Article on PIP Constitutionality

8/7/2019 Article on PIP Constitutionality

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household, persons operating the insured vehicle, passengers in the insured

vehicle, and pedestrians struck by the insured motorist.3 PIP pays 80 percentof all reasonable expenses for medically necessary medical services. Itadditionally pays 60 percent of lost wages caused by the injury in the autoaccident. Insured may also recover 100 percent of replacement services(child care, housekeeping, and yard work), and a $5,000 death benefit.4 Theowner-operator of the PIP-insured vehicle is immune from tort actions for pain, suffering, mental anguish, and inconvenience arising out of theaccident, except in cases of: (1) permanent loss of an important bodilyfunction; (2) permanent impairment and injury within a reasonable degree ofmedical probability; (3) permanent scarring or disfigurement; or (4) death.5

These provisions are known as the verbal threshold which means thatclaimants must meet one of these specific criteria regarding the type of injury

or severity of disability to file a liability claim for non-economic damages. 6A party may sue for economic damages not covered by PIP, such as the 20percent of medical bills and amounts that exceed the $10,000.00 limit.Insurers are required to offer a PIP policy with a deductible of up to$1,000.00. Florida law allows other limited alternatives to the standard PIPpolicy, relating to the limit of coverage, the percentages of expenses paid anda preferred provider option.

At the present, only twelve states mandate no fault insurance:Delaware, Florida, Hawaii, Kansas, Massachusetts, Michigan, Minnesota,New York, North Dakota, Oregon, Utah and Texas.7 No-Fault insurancemay be rejected by motorists in the choice states of Kentucky,Pennsylvania and New Jersey.8 Could there be a reason why thirty-five other

states, choose not to offer no-fault insurance at all? Perhaps Florida motorvehicle owners may find that the current quid pro quo, is not what Floridiansoriginally bargained for; as such, PIP could be a unconstitutionaldeprivation of our rights and be a far cry from the great expectations thatproponents and reformers once held.

This article will focus on development of Floridas Motor VehicleNo-Fault Law and, in particular, the evolution of the statute. The first part ofthis article will describe the legislative purpose and origins of the FloridaMotor Vehicle No-Fault Law concerning PIP. The second part of this articlewill examine 26 years of case law that mandated that PIP be paid in a swiftfashion. Then in the third part, this article will discuss the impact of PIPfraud and abuse on the subsequent amendments to the statute. Finally, this

3 FLA. STAT. 627.736(4) (2009).4 FLA. STAT. 627.736(1) (2009).5 FLA. STAT. 627.737 (2009).6Meyer v. Hutchinson, 861 So.2d 1185 (Fla. 5th Dist. Ct. App. 2003).7 Florida Senate Interim Project Report No. 2008-102, The Effect of Repealing the

Florida No-Fault Law, at 8 (2007) [hereinafter Senate Interim Report No. 2008-102].8Id.

2 THE PIP NO-PAY PLAN


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article will discuss whether PIP remains constitutional, after the most recent

legislative changes.

II. THE ORIGINS OF FLORIDA PIP

In 1971, Massachusetts became the first state to pass legislation that brought No-Fault automobile insurance to its citizens. Later that year,Florida became the second state to do so.9 After this time, as many as twentystates came to require no-fault insurance, but five subsequently went on torepeal those requirements.10 The Florida Legislature in coming to itsdecision to provide no-fault insurance for Florida citizens elected to do so toaccomplish several public policy goals: (1) to assure that persons injured in

vehicular accidents would be directly compensated by their own insurer,even if the injured party was at fault11; (2) to lessen court congestion anddelays in court calendars by limiting the number of law suits12; (3) to end theinequities of recovery under the traditional tort system13; and (4) to lowerautomobile insurance premiums.14

However, in exchange, an accompanying tort exemption was enactedunder FLA. STAT. 627.737(1) (1971), which read as follows:

In any action of tort brought against the owner, registrant,operator, or occupant of a motor vehicle with respect towhich security has been provided as required by ss. 627.730-627.741, or against any person or organization legally

responsible for his acts or omissions, a plaintiff may recoverdamages in tort for pain, suffering, mental anguish, andinconvenience because of bodily injury, sickness, or diseasearising out of the ownership, maintenance, operation, or useof such motor vehicle only in the event that the benefitswhich are payable for such injury under s. 627.736(1) (a) orwhich would be payable but for any exclusion or deductibleauthorized by ss. 627.730-627.741 exceed $1,000 or theinjury or disease consists in whole or in part of permanentdisfigurement, a fracture to a weight-bearing bone, a

9 Florida Senate Interim Project Report No. 2006-102,Floridas Motor Vehicle No-

Fault Law at 1 (2005) [hereinafter Senate Interim Report No. 2006-102].10 Nevada (repealed 1980); Pennsylvania (repealed 1984; reenacted 1990); Georgia(repealed 1991); Connecticut (repealed 1993); and Colorado (repealed 2003).11 FLA. STAT. 627.731 (1971).12SeeNational Car Rental v. Sanchez, 349 So. 2d 829 (Fla. 3d Dist. Ct. App. 1977).13 Union American Ins. Co. v. Lee, 625 So. 2d 112 (Fla. 4th Dist. Ct. App. 1993)(holding that attempting to use liability release language to get an insured to waiveall future PIP claims, violates the public policy behind the no-fault law prohibitinginequity of recovery).14SeeSmiley v. Nelson, 805 So. 2d 870 (Fla. 2d Dist. Ct. App. 2001).



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compound, comminuted, displaced or compressed fracture,

loss of a body member, permanent injury within reasonablemedical probability, permanent loss of a bodily function, ordeath. Any person who is entitled to receive free medical andsurgical benefits shall be deemed in compliance with therequirements of this subsection upon a showing that themedical treatment received has an equivalent value of atleast $1,000. Any person receiving ordinary and necessaryservices normally performed by a nurse from a relative or amember of his household shall be entitled to include thereasonable value of such services in meeting therequirements of this subsection.

