualty, supra, at 325.
The insurer attempts to distinguish Delta Casualty from the instant case, observing that it dealt only with an arbitration obligation under the statute, rather than any contractual obligation to arbitrate. They point to the case of Orion Ins. Co. v. Magnetic Imaging Systems, 696 So.2d 475, 478 (Fla. 3rd DCA 1997), holding that,
“Arbitration clauses in contracts are binding on third party beneficiaries . . . .
“As a third party beneficiary, Magnetic is bound by the arbitration provision in the insurance policy. The policy specifically anticipates the arbitration of disputes between it and a `health care provider.’ Accordingly, Orion and Magnetic must submit to arbitration, despite the absence of a written agreement between them.”
Indeed, footnote 3 to the Delta Casualty opinion seems to suggest such a distinction, stating that,
“In Orion Ins. Co. v. Magnetic Imaging Systems, 696 So.2d 475 (Fla. 3rd DCA 1997), the court held that a medical service provider was a third-party beneficiary of an insurance contract between the insured and the insurance company and that it was bound by an arbitration provision in the contract. In our cases, however, the insurance contracts between the insureds and their insurance companies are not in the record.” Delta Casualty, supra at 324.
However, despite the footnote’s suggestion that the holding of Delta Casualty may be limited only to arbitration under the statute, the logic the appellate court’s opinion compels a contrary conclusion. Under its reasoning regardless of whether the arbitration is dictated by statute or required by a contract provision that is, in turn, required by the statute, it is the mandatory nature of the arbitration violates the provider’s due process rights. Unable to reconcile its decision with that of the Third District Court of Appeals in Orion, the Court in Delta Casualty flatly stated, “We disagree with the reasoning in Orion.” Delta Casualty, supra, at 324.
This finding is not made without reservations where the medical provider, a person or entity offering an essential service, may not be so bereft of bargaining power as to render their acceptance involuntary or the contract one of adhesion. The provider may be capable of rejecting the benefits or requiring other payment arrangements and, in that event, traditional notions of overreaching and coercion would not appear to affect the validity of the contract. See, Steinhardt v. Rudolph, 422 So.2d 884 (Fla.App. 3 Dist. 1982) for an analysis of the procedural and substantive components of unconscionability. Additionally, contracts providing for arbitration are viewed in the light of a public policy favoring arbitration as an alternative means of resolving disputes. See, North American Van Lines v. Collyer, 616 So.2d 177 (Fla. 5th DCA 1993).
MISTAKE
This Court also finds and concludes, however, that the arbitration provision herein was the product of a mutual mistake as to the law applicable to this agreement. Each party was contracting in accordance with and pursuant to Section 627.736(5), Florida Statutes. The policy’s arbitration provision was predicated on and required by that section which was incorrectly understood to bind the parties. The parties mistakenly agreed based upon the statute’s apparent validity. Under such circumstances, it is appropriate for the Court to reform the agreement to delete the provision that resulted from the mistake.
“A court of equity has the power to reform a written instrument where, due to a mutual mistake, the instrument as drawn does not accurately express the true intention or agreement of the parties to the instrument.” Providence Square Ass’n, Inc. v. Biancardi, 507 So.2d 1366, 1369 (Fla. 1987).
ESTOPPEL
This Court also finds and concludes that the provider is not estopped to oppose arbitration. By initially seeking to compel arbitration under the facially valid statute, and without ever explicitly asserting the validity of the arbitration provision in the contract, the provider did neither more nor less than what appeared to be required by statute. As he was cooperating to schedule an arbitration, he was then pursuing the only avenue of relief open to him under the statute. When another course was opened up to him, that of a remedy at law, he promptly withdrew his motion and gave notice to that effect in a letter dated November 6, 1998 stating, “In light of the Fifth DCA’s opinion in Delta Casualty v. Pinnacle (October 2, 1998), please cancel the arbitration.”
The principal purpose of the doctrine of judicial estoppel is to,
“. . .[P]revent litigants from taking totally inconsistent positions in separate judicial, including quasi-judicial, proceedings. The doctrine is `designed to prevent parties from making a mockery of justice by inconsistent pleadings.’ American Nat. Bank of Jacksonville v. Federal Dep. Ins. Corp., 710 F.2d 1528, 1536 (11th Cir.1983). Stated differently, the doctrine is intended to prevent a litigant from `playing fast and loose with the courts.’ Russell v. Rolfs, 893 F.2d 1033, 1037 (9th Cir.1990), cert. denied, 501 U.S. 1260, 111 S.Ct. 2915, 115 L.Ed.2d 1078 (1991).” Smith v. Avatar Properties, Inc., 714 So.2d 1103, 1107 (Fla. App. 5th Dist., 1998).
In the instant case, that was not done as the provider was merely pursuing his available remedies diligently without improperly seeking any tactical advantage by adopting inconsistent positions.
JUDGMENT
Therefore, based upon the foregoing, it is ORDERED and ADJUDGED that the Defendant’s motion to compel arbitration is denied.
APPEAL
This is a non-final order that determines entitlement of a party to arbitration and is appealable pursuant to Rules 9.030(c)(1)(B) and 9.130(a)(3)(v), Rules of Appellate Procedure.
In light of the existing policies which include mandatory arbitration provisions, the current uncertainty as to their enforceability, the consolidation of the appeals which gave rise to the decision in Delta Casualty, and the certification in Delta Casualty that a related question was one of great public importance, this Court would be inclined to certify the following question to be of great public importance:
Does the holding of Delta Casualty v. Pinnacle Medical, Inc., 721 So.2d 321 (Fla. App. 5th Dist., 1998) that the compulsory arbitration provisions of Section 627.736(5), Florida Statutes (1995) are unconstitutional affect the enforceability of arbitration provisions in personal injury protection policies as to providers of medical services or supplies who have accepted assignment of benefits under the policies?
However, Section 34.017(1)(a), Florida Statutes (1997) permits a county court to certify a question to the district court of appeal only, “. . . in a final judgment if the question may have statewide application,” and is of great public importance or will affect the uniform administration of justice. (emphasis supplied) Since this is an interlocutory order and the not a final judgment, albeit one where the insurer has a right of immediate appeal, this Court lacks authority to certify the question.
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