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13 Fla. L. Weekly Supp. 355a

Insurance -- Personal injury protection -- Coverage -- Exhaustion of policy limits -- Where insurer elected not to pay PIP benefits for amounts billed and otherwise payable to medical provider, and there were sufficient benefits remaining under policy to pay full amount billed at time of billing, but insurer ignored provider's priority claim and exhausted benefits in payments to providers having subordinate claims, insurer owes provider compensatory damages in amount equal to benefits that would have been paid if insurer had properly paid claim prior to exhaustion of benefits, as well as statutory interest and penalties, attorney's fees and costs -- Insurer's failure to recall receipt of entire HCFA form is insufficient to rebut presumption that entire form was received where insurer acknowledges receiving portion of form

BARTON LAKE HEALTHCARE CENTERS, on behalf of Jose A. Martinez, Plaintiff, vs. PROGRESSIVE EXPRESS INSURANCE COMPANY, Defendant. County Court, 9th Ninth Judicial Circuit in and for Orange County. Case No. CCO-01-9950. January 11, 2006. Jerry L. Brewer, Judge. Counsel: Rutledge M. Bradford, Rutledge Bradford, Orlando. Matthew Haftel, Orlando.

Editor's note: see 16 Fla. L. Weekly Supp. 1125a

ORDER GRANTING PLAINTIFF'S MOTION

FOR FINAL SUMMARY JUDGMENT

THIS MATTER having come before this Court on PLAINTIFF'S MOTION FOR FINAL SUMMARY JUDGMENT and this Court having heard arguments of counsel and being otherwise fully advised in the premises, the court finds the following:

FACTUAL BACKGROUND

1. This is a claim for PIP benefits arising out of a motor vehicle collision that occurred on or about 12/28/2000.

2. The Plaintiff in this matter is BARTON LAKE HEALTHCARE CENTERS, as assignee of Jose A. Martinez.

3. On June 8, 2001, the Plaintiff rendered treatment to Jose Martinez for CPT code 99204 and billed the Defendant $225.00. The Defendant acknowledged receiving the HCFA form and one additional page of information, but claimed it did not receive the office notes for June 8, 2001 and therefore made no payment on this bill.

4. This lawsuit was filed on July 17, 2001.

5. Thereafter, on July 27, 2001, the Defendant exhausted benefits by making payments to other providers and the assignor, for wages.

6. The claims adjuster for the Defendant, Luisa Hernandez was deposed and confirmed that when the bill for the June 8, 2001 date of service was received by Progressive, there was more than enough PIP benefits remaining to have paid the bill in full.

7. Ms. Hernandez further confirmed that the Defendant did not set aside the sums at issue before paying subsequently received bills. When asked, "Do you know why?" she replied, "there was no particular reason. We just didn't set it aside and other bills came in that were ready to be paid." Deposition of Luisa Hernandez, p 16 lines 3-6.

8. The Plaintiff moves for final summary judgment asking the court to find as a matter of law, that the Defendant had an obligation to pay the bills in full in the order in which they were received; its failure to do so provides no protection from their obligation to the Plaintiff because of a subsequent exhaustion to others; that the Defendant's acknowledgment of receipt of a portion of the information provided by the Plaintiff creates a rebuttable presumption of receipt of all the information and that as a matter of law, the carrier received all the information necessary to make payment in full to the Plaintiff.

LEGAL ANALYSIS

There have been a multitude of decisions on the issue of exhaustion of benefits in the realm of PIP claims addressing the exhaustion of benefits before suit is filed, after suit is filed; when benefits have been requested to be reserved; when they have not; when a provider has advised of their objection to a partial payment and when they have not. For reasons that are not clear, courts are all over the place on this issue. What is clear in this case is that benefits that should have been paid to the Plaintiff were not, to the Plaintiff's detriment.

The purpose of the PIP law is to ensure "swift" payment of PIP benefits. Crooks v. Progressive Mutual Automobile Ins. Co., 659 So. 2d 1266, 1268 (Fla. 3rd DCA 1995). A provider of health services to a person injured in an accident should have a fair degree of predictability under Florida law: if they submit their bill with the requisite information, their bill will receive consideration and be processed for payment in the order in which it was received. When this does not occur, a provider has a cause of action against the carrier, regardless of whether or when benefits exhausted or under what circumstance.

