Tampa Chiropractic Center, Inc. v. State Farm Mutual Automobile Insurance Co. ( 2014 )

IN THE DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FIFTH DISTRICT
NOT FINAL UNTIL TIME EXPIRES TO
FILE MOTION FOR REHEARING AND
DISPOSITION THEREOF IF FILED
TAMPA CHIROPRACTIC CENTER, INC.,
Appellant,
v. Case No. 5D13-854
STATE FARM MUTUAL AUTOMOBILE
INSURANCE CO.,
Appellee.
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Opinion filed July 11, 2014
Appeal from the Circuit Court
for Orange County,
Walter J. Komanski, Judge.
Chad A. Barr of Eiffert & Associates, P.A.,
Orlando, for Appellant.
Kenneth P. Hazouri of deBeaubien,
Knight, Simmons, Mantzaris & Neal, LLP,
Orlando, for Appellee.
COHEN, J.
Tampa Chiropractic Center, Inc. (“Tampa Chiropractic”) appeals from the final
summary judgment entered in favor of State Farm Mutual Automobile Insurance
Company (“State Farm”). Tampa Chiropractic raises two issues on appeal, only one of
which merits discussion. It argues that the trial court erred in ruling that it lost subject-
matter jurisdiction over the case after State Farm paid the disputed claims. We agree
and reverse as to that issue.
In 2010, nine individuals who were insured by State Farm received medical
treatment at Tampa Chiropractic for injuries they sustained in automobile accidents and,
in turn, assigned their policy benefits to Tampa Chiropractic. Tampa Chiropractic later
submitted medical bills to State Farm for reimbursement pursuant to the insureds’
policies. In response to those bills, State Farm sent document requests to Tampa
Chiropractic, requesting, among other things, documents relating to the ownership and
management of the clinic, tax information, and copies of the clinic’s leases. State Farm
claimed that its request for such documents was authorized by section 627.736(6)(b),
Florida Statutes (2010). 1 The document request went on to state, in essence, that State
Farm would not pay the claims until Tampa Chiropractic complied with the document
requests. Another document request advised Tampa Chiropractic that “[f]ailure to comply
with this request may place you in violation of [section 627.736(6)(b)] and we may choose
to seek an order from the court to allow the release of such information to us, and seek
1 In pertinent part, section 627.736(6)(b) provides that a physician or medical
institution that treats an insured after bodily injury upon which a claim for PIP benefits is
claimed
shall, if requested by the insurer against whom the claim has
been made, furnish a written report of the history, condition,
treatment, dates, and costs of such treatment of the injured
person and why the items identified by the insurer were
reasonable in amount and medically necessary, together with
a sworn statement that the treatment or services rendered
were reasonable and necessary with respect to the bodily
injury sustained and identifying which portion of the expenses
for such treatment or services was incurred as a result of such
bodily injury, and produce, and allow the inspection and
copying of, his or her or its records regarding such history,
condition, treatment, dates, and costs of treatment if this does
not limit the introduction of evidence at trial.
§ 627.736(6)(b), Fla. Stat. (2010).
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reimbursement of our cost in attorney fees as permitted by law.” Soon thereafter, Tampa
Chiropractic’s attorneys responded to State Farm, maintaining that the requests were
outside the scope of documents that were required to be furnished under section
627.736(6)(b), because they did not seek information regarding the insureds’ medical
treatment.
State Farm instituted a declaratory judgment action on a matter not relevant to the
issue addressed in this opinion. Tampa Chiropractic later filed an amended counterclaim
seeking a declaratory judgment stating that State Farm’s document requests were outside
the scope of section 627.736(6)(b), and that State Farm could not predicate payment of
the subject claims on Tampa Chiropractic’s response to such requests. In its answer to
the amended counterclaim, State Farm requested a declaration that its document
requests were proper under section 627.736(6)(b) and asked the trial court to order
Tampa Chiropractic to produce the documents.
Tampa Chiropractic moved for summary judgment. A few months later, State
Farm filed a competing summary judgment motion in which it argued that the trial court
lacked subject-matter jurisdiction over the case because State Farm had paid the subject
medical bills and was no longer seeking the documents that it had previously requested.
In support of the motion, State Farm attached the sworn affidavit of its Claim
Representative, William Talley, who stated that State Farm had paid Tampa Chiropractic
for “all of the bills and charges that are the subject of, or related to, State Farm’s requests
for documents.” Talley’s affidavit did not identify the date on which the medical bills were
paid by State Farm. Talley’s affidavit further stated that State Farm was no longer seeking
production of the documents previously requested.
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During the hearing on the competing motions for summary judgment, State Farm
reiterated that it was “not withholding payment based on the (6)(b) request anymore.”
Tampa Chiropractic countered that, by changing its position regarding its entitlement to
the requested documents, State Farm had confessed judgment on the amended
counterclaim. Following the hearing, the trial court entered a final summary judgment in
favor of State Farm, ruling that the amended counterclaim no longer presented a
justiciable controversy or a bona fide need for declaration, and that the court therefore
lacked subject-matter jurisdiction over the case. This timely appeal ensued.
On appeal, Tampa Chiropractic argues that the trial court erred in entering the final
judgment in favor of State Farm on the basis that it lacked subject-matter jurisdiction over
the declaratory judgment action. Tampa Chiropractic further submits that if State Farm
paid the disputed claims after it filed its counterclaim, then State Farm confessed
judgment, and an award of attorney’s fees to Tampa Chiropractic pursuant to section
627.428, Florida Statutes (2010), is appropriate. We agree.