As a result, the bargain had been struck and an arms length transaction hadtaken place. Section 627.736 would serve as the shield that provided injuredmotorists with the safety and security of speedy compensation for payment ofmedical bills and lost wages, but section 627.737 would serve as the tort-reforming sword. This new weapon would allow liability insurers to strikedown any claims for reimbursement of bills for medical treatment renderedgreater than 20%, and claims for non-economic damages (pain and suffering)submitted to carriers under the bodily injury (BI) portion of the liabilitypolicy, that could not pass a threshold requirement.15

The full effect of this approach is best demonstrated by examiningthe case of Mansfield v. Rivero.16 In Mansfield, the Riveros and theMansfields were involved in an automobile accident in which Rosa Rivero

allegedly sustained permanent physical injuries that left her in constant painand deeply depressed.17 Riveros PIP insurer denied payment and Riverowas unable to recover 80% of her medical expenses.18 Additionally, at trial,the jury did not find that Rivero was able to demonstrate that her injuriessatisfied the threshold requirement.19 The judgment only included 20% ofthe medical expenses not payable under PIP, Rivero was unable to recoverthe remaining 80% and any amount for pain and suffering. 20 The Third

15Hannah v. Newkirk, 675 So. 2d 112 (Fla. 1996). InHannah, plaintiff was unableto convince a jury that her injuries exceeded the threshold requirement at trial. Id. at113. He was awarded $7,420.50, which represented reimbursement for medicalexpenses and lost wages. Id. At defendants post-trial motion for remittitur, bothparties agreed to reduce the jury verdict by $4,274.22, the amount plaintiffs PIP

carrier was responsible for. However, defendant further argued that plaintiffsdeductible should reduce the remainder further, because he argued that plaintiffHannah was self-insured for the amount of the deductible. Id. at 114. The FloridaSupreme Court agreed and held that defendant Newkirk was tort exempt from payingthe amount of the deductible. Id.16 620 So. 2d 987 (Fla. 1993).17Id. at 988.18Id.19Id.20Id.



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District Court of Appeal disagreed with the trial court and reversed, directing

the trial court to award 100% of the medical expenses.21 The FloridaSupreme Court reversed the decision of the Third District, striking the awardand finding that the application of section 627.737 precluded recovery of the80%, where Rivero had only suffered a non-threshold injury.22

The Florida Supreme Court, in deciding the case in this fashion,seemed to ignore the dangers it warned of, in the earlier case ofKluger v.White.23 In 1971, the Legislature, had similarly attempted to create no-faultinsurance with respect to claims for property damage (PD).24 The provisions of the now repealed section 627.783, provided that motoristscould elect basic coverage (liability only) and full coverage (liability and no-fault insurance).25 A damaged party involved in an automobile accidentcould not pursue a PD claim against an at-fault tortfeasor unless the amount

of damages exceeded $550.00.26 Klugers car would cost $774.95 to repair,but that exceeded the fair market value (FMV) of the car, which was only$250.00.27 Her damages had to be limited to the FMV by law, 28 and thuswere below the monetary threshold, barring her recovery.29 The FloridaSupreme Court held that depriving her of due process accordable to the$250.00 FMV amount violated her equal protection rights under Fla. Const.,art. I, 2, and U.S. Const., amend. XIV, 1. In so doing, the Legislaturedeprived her of access to courts under Fla. Const., art. I, 21. 30 The FloridaSupreme Court subsequently held that section 627.738 was unconstitutionalas written, because the Legislature eliminated a constitutionally protectedremedy without providing a reasonable alternative.31

21Id. at 989.22Id. at 990 (Accordingly, because the record reflects that both the Mansfields andthe Riveros had PIP coverage as required by the statute, and because the jury foundthat no permanent injury existed, the Mansfields were exempted from tort liability bythe express provisions of section 627.737(1) to the extent that PIP benefits would bepayable under the Riveros' PIP policy.)23 281 So. 2d 1 (Fla. 1973).24 FLA. STAT. 627.738 (1971).25Kluger, 281 So. 2d at 2.26Id.27Id.28

McDonald Air Conditioning, Inc. v. John Brown, Inc., 285 So. 2d 697 (Fla. 4thDist. Ct. App. 1973). In McDonald Air Conditioning, the plaintiffs attempted torecover both the value of its machines as well as additionally amounts due to the lossof use of the machines daily. Id. The Fourth District Court of Appeal held that thedamage recovery could not exceed the value of machines. Id. at 698. The propermeasure of damages for loss of personal property is its market value on the date ofthe loss. Id.29Id.30Id. at 3-4.31Id. at 5.



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In Lasky v. State Farm Ins. Co.,32 appellants raised similar

arguments contending they were deprived of their rights guaranteed underthe Florida and U.S. Constitutions, because sections 627.736 and 627.737denied the parties access to courts and placed monetary threshold amounts(such as the $1,000 amount found in section 627.737) barring recovery,which would result in a violation against equal protection. By contrasthowever, the Florida Supreme Court upheld the constitutionality of theFlorida No-Fault PIP law.33 To do so, the Court struck the portion of thestatute, which imposed a $1,000.00 threshold and left the other remainingportions intact.34 In this way, it was able to distinguish its treatment of PIPlaw from the problematic no-fault law that was the subject ofKluger.35 TheCourt held that [i]n exchange for the loss of a former right to recover-uponproving the other party to be at fault-for pain and suffering, etc., in cases

where the thresholds of the statute are not met, the injured party is assured aspeedy payment of his medical bills and compensation for lost income fromhis own insurer, even where the injured party was himself clearly at fault. 36

In so doing, the Florida Supreme Court sent a clear signal to the public: PIPis constitutional and it is here to stay.37

The First District Court of Appeal, inDunmore v. Interstate Fire Ins.Co., rightfully recognized that the quid pro quo turned on the assurance of aswift and speedy payment of medical bills and lost wages. 38 Dunmore hadsubmitted an application for PIP benefits to the insurer along with anauthorization for release of medical and wage information. 39 The insurerfailed to make payment of $5,000.00 in benefits and Dunmore filed suit. 40

Dunmore secured a default judgment, which was later set aside by the trial

court.41 The insurer acknowledged that it was responsible for making thepayments but argued that attorneys fees, as provided for by section 627.736were not due.42 The district court held that the insurer was responsible forthe paying the attorneys fees and costs as:

It appears to us that the statutory language is clear andunambiguous. The insurance company has thirty days in whichto verify the claim after receipt of an application for benefits.

