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

My client, a water extraction and mold remediation company, performed services for a homeowner insured under a State Farm Florida insurance policy. State Farm refused to pay the entire bill, and in accordance with Florida Statute Section 627.7015, Fla. Stat., offered our client the opportunity to participate in the state sponsored mediation program. My client accepted that offer and attended the mediation. The mediation was unsuccessful and our client asked us to file suit on her behalf as assignee of State Farm’s insured.

Both before filing suit and after, State Farm requested appraisal under the homeowner’s policy. However, pursuant to Section 627.7015, Fla. Stat., I asserted that appraisal is not available to an insurer if: 1) the insurer does not notify the insured of their rights to state sponsored mediation at the time a dispute arises; or 2) when the parties participate in an unsuccessful state sponsored mediation. Because my client had participated in an unsuccessful state sponsored mediation, it was my position that State Farm was no longer entitled to ask for appraisal.

The issue was presented to the court on State Farm's Motion to Dismiss/Abate, and the court denied State Farm's motion, holding that State Farm was no longer entitled to ask for appraisal under the policy because it participated in the state sponsored mediation program.

State Farm attempted to avoid the clear application of the statute by arguing that the right to appraisal is only lost when the insurer requests the mediation, but that appraisal remains available when the insured asks for the mediation. I do not believe that the statute makes such a distinction, especially given the fact that the insurer is never allowed to request the mediation. The insurer is required to notify the insured of the insured’s right to state sponsored mediation. It is then up to the insured agree to participate. State Farm’s reading of the statute would result in an absurdity, where the parties would always be required to participate in appraisal after every unsuccessful mediation; something clearly not contemplated by the statute.
 

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In Metropolitan Casualty Insurance Company v. Tepper, 34 FLW S111 (Jan. 30, 2009) the Florida Supreme Court resolved a direct conflict between the 5th DCA and the 2nd DCA concerning when an uninsured motorists carrier can begin a subrogation action against the at-fault driver/owner.

In general, under Florida Statute Section 627.727, if the insured intends to seek UM benefits, the insured must notify the UM carrier whenever the insured wishes to settle a case with the at-fault driver/owner. The UM carrier then has 30 days from receipt of the notice to either agree to the settlement, in which case the UM carrier waives its rights of subrogation against the at-fault driver/owner; or the UM carrier can pay the amount that the at-fault driver/owner is offering in settlement of the claim, in which case the UM carrier preserves its rights of subrogation against the at-fault driver/owner. (The UM carrier also waives its rights of subrogation if it fails to properly respond to the insured’s request within 30 days of receipt of the notice).

The question in Tepper, was when can the UM carrier initiate the subrogation action after paying its insured the amount which was being offered by the at-fault driver/owner.

The UM Statute says that “upon final resolution of the underinsured motorist claim, the underinsured motorists insurer is entitled to seek subrogation against the underinsured motorist and the liability insurer for the amounts paid to the injured party.” Fla. Stat. § 627.727(6)(b). The 2nd DCA held that this language allowed the UM carrier to file the subrogation action as soon as the UM carrier paid its insured the amount being offered by the underinsured motorist; while the 5th DCA held that this language required that the UM carrier wait until after its insured’s UM claim against it had been finally resolved before the UM carrier could initiate the subrogation action.

The Supreme Court affirmed the 5th DCA, holding that the final resolution of the entire UM claim was a “condition precedent to the UM carrier’s entitlement to bringing a subrogation action.” Recognizing that this holding could prejudice UM carriers when the underlying UM claim was not concluded before the 4 year tort statute of limitations had expired, the Supreme Court also held that the statute of limitations for the subrogation claim does not begin to run until the entire underlying UM claim has concluded.
 

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Federico A. was involved in a serious car accident and as a result suffered extensive physical injuries. He was transported to the hospital for several emergency surgeries. The hospital promptly submitted his medical bills to his PPO health insurance company, Blue Cross and Blue Shield of Florida, for payment. The treatment had been rendered by a physician who did not participate with Blue Cross as one of its preferred providers (a "non-PPO provider"). Blue Cross denied many of the bills claiming that an assistant surgeon who was utilized in the multiple surgeries was not necessary.  Those bills which Blue Cross did pay were significantly reduced to what Blue Cross refers to as its "allowance."

