Florida Insurance Law Blog : Florida Insurance Lawyer & Attorney : Mark Nation Law Firm : Orlando, Longwood, Gainesville

A prominent personal injury firm has referred me their client in order to deal with an ERISA lien which is being asserted against a personal injury settlement.  The lien recovery firm is seeking 100% of the amount paid in medical benefits after an automobile accident, and is refusing to budge.  However, I believe I will be able to show that the medical treatment was not actually caused by the accident.  Instead, according to my client's treating physician, the treatment for which the lien is being asserted would have been needed regardless of the accident. 

Because the lienholder will not agree to waive its lien, I have filed a declaratory judgment action in federal court seeking to have the lien judicially extinguished.  I will keep you posted.

Repeatedly, I have seen cases where good attorneys pay back liens that do not even exist, or they pay back way too much. Paying back liens that don't exist, or paying back too much is a disservice to our clients, and can be considered malpractice. The law on health insurance liens is complicated and one should not dabble in it unless experienced.

Frequently, personal injury attorneys will recommend their clients to hire The Nation Law Firm to negotiate those liens.  This referral removes any potential liability from the personal injury attorney, and provides a much needed service to their clients.
 

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In Lewis v. Universal Property and Casualty Insurance Co., ____ So.3d ____ (Fla. 4th DCA June 3, 2009), the insureds sustained damage to the roof on their home as a result of Hurricane Wilma.  The insureds believed that the insurer should pay to replace their entire roof.  In a November 16, 2006 letter, the insurer advised the insureds that based on its engineer's report, it would only pay for 1 square foot of concrete tile shingles, and 120 linear feet of ridge tiles.  According the insurer, the remainder of the damage was due to aging, wear and tear or construction deficiencies.  In this letter, the insurer advised the insureds of their right to invoke the mediation and/or appraisal provisions of the policy and that the insurer was "closing its file." 

Thereafter, the parties participated in mediation which impassed.  The insureds then retained counsel who mailed a letter with a copy of a civil complaint to the insurer.  The insurer responded by demanding appraisal under the policy and also noting that it reserved its right to "deny the claim."  Shortly thereafter, the insureds' attorney filed suit.  Over the insureds' objections, the legal case was stayed while the matter proceeded to appraisal.  The appraisal resulted in the insurer paying its insureds over $51,000. 

After the appraisal, the attorney for the insureds filed a motion for attorneys fees pursuant to 627.428.  The insurer objected to paying fees, claiming that the insureds were not entitled to fees because: 1) the insurer had invoked its appraisal clause before filing suit; and 2) the insured had never confirmed the appraisal award and obtained a judgment. 

The Court noted that there are some cases denying fees when the lawsuit is filed after the insurer invokes its right to appraisal, but according to the Court:

The decisions in these cases plainly indicate that whether suit is filed before or after the invocation of the appraisal process is not determinative of the insured's right to fees; rather, the right to fees turns upon whether the filing of the suit served a legitimate purpose.

The Court then held that the lawsuit in this case did serve a legitimate purpose.  According to the Court:

Here, more than a year after the loss, the insurer was taking the position that the bulk of the damage to the roof was not covered and indicating to the insured that it intended to take no further action and was 'closing [its] file.'  The insureds thus invoked their right to mediation under the insurance contract.  When this failed to resolve the dispute, the insured hired counsel and threatened suit, sending the insurer a draft complaint, stating a claim for breach of contract.  Only after the insureds' counsel sent the letter and draft complaint did the insurer invoke its right to an appraisal and, even in invoking such right, the insurer asserted it was retaining the right to deny the claim.  The insureds then filed suit, stating a claim for breach of contract and seeking a declaratory judgment regarding coverage.  These circumstances are not indicative of an insured who 'raced to the courthouse' or who filed suit simply for the purpose of securing a fee award. 

With regard to whether the insured was required to confirm the appraisal award and obtain a judgment, the Court stated:

And, while it is true that the trial court never entered judgment or an order confirming the appraisal award, it is undisputed that the insurer paid the claim.  Florida law squarely holds that 'payment after suit was filed operates as a confession of judgment...entitling [the insured] to attorney's fees.

As a result, the Court ultimately held that the insureds were indeed entitled to prevailing party attorneys fees under 627.428. 

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In Grider-Garcia v. State Farm Mutual Automobile Insurance Company, ____ F.3d ____ (Fla. 5th DCA June 12, 2009), the insured sought a writ of certiorari to quash two orders rendered at the trial court level.  The 5th DCA denied the requests for certiorari review, holding that the issues could be handled on a final appeal at the end of the case. 