32296 So. 2d 9 (Fla. 1974).33Id. at 23.34Id. at 20-21.35

Id. at 13-14, 22.36Id. at 14-15.37Id. at 21 (If, when the unconstitutional part of a statute is stricken, that whichremains is complete in itself and capable of being executed in accordance with theapparent legislative intent, the valid portion of the statute will be sustained.)38 301 So. 2d 502 (Fla. 1st Dist. Ct. App. 1974).39Id.40Id.41Id.42Id.



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There is no provision in the statute to toll this time limitation.

The burden is clearly upon the insurer to authenticate the claimwithin the statutory time period. To rule otherwise wouldrender the recently enacted no-fault insurance statute a no- pay plan-a result we are sure was not intended by thelegislature.43

The First District subsequently reversed the trial courts decision anddirected it to award Dunmores attorneys fees for work performed during both the trial court and appellate court proceedings.44 For nearly threedecades that would follow, it would seem that the decisions of the Floridacourts had followed in line with Dunmores reasoning that a reasonablealternative to the rights that Florida citizens lost, required that PIP did not

devolve into a no-pay plan.

III. THE PERIOD OF PROHIBITION AGAINST NO-PAY

The Third District Court of Appeal in Government Employees Ins.Co. v. Gonzalez,45 continued to reiterate the mandate that an insurer cannotavoid its burden to pay claims timely in thirty days. Gonzalez had beenseriously hurt in an automobile crash and had in excess of $10,000.00 inhospital bills.46 The hospital placed Gonzalezs insurer GEICO on notice ofits lien, but Gonzalezs attorney advised GEICO that other health insurancewould cover the hospital bills and to reserve the entirety of the $10,000.00 in

PIP benefits for the payment of Gonzalezs lost wages.47 GEICO was facedwith a conflict: it could not disregard a hospital lien,48 nor could it disregard arequest to reserve benefits for lost wages.49 The district court observed thatGEICO could have made a check payable to both insured and hospital 50 orfiled an interpleader action within the 30 days,51to resolve the dilemma and

43Id.44Id.45 512 So. 2d 269 (Fla. 3d Dist. Ct. App. 1987).46Id. at 270.47Id.48Fernandez v. South Carolina Ins. Co ., 408 So. 2d 753 (Fla. 3d Dist. Ct. App. 1982)

(holding that payment of bills subject to a hospital lien take priority over payment ofother PIP benefits).49Holloway v. State Farm Mut. Auto. Ins. Co., 370 So. 2d 452 (Fla. 4th Dist. Ct.App. 1979) (holding that an insurer could not disregard an insureds request toapportion PIP benefits where insured intended to use other health coverage to pay bills for treatment rendered and PIP benefits to pay lost wage claims; suchapportionment would avoid exhausting limits and maximizing loss recovery by aninsured)50Fernandez, 408 So. 2d at 755.51New York Life Ins. Co. v. Shuster, 373 So. 2d 916, 917 (Fla. 1979)



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ordered GEICO to pay Gonzalezs attorneys fees caused by the inexcusable

delay.52 The Third District concluded that the purpose of the legislativescheme is to provide swift and virtually automatic payment so that theinjured insured may get on with his life without undue financial interruptionand that an insurer cannot be permitted simply to stonewall its insured byretaining-and drawing interest upon-payments to which it is admittedly notentitled.53

Eight years later, in Crooks v. State Farm Mut. Auto. Ins. Co.,54 theThird District was faced with a situation where a pedestrian (bicyclist) hadbeen struck by a PIP insured motor vehicle on the streets of Miami Beach.Crooks wrote a letter requesting payment of his bills. State Farm refused tohonor the claim, insisting that Crooks submit an approved in house PIPapplication form that State Farm. Crooks filed suit after three months.55

State Farm paid the claim thereafter and the district court held that StateFarms position that Crooks failed to submit an approved claim form, did notconstitute the reasonable proof that State Farm needed in order to toll the30-day deadline. Citing Dunmore, the Third District held that creating anexception by allowing State Farm to refuse to recognize the claim for failureto use its approved form, contravened the intent of the statute which is toguarantee swift payment of PIP benefits.56

The Fourth District Court of Appeal, in Martinez v. Fortune Ins.Co.,57 tackled the question of whether the portion of section 627.736(4)(b)referring to PIP benefits being overdue if not paid within 30 days after theinsurer is furnished written notice of the fact of a covered loss, meant thatan insurer could delay paying a wage loss claim by demanding medical

verification from the treating physician, even though written notice had beenfurnished. The district court noted that section 627.736 had been amended25 times since 1971.58 The district court in discussing the rationale of thedecisions in Dunmore and Crooks, held that this portion of the statute hadremained intact, and that the implied adoption by the legislature of theinterpretation established in Dunmore is the most persuasive evidence ofwhat the legislature intended.59

InFortune Ins. Co. v. Pacheco,60the Third District Court of Appealdealt with a question similar to the one faced by the Fourth District inMartinez. The question had been certified by the county court, as a matter ofgreat importance.61 The district court rephrased the question as whether a

52

Gonzalez, 512 So. 2d at 270-271.53Id.54 659 So. 2d 1266, 1268 (Fla. 3d Dist. Ct. App. 1995).55Id. at 1267.56Id. at 1268-1269.57 684 So. 2d 201, 202 (Fla. 4th Dist. Ct. App. 1996).58Id. at 203.59Id.60 695 So. 2d 394, 395 (Fla. 3d Dist. Ct. App. 1997).61Id.