Federico was referred to us by his personal injury attorney for assistance with his substantial medical bills. Based on prior experience, I believe that current version of the Blue Cross Blue Shield of Florida's PPO policy and the payments made thereunder violate Florida Statutes Sections 627.6044 and 627.6471. Section 627.6044 requires a PPO insurer to specifically identify in the insurance contract the methodology it uses to pay claims. The Blue Cross PPO policy does specifically identify numerous factors which it says will be evaluated in determining the appropriate "allowance." However, in reality, Blue Cross does not utilize any of those factors, and instead relies on only one undisclosed factor. I also believe that the Blue Cross PPO insurance policy violates section 627.6471, by reimbursing non-PPO providers at a rate lower than allowed by law, and by requiring the insureds to pay coinsurance in excess of the statutory maximum.

In addition, after conferring with the treating surgeon, I felt confident that we would be able to prove the necessity of an assistant surgeon for the various procedures.

Based on these factors, I filed suit against Blue Cross for breach of contract. Discovery ensued, but within one week of taking the adjusters' depositions, Blue Cross agreed to settle the case by paying the doctor’s bills.

As part of the settlement, Blue Cross agreed to reduce its lien against the personal injury proceeds from $270,000 to $10,000.  (For more information on reducing and waiving liens, you can search this blog for the word "lien.") Blue Cross also agreed to pay all of my attorneys fees and costs incurred in investigating and prosecuting the case.

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Provident Life and Accident Insurance Company paid our client, Ronnie H., his long term disability benefits from October 2001 until February 2004. Then, as of March 1, 2004, Provident terminated Ronnie’s LTD benefits, claiming he was no longer disabled. Provident terminated Ronnie’s benefits even though the medical records showed that Ronnie’s condition had not improved during this time; quite to the contrary, his physical condition had declined since 2001.

I filed suit against Provident for breach of contract for wrongfully terminating Ronnie’s LTD benefits, and simultaneously filed a Civil Remedy Notice of Insurer Violation (CRN) pursuant to Florida Statute Section 624.155.

Prior to trial, Provident agreed to reinstate Ronnie’s LTD benefits, pay all past due benefits, and pay my attorneys fees and costs. By that time, the CRN had expired, exposing Provident to liability for extracontractual bad faith damages.

As a result of Provident’s conduct in this case, and others, I recently filed a Bad Faith lawsuit against Provident in the United States District Court, for the Middle District of Florida.

This is not the first time Provident’s LTD claims handling procedures have been questioned. We will present evidence in this case showing that in November 2004, Provident entered into a Multi-State Plan of Corrective Action/Regulatory Settlement Agreement with 49 jurisdictions including the State of Florida, as a result of Provident’s improper claims handling procedures for LTD claims. The Multi-State Agreement was the culmination of a lengthy and exhaustive investigation into Provident and its affiliates, Unum Life Insurance Company of America, and The Paul Revere Life Insurance Company’s LTD claims handling procedures. Among other things, the investigation revealed specific areas of concern that Provident:

• improperly relied upon in-house medical professionals;

• unfairly construed attending physician and IME physician reports;

• failed to evaluate the totality of the claimant’s medical conditions;

• placed an inappropriate burden on claimants to justify eligibility for benefits.

All of these were a calculated and systemic business practice by Provident and its affiliates. As a result of the multi-state investigation, in November 2004, Provident, Unum and Paul Revere agreed to reassess claims; modify claims handling and benefit determination practices, establish a specific claim reassessment process, and pay a $15,000,000.00 fine.

In Ronnie’s case, the initial Rule 26 meeting recently took place, and the parties are now providing their initial voluntary disclosures.

One of our experts in the case is a former insider from Provident and its affiliates who will be able to expose Provident’s bad faith claims handling experience.
 

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The issue in this third-party bad faith lawsuit was the propriety of the following jury instruction, given by the trial court:

In your determination of whether GEICO General Insurance Company acted in bad faith in the handling of the Giovo claim against Jack McDonald, Penny McDonald, and Brandi McDonald, any question about the possible outcome of a settlement effort should be resolved in favor of Jack McDonald, Penny McDonald, and Brandi McDonald. GEICO General Insurance Company has the burden to show that there was no realistic possibility of settlement within policy limits.

