Articles Posted in Insurance Law

law-books-300x238Florida Motor Vehicle No-Fault insurance (“Personal Injury Protection” or “PIP”) is a form of medical insurance used for motor vehicle crashes. It is mandatory on vehicles registered in Florida. It covers owners, certain family members and passengers, and pedestrians. The typical policy limit is $10,000 reduced by deductibles ranging from $500 to $2,000.

PIP does not compensate the insured or anyone else for pain and suffering damages. This type of compensation comes from bodily injury (BI) and uninsured/underinsured motorist (UM/UIM) insurance. Florida is one of only a handful of states that does not require drivers to maintain BI insurance. (Besides PIP, the only other type of mandatory vehicle insurance is Property Damage — Liability. It pays for damage to the personal property of others.) Because BI and UM/UIM cost extra, a large percentage of Florida operators do not maintain them.

Neither BI nor UM/UIM cover medical expenses that are “paid or payable” by PIP. This is known as the PIP offset (or setoff). Example of a “paid” scenario and its consequences: $20,000 BI policy limit. $15,000 medical bill, reduced by the Medicare “Allowable” formula to $10,000. Assuming no deductible, PIP pays  $8,000, or 80%, leaving a $2,000 balance. Hence, the limit of liability to the at fault driver’s insurance company, the BI carrier, for past medical expenses, is $2,000 instead of $15,000. Accordingly, instead of offering $20,000 to settle the BI case, which approximates its exposure without the offset, the carrier may only offer $5,000 or $6,000. (These numbers are hypotheticals based on a typical case. In some instances, a case with $15,000 in medical charges, even with the PIP offset, can be worth hundreds of thousands of dollars, if not millions, depending on the injuries.)

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motorway-300x224Personal Injury Protection (PIP) is a type of insurance coverage that is mandatory on operational motor vehicles registered in Florida. See Florida statute 627.736. It provides “protection to the named insured, relatives residing in the same household, persons operating the insured motor vehicle, passengers in the motor vehicle, and other persons struck by the motor vehicle and suffering bodily injury while not an occupant of a self-propelled vehicle.” 627.736(1).  

Like most insurance carriers, PIP carriers are practiced at findings legitimate and some less than legitimate reasons for denying coverage, even for medical care provided in Florida. Standard excuses include application misrepresentation and failure to cooperate. Foreign care presents additional hurdles.

The greatest hurdle can be getting the foreign medical provider to even be able to comply with Florida’s unusual billing requirements. Besides having to use forms unique to America’s medical/insurance system — 627.736(5)(d) requires use of CMS/UB forms — the bills have to be provided (on those forms) within thirty-five (35) days of the furnishing of treatment. See627.736(5)(c). Florida law also requires the patient to execute a set of forms no foreign provider will have in its possession.

ATV-300x200Uninsured/Underinsured motor vehicle insurance (UM/UIM) – Florida Statute 627.727 — covers losses covered by bodily injury liability insurance (BI) but not available because the at-fault party did not maintain BI (UM) or the BI limit is insufficient to cover the full extent of the damages (UIM).

Subsection (2) of the UM/UIM statute provides that “[t]he limits of uninsured motorist coverage shall be not less than the limits of bodily injury liability insurance purchased by the named insured.” The typical application of this provision involves dollars: the UM policy limit must be the same amount as the BI policy limit. E.g., if the BI policy limit is $100,000, the UM/UIM limit must be $100,000.

In Amica Mutual Insurance Company v. Willis, Fla: Dist. Court of Appeals, 2nd Dist. 2018 (Opinion filed January 17, 2018), the court considered the same statutory provision in the context of a different scenario. Appellee Willis was injured by an uninsured golf cart. She sought coverage under her UM policy. The BI section of the policy provided liability coverage for damages resulting from an accident involving this type of motor vehicle, while the UM section excluded coverage. Relying on the UM exclusion, the insurance company denied coverage.

caduceus-1219484-mIn the upcoming healthcare debate, watch carefully for a Republican shell game. In his 60 Minutes interview, Trump professed support for prohibiting insurance carriers from denying coverage for preexisting medical conditions. Left unsaid is whether carriers will be allowed to charge higher premiums based on preexisting conditions, a practice banned under the Affordable Care Act (a/k/a “Obamacare”).

