8 Fla. L. Weekly Supp. 503b
Insurance — Personal injury protection — Insurer’s failure to investigate medical claims is not excused by fact that it did not have a medical authorization from claimant since insurer had alternative means of obtaining needed information through section 627.736(6)(b), Florida Statutes — Whether notice of claim is deemed the insurer’s receipt of Accord Automobile Loss Notice and health insurance claims forms or when insurer received at least six claims from or on behalf of claimant, it was sufficient as a matter of law — Notice having been given, thirty days having passed, there being no provision for tolling the 30-day period, payment not having been made nor denial of coverage having occurred within the 30 days, partial summary judgment is granted and affirmative defense that complaint is barred by failure to provide adequate and timely notice which prejudiced insurer is stricken
CHRIS MERRICK, Plaintiff, v. FORTUNE INSURANCE COMPANY, Defendant. County Court, 12th Judicial Circuit in and for Sarasota County. Case No. 1995 CC 003732 NC. April 5, 2001. Emanuel LoGalbo, Jr., Judge. Counsel: Peter Tanksley, Sarasota, for Plaintiff. David R. Reed, Mattson & Associates, P.A., St. Petersburg, for Defendant.
ORDER ON PLAINTIFF’S AMENDED MOTIONFOR PARTIAL SUMMARY JUDGMENT
THE PARTIES have presented argument on plaintiff’s amended motion for partial summary judgment. Counsel for both sides have submitted extensive written memoranda for which the court is appreciative.
The defendant’s memo sets forth the context: “This case concerns alleged bodily injuries and alleged lost wages sustained by the plaintiff on August 2, 1994, while in the course and scope of his employment, when the van in which the plaintiff was a passenger was struck by another motor vehicle”. See p. 1 Count 1 of the Fourth Amended Complaint seeks a declaratory judgment as to plaintiff’s right to coverage for personal injury protection [PIP] under a policy issued by defendant to his wife, Astrich Merrick. The plaintiff’s present motion attacks defendant’s first and fifteenth affirmative defense.
The court has reviewed the amended motion, the parties’ several memoranda relative to the motion and their pleadings. The first affirmative defense states as follows: “The plaintiff failed to provide adequate and timely notice of the claim which prejudiced the defendant, and, therefore plaintiff’s claims are barred.”
The statute is the mainspring of our discussion: Under Florida Statutes 627.736(4), we would ask whether any benefits have become due and payable. This happens when the insurer is in “receipt of reasonable proof of such loss and the amount of expenses and loss incurred which are covered by the policy…” Id. Under Florida Statute 627.736(4)(b), we would likewise ask whether payment of benefits have become overdue. This happens if benefits are “not paid within 30 days after the insurer is furnished written notice of a covered loss and of the amount of same.” Id.
The first issue that would appear to surface as to an Affirmative Defense of this nature given this lawsuit, when juxtaposed with the statutes, is whether the insurer received reasonable proof of loss, i.e., written notice of a covered loss and the amount? According to plaintiff there are two types of notices. The first is notice of the historical occurrence of an accident. Pointing out that he provided notice of the accident to defendant as early as the date that it had occurred, Plaintiff asserts that this notice is the core issue at this stage of the discussion, and that he has met this obligation.1
The task that presents itself at this point is to determine what the case law says about the sufficiency vel non of the initial step or method which a PIP claimant might take in order to notify the insurer in order that coverage may be invoked. We will find that none speaks to the quantum or quality or sufficiency of such notice. But the cases will provide an appreciation of the operation and effect of such notice, so that we may proceed by induction to determine appropriate attributes of sufficient notice.
We begin with the case of Dunmore v. Interstate Fire Insurance Company, 301 So.2d 502 (Fla. 1st DCA 1974). The claimant filed “an application for `no-fault’ benefits…including an executed authorization for medical information and wage and salary information.” 301 So.2d at 502. The court stated later in the opinion: “It appears to us that the statutory language is clear and unambiguous. The insurance company has thirty days in which to verify the claim after receipt of an application for benefits.” Id.
The case however did not adjudicate the sufficiency or even the quality of the notice, a so-called “application for benefits,” as the question presented on appeal did not raise any issue of the sufficiency of the application. In fact, the sole dispute on appeal was an issue over claimant’s entitlement to attorney’s fees; after suit was filed, the insurer had not even contested claimant’s entitlement to the benefits. That the notice was a specified form with an authorization from the claimant, similar to that which defendant demanded of the plaintiff, is in this court’s view simply incidental to the opinion.