GEICO General Insurance Company v. McDonald, 2008 WL 4946221 (11th Cir. November 20, 2008).

GEICO objected to this jury instruction, asserting that it was not an accurate statement of the law, and was tantamount to directing a verdict in favor of the bad faith plaintiffs.

The 11th Circuit held:

The district court's jury instruction was not an inaccurate statement of Florida law that misled the jury as it was taken directly from Powell [v. Prudential Property and Casualty Insurance Co., 584 So.2d 12, 14 (Fla. 3d DCA 1991)]. Additionally, we reject GEICO's contention the instruction was tantamount to giving the McDonalds a directed verdict, as the district court correctly instructed that GEICO had the burden of showing there was no possibility of settlement within policy limits. If GEICO had met that burden at trial, the jury could have reasonably found GEICO did not act in bad faith.

GEICO also argued that the trial court should have entered a judgment notwithstanding the verdict because, according to GEICO, the plaintiffs presented “absolutely no evidence of bad faith on the part GEICO….” The 11th Circuit disagreed, holding that:

The evidence showed that although GEICO attempted to settle with Giovo, it did not keep the McDonalds informed of the settlement negotiations. GEICO exposed the McDonalds to a significant excess judgment without the McDonalds' knowledge. GEICO made a counteroffer on Giovo's offer, but represented to the McDonalds it had complied with Giovo's demands. Regardless of whether mere negligence is enough to find bad faith under Florida law, the evidence was legally sufficient to find that GEICO's conduct was more than mere negligence and that GEICO acted in bad faith.

This decision addresses a huge issue in many third-party bad faith cases where the insurer claims that the underlying case could not have settled. This case along with Powell, places a heavy burden on insurers to prove that the underlying case could not have settled, with any question about the possible outcome of a settlement effort to be resolved in favor of the insured.
 

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The Goff’s sustained hurricane damage to their home and submitted their claim to State Farm, their homeowners insurer. The Goffs carried a “replacement cost” policy with State Farm. State Farm’s replacement cost policy allowed State Farm to pay only the actual cash value of the loss until such time as repairs were made. Only after the repairs were actually made was State Farm required to pay the difference between the actual cash value and the replacement cost.

The estimate for the damage to the Goff’s residence included projected costs for “overhead and profit” to the general contractor. State Farm agreed that it owed the overhead and profit, but withheld a portion of the overhead and profit until such time as the repairs were made.

The Goff’s filed a declaratory judgment action arguing that State Farm cannot withhold any portion of the overhead and profit pending repairs. The trial court granted summary judgment in favor of State Farm. The 2nd DCA affirmed and held that: “We are unpersuaded by the Goffs’ argument that the policy entitles them to the total amount of overhead and profit in the actual cash value payment. Therefore, we affirm the summary judgment for State Farm on count II.” Goff v. State Farm Florida Insurance Company, 33 FLW D2833a (Fla. 2nd DCA December 12, 2008).

Importantly, this case did not deal with or mention Florida Statute Section 627.7011. Section 627.7011 was amended in 2005 (after the loss in Goff) and states in subsection (3) that:

In the event of a loss for which a dwelling or personal property is insured on the basis of replacement costs, the insurer shall pay the replacement cost without reservation or holdback of any depreciation in value, whether or not the insured replaces or repairs the dwelling or property.

Subsection (3) does not state whether it is to apply only prospectively or may also apply retroactively.
 

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Our client maintains and services sewage lift stations. He purchased liability insurance from Nationwide Insurance. Nationwide clearly knew that its insured maintained and serviced sewage lift stations, as that information was set forth in the application and the premiums were based on the proposed insured’s SIC designation as a lift station maintenance company.

Some time later, a bank which utilized a lift station serviced by our client was flooded with a backup of raw sewage. As hard as it is to believe, the bank took offense, and filed suit against our client for negligently maintaining the sewage lift station. The insured presented the claim to Nationwide Insurance to defend and indemnify, if necessary.