When an insurer wrongfully denies or withholds payment, the insurer does so at its own risk and must suffer the consequences of its actions. § 627.736(4) and (8), Fla. Stat. set forth the statutory penalties of interest, attorney fees and costs for an insurer's failure to properly pay PIP benefits. Here, because Progressive failed to follow the law regarding payment of claims, it is responsible for statutory interest and penalties for its improper conduct in paying claims out of order prior to exhaustion of benefits.

Progressive is further responsible for payment of compensatory damages in an amount equivalent to the benefits that would have been paid had Progressive properly paid the claim at issue prior to the exhaustion of benefits. Progressive is liable for compensatory damages by virtue of the assignment of benefits given to the Plaintiff by Progressive's insured, and the compensatory damages arise from Progressive's willful disregard of the priority status of the Plaintiff's claim to payment of benefits. Alternatively, Progressive should or could reapportion benefits to the Plaintiff for the bills that would have been paid had Progressive properly paid the claim prior to the exhaustion of benefits, and seek recovery of benefits from the last-paid providers that would otherwise not have been paid due to benefits exhausting earlier had they been properly paid.

Defendant, Progressive, at its own risk, elected to deny PIP benefits for amounts billed and otherwise payable for the reasonable charges incurred by Jose Martinez for treatment rendered by the Plaintiff. At the time of the improper denial, there were sufficient benefits remaining under the Progressive policy to pay the full amount billed by Plaintiff. Progressive disregarded Plaintiff's priority claim to payment under the assignment and instead paid benefits to others having claims subordinate to the Plaintiff. The balance of the benefits due to the Plaintiff are "overdue" by the plain language of § 627.736(4) and (8), Fla. Stat. In addition to the compensatory damages owed, once the bills are determined to be "overdue", Progressive's liability for interest, attorney fees and costs is established, and the fact that the coverage was exhausted is irrelevant.

A PIP insurer should not be entitled to pay PIP benefit claims in the order and amount that it deems appropriate (especially if improper or incorrect), and then hide behind the fact of payment of the full policy benefit. If this procedure were allowed, as advocated by Progressive in this case, ". . . it would permit and sanction allowing an insurer to apply the payments of medical bills in any manner it chose and, in some cases, to exhaust PIP benefits so as to deny payment to any medical providers who are not 'favored.' The courts cannot be unwitting facilitators of such a manipulation." Pinnacle Medical, Inc. d/b/a ISO Data Diagnostics v. Progressive Insurance Company, 5 Fla. L. Weekly Supp. 663a (Fla. 17th Cir. Ct. 1998).

Finally, it is important to note in this case that the carrier failed to rebut the presumption that it received the information it needed to process this bill. In Allstate vs. Eckert, 472 So.2d 807 (Fla. 4th DCA, 1985), the Fourth District reasoned, "The rule is that, when something is mailed by a business, it is presumed that the ordinary course of business was followed in mailing it and that the mail was received by the addressee." Citing Brown vs. Geffen Industries, 281 So.2d 897 (Fla. 1973). The court went on, "Additionally, where several papers are enclosed in one envelope, when one is received, there is a strong presumption that they all were. Failure to remember whether something mailed is received is usually considered insufficient to overcome the presumption of receipt. Accordingly, Eckert's failure to recall receipt of the entire form is insufficient to rebut the presumption that it was received. Since no credible evidence sufficient to sustain a finding of the nonexistence of the presumed fact was introduced, the trier of fact was required to assume the existence thereof. Sec. 90.302 Fla. Stat. (1983)."

It is hereby, ORDERED AND ADJUDGED:

1. Plaintiff's Motion for Final Summary Judgment is GRANTED. The Defendant has failed to rebut the presumption that it received the office notes with the billing submitted in this case. Additionally, the Defendant failed to abide by the English rule regarding priorities of payment and did so at its own risk.

2. The Plaintiff is entitled to full payment of the bill submitted (at the contracted amount under the policy) as well as interest at 11% from the date of submission in 2001 through payment.