Next is Bankers Insurance Company v. Macias, 475 So.2d 1216 (Fla. 1985), where the claimant was said to have failed “to give timely notice of an accident to the insurer.” 475 So.2d at 1217. However, the court was called upon to adjudicate the nature of prejudice resulting to the insurer when a failure of notice occurs. The question was whether a presumption of prejudice to the insurer arises or whether the insurer must put on some evidence of substantial prejudice on the first instance? The Court tied the notice-of-accident phraseology to it being a condition precedent in most policies. In those circumstances where the insurer could first make a showing that it had been deprived of an opportunity to investigate the facts and examine the insured, the Court also stated that a burden should rest on the shoulders of an insured/claimant to show lack of prejudice.
The phrase “notice of accident” could not be said to have achieved legal significance in this case, as the opinion did not speak to whether or how the sufficiency of the notice that was given impacted the issue of prejudice. In the end the Court fixed the relative burdens of the parties and established the principle of a rebuttable presumption of prejudice in connection with a failure of notice.
In Crooks v. State Farm Mutual Automobile Insurance Company, 659 So.2d 1266 (Fla. 3rd DCA 1995), notice was said to have occurred by claimant’s counsel, who “wrote a letter to State Farm, listing the itemized bills for three medical providers…and requesting State Farm to pay these bills within thirty days of receipt of the letter.” 659 So.2d at 1267. The court was called upon to review the trial judge’s decision that while State Farm “technically” violated the 30-day rule, no attorney’s fees should be assessed against it since the court felt State Farm had not violated the intent of the 30-day statutory requirement. The third district ruled that the trial court erroneously excused the violation as being merely technical. Incidental to the result was the court’s finding that State Farm violated the statute “by failing to pay Crooks’ medical bills within thirty days of being notified, in writing, of these charges.” 659 So.2d at 1268. Again, we see that the description of the notice as set forth in the opinion cannot be said to have achieved any legal significance.
We now turn to Martinez v. Fortune Insurance Company, 684 So.2d 201 (Fla. 4th DCA 1996). The insurer received from the claimant a “No-Fault Application” which indicated that claimant had suffered lost wages as a result of an auto accident. There was a delay in payment by the insurer because it was awaiting receipt of a medical verification of claim, i.e., the disability report from the doctor. Within thirty days of its receipt of this report, the insurer paid the benefits; however, suit had already been filed. The court was called upon to decide whether the claimant was entitled to statutory interest and attorney’s fees as his position was that the insured had violated the thirty-day rule. The court agreed, saying the statute “requires a PIP insurer to pay the claimed benefits within thirty days of receipt of written notice of the claim.” 684 So.2d at 203.
In reaching its own decision, we should note what the Martinez court said about the Crooks‘ ruling. The Martinez court noted: “In reversing, the third district [in Crooks] did not reason that the insurer violated the statute because the medical bills constituted proof under the statute. Rather, the court cited Dunmore for the proposition that the burden to verify the claim is on the insurer, and noted that the plain meaning and intent of the statute `is to guarantee swift payments of PIP payments.”’ 684 So.2d at 203. Thus, we know the insurer could not excuse itself from the effects of the thirty-day rule by pointing out that it had not yet received the medical verification of the claim from the doctor, and we know that the insurer’s possession of the medical documents is not a necessary component of an insurer’s “receipt of reasonable proof.”
In Fortune Insurance Company v. Pacheco, 695 So.2d 394 (Fla. 3rd DCA 1997), claimant is said to have “notified Fortune of the accident and on January 25, 1995, he filed a claim letter; medical bills… medical reports, PIP form; and a copy of the police report.” 695 So.2d at 395. The opinion indicates that payment was made after the thirty-day time limit and after suit was brought. When opposing claimant’s motion for summary judgment, “Fortune argued that the terms of the policy required Pacheco to submit, with his claim for benefits, all supporting medical records.” 394 So.2d at 395. Thus, a sufficiency issue was four-square before the court, albeit narrowly drawn to the insurer’s requirement that all supporting medical records be provided.