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PIP insurer can require an insured to submit all supporting medical records

before the thirty day time period for payment of the claim begins to run. 62

The Third District elected to hear the matteren banc in order to to settle thelaw in this district; in so doing, we align ourselves with the First and Fourthdistricts.63 The district court answered the question in the negativeresoundingly and, based upon twenty-two years of established lawdeclined to agree with Fortunes arguments that an insurer could define whatreasonable proof means for purposes of tolling the statute.64 The ThirdDistrict relied on the decisions ofDunmore, Crooks and Martinez, andrefused to interpret section 627.736 as granting insurers the unilateral powerto determine when they could safely declare that they had receivedreasonable proof of loss, and then allow the thirty-day period to beginrunning.65

Yet the Third District was faced with yet another variant of thisquestion, two years later. InAmador v. United Auto. Ins. Co.,66 one of manycases to come before the courts that would involve United AutomobileInsurance Company (United Auto) as a party, United Auto sought tobypass the 30-day deadline provision by scheduling an examination underoath (EUO) well after the elapse of 30 days. The insured did not attendand filed suit.67 United Auto contended that on the authority of the FourthDistricts decision in Willis v. Huff,68that an EUO is a condition precedent tocoverage and that the insured was barred from filing a lawsuit due to hisfailure to comply with the EUO condition.69 United Auto also attempted toargue that its policy defined the meaning of reasonable proof.70 Thedistrict court disagreed and cited to the precedent decisions ofDunmore,

Crooks andPacheco.71 It held that while an EUO is a condition precedent tocoverage, that under the facts of this case, an insurers late request for anEUO could not be used to toll the deadline which had already passed,because this would allow an insurer to use investigative rights to extend the30-day period without reasonable proof that it is not responsible for theclaim.72

Thus from 1974 to 2000, twenty-six years had passed since thestatute had been held constitutional. Relying onDunmore, the courts seemedto remain committed to the prohibition against any interpretation of section

62Id.63

Id. at 394.64Id. at 395.65Id.66 748 So. 2d 307 (Fla. 3d Dist. Ct. App. 1999).67Id. at 308.68 736 So. 2d 1272 (Fla. 4th Dist. Ct. App. 1999).69Amador, 748 So. 2d at 308.70Id.71Id.72Id.



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627.736 that would turn PIP into a no-pay plan.73 That opinion would soon

change. What happened to cause the subsequent change of heart?

IV. THE DRAMATIC CHANGES IN PIP

As the reasonable proof in section 627.736(4)(b),74 had not beenwell defined, the option an insurer initially had to attempt to control the costof PIP claims, was to resort to the use of an independent medicalexamination (IME), provided for in section 627.736(7).75 The examination

73See e.g., Peachtree Cas. Ins. Co. v. Walden , 759 So. 2d 7 (Fla. 5th Dist. Ct. App.2000). Waldens PIP insurer, Peachtree Casualty sent her to an independent medicalexamination. Id. at 8. Based on the results of the examination, Peachtree Casualtysent Walden a letter advising that no further treatment was reasonable, related ornecessary and that it would not honor any further claims for benefits. Id. Waldencontinued to treat and immediately sued, prior to the expiration of 30 days. Id.Peachtree Casualty paid the claims and asserted in defense that Walden could not suefor an anticipatory breach. Id. The Fifth District Court of Appeal disagreed andnoted that [i]nsurers have 30 days to provide the benefits unless they themselvesannounce that they will pay no benefits in any event. We do not think the insured isrequired to wait 30 days to see if the insurer was only kidding when it sent thenotice. Id. at 8-974 This section states:

Personal injury protection insurance benefits shall be overdue if not

paid within 30 days after the insurer is furnished written notice of thefact of a covered loss and of the amount of same. If such writtennotice is not furnished to the insurer as to the entire claim, any partialamount supported by written notice is overdue if not paid within 30days after such written notice is furnished to the insurer. Any part orall of the remainder of the claim that is subsequently supported bywritten notice is overdue if not paid within 30 days after such writtennotice is furnished to the insurer. However, any payment shall not bedeemed overdue when the insurer has reasonable proof to establishthat the insurer is not responsible for the payment, notwithstandingthat written notice has been furnished to the insurer. For the purposeof calculating the extent to which any benefits are overdue, paymentshall be treated as being made on the date a draft or other valid

instrument which is equivalent to payment was placed in the UnitedStates mail in a properly addressed, postpaid envelope or, if not soposted, on the date of delivery.

FLA. STAT. 627.736(4)(b) (1971).75 This section provides:

Mental and physical examination of injured person; reports.--(a) Whenever the mental or physical condition of an injured personcovered by personal injury protection is material to any claim that



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would provide insurers with a second opinion that could be used to establish

reasonable proof that no further treatment was necessary.76 If an insuredunreasonably refused to attend, an insurer would no longer be liable forsubsequent benefits.77 As one response, lobbying on the part of the medicalproviders resulted in the 1987 amendment to section 627.736(7)(a), whichspecified that insurers could only withdraw payment after obtaining amedical report based on a physical examination of the insured by a physicianlicensed under the same chapter (specialty) at the treating physician.78

Other medical providers would resort to bulk billing to skirt theeffects of IME provision altogether, by treating the insured for amounts nearthe policy limits, and then submitting the bills all at once before an insurer

has been or may be made for past or future personal injury protectioninsurance benefits, such person shall, upon the request of an insurer,submit to mental or physical examination by a physician orphysicians. The costs of any examinations requested by an insurershall be borne entirely by the insurer. Such examination shall beconducted within the city of residence of the insured. If there is noqualified physician to conduct the examination within the city ofresidence of the insured, then such examination shall be conducted inan area of the closest proximity to the insured's residence. Personalprotection insurers are authorized to include reasonable provisions inpersonal injury protection insurance policies for mental and physicalexamination of those claiming personal injury protection insurancebenefits.(b) If requested by the person examined, a party causing anexamination to be made shall deliver to him a copy of every written

report concerning the examination rendered by an examiningphysician, at least one of which reports must set out the examiningphysician's findings and conclusions in detail. After such request anddelivery, the party causing the examination to be made is entitled,upon request, to receive from the person examined every writtenreport available to him or his representative concerning anyexamination, previously or thereafter made, of the same mental or physical condition. By requesting and obtaining a report of theexamination so ordered, or by taking the deposition of the examiner,the person examined waives any privilege he may have, in relation tothe claim for benefits, regarding the testimony of every other personwho has examined, or may thereafter examine, him in respect to thesame mental or physical condition. If a person unreasonably refuses

to submit to an examination, the personal injury protection carrier isno longer liable for subsequent personal injury protection benefits.

FLA. STAT. 627.736(7) (1971).76Allstate Ins. Co. v. Garrett, 550 So. 2d 22 (Fla. 2d Dist. Ct. App. 1989). InGarrett, Allstate requested the insured attend an IME with a medical doctor,specifically a board certified orthopedic surgeon, but the insured had been treatingwith a chiropractor. Id. at 23. The Legislature had amended the statute in 1987, tospecifically require that a withdrawal of payments must be based on IME with aphysician from the same specialty and licensing chapter under the Florida Statutes.



