Articles Posted in Insurance Law

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Reproduced below is a letter published in the September/October 2010 issue of The Florida Bar Journal. It was written by my friend, collegue, superb trial lawyer, and advocate for the underprivileged, Cris Boyar. The letter exposes the dirty propaganda disseminated by the insurance industry regarding PIP (Personal Injury Protection) lawsuits. A must read.

Elimination of PIP Multipliers Response

I read the slanted article, “Putting the Lid Back on Pandora’s ‘Jar’: A Clarion Call for the Elimination of Contingency Risk Multipliers in Florida PIP Litigation,” by insurance defense lawyers Douglas Stein and Donald Blackwell in the July/August issue. While it is long on words, it is clearly short on reality. The article fails to mention that insurance companies drive up legal fees by causing expensive and protracted litigation. In the real world, insurance companies not only routinely and unreasonably deny valid claims, but when sued, the insurers file frivolous defenses, deny admissions that should be admitted, propound significant discovery, object to basic discovery, force countless hearings, schedule numerous unnecessary depositions of collateral witnesses, and demand jury trials that can last for days. If the insurer loses, it demands attorneys’ fees hearings and files appeals. Then, after all of the litigation that it caused, the insurer complains the legal fees awarded against it are too high and do not bear a relationship to the amount in controversy. The hypocrisy is obvious to those who sue insurance companies for denying valid claims.

If an insurer wants to limit its exposure to legal fees and costs, it can simply pay valid claims timely. It could also pay the claim in response to the statutorily mandated presuit demand letter, which allows 30 additional days to pay without risk of paying attorneys’ fees. If it is sued for not paying a claim, it can instruct its defense lawyers to agree to a bench trial, admit allegations and admissions, and agree to narrow the issues. If the insurer believes it will lose the case, the insurer, at any time, can simply confess judgment to stop the clock. Alternatively, the insurer can file an offer of judgment. If the insurer then prevails in the litigation, the insurer will be reimbursed its attorneys’ fees and costs by the insured or the medical provider.

Rather than fall prey to insurance industry propaganda, the public should realize the insurance industry has embarked on a strategic campaign designed specifically to poison the pool of potential jurors and bar its insureds’ access to courts, while at the same time filling its coffers with premiums Florida citizens are legislatively mandated to pay.

It must be pointed out that multipliers are very rarely awarded in PIP cases. Most lawyers who handle PIP claims reject a significant number of cases for various reasons. The unfortunate result is that many insureds and medical providers have no recourse when the insurers wrongly and routinely deny valid PIP claims. This is exactly what some of the billion dollar insurance companies hope to accomplish. Accepting premiums and denying claims is a very profitable business model.

The multiplier is the only tool available to encourage competent counsel to accept the most difficult cases that virtually every other lawyer would reject. The applicability of the multiplier should be preserved by the legislature. The trial judges, observing the conduct of counsel for both sides, should be trusted to make the correct decision based on existing Florida law.
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To the surprise of many, most of the doctors who work in Florida’s hospital emergency rooms are not hospital employees. Instead, they are independent contractors. (It is quite rare for Florida hospitals to employ their ER physicians.) Equally surprising is that Florida law does not hold a hospital liable for a doctor’s negligence simply because the hospital grants privileges or credentials to the doctor, unless there was negligence in the credentialing. These matters become important when emergency room malpractice causes serious personal injuries and death.

With the reality of arbitrary statutory damage caps limiting the monetary exposure of medical negligence defendants, it is often necessary [for the victim or the victim’s family] to recover from multiple parties to be justly compensated for serious injuries or death. For such damages resulting from negligent emergency room services, the hospital would seem to be a natural target. Not so.

Today’s hospitals typically take the position that the doctors working in their emergency rooms are independent contractors, individuals for whom they have no legal liability when things go wrong. Strictly speaking, they may be right. Independent contracts are not employees, whose negligence subjects the employer to liability under the principle of respondeat superior (the Latin meaning is ‘let the master answer’).

Thankfully, Florida law does not accept the strict view of this consequential subject.