In arriving at the conclusion that the trial court properly entered summary judgment for the claimant, the court articulated a most noteworthy conclusion about the insurer’s modus operandi:
“The statute does not define `reasonable proof’ of loss; Fortune chose to include its own definition of `reasonable proof’ in its policy to include all supporting medical records. By so defining the term, Fortune sought to determine when the thirty-day period to pay the claim would begin to run, and thus circumvent long-established case law that once an insurer receives notice of a loss and medical expenses, it must pay within thirty days…” Emphasis added.
Id. The point is that the policy requirements left too much discretion to Fortune in the exercise of its responsibility to examine the claimant’s tender of “reasonable proof,” a rather broad capacity to determine what “quantum of proof” is reasonable. The potential for its own “unilateral power” to determine when it could declare that it had received reasonable proof of loss was seen in a negative light by the court. 695 So.2d at 396.
In Ivey v. Allstate Insurance Co., 25 Fla.L.Weekly at S1103 (Fla. December 7, 2000), the Court reviewed the third district reasoning “that because Allstate did not pay the entire claim due to an error in the doctor’s bill, Ivey [the claimant] was not entitled to attorney’s fees.” Id. The Florida Supreme Court quashed the third district’s position and quoted from Government Employees Insurance Company v. Gonzalez, 512 So.2d 269, 271 (Fla. 3rd DCA 1987) where the court spoke of the statutory realm of PIP benefits: “…the foundation of the legislative scheme is to provide swift and virtually automatic payment so that the injured insured may get on with life without undue financial interruption…” 25 Fla.L.Weekly at S1104. Though no issue of the sufficiency of the notice arose, it is nonetheless most remarkable for the Court to have spoken about payment as “virtually automatic.”
Most recently, we have Palmer v. Fortune Insurance Company, 26 Fla.L.Weekly at D278 (Fla. 5th DCA, January 19, 2001). Fortune received a letter from Deborah Palmer, the mother and the personal representative of the estate of Corey Henne who was killed in an auto accident. Henne had been driving a vehicle owned by his girlfriend’s father, Edwin Burch, who was insured by Fortune. The accident occurred on June 3, 1997, while the letter was sent on September 2, 1997. The personal representative also sent a Personal Injury protection Application, the death certificate of the decedent, a copy of a funeral bill, and a request that Fortune pay a death benefit provided by Burch’s PIP coverage.
After receiving such notice, a question arose over the deceased’s address. The PIP application and the death certificate erroneously made it appear that Henne lived at an address that was the home of his mother. Fortune awaited receipt of a police report so that it might clear up the question of the deceased’s residency, but the police report merely repeated the error. Furthermore, during this time, Fortune became aware that PIP coverage could potentially have been available through Henne’s father with whom, it was thought, he resided.
It is at this point of the opinion that we learn that the attorney for the personal representative advised Fortune that Henne did not live at the Palmer address at the time of the crash. Eventually suit was filed. But it was only afterwards that affidavits were provided to the insurer so as to establish that the deceased was not living with his parents. After receiving the affidavits, Fortune paid the claim. The actual issue in the case was whether the personal representative was entitled to statutory interest and attorney’s fees. The court cited Martinez, supra, Crooks, supra, and Dunmore, supra. Though notice was not the issue, the court did give direction as to how the 30-day rule was to play out. “Fortune should have either paid the reasonable value of the submitted claims or denied coverage before the 30-day period expired. [Citation.] Fortune did neither, it simply continued its investigation.”Emphasis added. 26 Fla.L.Weekly at D279.
With the appearance of Martinez, Pacheco, Ivey, and Palmer, we may note several insights in this ever-evolving area of law. What seems to be most clear is that the thirty-day time limitation has been given a special talismanic aura. Rather unrelenting in effect, I would say.
We might ask why are these rulings rather rigid? Of course, this is not an issue for this court to address. But we may glean several principles. The onus rests with the insurer to authenticate the claim within the statutory time period. Dunmore, 301 So.2d at 502. The burden that is rightly the responsibility of the insurer should not be shifted to the insured. Palmer, 26 Fla. L. Weekly at D279. The circumstances wherein an insurer may exercise authority to deny coverage must be reasonable. Pacheco. The only statutory provision which could arguably provide the insurer a tolling of the thirty-day time limit is referenced in Crooks, 659 So.2d at 1269, and Pacheco, 695 So.2d at 395, where the insurer develops reasonable proof that it is not responsible for the payments. Otherwise, while it is the responsibility of the insurer to verify a claim, it is also the insurer’s responsibility either to pay or to deny coverage before the 30-day period expires. There is no authority simply to continue to investigate for an indeterminate period of time. Palmer, 26 Fla.L.Weekly at D279. The statutory threshold for receipt of reasonable proof does not require medical verification from the doctor. Martinez. Finally, the legislative scheme aims at making the payment virtually automatic. Ivey, 25 Fla.L.Weekly at S1104.2
We must next examine the reasons given by defendant for not paying the claim. Its memorandum, at p. 2, speaks of the necessity for claiming to fill out and return a `Florida Application for No-Fault Benefits’ which contains an authorization for release of medical information.