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was notified of the loss.79 This deprived the insurance companies of their

opportunity to obtain the proof they needed to contest the validity oftreatment80 and their rights to deny a claim altogether, for an insuredsunreasonable failure to comply with the IME requirement.81 As a result ofsuccessful lobbying by the insurance industry, with the goal of stamping outthis practice, the Legislature amended section 627.736 in 1998, to include asection which requires that bills be submitted to an insurer within 35 days oftreatment rendered or they will never be paid.82 The grace period willincrease from 35 days to 75 days, if a notice of treatment is sent to the carrierwithin 21 days of the initiation of treatment.83

Id. The Second District Court of Appeal held that the legislative change as appliedto Allstates policy with Garrett (a contract entered prior to the changes), would beunconstitutionally impairing the settled terms of a contract that was legal under theprevious law. Id. at 24. The district court reversed, directing the trial court not toAllstates motion for summary judgment on the grounds that it had reasonable proof(the report of an orthopedic surgeon) that it was no longer responsible for paymentsof Garretts chiropractic treatment. Id. at 25.77Allstate Ins. Co. v. Graham, 541 So. 2d 160 (Fla. 2d Dist. Ct. App. 1989); Tindallv. Allstate Ins. Co., 472 So. 2d 1291, 1292 (Fla. 2d Dist. Ct. App. 1985); Griffin v.Stonewall Ins. Co., 346 So. 2d 97 (Fla. 1977).78 In the legislative session of 1987, this section was amended to add the followinglanguage:

An insurer may not withdraw payment of a treating physicianwithout the consent of the injured person covered by the personal

injury protection, unless the insurer first obtains a report by aphysician licensed under the same chapter as the treating physicianwhose treatment authorization is sought to be withdrawn, stating thatthe treatment was not reasonable, related, or necessary.

FLA. STAT. 627.736(7)(a) (1988).79State Farm Mut. Auto. Ins. v. Warren, 805 So. 2d 1074 (Fla. 5th Dist. Ct. App.2002) (In order for an insurer to exercise its right to require an IME, it must beaware that treatment is being provided, but there is no statutory authorization for aninsurer under a PIP policy to require notice of treatment. The absence of a noticerequirement could allow an insured to receive a lengthy series of treatments and befully recovered before the insurer becomes aware of the treatment The timelystatement requirement also reduces the practice of bulk billing by some medical

providers which occurs when treatments are rendered over a period of time and theinsurer is subsequently billed for multiple treatments. In turn, this lowers theinsurer's cost of providing PIP coverage.) In Warren, the medical provider Dr.Rotstein, engaged in precisely this type of bulk billing, but insurer denied the claimbased on the 1998 legislative amendment to the statute, which precluded recovery ofbills submitted to the insurer late by medical providers. Id. at 1076. Dr. Rotsteinbrought a constitutional challenge, claiming that by differentiating between hospitals,ambulance services and medical providers for purposes of imposing the requirementthat this amendment violated the equal protection clause. Id. He additionallychallenged on the bases of due process and access to the courts. Id. The Fifth



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The most significant legislative reforms occurred in 2001 and 2003,

as major changes were instituted to curb other undesired practices on the partof claimants, medical providers and their attorneys.84 For example, PIP payments that are late, are owed with interest prescribed by statute.85

Sometimes, the attorney of an insured or a provider would bring a lawsuit,seeking thousands of dollars in attorneys fees, over a miscalculated paymentthat was short less than three dollars,86 more than likely due to amathematical error on the interest. Additionally, some providers inflated billing by referring patients to unnecessary diagnostic procedures andtesting.87 In some cases of PIP fraud, claimants had never seen the doctors,having been solicited by runners, and phony patient logs were submitted to

District Court of Appeal rejected both the equal protection and due processarguments on rational basis grounds, finding that hospitals and EMS usually onlybilled once as opposing to recurring treatment from medical providers, and that theamendment served the logical purpose of allowing insurers an opportunity to controlmanagement of claims which would result in savings to both insurers andpolicyholders. Id. at 1077. The district court additionally found there were noviolation of access to courts as well, because time limitations under the law, havebeen upheld as constitutionally valid. Id. at 1078.80Id. at 1077.81 Graham, 541 So. 2d at 162 (In fact, the unmistakable intent behind theindependent medical examination requirement is to provide the insurance companywith an opportunity to evaluate whether the benefits should be paid. Thus, anunreasonable refusal of a claimant to submit to an examination alleviates the insurerof any further liability for PIP benefits.)82 The subsection reads:

1. With respect to any treatment or service, other than medicalservices billed by a hospital or other provider for emergencyservices as defined in s. 395.002 or inpatient services rendered at ahospital-owned facility, the statement of charges must be furnishedto the insurer by the provider and may not include, and the insureris not required to pay, charges for treatment or services renderedmore than 35 days before the postmark date or electronictransmission date of the statement, except for past due amounts previously billed on a timely basis under this paragraph, andexcept that, if the provider submits to the insurer a notice ofinitiation of treatment within 21 days after its first examination ortreatment of the claimant, the statement may include charges for

treatment or services rendered up to, but not more than, 75 daysbefore the postmark date of the statement. The injured party is notliable for, and the provider shall not bill the injured party for,charges that are unpaid because of the provider's failure to complywith this paragraph. Any agreement requiring the injured person orinsured to pay for such charges is unenforceable.

2. If, however, the insured fails to furnish the provider with thecorrect name and address of the insured's personal injuryprotection insurer, the provider has 35 days from the date the



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give the appearance to the insurer that the patient had been physically present

and receiving the treatment the medical providers billed for.88 Theamendments addressed these matters in part, eliminating remedialtreatments and services for an injured person who relies upon spiritual meansthrough prayer alone for healing in accordance with his religious beliefs, providing for a uniform fee schedule for diagnostic and other types oftreatment, mandating a disclosure and acknowledgment form be given byproviders to claimants, imposing a requirement for a 15-day pre-suit demandletter prior to the commencement of litigation, which afforded insurers anextra grace period with which to resolve and pay claims with penalties andinterest, cracking down on brokering and kickbacks and adding a sunsetprovision that would repeal the No-Fault laws, if not renewed after October1, 2007.89

Arguably, the most startling change, was to section 627.736(4)(b): anamendment to its language changed the interpretation of when an insurer hadto have reasonable proof that it did not owe the claim.90 The opinion of the

provider obtains the correct information to furnish the insurer witha statement of the charges. The insurer is not required to pay forsuch charges unless the provider includes with the statementdocumentary evidence that was provided by the insured during the35-day period demonstrating that the provider reasonably relied onerroneous information from the insured and either:

a. A denial letter from the incorrect insurer; or

b. Proof of mailing, which may include an affidavit under penaltyof perjury, reflecting timely mailing to the incorrect address orinsurer.