The main legal principles being used to hold hospitals accountable are:

  • Non-delegable duty
  • Actual agency
  • Apparent agency
  • Negligent credentialing

Non-delegable duty. This theory, which is not limited in its application to medical negligence cases, is most often utilized for activities involving the risk of serious injury or loss. In the context of emergency rooms, the risk is addressed by statutes and rules which set forth strict guidelines for modes of operation. Recent court decisions have relied on these rules and regulations to find that hospitals have a non-delegable duty to provide various non-negligent services in its emergency rooms.

Actual agency. The elements necessary to establish an actual agency relationship are: acknowledgment by the principal that the agent will act for him, the agent’s acceptance of the undertaking, and control by the principal over the actions of the agent.

Apparent agency.The main element of this principle is the impression through words and actions a hospital conveys to the public about its ER. Through advertising and appearance (e.g., uniforms; logos; paperwork; etc.), the general public can reasonably believe that an ER’s physicians are hospital employees. This is usually a fact question requiring a decision by the trier of fact, typically a jury.

Negligent credentialing. Involves granting privileges to an unqualified physician to practice medicine in the hospital. The mechanism for allowing a doctor to ply his trade in a hospital setting is supposed to be more than a rubber-stamp process. Thoughtful consideration based on rigorous standards should be followed.
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Florida insurance adjusters often argue that vehicles sustaining damage costing in excess of 80% of fair market value (or replacement cost) to repair, must be declared a total loss. The argument is made with such conviction that most people, including many attorneys, believe it is true. It is not true. It is an urban myth.

The truth is that insurance companies must pay for repairs costing up to 100% of fair market value. (Florida Statute 319.30(3)(a)2.)

For many owners, repairing makes more sense than replacing. This is especially true for owners who owe little or no money on their vehicle.

Replacement usually requires owners to lay out more money than they receive as fair market value from the insurance companies. The main reason why is because insurance companies use databases that understate fair market value. Thus, the carriers try to pay less than the actual replacement cost.
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“Umbrella” insurance is a relatively inexpensive way to obtain significant increases in important insurance policy coverage limits.

Consumers are familiar with motor vehicle and homeowners insurance policies. They are separate policies covering separate and distinct risks. Each has its own policy limits and premium charge.

Umbrella insurance is a distinct coverage that is purchased as a stand alone package to supplement other, separate policies, such as the the motor vehicle and homeowners examples mentioned above.

Example: A motor vehicle policy may provide bodily injury coverage of $10,000 or even $100,000. Separately, the homeowners policy (similar renters insurance is also available) may provide the same coverage limit.

Bodily injury coverage pays for personal injuries and death caused by the insured’s negligence. Although $100,000 in coverage is enough in most cases, in some cases it is not nearly enough. Some serious injuries command $1,000,000 and more in damages, while wrongful death damages can reach into the multiple millions. In these cases, the protection afforded by the primary policy is insufficient. This is where umbrella coverage comes into play.
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Personal Injury Protection (PIP) (also known as No-Fault Insurance) is one of the few coverages in Florida that is mandatory in most motor vehicle insurance policies. (See this blog about “Full Coverage.”) Its primary function is to pay the medical expenses and lost wages of those individuals injured in motor vehicle accidents. (Which individuals are covered is another subject and beyond the scope of this blog.) However, unbeknownst to many lawyers and lay people alike, the PIP statute also provides for the payment of “Death Benefits.” (See Florida Statute Section 627.736(1)(c) (2008).)

The maximum dollar amount of coverage available under PIP is $10,000. Of this $10,000, only $5,000 is available for death benefits under Section 627.736(1)(c).
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Most Florida motor vehicle insurance policies extend coverage to its insureds for accidents involving temporary substitute automobiles. The typical requirements of the insurance policy provision are that the vehicle is used as a substitute for the owned auto when withdrawn from normal use because of its breakdown, repair, servicing, loss or destruction AND with the permission of the owner. A substitute vehicle can include a rental car.

In Geico Insurance Company v. Shazier, So.3d , 35 FLW D539 (Fla. 1st DCA 3-10-2010), the permission element of the insurance provision was put to the test. The insured lost.

