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

In Ward Mfg. v. Yeager, 2009 WL 1107891 (E.D. Pa. April 22, 2009), Yeager's injury lawyers recovered money for personal injuries.  Ward had paid medical expenses associated with the injuries, and claimed a right to be reimbursed from the personal injury proceeds.  Ward filed an action under 29 USC Section 1132(a)(3) (2009) against Yeager and his injury lawyers seeking an equitable lien or constructive trust on $37,963.01 held in trust by the injury lawyers. 

Yeager and his lawyers argued that Ward's action was not an authorized equitable action, but instead amounted to an action seeking legal relief.  Ward's action is governed by 29 USC Section 1132(a)(3) which only allows equitable actions, and does not allow actions for legal relief. 

The court held that because

Ward seeks an equitable lien or constructive trust on an identifiable piece of property--namely, the $37,963.01 held in trust--rather than a claim against Yeager's general assets, § 502(a)(3) does authorize this action. See Knudson, 534 U.S. at 213 (noting that "a plaintiff could seek restitution in equity, ordinarily in the form of a constructive trust or an equitable lien, where money or property identified as belonging in good conscience to the plaintiff could clearly be traced to particular funds or property in the defendant's possession .")

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Frequently, the outcome of an insurance case depends on the critical issue of whether the person who sold the policy is an agent for the insured or an agent for the insurer. The fundamentals for determining whether an insurance agent/broker is an agent for the insurer or the insured were set forth in Essex Insurance Company v. Zota, 985 So.2d 1036, 1046-47 (Fla. 2008), and bear repeating. The Court held:

“[A]n insurance broker acts as an agent of the insured, not the insurer, where the broker is employed by the insured to procure insurance. The presumption can be overcome by the existence of special circumstances [i.e., indicia of agency] indicating that the broker's arrangement with the insurer was not a standard relationship.

“3 Russ & Segalla, supra § 45:5 (emphasis supplied) (footnotes omitted). It is important to note that “insurance broker” and “insurance agent” are not synonymous terms:

“A representative of the insured is known as an “insurance broker.” A broker represents the insured by acting as a middleman between the insured and the insurer, soliciting insurance from the public under no employment from any special company, and, upon securing an order, places it with a company selected by the insured, or if the insured has no preference, with a company selected by the broker. In contrast, an “insurance agent ” represents an insurer under an exclusive employment agreement by the insurance company.... The distinction between an agent and a broker is important because acts of an agent are imputable to the insurer, and acts of a broker are imputable to the insured.

"3 Russ & Segalla, supra § 45:1 (emphasis supplied)(footnotes and internal division omitted) see also Almerico, 716 So.2d at 776-78.  Based on its recognition of "the sometimes amorphous nature of an insurance broker," this court held in Almerico "that under the provisions of Section 626.342(2), Florida Statutes (1989), as well as Florida's common law, civil liability may be imposed upon insurers who cloak unaffiliated insurance agents with sufficient indicia of agency to induce a reasonable person to conclude that there is an actual agency relationship."  716 So.2d at 782 n. 13, 783 (emphasis supplied). 

“In this vein,

"[c]ourts have found the existence of [indicia of agency] when the insurer characterizes the broker as a representative of the insurer, or when insurers contemplate broker solicitation of their products using the insurer's application and sales brochures. [ See, e.g., Almerico, 716 So.2d at 777 (“Evidence of indicia of agency may be demonstrated if the insurer furnishes an insurance agent or agency with any blank forms, applications, stationery, or other supplies to be used in soliciting, negotiating, or effecting contracts of insurance.” (internal quotation marks omitted)).] Conversion of a broker to an agent has also been found when an insurer uses a broker as an agent for a single purpose. Finally, an agent licensed to sell insurance products for a variety of insurers as an independent insurance agent, may still be considered the agent of an insurer if the insurer has a written agency appointment agreement expressly authorizing the agent to transact business on behalf of the insurer as its agent.

“3 Russ & Segalla, supra § 45:5 (emphasis supplied) (footnotes omitted).”