3. The Court reserves jurisdiction for the assessment of attorneys fees and costs, as appropriate.

* * *

12 Fla. L. Weekly Supp. 607a

Insurance -- Personal injury protection -- Res judicata -- Appeal of dismissal of subsequent suit involving same accident and injuries involved in prior suit -- Where order enforcing settlement of first suit clearly does not provide that resolution of matter was without right to further proceedings by medical provider, and trial court determined that settlement covered only those bills incurred through certain date and second suit could proceed as to bills incurred after that date, doctrine of res judicata does not bar second suit -- Error to dismiss suit

OSAMA YOUSSEF, Appellant/Cross Appellee, vs. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellee/Cross-Appellant. Circuit Court, 6th Judicial Circuit (Appellate) in and for Pinellas County. Case No. 03-1775CI-88B. UCN 522003AP001755XXXXCV. October 14, 2004. Appeal from Final Judgment, Pinellas County Court, Judge William B. Blackwood. Counsel: Earl I. Higgs, Jr., Morgan, Colling & Gilbert, P.A., Orlando, for Appellant/Cross-Appellee. Jennifer M. Mandelbaum, Ramey, Ramey & Kampf, Tampa, for Appellee/Cross-Appellant.

ORDER AND OPINION

(DAVID A. DEMERS, J.) This matter is before the Court on consolidated appeals filed by Osama Youssef (Youssef) and State Farm Mutual Automobile Insurance Company (State Farm) from the Final Judgment and Order entered on June 25, 2003, granting State Farm summary judgment but denying it attorney's fees. Having reviewed the briefs, the record, and pertinent legal authority, this Court reverses the trial court's award of summary judgment to State Farm. However, this Court affirms the trial court's denial of State Farm's attorney's fees.1

The long and winding path of this matter began when Youssef, who had been injured in an automobile accident, sued his insurer, State Farm, over its withdrawal of Personal Injury Protection (PIP) benefits (Youssef I). State Farm based the withdrawal upon independent medical examinations (IME) that determined that additional treatment was not warranted.

Pursuant to Florida Statutes, § 768.79 (1999), State Farm made an Offer of Judgment/Proposal of Settlement to Youssef, which Youssef promptly accepted. However, Youssef never cashed the check State Farm forwarded to him, and on March 2, 2000, he filed the present lawsuit (Youssef II), essentially alleging the same matters as in the first lawsuit, although presenting additional bills for which he claimed entitlement to payment.

Believing Youssef II to be duplicative of Youssef I, State Farm filed a $100.00 Offer of Judgment in Youssef II, which Youssef rejected. State Farm then filed a Motion to Enforce Settlement in Youssef I, which the trial court granted on October 22, 2002. In its order, the trial court found that Youssef's acceptance of the Offer of Judgment/Proposal of Settlement constituted a "settlement on the merits" of Youssef I. The court further determined that the settlement encompassed all bills through July 8, 1999, and therefore that "no bills may be at issue in the current proceedings [Youssef II] for benefits or bills incurred prior to July 9, 1999." The court also reserved jurisdiction to address other matters in Youssef II, including State Farm's pending motion for summary judgment.

In its summary judgment motion, State Farm argued that Youssef II was barred by the doctrine of res judicata because the claims alleged in Youssef II had already been settled in Youssef I. The trial court granted State Farm's motion, agreeing with State Farm that this Court's decision in Erickson v. State Farm Mut. Auto. Ins. Co., No. 01-0670-CI-88A (Fla. 6th Cir. Ct. Dec. 20, 2001) controlled. In Erickson, this Court held that where the order settling a first PIP suit was clearly intended to resolve all matters regarding the medical treatment at issue, res judicata barred a second PIP suit involving the same accident and injuries.

As it did at the trial level, State Farm asserts that Erickson governs this matter and mandates dismissal. However, after carefully reviewing Erickson and comparing its factual and procedural history to the present case, this Court concludes that res judicata does not apply to this matter because the order in Youssef I did not resolve all issues concerning Youssef's medical treatment.

Erickson, like Youssef, filed suit against State Farm for PIP benefits she had been denied. Just prior to trial, Erickson accepted State Farm's settlement proposal, but she refused to execute a release and then sought to amend her complaint to sue for additional PIP benefits. State Farm then moved to enforce the settlement.

The trial court granted State Farm's motion, finding that "when Plaintiff accepted the offer of settlement, Defendant's obligations to provide PIP benefits to this Plaintiff arising out of any claims from the . . . accident were fully litigated, compromised and settled." Erickson v. State Farm Mutual Auto. Ins. Co., No. 96-009360-CO-039 (Fla. Pinellas Co. Ct. April 15, 1999). The court further determined that "the issues of this case have been resolved" and deemed "this matter concluded." Id.