Nationwide, contrary to its many promises, on air and in print, sent a letter emphatically explaining to its insured that it was in fact NOT “on your side.” The claim was denied by Nationwide citing its “pollution” exclusion.

I filed suit for breach of contract. It is my position that the pollution exclusion does not apply for 3 reasons: 1) raw sewage does not fit the definition of “pollution” as set forth in the policy; 2) even if raw sewage was “pollution,” the exclusion requires that the insured be in the business of handling, or abating pollution, which our client was not; and 3) the insurance policy (which by statute incorporates the application for insurance) was intended by the parties to insure claims arising from sewage spills, and Nationwide is prohibited from excluding the very thing for which the insurance was sought.

I suspect that this case will be decided on summary judgment in the very near future.
 

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Our client was traveling in the Middle East when she fell and suffered a serious injury. She was treated at a local hospital but required medical evacuation back to the United States.

Before her trip, our client purchased a travel insurance policy before leaving on her trip. The policy provided for emergency evacuation benefits up to $50,000.00. The insurer refused to pay the full value of the emergency evacuation arguing that our client should have travel back to the Untied States on a much cheaper, commercial stretcher flight. Litigation continues.

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Our client's Long Term Disability claim was denied by Hartford.  At the time he became disabled, our client worked as a cruise ship engineer working for Disney Worldwide Services, Inc. He suffered from a severe stomach condition and was unable to work. Litigation continues.

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The Estate of Reinaldo de Morales sued Donel Enterprises for negligently causing Mr. de Morales’s death. Donel defended by claiming it was de Morales’s employer and thus entitled to workers compensation immunity. Donel’s insurer agreed to defend Donel under a reservation of rights.

The insurer also filed a declaratory judgment action against Donel and the estate, seeking a declaration that the claim was excluded from coverage and the insurer had no duty to defend or indemnify the claim under Donel’s commercial general liability policy. Donel asked the trial court to stay the declaratory judgment action pending the resolution of the wrongful death action.

The trial court agreed to stay that portion of the dec action directed towards the insurer’s duty to indemnify, stating: “The same question of fact is going to be determined by a jury in the underlying case.” The trial court refused to abate or stay that portion of the dec action directed towards the insurer’s duty to defend.

The trial court seems to have recognized the distinction between the “duty to defend,” which is simply determined by comparing the allegations in the underlying complaint with the terms of the insurance policy; and the “duty to indemnify,” which is based upon the actual facts of the loss as determined by the fact finder.

Realizing that the jury in the wrongful death action would determine the precise factual issue which controlled the indemnification issue, the trial court stayed the indemnification issue pending resolution of the wrongful death action.

The 4th DCA granted certiorari review, found that this order departed from the essential requirements of the law, and ordered that the entire declaratory judgment action proceed unstayed. The 4th DCA cited to the Supreme Court’s ruling in Higgins v. State Farm Fire & Casualty Co., 894 So. 2d 5 (Fla. 2004), which identified three factors for trial courts to consider when determining whether a coverage action should be tried before the tort action. Those factors are:

1. Whether the two actions are mutually exclusive;

2. Whether proceeding to a decision on the indemnity issue will promote settlement and avoid the problem of collusive actions between the claimant and the insured in order to create coverage where there is none; and

3. Whether the insured has resources independent of insurance, so that it would be immaterial to claimant whether the insured’s conduct was covered or not covered by indemnity insurance.

The 4th DCA determined that the first 2 factors militated in favor of allowing the declaratory judgment action to proceed. The court found that there was no record evidence concerning the third factor. The 4th DCA found support for its decision in Progressive Express Insurance Co. v. Reed, 971 So. 2d 176 (Fla. 5th DCA 2007), and Indemnity Insurance Co. v. Ridenour, 629 So. 2d 1053 (Fla. 2nd DCA 1993).

Given this decision, along with Higgins, Reed, and Ridenour, it seems it will be difficult for either party to stay either of the underlying actions without agreement of the parties.

This case can be found at Century Surety Insurance Company v. de Morales, 34 FLW D93 (Fla. 4th DCA January 5, 2009).
 