With “Profits Over People” representing a fundamental Republican theological belief, it seems likely that their healthcare plan will allow price gouging on this issue just like before the ACA, essentially making illusory the promise of coverage for preexisting conditions.

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car-insurance-policyFlorida law requires every owner or registrant of an operable personal use motor vehicle to maintain Personal Injury Protection (PIP) and Property Damage (PD) – Liability insurance. See Florida Statute 627.733 Required security. While other types of coverage are available under the standard Florida motor vehicle insurance policy, these are the only two that are mandatory. While a premium is charged for the other types of coverage, the value can be worthwhile. For example, the minimum mandatory coverage (PIP & PD – Liability) does not prevent the at-fault insured from losing driving privileges when an accident involves injuries. Bodily Injury (BI) insurance does.

Here is a summary of the various types of coverage available under the standard Florida motor vehicle insurance policy:

Personal Injury Protection (PIP).
This coverage is outlined in Florida Statute 627.736. For in-state accidents, PIP covers the named insured, relatives residing in the same household, persons operating the insured motor vehicle, passengers in such motor vehicle, and other persons struck by such motor vehicle while not occupying a self-propelled vehicle. For out-of-state accidents occurring within the U.S. and Canada, PIP covers the named insured and resident relatives if occupying a listed vehicle. Remember this: Out-of-state, out-of-vehicle, out-of-luck.

PIP pays:

  • 80 percent of reasonable or allowable accident-related medical expenses
  • 60 percent of lost wages
  • $5,000 death benefits

The typical PIP policy limit is $10,000 per person with a deductible of up to $2,000.

Property Damage Liability (F.S. 324.022). Covers damage to a third party’s property, including motor vehicles, walls, telephone poles, buildings, etc. The coverage travels with the insured, meaning it applies (with exceptions) when the insured is operating a non-listed vehicle. It may also cover a permissive user of a listed vehicle. The minimum policy limit is $10,000.

Bodily Injury Liability (BI) (324.021). Not mandatory in Florida. However, for those convicted of DUI, it is mandatory for a period of three years after  license reinstatement. For convictions before October 1, 2007, the minimum coverage limits are $10,000 per person/$20,000 per accident. On or after October 1, 2007: $100,000/$300,000.

BI covers for injuries and loss of life caused by the insured while operating certain listed vehicles. It may also afford coverage to the insured while operating a non-listed vehicle, like a friend’s car. An added bonus of maintaining BI is that the insurance carrier will furnish a legal defense on its tab. The minimum BI coverage limits are $10,000/$20,000. The maximum can be whatever the insured desires and can afford. Umbrella insurance is a way of increasing limits while saving on cost.
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UberUber is an app-based transportation service company. The company arranges for service through private motor vehicle owners.

Naturally, some Uber drivers cause accidents. However, Uber does not require its Florida drivers to maintain bodily injury (BI) liability insurance. (BI is a type of liability insurance which compensates for personal injuries and economic losses caused by an at-fault party.) Moreover, Uber considers itself and its drivers  exempt from §324.032 Florida Statutes, which requires owners or lessees of one or more taxicabs, limousines, jitneys, or “any other for-hire passenger transportation vehicles” to maintain 24-hour commercial liability insurance with limits of $125,000/250,000/50,000. Finally, Uber argues that its drivers are independent contractors, a position which, if correct, would shield Uber from liability for driver negligence. See § 440.02(15)(d) Florida Statutes for a comprehensive statutory definition of “independent contractor.”