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In Waters v. Miller, ____ F.3d ____ (11th Cir. April 15, 2009), Waters was rear-ended by Miller's tractor-trailer on November 29, 2005.  At the time of the accident, Miller was hauling cars from Florida to Georgia.  Miller carried commercial vehicle insurance with Progressive Express Insurance Company.  Progressive denied the claim asserting that the policy period was September 11, 2004 - September 11, 2005, and that the insured did not pay the premium to extend the policy past its expiration date of September 11, 2005.   

Waters filed a declaratory judgment action against Progressive, arguing that 1) pursuant to Florida Statue Section 320.02(5)(e), Progressive's policy remained in effect until Progressive notified the Florida Department of Highway Safety and Motor Vehicles that the policy had been canceled; and 2) Progressive knew or should have known that Miller was engaged in interstate trucking and that as a result, an MCS-90 endorsement should be read into the policy. 

Section 320.02(5)(e) states that a policy insuring commercial motor vehicles "may not be canceled on less than 30 days written notice by the insurer to the [FDHSMV]."  However, in this case, the 11th Circuit held that this statute does not apply when a policy expires as opposed to when a policy is canceled. 

Under the Motor Carrier Act of 1980, 49 U.S.C. Section 10101 et seq., and the regulations promulgated thereunder, certain interstate motor carriers must obtain an insurance policy containing an MCS-90 endorsement "providing that the insurer will pay within policy limits any judgment recovered against the insured motor carrier for liability resulting from the carrier's negligence[.]"  Coverage from policies containing an MCS-90 endorsement remains in effect until the insurance company gives 30 days' written notice to the FMCSA.  See, 49 C.F.R. Sections 387.15, 387.313(d). 

The Progressive policy at issue did not contain an MCS-90 endorsement, however, Miller argued that one should be incorporated into the Progressive policy because Progressive knew or should have known that Waters was engaged in interstate travel.  The 11th Circuit held that Waters did not present sufficient evidence to support a conclusion that Progressive knew or should have known Miller was driving the tractor-trailer interstate. 

Importantly, the 11th Circuit specifically held that because Waters failed to provide sufficient evidence that Progressive knew or should have known that Miller was engaged in interstate trucking the Court found it

unnecessary for us to reach the issue of whether the endorsement can be read into a policy that does not contain it, and we expressly decline to do so." 

In Footnote 3, the Court notes that "[s]ome court have incorporated the endorsement into policies as a matter of law." 

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My client is the beneficiary of an accidental death policy which was taken out on her fiance.  Tragically, her fiance was killed in a car accident.  The crash was caused by the other driver who was intoxicated.  Our client's fiance was also allegedly above the legal limit for alcohol.  The accidental death policy contains an exclusion for deaths that states "This certificate does not cover injuries received while under the influence of alcohol."  The insurance company denied the claim based on this exclusion. 

The insurance company has the burden of proving that the claim is excluded.  I have handled numerous cases such as this past, and frequently the insurance company has trouble carrying its burden.  Not only does the insurer have to prove that the decedent was intoxicated, but case law requires that the insurer also prove that the intoxication caused the death.  Here, the other driver lost control of his car, crossed the center line, and struck the decedent's car head-on.

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In Gables Insurance Recovery, Inc. v. Seminole Casualty Insurance Company, 34 FLW D672 (Fla. 3rd DCA April 1, 2009), the PIP insured received medical care from Atlantic Medical Specialty, Inc. and executed a document titled "ASSIGNMENT OF BENEFITS/POLICY RIGHTS."  This document purported to assign the insured's rights and benefits under her PIP policy to Atlantic although it failed to expressly name Atlantic as the medical provider/assignee referred to in the document.  Later, Atlantic assigned to Gables Insurance Recovery, Inc. any outstanding sums owed to Atlantic by the PIP insurer.

Gables then sued Seminole Casualty for outstanding amounts which Atlantic had billed to Seminole Casualty.  Seminole Casualty moved for summary judgment on two grounds: 1) the initial Assignment of Benefits to Atlantic was legally inadequate because it failed to name the purported assigner, Atlantic; and 2) that PIP benefits are not payable to third parties who did not render medical services.