FLA. STAT. 627.736(5)(c) (2009).83Id.84 Florida Department of Financial Services, Study of PIP Insurance ChangesEffect of Changes Pursuant to the Florida Motor Vehicle Insurance AffordabilityReform Act of 2003, at 3 (2005). [hereinafterStudy of PIP Insurance Changes]85 FLA. STAT. 627.736(4)(d) (2009).86 United Auto Courts Report: A Fair and Balanced Review, Car accident lawsuit inBroward court seeks $2.59 even after all PIP benefits paid,http://www.unitedautocourtsreport.com/blog/?p=55 (last visited March 31, 2010).87

Study of PIP Insurance Changes,supra note 84, at 4.88 Mark K. Delegal & Allison P. Pittman,Florida No-Fault Insurance Reform: AStep in the Right Direction, 29 FLA. ST. U. L. REV. 1031 (2002).89Study of PIP Insurance Changes,supra note 84, at 3.90 This subsection now provided:

Personal injury protection insurance benefits paid pursuant to thissection shall be overdue if not paid within 30 days after the insureris furnished written notice of the fact of a covered loss and of theamount of same. If such written notice is not furnished to the



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Fifth District Court of Appeal, in Jones v. State Farm Mut. Auto. Ins. Co.,

became one of the first decisions, which laid the foundation for a change inthe law that apparently departed from the clear direction in Dunmore. InJones, the plaintiff had undergone a surgery and forwarded the bills for thissurgery to State Farm, his PIP carrier. State Farm questioned the necessityof the surgery but had allowed 30 days to elapse and then sometime after thedeadline, set Jones for an IME. While the Fifth District agreed that StateFarm did not have the reasonable proof it needed to contest the claim withinthe 30-day period, it concluded that failure to obtain this proof did notforever bar the insurer from being able to contest the claim at a later time.However, the district court equally did not agree that State Farm could avoidpayment of the surgery, because the statute provides that failure to attendonly relieves the insurer of paying subsequent benefits. It reversed and

remanded the matter for further proceedings as to whether Jones could berequired to attend an IME in a location not provided for, by statute.

insurer as to the entire claim, any partial amount supported bywritten notice is overdue if not paid within 30 days after suchwritten notice is furnished to the insurer. Any part or all of theremainder of the claim that is subsequently supported by writtennotice is overdue if not paid within 30 days after such writtennotice is furnished to the insurer. When an insurer pays only aportion of a claim or rejects a claim, the insurer shall provide at thetime of the partial payment or rejection an itemized specification ofeach item that the insurer had reduced, omitted, or declined to payand any information that the insurer desires the claimant to

consider related to the medical necessity of the denied treatment orto explain the reasonableness of the reduced charge, provided thatthis shall not limit the introduction of evidence at trial; and theinsurer shall include the name and address of the person to whomthe claimant should respond and a claim number to be referencedin future correspondence. However, notwithstanding the fact thatwritten notice has been furnished to the insurer, any payment shallnot be deemed overdue when the insurer has reasonable proof toestablish that the insurer is not responsible for the payment. For the purpose of calculating the extent to which any benefits areoverdue, payment shall be treated as being made on the date a draftor other valid instrument which is equivalent to payment wasplaced in the United States mail in a properly addressed, postpaid

envelope or, if not so posted, on the date of delivery. Thisparagraph does not preclude or limit the ability of the insurer

to assert that the claim was unrelated, was not medically

necessary, or was unreasonable or that the amount of the

charge was in excess of that permitted under, or in violation of,

subsection (5). Such assertion by the insurer may be made at

any time, including after payment of the claim or after the 30-

day time period for payment set forth in this paragraph.

FLA. STAT. 627.736(4)(b) (2004) (emphasis added).



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Nonetheless, the Fourth District Court of Appeals began to agree

with the reasoning in Jones.91 The First District Court of Appeals aligneditself with the Fourth and Fifth District.92 The Second District Court ofAppeal, in The Third District Court of Appeals however, adamantly resistedthis interpretation in contrast and conflicted with its sister district courts.93

The conflict was certified, and the Florida Supreme Court quashed thedecision of the Third District and agreed with the holding in Jones, thatfailure to obtain reasonable proof in 30 days, does not bar an insurer from theright to contest the claim at a later time. 94 The effect of this change, whichwas subsequently legislatively incorporated into the statute, was dramatic,because now an insurer could refuse to pay claims for unrelated or arbitraryreasons, wait until litigation was filed, allow the matter to linger for yearsunpaid and finally hire an expect who has never physically examined the

insured, to obtain reasonable proof, years after the 30-day window, eitherby the time of a summary judgment hearing or trial.95 This development begsthe question: is PIP still constitutional?

V. IS PIP UNCONSTITUTIONAL?

91AIU Ins. Co. v. Daidone, 760 So. 2d 1110, 1112 (Fla. 4th Dist. Ct. App. 2000) (Ifthe insurer has refused to pay the bill within thirty days and does not have reasonableproof to establish that it is not responsible, then the insurer is liable for ten percentinterest when the bill is paid. Failing to obtain proof that it is not responsible for

payment, however, does not deprive the insurer of its right to contest payment.)92State Farm Mut. Auto. Ins. Co. v. Jones , 789 So. 2d 504 (Fla. 1st Dist. Ct. App.2001).93Perez v. State Farm Fire and Cas. Co., 746 So. 2d 1123, 1125-1126 (Fla. 3d Dist.Ct. App. 1999) (reversing the appellate circuit courts decision, directing the lowercourt to follow the holding in Pacheco and to disregard Jones as precedent, since itwas only the decision of a sister court).94United Auto. Ins. Co. v. Rodriguez, 808 So. 2d 82, 87 (Fla. 2001).95See United Auto. Ins. Co. v. Perez, 21 So. 3d 886 (Fla. 3d Dist. Ct. App. 2009). In