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gavel-952313-mFlorida Statute §627.737(2) provides that a plaintiff may recover tort damages for pain, suffering, mental anguish, and inconvenience because of injury arising out of the use of a motor vehicle only if that injury or disease consists in whole, or in part of: (a) significant and permanent loss of an important bodily function; (b) permanent injury within a reasonable degree of medical probability, other than scarring or disfigurement; (c) significant and permanent scarring disfigurement; or (d) death.* A plaintiff failing to meet any of these thresholds may recover only economic damages, such as medical expenses or lost wages

Florida law allows lawsuits against insurers whose denial of meritorious claims is in bad faith. Two types of bad faith claims are recognized: Common law, in the third party context only, and statutory (§625.155 Florida Statutes). Reasonable diligence and ordinary care are material in determining bad faith. See Campbell v. Gov’t Employees Ins. Co., 306 So.2d 525, 530-31 (Fla.1974).

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caduceus-1219484-mMost Florida hospitals and many doctors have contracts with health insurance companies to provide services to covered insureds at discounted rates. The arrangement requires those providers to bill the carriers for covered services without seeking payment from insureds through self-pay and other sources such as third party liability insurance. Some contracts allow providers to collect copayments.

We are currently handling a car crash case involving a local hospital that purposely failed to bill our client’s health insurance company with the expectation of receiving more money from the proceeds of our client’s settlement with the at-fault driver’s bodily injury liability insurance company. The hospital filed a lien for charges totaling more than $39,000 for a three hour emergency room visit. (The hospital is located in Miami-Dade County. An old Dade County ordinance grants hospitals lien rights. However, the lien does not take precedent over contractual obligations between hospitals and insurers.) It received $8,000 from our client’s PIP insurance — not to be confused with health insurance — leaving a $31,000 balance. (We are questioning the hospital’s right to bill PIP. The money it received could have been used to pay medical providers who do not accept our client’s health insurance.) Since the bodily injury policy per person limit is $25,000, something has to give. (Bodily injury liability insurance provides coverage in case you cause an accident in which another person (or people) is hurt. It covers the damages that you are legally responsible for, and provides a legal defense if someone sues you for damages.)

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scales.jpgInsurance companies selling coverage in Florida have a fiduciary obligation to protect their insureds from judgments exceeding the limits of their insurance policies. Berges v. Infinity Ins. Co., 896 So.2d 665 (Fla. 2004). The obligation was well articulated in Boston Old Colony Insurance Co. v. Gutierrez, 386 So.2d 783 (Fla.1980):

An insurer, in handling the defense of claims against its insured, has a duty to use the same degree of care and diligence as a person of ordinary care and prudence should exercise in the management of his own business. For when the insured has surrendered to the insurer all control over the handling of the claim, including all decisions with regard to litigation and settlement, then the insurer must assume a duty to exercise such control and make such decisions in good faith and with due regard for the interests of the insured…. The insurer must investigate the facts, give fair consideration to a settlement offer that is not unreasonable under the facts, and settle, if possible, where a reasonably prudent person, faced with the prospect of paying the total recovery, would do so. Because the duty of good faith involves diligence and care in the investigation and evaluation of the claim against the insured, negligence is relevant to the question of good faith.

Ordinarily, “[t]he question of failure to act in good faith with due regard for the interests of the insured is for the jury.” Gutierrez, 386 So.2d at 785; see also Campbell v. Gov’t Employees Ins. Co., 306 So.2d 525, 530-31 (Fla.1974) (“[R]easonable diligence and ordinary care [are] material in determining bad faith. Traditionally, reasonable diligence and ordinary care are considerations of fact — not of law.”).

In Florida’s civil justice system, unless a court is sitting as the trier of fact, which is the exception rather than the rule, the court’s role is typically limited to ruling on matters of law, leaving fact questions to be resolved by juries. Only when pleadings and evidence properly filed show that there is no genuine issue as to any material fact, is the court supposed to enter judgment as a matter of law. This is called Summary Judgment. See FRCP 1.510. Given the importance of juries in the civil justice system, the procedure is supposed to be used sparingly and with caution. (Citations omitted because they are so plentiful.)

Unfortunately, some Federal court trial judges have chosen to ignore this admonition. What follows is a discussion of some recent Federal Court insurance bad faith cases.