Kutusha Shazier and her husband were insureds under a motor vehicle policy with GEICO. Due to mechanical problems with her Ford Expedition, Kutasha rented a vehicle from Avis Rent-A-Car System. The rental agreement provided that only Kutasha Shazier was allowed to operate the vehicle and if the provision was violated, the rental agreement was automatically terminated.

Without permission from Avis, Shazier allowed another person to operate the vehicle. That person caused a serious accident resulting in injuries to numerous passengers and one fatality.
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From reading United Automobile Insurance Company’s blog page, one could be mislead into believing that every claim made against United is frivilous. This is not my personal experience or that of most other lawyers familiar with United.

A simple inspection of the County Court records for Miami-Dade and Broward Counties will reveal a nearly countless number of resolved PIP (Personal Injury Protection) cases against United Automobile Insurance Company resulting from favorable Plaintiff settlements or verdicts, and an active docket of ongoing cases that, I daresay, will conclude in similar fashion. United’s unidentified blogger fails to disclose this crucial information, choosing instead to suggest that one or two cherry-picked unusual situations demonstrate the whole picture. They do not.

My recent experience: On Monday, May 10, 2010, I settled a PIP case with United inside the Miami-Dade courthouse shortly before our jury trial was scheduled to begin. The lawsuit had been filed in June of 2008 for the payment of PIP benefits to a United insured for medical services and physical therapy provided at Orthopedic Care Center (Aventura) under the guidance and control of a board certified orthopedist (the highest certification an orthopedist can achieve) for injuries resulting from a moderately serious motor vehicle accident.
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Florida’s maze of motor vehicle insurance laws can be difficult to comprehend.

A case in point: Personal Injury Protection (PIP) and Property Damage – Liability are the only required coverages for an owner to lawfully operate his/her vehicle on Florida’s streets and highways. (PIP pays 80% of medical bills and 60% of lost wages for the insured up to $10,000, while Property Damage – Liability pays to repair or replace the other owner’s motor vehicle.) With these coverages, the vehicle owner is able to purchase a license plate and a vehicle registration.

Surprisingly, however, in the event of a motor vehicle accident involving injury or death, having the minimum mandatory coverages will not prevent the at-fault party from having her drivers license and all vehicle registrations from being suspended. Sections 316.066(3)(a)1 and 324.051(2)(a) Florida Statutes.

The type of insurance coverage that will prevent the suspensiong is Bodily Injury (a/k/a liability insurance) in the minimum amounts of $10,000 per person/$20,000 per accident. Section 324.021 (7) Florida Statutes.
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Unlike prior PIP statutes that applied the “usual and customary” standard to determine allowable charges for medical services, Florida’s 2008 version (627.736), mostly mandates that allowable charges are 200% of prospective payments for the same services under Medicare Parts A & B. (Main exceptions: emergency transportation and emergency hospital services.)

For the most part, the Medicare tie-in reduces the amounts payable to medical providers, and because the PIP statute also explicity prohibits medical providers from balance billing beyond the 20% remaining after PIP’s 80% payment of allowable charges (627.736(5)(a)5.), the Plaintiff’s (patient) out-of-pocket medical expenses are likewise reduced. No longer may a medical provider seek full reimbursement from the patient for charges unpaid after the receipt of PIP payments. Doing so under the 2008 PIP statute is an actionable offense.
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law books.jpgFlorida Statues may allow PIP carriers to conduct medical examinations and perform paper reviews, but no authority, including the statute itself, grants PIP carriers license to reference those procedures as an “IME,” “Independent Medical Examination,” or a “Peer Review.” In short, PIP carriers have created the terms out of whole cloth to mislead juries.

The doctors are not independent or conducting peer reviews. (Merriam-Webster Dictionary’s only definition of “peer review” is: a process by which something proposed (as for research or publication) is evaluated by a group of experts in the appropriate field.) They are hired by the defense and paid by the defense. If the jury hears that doctors are “independent” or a “Peer Review,” the jury may be confused into believing or thinking the doctors were appointed by the court, a governing body, or with the approval of the Plaintiff or the Plaintiff’s attorney.

When preparing for trial, the Plaintiff’s attorney should consider moving the court for an In Limine order preventing the insurance company from perpetuating the falsehood.
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