Perez, the plaintiff treated for injuries in 2003. Id. United Auto denied claims afterobtaining a favorable IME, indicating it would not be paying any subsequent claimsafter November of 2003. Id. However, United Auto never paid bills for treatmentrendered prior to the IME. Id. Plaintiff filed suit in 2004. Id. United Auto

proceeded to retain Dr. Glatzer, an expert in May of 2005 to furnish a report thatwould provide it with reasonable proof that the bills for treatment rendered prior tothe date of the IME, were not reasonable, related or necessary. Id. The trial courtdisallowed United Autos use of Dr. Glatzers findings. Id. at 887. The appellatecircuit court held that the insurer cannot wait three years after the denial of a claimand two years after the commencement of litigation ... to file a peer review report asthe only evidence which supports a blanket denial of a claim. Id. The ThirdDistrict Court of Appeal reversed the decision of the appellate circuit court, holdingthat statute provided that the insurer could contest the claim at any time regardless ofthe expiration of the 30-day deadline. Id.



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Does the existence of PIP result in a lessening of the congestion of

the court system? No, it does not, in fact, most of the reforms of PIPincluding the requirement of the 15-day pre-suit demand letter, haveunsuccessfully attempted to find ways to reduce the volume of PIP litigation,which consistently increases yearly.96 Has PIP resulted in a reduction ofautomobile insurance premiums? No, in fact, statistics show that the Floridapremiums for automobile insurance, are rising and among the highest in thecountry.97 Additionally, there is evidence from Colorados repeal of its No-Fault law, that eliminating PIP would result in overall lowered automobileinsurance premiums.98 Has PIP eliminated inequalities of recovery? No,because if insurers are now permitted to use their vast resources to steer PIPclaims they refuse to pay, into litigation with the ability to unilaterally reducepayment of benefits, negotiate the claims at a reduced settlement amount or

prevail at summary judgment or trial, how does this differ from thebargaining and litigation process that occurs when medical bills are settled or

96 Senate Interim Report No. 2006-102,supra note 9, at 80 (One of the purposes ofno-fault was to reduce these types of transaction costs and to allow a greaterpercentage of the premium dollar to be paid in benefits. But, the increased PIPlitigation in Florida between insurers and health care providers regarding medicalnecessity and reasonableness of charges has compromised this goal.)97 Senate Interim Report No. 2008-102,supra note 7 ([T]he 2004 combined averagepremium for the primary coverages is $1,150.64, which is 20 percent greater than thenational average of $959.76.)98 An analysis of the changes in premiums in the state of Colorado, after the repeal of

PIP found as follows:

The premium effects on PIP and BI described above have beenreflected in Colorado. After no-fault was repealed in that state in2003, drivers were no longer required to purchase PIP, which is theprimary source of savings under the new law, by deducting thePIP premium. The percentage savings is greater for drivers whopurchase the minimum mandatory liability coverage, which hasaveraged about 31 percent according to the Colorado Departmentof Insurance and about 21 percent for drivers with full coveragepolicies. But, according to the Chief Actuary for the department,BI liability rates have increased about 50 percent and UM rateshave increased about 30 percent due to the repeal. But, the net

effect is still a lower overall premium, due to dropping expensivePIP coverage. Most insurers continue to offer Medical Paymentscoverage in Colorado that is similar to PIP, but usually for lowerlimits and providing coverage only for medical expenses, not lostwages. Also, insurers generally have more discretion in their policies to limit medical benefits under Medical Paymentscoverage, in contrast to PIP benefits subject to statutoryrequirements.

Senate Interim Report No. 2006-102,supra note 9, at 79-80.



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litigated within the context of BI liability claims and tort lawsuits? 99 The

ability of insurers to assert that claimants and medical providers may never bring suit to recover for certain bills that violate statutory technicalrequirements, creates a one-sided limitation on access to courts.100 In otherwords, with the ability to contest the claim at any time, medical bills need nolonger be paid timely.101 The only disincentive against this, is the possibilityan insurer will have to pay interest, penalties and attorneys fees, butfinancially solvent insurance companies in Florida (the motto of one non-standard insurer which was Deny, Delay, Dont Pay), have the tremendousresources necessary to do so.102

Does PIP eliminate the necessity to bring a cause of action in manycases? As previously mentioned, PIP litigation has steadily risen year afteryear (though reduced in part from 2004 onwards due to statutory addition of

the pre-suit filing requirements) and the ability of insurers to contest claimswithout limitation, will continue to create increased need to bring causes ofaction to resolve PIP disputes. Does PIP provide for prompt reimbursementof their most essential out-of-pocket losses? No, because PIP benefits maybe contested indefinitely and paid years later, only subject to the statutorypenalties.103 For example, a Target Market Conduct Examination performedby the Office of Insurance Regulation of a non-standard insurer in Floridareported that, during 2002, the insurer received over 6,034 new open PIPclaims but as of December 2003, only 88 of these claims had been paid. 104

Additionally, with the passage of the Patient Protection and Affordable CareAct105and Health Care and Education Reconciliation Act of 2010,106 Floridacitizens will soon have access to universal health coverage, which may

obviate the need for PIP. Therefore, it can be argued that the reasonsarticulated by the Florida Supreme Court in Lasky, no longer exist and that

99See Ivey v. Allstate Ins, Co., 774 So. 2d 679, 684 (It is clear to us that the purposeof this provision is to level the playing field so that the economic power of insurancecompanies is not so overwhelming that injustice may be encouraged because peoplewill not have the necessary means to seek redress in the courts.)100Warren, 899 So. 2d at 1097 (Pariente, C.J., specially concurring) (However, inmy view, there may be circumstances in which this statute results in anunconstitutional denial of access to the courts as applied.)101Rodriguez, 808 So. 2d at 87.102 Wyatt Olson, The Friendly Ties of United, Broward/Palm Beach New Times, May6, 2006, at 1, available at http://www.browardpalmbeach.com/2006-03-09/news/the-

friendly-ties-of-united/.103Rodriguez, 808 So. 2d at 92 (Lewis, J., dissenting) (The practical impact of this judicial rewrite is to sanction the practice of withholding benefits for extendedperiods of time without any basis whatsoever and then permit the contesting andlitigating of minor aspects related to loss of wages and medical treatment renderedyears earlier.)104 Senate Interim Report No. 2006-102,supra note 9, at 41.105 Patient Protection and Affordable Care Act, Pub. L. No. 111-148, 124 Stat. 119.106 Affordable Care Act and Health Care and Education Reconciliation Act, Pub. L.No. 111-152, 124 Stat. 1029.