Harris v. GEICO General Ins. Co., 961 F. Supp. 2d 1223 (S.D. Fla. 2013). The jury returned a verdict for Harris, the insured, concluding that Harris proved to a preponderance of the evidence that Geico acted in bad faith in failing to settle her claim during the 60-day safe harbor period (Fl. Stat. § 624.155(1)(a), (b)(1)). Geico moved for judgment as a matter of law during trial and renewed its motion subsequent to the jury verdict. Federal trial court judge Kenneth L. Ryskamp granted GEICO’s motion. He made the following points: (1) Fusion surgery was performed after the bad faith action was filed; (2) GEICO was not provided with evidence of a permanent impairment before the bad faith action was filed; and (3) the statutes (Fl. Stat. § 627.727(10) and § 624.155) do not say that the damages are what a jury awarded in an underlying liability action. See Geico General Ins. Co. v. Bottini, 93 So.3d 476 (Fla. 2d DCA 2012) (Altenbernd, J., concurring); King v. Government Employees Ins., Co., 2012 WL 4052271, No. 8-10-cv-977-T030-AEP (M.D.Fla. Sept. 13, 2012).

Coulter v. State Farm Mut. Auto Ins. Co., No. 4:12cv577-WS/CAS (N.D. Fla. 2014). The trial court entered Summary Judgment for State Farm. While the facts, which were convoluted, were not so much in dispute, the trial judge nevertheless took it upon himself to rule that the carrier’s actions did not amount to bad faith as a matter of law. The court’s action flies in the face of black letter law that “[t]he question of failure to act in good faith with due regard for the interests of the insured is for the jury.” The court’s opinion sets forth the facts in great detail. It’s an interesting read for how everyday issues are handled.

Houston v. Progressive American Ins. Co., No. 8:13-cv-194-T-35AEP (M.D. Fla. 2014). A multi-claimant case with limited insurance coverage involving varying degrees of injuries and a global settlement. The most seriously injured claimant alleged that Progressive acted in bad faith by scheduling a global settlement conference rather than tendering the policy’s $10,000 per person limit upon learning of her injuries. The court disagreed, granting Summary Judgment in Progressive’s favor. The court did, however, concede that there could be instances “in which the injuries to a specific victim are so grave, the injuries to the remaining potential claimants are so minor, and the concomitant documentation and information before the insurer of those injuries is so clear, that a duty arises on the part of the insurer to jettison the global settlement approach, which it unquestionably has the discretion to choose [italics added for emphasis], and make a full tender to the gravely injured victim.”
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scales of justice.jpgI have blogged here ad nauseam about the continual conflict between insurance companies and their insureds over claims. While carriers insist upon receiving premium payments timely, their all too common approach to the claims process is delay and deny.

Carriers have at their disposal a bag of tools designed to effectuate this delay/deny business model. Examination Under Oath (EUO) (an oral examination conducted under oath by an insurance company of an insured making a claim under a policy), Independent Medical Examination (IME), appraisal, policy application misrepresentation, refusal to cooperate are just some of the tools at their disposal. Some are statutorily prescribed, others are a matter of contract.

An insurance policy is a contract. While statutes control various rights and obligations between carriers and insureds, the terms of the insurance policy determine many others.

Courts frequently become embroiled in conflicts involving the application of contested policy provisions. One such conflict of significance was fought out in State Farm v. Curran, (Fla. 2014). The Florida Supreme Court framed the conflict as follows:


Curran, State Farm’s insured, sustained catastrophic injuries in a vehicle crash. Because the at-fault party’s insurance coverage was inadequate, Curran demanded from State Farm the $100,000 in UM available under his own policy. He gave State Farm thirty days to tender the money, estimating his damages to be $3.5 million because she suffered from reflex sympathetic dystrophy syndrome (RSD) type 1. On the 29th day, State Farm demanded that Curran undergo a Compulsory Medical Exam (CME) pursuant to the terms of the policy. Curran refused and proceeded to sue State Farm. A jury trial culminated in an award of $4,650,589 in damages to Curran.
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