Defendant correctly notes at p. 6 of its memo that the statute neither defines nor restricts the type of written notice that the insurer might require; nor does it define or limit the insurer’s ability to define what is meant by “reasonable proof of loss. These tenets of the defendant echo positions raised before the Pacheco court, 695 So.2d at 395. Defendant goes on to say at p. 9 that because the Fourth Amended Complaint fails to allege submission of the authorization for release of medical records or other form designating a waiver of confidentiality, the instant motion as to the First Amended Defense should be denied. In support of its position, defendant cites Dunmore and Pacheco, see p. 8.
Dunmore is cited for the notion that the court’s reference to the quantum of information given to the insured which included an “executed authorization for medical information” is synonymous as a matter of law with the quantum of information that must have previously been given by this claimant in order to successfully invoke coverage. But, again, as alluded to above, this court finds that there was no adjudication of this sort in the Dunmore opinion.
Pacheco is cited for the notion that the claimant “fulfills his obligation to furnish his medical records upon signing a `waiver of confidentiality.’ ” In his first memorandum of law at pp.4-5, under Certificate of Service of January 26, 2001, plaintiff highlights the deposition testimony of defendant’s agent. Though it had received several claims involving a number of medical providers, defendant did not request any further information about any of these claims from the providers. Why? Because defendant had no medical authorization from plaintiff, was the deposition testimony? Plaintiff’s response to the failure-to-sign-waiver argument, set forth in his initial memorandum, is simple: There is a statute, Section 627.736(6)(b), that enables insurers to “freely obtain such records under authority of law.”
After plaintiff’s initial memo, defendant filed one memorandum, under Certificate of Service February 16, 2001. It makes no reply to plaintiff’s instruction that the statutory method of obtaining the medical records ought to have been undertaken. So, it is not clear what response defendant might make. Nonetheless, the gist of the case law makes it plain. The court finds that alternative means, slight in nature, reasonable in application, of obtaining the needed information are statutorily available to the insured whose responsibility it is not to shift burdens upon a claimant. Given defendant’s excuse for not acting on the claim for benefits, the negligible task of utilizing this statute pales in comparison to the magnitude of the ultimate outcome that defendant seeks in this case is disproportionate and would defeat the legislative scheme.
The court finds that whether notice be deemed the receipt of the Accord Automobile Loss Notice and health insurance claims forms or when Fortune received at least six claims from or on behalf of Merrick between October 28, 1994, and November 18, 1994, it was sufficient as a matter of law.
Notice having been given, thirty days having passed, there being no provision for the tolling of the 30-day period, payment not having been made within 30 days nor denial of coverage having occurred within 30 days [actually no payment was ever made], the court finds that partial summary judgment should be granted and the First Affirmative Defense be stricken. The court finds it unnecessary to consider any further issues as to this affirmative defense.
As for the final issue, the court accepts plaintiff’s several arguments and finds that defendant’s Fifteenth Affirmative Defense may not be maintained as a matter of law. It is likewise stricken, and partial summary judgment relative thereto is granted as well.
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1The second notice that is discussed in plaintiff’s memo is notice of a covered loss, an obvious reference to the statute. Plaintiff asserts that any issue concerning this notice is not ripe as yet, explaining that because this action is only over coverage in the first instance, it is solely the notice of the incident that has legal significance at this juncture. The court makes this initial observation: it would be most remarkable that the simple act of notifying the insurer of the historical occurrence of an accident would be sufficient to invoke Section 627.736.
2The court cannot agree that the case law necessarily support’s plaintiff’s conclusion in his initial memo, p.5: “A PIP insurer cannot require its insured to submit claims only on an in-house claims form.” Nor does the court agree with defendant’s argument that the phrase “application for benefits” has become a term of art. See p. 9 of defendant’s memo.
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