Today, State Farm and the Florida Office of Insurance Regulation announced an agreement for State Farm to remain in Florida. A copy of the Consent Order between the state and State Farm can be downloaded by clicking here.
State Farm's dispute with the state began with a request by State Farm for a 67.1 percent rate increase. In the Consent Order, the state did agree to a 14.8 percent rate increase.
In Palm Beach Polo, Inc. v. TJ Palm Beach Associate, L.P., ____ So.3d ____ (Fla. 4th DCA November 25, 2009), the trial court granted TJ Palm's motion for attorneys fees and awarded fees.
Palm Beach Polo appealed, arguing that the trial court failed to make express written findings in its order as to the time reasonably expended by, and the hourly rates of, Appellee's attorneys. As to the number of hours expended, the 4th DCA reversed, and ordered the trial court to set forth with specificity the reasonable number of hours expended by Appellee's attorneys. The DCA found that the trial court's failure to set forth a specific hourly rate was harmless "because the court referenced another portion of the record which listed those rates, thereby adopting the rates as reasonable."
Defective Chinese drywall is a huge problem. Not only does it stink, but it also causes other parts of the home to corrode. What is covered, and what is not?
It appears that any damage to the home resulting from the Chinese drywall should be covered. Chinese drywall causes many of the components of the home to corrode and deteriorate. Resulting damages include corrosion to metal studs, metal lath, nails and screws, air-conditioning equipment, pipes, coils, wiring, furniture, fixture, and jewelry. Those "ensuing losses" should be covered, even if the policy does not provide coverage for the tearing out and replacing the defective drywall.
If an insurer alleges that the policy excludes corrosion or deterioration, keep in mind that that exclusion only applies to a losses that are due to a quality in the product that causes the property to damage or destroy "itself." It does not apply to deterioration or corrosion that is caused to another item. In the context of Chinese drywall, the drywall is not destroying itself, but is destroying other items.
Whether or not losses due to the fumes from the Chinese Drywall would be excluded under a pollution exclusion will be addressed in a forthcoming blog.
In The Florida Insurance Guaranty Association, Inc. v. Shadow Wood Condominium Association, ____ So.3d ____ (Fla. 4th DCA December 2, 2009), FIGA moved for appraisal of a condo claim. The insured argued that FIGA's predecessor waived its right to demand appraisal by failing to provide the insured notice of the state sponsored mediation program pursuant to 627.7015(2).
Subsection (2) of 627.7015 requires the insurer to "notify all first-party claimants of their right to participate in the mediation program under" section 627.7015 "[a]t the time a first-party claim within the scope of this section is filed." Citing subsection (7), the court noted that:
If an insurer fails to comply with the section 627.7015(2) notice requirement, then the insured shall not be required to submit or participate in any contractual loss appraisal process of the property loss damage as a precondition to legal action for breach of contract against the insurer for its failure to pay the policyholder's claims covered by the policy.
The court then noted that the predecessor insurer did not properly notify its insured of the availability of mediation, and then held:
Because FIGA is bound by Southern Family's failure to notify Shadow Wood of the availability of mediation, we hold that Shadow Wood was not required to submit to the loss appraisal process sought by FIGA.
The 4th DCA made a similar finding in another case released at the same time. See, The Florida Insurance Guaranty Association, Inv. v. Devon Neighborhood Association, ____ So.3d ____ (Fla. 4th DCA December 2, 2009).
In Central Magnetic Imaging Open MRI of Plantation, Ltd a/a/o v. State Farm Fire and Casualty Insurance Company, ____ So.3d ____ (Fla. 4th DCA November 18, 2009), State Farm received an MRI bill on one of its PIP insureds. State Farm sent the MRI bill and its PIP insured's medical records to be reviewed by its own physician to determine if the MRI was reasonable, necessary and related to a motor vehicle accident. State Farm did not have its PIP insured physically examined by its physician.
Based on the report for the reviewing physician, State Farm denied payment for the bill. The MRI facility, as assignee of the insured, filed suit against State Farm for breach of the insurance contract. On summary judgment in the county court, the MRI facility argued that State Farm was required by 627.736(7)(a) to obtain a "valid report" prior to denying the MRI bill. The MRI facility argued that an essential element of a "valid report" was that State Farm had to obtain a physical exam of its insured prior to denying the bill. The county court agreed, but the circuit court reversed finding that no physical examination was necessary.
The 4th DCA denied the petition for certiorari, finding that the circuit court applied the correct law. According to the 4th
We conclude, in line with the Third District Court of Appeal, that the 'valid report' required by the statute does not require an insurer to order an IME before denying a claim for PIP benefits.
In a footnote, the 4th did note that
Although the issue was not raised in this case, we note that other districts have held that the valid report requirement of section 627.736(7)(a) does not apply at all in a case such as this.... [However, in this case, t]he insurer conceded that the valid report requirements applied to the claim in this case.
As previously noted in this blog, numerous cases have held that 627.736(7)(a) only applies to the withdrawal of future benefits, and section (4)(b) applies to the denial of a past bill. Section (4)(b) does not require a report at all. Section (4)(b) merely requires an insurer to provide "reasonable proof" that the bill is not owed, and such "reasonable proof" can be produced at any time.
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