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Recently, a prominent local personal injury law firm asked me to deal with a $192,000 ERISA health insurance lien on a case they had settled. That firm had attempted to negotiate with the lien-holder to reduce the lien, but as is often the case, the lien-holder would not budge. The personal injury victims retained me, and I filed a declaratory judgment action in the United States District Court, for the Middle District of Florida. Soon after the initial Rule 26 meeting, the lien-holder agreed to accept $10,000 as payment in full for their lien.

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 requires experience to unravel.

Many times, personal injury attorneys will recommend that their clients hire The Nation Law Firm to negotiate 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.

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In Flaxman v. Government Employees Ins. Co.,  993 So.2d 597 (Fla. 4th DCA 2008), the insured had PIP with GEICO which paid statutorily mandated benefits of 80% of medical expenses as well as 60% of lost wages up to a total of $10,000. The insured also had available under the same policy "Additional" PIP or APIP which increased the amount of PIP benefits up to 100% of medical expenses and 85% of lost wages.

The insured incurred $17,000 of medical expenses as a direct result of a covered automobile accident. GEICO argued that the most that they were required to pay under the policy, including both PIP and APIP, was $10,000. The insured argued that GEICO was required to pay $10,000 under the PIP portion of the policy, and $2,500 under the APIP portion of the policy. Suit ensued, and the issue eventually worked its way up to the 4th DCA.

The 4th DCA ruled in favor of GEICO, and held that the APIP did not increase the aggregate benefits available under the policy. The aggregate available benefits under the policy remained $10,000. The APIP merely increased the percentage which GEICO had to pay for covered expenses, i.e., instead of paying 80% of covered medical expenses, GEICO had to pay 100% of covered medical expenses up to $10,000.

In reaching its decision, the court relied heavily on the "limit of liability" section of the policy which limited GEICO's total exposure to an aggregate of $10,000. From the decision it does not appear that GEICO's "Additional" PIP carried a separate limit of liability. In other words, the APIP did not have a limit of say $2,000, or $5,000. Instead, the APIP merely paid the additional percentages for covered expenses. The outcome would likely be different if the Additional PIP had a separately stated limit amount.

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On January 8, 2009, the 1st DCA decided O'Brien v. State Farm Mut. Automobile Ins. Co., 34 FLW D110a. In O’Brien, Mr. O’Brien purchased a $1,000,000 umbrella policy from State Farm. He rejected UM coverage in writing on the umbrella. Thereafter, Mr. O'Brien added vehicles which were covered under the umbrella policy, and ultimately added his 4 children as they began to drive.

Tragically, sometime later, Mr. O’Brien’s daughter was killed by an underinsured driver. State Farm tendered the limits on the underlying policies which included UM, but refused to pay anything under the umbrella.

The trial court agreed with State Farm about the lack of coverage, and the 1st DCA affirmed. The 1st DCA analyzed Section 627.727(2), Fla. Stat., (the section of the UM statute dealing with umbrella policies), and held that it only requires an insurer to make UM “available as part of the application, and at the written request of an insured.”  The Court stated there was no need to obtain another waiver of UM coverage under the umbrella after the initial waiver was obtained. The Court noted that subsection (2) does not contain the same strict notice requirements as subsection (1) (the section dealing with primary policies), but implied that even under subsection (1) there would have been no need for additional waivers under these circumstances as long as the other requirements of subsection (1) had been met.

The 1st DCA distinguished Strochak v. Federal Ins. Co., 717 So. 2d 453 (Fla. 1998)(holding that when moving from New Jersey to Florida, excess insurer was required to obtain a new UM rejection/selection form when vehicles first become registered or principally garaged in Florida and when the policy is delivered or issued for delivery in Florida); and Fireman’s Fund Ins. Co. v. Pohlman, 485 So. 2d 418 (Fla. 1986)(holding that insured entered a “separate and severable contract of insurance” when an automobile policy endorsement added coverage for an additional vehicle after Section 627.4132, Fla. Stat., had been amended to permit stacking.)
 

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Florida Rule of Civil Procedure 1.525 requires that any party seeking to tax attorney’s fees and costs “shall serve a motion no later than 30 days after filing of the judgment, including a judgment of dismissal, or the service of a notice of voluntary dismissal.”

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