The Court then had to deal with the issue of whether the insured would be entitled to a "conditional" award of attorneys fees incurred in presenting the petition for certiorari contingent upon the insured ultimately winning the underlying case. 

In reliance on Bass & Singer, P.A. v. United Automobile Insurance Co., 944 So.2d 252 (Fla. 2006), the 5th DCA ruled that the insured who is unsuccessful in a Petition for Certiorari can not recover attorneys fees for the Petition even if the insured ultimately wins the underlying case.  Specifically, the Court held:

Given the [Supreme] court's narrow interpretation of the language of section 627.428, it appears that this Court is not authorized to grant fees to an insured who does not succeed in his or her application for certiorari.

Equally, troubling for insureds is the following statement by the 5th:

indeed, it is doubtful that an insured would even be entitled to fees for a certiorari proceeding in which it prevails based on the interpretation of the statute that appellate courts are authorized to award fees only for an appeal that the insured wins. 

Whether the court would actually refuse to conditionally grant attorneys fees to an insured who successfully pursue certiorari review remains to be seen.  However, given this dictum, counsel for insureds - at least in the 5th DCA - had better think twice before filing a Petition for Certiorari unless it is absolutely necessary. 

The insured in this case and in Brass & Singer, argued that such rulings violate the purposes behind 627.428 - to make the insured whole - but the courts rejected this argument. 

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Agents have a special obligation to properly explain the implications of a coinsurance penalty in regards to his or her client's insurance needs.  Most insureds have no idea what a coinsurance penalty is, or how it works.  It is vitally important for agents to fully explain the coinsurance penalty to every insured. 

The risk of a total loss to a structure is fairly small.  Accordingly, many insureds may choose insurance limits that are less than what are needed to replace the entire structure.  From an actuarial standpoint this may be a very sound idea.  However, most insurance policies contain a coinsurance penalty that reduces what the insurance company has to pay in the circumstances where the structure is underinsured. 

For example, assume a $1,000,000 structure insured for $500,000.  In this case, the insured will think that the insurance company will pay for any damage up to $500,000, and the insured will be on the hook for any damage over $500,000. While this may seem like a reasonable business decision under the insured's particular circumstances, the coinsurance penalty will raise its head to thwart the insured. 

In this situation, further assume a fire which causes $200,000 in damage.  No problem right?  The $200,000 is less than the $500,000 limit and the insurance company should be on the hook for the whole loss minus the deductable.  Wrong.  Here the coinsurance penalty, depending on the penalty amount, will reduce the amount owed by the insurance company up to 90%. 

In a case I filed last week, I've sued my client's insurance agent for failing to properly explain the coinsurance penalty.  In that case, the limits of insurance are more than enough to pay for the damages caused by a fire, but because of the coinsurance penalty, my client will only be receiving about 20% of the amount needed for repairs.  Had the agent explained the coinsurance penalty to my client, he would have increased the limits of insurance, and thereby recovered all of his losses. The agent's failure to even mention the coinsurance penalty has cost my client over a half-million dollars thus far. 

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Last week I filed four lawsuits against various homeowner's insurance companies as a result of their failure to pay, or to pay in full, for roof damage arising out of Tropical Storm Fay.  Two of these roofs also involved degranulation losses due to hail damage.  Over the years since the massive 1992 hail storms I've successfully handled 100's of roof damage cases. 

With the economy waning, I've seen many denials of claims that have been paid in years past.  Many of the recent roof cases which I've filed over the past several months involve the insurance companies refusing to pay for replacement of a flat roof where the insurer has agreed to replace the shingled portion of the roof.  These flat roofs frequently need to be replaced because roofers cannot get a proper and effective "tie in" without also replacing the entire flat roof.  Or, the flat roof needs to be replaced because the tie in is so deep into the flat roof that more than 25% of the flat roof has to be replaced.  Under the Florida Building Code, if more than 25% of a roof section has to be replaced, then the entire roof must be replaced. 

In some of these cases, the insurance companies are getting their own roofers to say that they can replace the shingle roof without having to replace the flat roof.  While there may be some roofers who are willing to perform repairs in this manner, beware: this is not the proper way to repair the roof.  Such short cuts may work for a little while, but this improper tie in leaves the roof in a compromised position and will likely soon begin to leak.  This new leaking will usually take a year or two, and once that starts, the insurance company will deny any further responsibility by claiming that the leaks are excluded as "improper workmanship. 

Another problem that has been arising is the insurance companies are refusing to pay profit and overhead when there are 3 or more trades involved.  Overhead and profit are owed when 3 or more trades are involved. 