On second-tier certiori review, the 3rd DCA ruled in favor of Gables and against Seminole Casualty.  The Court first determined that "any ambiguity regarding the identity of the initial assignee is easily rectified" by the fact that the insured submitted an affidavit confirming that she intended to assign the benefits to Atlantic, and that Atlantic was the provider to which the initial assignment refers.  (An assignment is a contract controlled by the intent of the parties). 

The Court then confirmed that the insured can assign the benefits of an insurance claim after a loss.  The Court then noted that Atlantic, as assignee, received all of the insured's rights including the right to further assign the policy proceeds.  Accordingly, Atlantic, standing in the shoes of the insured, was free to assign anything which it received by assignment. 

In its ruling, the Court cited a number of Florida cases allowing the assignment of insurance money after a loss, and recognizing that

a provision in a policy of insurance which prohibits assignment thereof except with consent of the insurer does not apply to prevent assignment of the claim or interest in the insurance money then due, after loss.

I pursue many cases on behalf of construction contractors, vendors, and medical providers under an assignment of benefits.  The insurance companies frequently - wrongly - allege that such assignments are improper because the policy prohibits assignments without the consent of the insurer.  This case, once again, confirms that such post loss assignments are valid.  

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Our client was the beneficiary of an ERISA life insurance policy that the decedent had taken out through his employer.  Tragically, the decedent was killed in a motor vehicle accident, and cocaine was detected in his system.  The life insurance policy contained an exclusion for deaths if a person is "under the influence of narcotics."  The life insurance claim was denied based on this exclusion. 

We were successful in forcing the insurance company to pay the life insurance proceeds based on two simple grounds. First, cocaine is not a narcotic.  We retained an expert pharmacologist who testified that narcotics are a derivative of opium, and are a depressant to the system; while cocaine is derives from the coca plant, and is a stimulant to the system.  In fact, they are pharmacologically opposites. 

Second, there is no level over which a person is considered "under the influence" of cocaine.  Thus, we argued that the ERISA insurer could not carry its burden of proof on this element of its exclusion.   

We filed suit on this case, but the insurer settled shortly after receiving our Motion for Summary Judgment. 

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In Hingson v. MMI of Florida, Inc., ____ So.2d ____ (Fla. 2nd DCA March 18, 2009), the trial court required the losing party to pay the prevailing parties attorney's fees.  However, the trial court refused to award prejudgment interest on the attorney's fees from the date which the prevailing party became entitled to the the attorney's fees. 

The 2nd DCA reversed this decision, and quoting the Supreme Court's in Quality Engineered Installation, Inc. v. Higley South, Inc., 670 So.2d 929, 930-31 (Fla. 1996), held that

interest accrues from the date the entitlement to attorneys fees is fixed through agreement, arbitration award, or court determination, even though the amount of the award has not yet been determined.

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In Holmstrom v. Metropolitan Life Insurance Company, 2009 WL 901127 (N.D. Ill. March 31, 2009), Holmstrom sued Metropolitan for terminating her long term disability payments.  Metropolitan counterclaimed seeking reimbursement from Holmstrom for an overpayment of LTD benefits which occurred when Holmstrom received a payment for back benefits from social security disability.  (The Metropolitan plan contained a provision that reduced the monthly LTD payments by the amount received from social security disability). 

The only way Metropolitan would be allowed to proceed on its counterclaim is if its claim was equitable in nature.  If Metropolitan's claim was not equitable in nature, then the court would not have jurisdiction.  In a lengthy analysis, and based on the Supreme Court's determination in Sereboff v. Mid Atlantic Medical Services, Inc., 547 U.S. 356 (2006), the Illinois district court determined that Metropolitan's claim was equitable in nature and granted summary judgment for Metropolitan on its counterclaim.

Holmstrom also argued, unsuccessfully, that Metropolitan did not assist her in obtaining the social security disability benefits, and therefore, Metropolitan waived its right to claim the overpayment.  While recognizing the potential viability of such a claim, the court stated that Holmstrom could not rely on such an argument where the LTD plan did not require the administrator to assist the beneficiary in seeking social security disability benefits. 

When evaluating a request by an LTD carrier for reimbursement, a careful analysis of whether the claim is actually "equitable" is foundational.  This case, along with Sereboff are essential starting points in that analysis. 

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