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the Florida No Fault law no longer serves a valid rational governmental

purpose.107Lasky presumed these conditions to be true, because it claimed tohave no evidence to the contrary.108 We now have over thirty years ofevidence with which, to prove that each and every one of presumptionsarticulated in Lasky is presently invalid. After all, insurers are now free toretain a hired gun to prepare a report at any time; this hired gun need noteven be licensed under the same chapter as the treating physician, this hiredgun can review bills and reports years after treatment has been rendered in afashion tantamount to a paper IME, in order to defeat the insureds claim attrial.109

In coming to this conclusion, this author does not make discount ormake light of, the evils of PIP fraud and abuse. Florida is facing a crisis inPIP with alarming concerns about ambulance chasing, swoop and squat

and other staged crashes, patients being solicited and brokered by medicalprofessionals, attorneys, cappers and runners, bulk, phony or inflated billing,unnecessary or inappropriate diagnostic testing, and fraudulently trumped uplawsuits.110 However, there is evidence that part of this fraud and abuseoccurs due to the lure of PIP itself.111 Costs associated with health careprovider fraud and abuse are likely to be reduced if no-fault is repealed,because this problem is primarily associated with PIP claims, more so thanliability claims.112

Taking the totality of the amendments together, the tort exemptionin section 627.737, which deprives Florida citizens of due process withrespect to tort claims for economic and non-economic damages and thealternative given in exchange (PIP) is no longer reasonable. The Florida

Supreme Court has made it abundantly clear, that when a right of redress incourts pre-exists the adoption of the Declaration of Rights of Florida'sConstitution, the Legislature cannot abolish that right without providing areasonable alternative. If the Legislature cannot do this, then it must show anoverpowering public necessity for its abolishment and no alternative methodof meeting such public necessity. Following this rule, it is this authorshumble opinion that the Florida Supreme Court should declare PIP

107Lasky, 296 So. 2d at 15 ([The test] is whether the statute bears a reasonablerelation to a permissible legislative objective and is not discriminatory, arbitrary oroppressive.)108Id.109 See FLA. STAT. 627.736(4)(b) (2009); United Auto. Ins. Co. v. Hollywood

Injury Rehab Center, 27 So. 3d 743, 744 (Fla. 4th Dist. Ct. App. 2010); FLA. STAT. 627.736(7)(a) (2009)110 See Second Interim Report of the Fifteenth Statewide Grand Jury, FloridaSupreme Court Case No. 95,746, available at http://myfloridalegal.com/. [hereinafter

Fifteenth Statewide Grand Jury Interim Report]111Fifteenth Statewide Grand Jury Interim Report, supra note 102 (We find itdifficult to believe any medical professional can render competent care to patientswhen the exercise of independent professional judgment is clouded by the lure ofexorbitant profits.)112 Senate Interim Report No. 2006-102,supra note 9, at 79.



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unconstitutional. It is a far cry from the PIP coverage that existed at the time

ofLasky andDunmore. Modern day PIP claimants are no longer guaranteedthe uncontested, swift payments that provide them with financial security and peace of mind to be able to move on with their lives. It is furtherquestionable that the public necessity that was once said to exist, presentlyremains. The quid pro quo that once was, is clearly no more.

VI. CONCLUSION

Floridians are guaranteed access to the courts by our Constitution.The courts shall be open to every person for redress of any injury, andjustice shall be administered without sale, denial or delay.113 The No-Fault

scheme eliminated Floridians right to be compensated for injuries caused byother drivers. An injured person must first show a permanent injury withinthe specific legal definition of the statute to receive full compensation. Onits face, the No-Fault law is an unconstitutional denial of access to the courtsfor redress of injury as guaranteed by Floridas constitution. But the No-Faultscheme withstood constitutional scrutiny because Floridians were providedwith a reasonable alternative in the past that bettered their position.

The bettered position was the automatic payment of PIP benefits.PIP was constitutional only because the loss of rights in tort had beencompensated for by the swift and virtually automatic payment so that theinjured insured may get on with his life without undue financialinterruption.114 [T]he provisions of Florida's No-Fault Law that denied a

plaintiff the right to sue unless certain threshold damages existed was not aviolation of access to courts because the right was replaced with the ability torecover uncontested benefits and an exemption from tort liability. 115 No-Fault has teetered on the edge of constitutionality only because of therelatively uncontested benefits it once purported to provide on an equal basisto all citizens, regardless of financial status.116

If the balance of power places too much managing power over PIPclaims in the hand of insurers, the entire No-Fault structure fails becauseinsurers are now free to drive more and more PIP claims into litigation forany reason, with only the fear of statutory penalties to discourage them. In sodoing, insurers can easily recreate the harmful inequality of recovery that theLasky court thought the legislation intended to eliminate. The courts cannot

simply uphold what may be tantamount to the Legislatures knee-jerkreaction to every perceived crisis in the insurance business. 117 The courtwill become a court of men instead of a court of law, guided by an alleged

113 Fla. Const. art. I, 21.114Gonzalez, 512 So. 2d at 271 (citing Comeau v. Safeco Ins. Co., 356 So. 2d 790(Fla. 1978)).115Nationwide Mut. Fire Ins. Co., v. Pinnacle Medical, Inc., 753 So. 2d 55, 59 (Fla.2000), citing Smith v. Department of Insurance, 507 So. 2d 1080, 1088 (Fla. 1987).116SeeKluger, 281 So. 2d at 5.



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crisis instead of the wording of the Constitution.118 Unlike the Pip of

Dickenss novel, this grown-up PIP no longer harbors any greatexpectations.

117Smith, 507 So. 2d at 1099 (Adkins, J. (Ret.), concurring in part, and dissenting inpart).118Id.


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Article on PIP Constitutionality