The court essentially reiterated its position in its order denying Erickson's motion for rehearing, stating that "the concepts of res judicata and collateral estoppel prohibit the same issues from being litigated, again and again. This dispute simply must come to an end." The court also noted that once any remaining fee and cost issues were resolved, it would dismiss the case. Erickson v. State Farm Mutual Auto. Ins. Co., No. 96-009360-CO-039 (Fla. Pinellas Co. Ct. Sept. 10th, 1999).

Erickson did not appeal this order; however, again like Youssef, she filed an entirely new complaint seeking recovery for bills stemming from her accident. After the trial court dismissed this complaint, she appealed to this Court.

In affirming the dismissal of the second suit, this Court noted that for res judicata to apply, it must be clear that the court in the first suit intended that the resolution of that suit was to be "without right to further proceedings by the plaintiff." Erickson v. State Farm Mut. Auto. Ins. Co., No. 01-0670-CI-88A, slip op. at 3 (Fla. 6th Cir. Ct. Dec. 20, 2001) (citing Equitable Fire & Marine Ins. Co. v. Bradford Builders, Inc., 174 So. 2d 44, 45 (Fla. 3d DCA 1965)). This Court found that the order denying rehearing in the Erickson's first suit met this standard because its entry clearly "constituted an end to the judicial labor in the cause of action in Case I and was intended to be a complete disposition of the issues raised regarding all dental treatment received by the Appellant stemming from the . . . accident." Id. (citing S.L.T. Warehouse Co. v. Webb, 304 So. 2d 97, 99 (Fla. 1974)). Thus, this Court determined that the dismissal of Erickson's second complaint was appropriate because she was simply attempting to relitigate the same issues that had already been adjudicated in her first case.

On the surface, the facts of Erickson appear strikingly similar to the facts in the present matter. However, a comparison of the orders terminating Erickson's first suit with the order terminating Youssef's first suit reveals significant differences making the doctrine of res judicata inapplicable here. While the trial court in Erickson specifically stated that the settlement of the first case concluded the matter and that the litigation "must come to an end," the Order Enforcing Settlement of Youssef I specifically states

Based on the parties' stipulation during hearing, this Court finds that all benefits incurred by Plaintiff up through and including July 8, 1999, are included in the prior settlement. Therefore, this Court finds that no bills may be at issue in the current proceedings for benefits or bills incurred prior to July 9, 1999.

Further, the trial court reserved jurisdiction over Youssef II to address other issues "including the parties' summary judgment motions."

Thus, the Order Enforcing Settlement of Youssef I clearly does not provide that the resolution of that matter was "without right to further proceedings by the plaintiff." On the contrary, the trial court determined that the settlement of Youssef I covered only those bills incurred up through July 8, 1999, and that Youssef II could proceed as to bills incurred after that date. Consequently, the doctrine of res judicata does not bar Youssef II, and the trial court erred in dismissing this action on that basis.2

Therefore, it is

ORDERED AND ADJUDGED that the Final Judgment is reversed insofar as it grants summary judgment to Appellee/Cross Appellant, State Farm Mutual Automobile Insurance Company, and that this matter is remanded for further proceedings consistent with this Order.

It is further

ORDERED AND ADJUDGED that the Final Judgment is affirmed insofar as it denies attorney's fees to Appellee/Cross Appellant, State Farm Mutual Automobile Insurance Company.

It is further

ORDERED AND ADJUDGED that Appellee/Cross Appellant State Farm Mutual Automobile Insurance Company's Motions for Appellate Attorney's filed September 16, 2003 and October 30, 2003, are denied.

It is further

ORDERED AND ADJUDGED that Appellant/Cross Appellee Osama Youssef's Motions for Appellate Attorney's Fees filed September 23, 2003 and December 8, 2003, are granted. Youssef is entitled to reasonable attorney's fees expended on this appeal contingent upon him ultimately prevailing in the action below. The trial court shall determine the amount of these fees.

__________________

1Because State Farm is no longer the prevailing party in this matter, there is no basis on which it is entitled to attorney's fees. Therefore, this Court does not reach the propriety of the trial court's denial of attorney's fees to State Farm on the basis it made a settlement offer in bad faith.

2This Court recognizes that the wording of the Order Enforcing Settlement may have been complicated by the fact that Youssef II was filed before Youssef I was settled. However, if the Order Enforcing Settlement was intended to cut off Youssef's right to proceed, the Order should have stated that the settlement of Youssef I covered any future medical treatment of the injuries at issue.