Interestingly, in one of my hail damage claims I was able to locate video footage of the exact hail storm on youtube.com. 

Who thought roofs could be so much fun. 

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Yesterday, the circuit court in DeLand granted summary judgment in favor of our client in a first-party case where sewage backed up into a residential condo. 

Upon returning to his condo in New Smyrna after a week away, our client found that raw sewage from 7 other units had flooded his entire condo.  Needless to say, it was a mess.  The source of the back up was roots growing into and blocking a gravity fed sewage line which took the sewage from the building to the city's main sewage line. 

My client submitted the cost of cleanup and damage to his family's personal property to his condo owner's insurance carrier, Florida Family Insurance Company.  Florida Family denied the claim based on what it claimed was a clear and unambiguous exclusion for sewage backups.

However, based on the language of the policy, I believed that the policy could be read to only exclude sewage backups which originate from a sump.  As this was a gravity fed line, there was no sump involved.  The court agreed, leaving one very happy condo owner. 

Interestingly, upon reviewing the information which Florida Family had previously filed with the Department of Financial Services, Bureau of Rates and Forms, I found that the insurer's policy was a standard ISO policy; however, the insurer had modified this particular part of the policy.  By modifying the standard policy, the insurer actually created the ambiguity which led to the confusion.  Had the insurance company not modified the standard ISO form, then this loss would have been excluded. 

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On June 1, I wrote about a declaratory judgment action I filed in order to reduce a $200,000 ERISA health insurance lien.  Prior to receiving the suit, the health insurer took an aggressive stance, and advised my client's personal injury attorney that it would take $142,000 of the personal injury settlement.  Other than that meager reduction, the health insurer refused move off its demand. 

Upon receiving my declaratory judgment action the health insurer agreed to accept $10,000 as payment in full. My client is very pleased with this quick turn of events which provides him with much needed funds following a tragic and life-altering accident. 

Repeatedly, I have seen cases where good attorneys pay back liens that do not exist, or they pay back way too much. Paying back liens that don't exist, or paying back too much is a disservice to our clients, and can be considered malpractice. The law on health insurance, ERISA, PPO, and HMO liens is complicated and requires experience to unravel.

Many times, personal injury attorneys will recommend that their clients hire The Nation Law Firm to negotiate and litigate liens on behalf of the personal injury victims. This removes any potential liability from the personal injury attorney, and provides a much needed service to their clients.

I am currently in litigation in numerous such declaratory judgment actions at this time.  For more information on lien resolution, click the word "Liens" in the right-hand column

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Today I filed a lawsuit against Fidelity National Insurance Company for its denial of a flood claim arising out of Tropical Storm Fay.  Fidelity is a "write your own" insurer under the National Flood Insurance Program which is administered by the Federal Emergency Management Association.  In this case, Fidelity claims that the damages are less than $25,000, while our public adjuster has set the damages at over $120,000. 

I also sued the insurance agent who issued the policy for negligence.  The agent advised my client that she had a $5,000 deductible, however she was actually given a $50,000 deductible.  

I will keep you posted. 

For those of you who deal with flood claim, please remember the absolute requirement that the proof of loss be filed within 60 days of the loss. 

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Our client was severely injured in a car accident and his parents' health insurer paid over $200,000 for medical expenses incurred as a result of the crash.  Our client's personal injury attorney settled the case for the available BI and UM policy limits (plus some additional money from the UM carrier for alleged bad faith).  However, even given the excellent job by our client's personal injury attorney, our client could not be made whole by the settlement. 

The health insurer agreed to reduce its lien pro-rata for the attorneys fees and costs.  However, after reviewing the insurance plan, I do not believe that the ERISA insurer has any right to any of the settlement proceeds.  I filed a declaratory judgment action in federal court seeking a declaration that the ERISA carrier is not entitled to any of the settlement proceeds.  I will keep you apprised of what occurs. 

Repeatedly, I have seen cases where good attorneys pay back liens that do not exist, or they pay back way too much. Paying back liens that don't exist, or paying back too much is a disservice to our clients, and can be considered malpractice. The law on health insurance, ERISA, PPO, and HMO liens is complicated and requires experience to unravel.

Many times, personal injury attorneys will recommend that their clients hire The Nation Law Firm to negotiate and litigate liens on behalf of the personal injury victims. This removes any potential liability from the personal injury attorney, and provides a much needed service to their clients.

I am currently in litigation in numerous such declaratory judgment actions at this time.  For more information on lien resolution, click the word "Liens" in the right-hand column

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