Section 627.428 provides for the award of attorney’s fees to an insured upon the
rendition of a judgment against an insurer in an action between the insurer and its
insured. 2 § 627.428, Fla. Stat. “By using the legal fiction of a ‘confession of judgment,’
our supreme court extended the statute’s application” to cases in which the insurer settles
2 Although the instant case involves a suit between the insurer and the insureds’
medical provider—as opposed to the insureds themselves—this does not preclude us
from applying section 627.428 and the confession of judgment doctrine because the
insureds assigned their policy benefits to Tampa Chiropractic. See Ind. Lumbermens
Mut. Ins. Co. v. Pa. Lumbermens Mut. Ins. Co., 125 So. 3d 263, 266 (Fla. 4th DCA 2013)
(“An assignee of an insurance claim stands to all intents and purposes in the shoes of the
insured and logically should be entitled to an attorney’s fee when he sues and recovers
on the claim.”).
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or pays a disputed claim before rendition of judgment. Basik Exports & Imports, Inc. v.
Preferred Nat’l Ins. Co., 911 So. 2d 291, 293 (Fla. 4th DCA 2005) (citing Wollard v. Lloyd’s
& Cos. of Lloyd’s, 439 So. 2d 217 (Fla. 1983)). When the insurer has agreed to settle a
disputed case, “it has, in effect, declined to defend its position in the pending suit,” and
its “payment of the claim is . . . the functional equivalent of a confession of judgment or a
verdict in favor of the insured.” Wollard, 439 So. 2d at 218. For the confession of
judgment doctrine to apply, the insurer must have unreasonably withheld payment under
the policy, id. at 219 n.2, or engaged in some other wrongful behavior that forced the
insured to sue, Gov’t Emps. Ins. Co. v. Battaglia, 503 So. 2d 358, 360 (Fla. 5th DCA
1987); see also Jerkins v. USF & G Specialty Ins. Co., 982 So. 2d 15, 17 (Fla. 5th DCA
2008). This Court has described the rationale for the confession of judgment doctrine as
follows:
[T]he statutory obligation for attorney’s fees cannot be
avoided [by the insurer] simply by paying the policy proceeds
after suit is filed but before a judgment is actually entered
because to so construe [section 627.428, Florida Statutes,]
would do violence to its purpose, which is to discourage
litigation and encourage prompt disposition of valid insurance
claims without litigation.
Gibson v. Walker, 380 So. 2d 531, 533 (Fla. 5th DCA 1980); accord First Floridian Auto
& Home Ins. Co. v. Myrick, 969 So. 2d 1121, 1124 (Fla. 2d DCA 2007) (noting that
confession of judgment doctrine operates “to penalize an insurance company for
wrongfully causing its insured to resort to litigation in order to resolve a conflict with its
insurer when it was within the company’s power to resolve it”); Cincinnati Ins. Co. v.
Palmer, 297 So. 2d 96, 99 (Fla. 4th DCA 1974) (“[I]t is neither reasonable nor just that an
insurer can avoid liability for statutory attorney’s fees by the simple expedient of paying
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the insurance proceeds to the insured or the beneficiary at some point after suit is filed
but before final judgment is entered, thereby making unnecessary the entry of a
judgment.”).
We conclude that the trial court erred in entering final summary judgment in favor
of State Farm. Instead, the court should have applied the confession of judgment doctrine
if State Farm, in fact, paid the claims after Tampa Chiropractic filed the amended
counterclaim. At the outset, State Farm not only unreasonably withheld payment based
on its contention that the scope of its document requests was proper under section
627.736(6)(b), 3 but it also threatened litigation in the event that Tampa Chiropractic
refused to comply with its document requests. In light of State Farm’s position that it
would not pay the claims until Tampa Chiropractic produced the documents, Tampa
Chiropractic was forced to file suit seeking a declaratory judgment. In its answer to the
counterclaim, State Farm maintained its position that it could, in fact, predicate payment
on Tampa Chiropractic’s provision of the documents. By the time the summary judgment
hearing took place, however, State Farm had paid the disputed claims and changed its
position regarding its entitlement to the documents. If State Farm indeed paid the medical
bills after Tampa Chiropractic filed its counterclaim, this constitutes a confession of
judgment, entitling Tampa Chiropractic to attorney’s fees. Cf. Bassette v. Standard Fire
Ins. Co., 803 So. 2d 744 (Fla. 2d DCA 2001) (holding that attorney’s fees were properly
3 While section 627.736(6)(b) allows the insurer to request a “written report of the
history, condition, treatment, dates, and costs of such treatment of the injured person and
why the items identified by the insurer were reasonable in amount and medically
necessary” and the clinic’s “records regarding such history, condition, treatment, dates,
and costs of treatment,” it does not permit the insurer to request records regarding the
ownership and management of the medical provider, or the medical provider’s tax
documents or leases. § 627.736(6)(b), Fla. Stat.
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awarded where insured successfully brought declaratory judgment action seeking
declaration that she was not required to execute authorizations for insurer to secure her
medical records where insurer had previously advised the insured it would deny coverage
if she refused to execute such authorizations); see also Jerkins, 982 So. 2d at 18 (holding
that insured was entitled to attorney’s fees under section 627.428 where “it appear[ed]
that [the insurer] would not have paid [the insureds] the proper amount of the loss without
judicial intervention”).
We reject State Farm’s argument that it could not confess judgment in a cause of
action over which the trial court lacked subject-matter jurisdiction. This argument is at
odds with the very purpose of the confession of judgment doctrine: to deter insurers from
contesting valid insurance claims. Under State Farm’s theory, every time an insurer paid
a disputed claim while litigation was pending, the court would lose subject-matter
jurisdiction over the case and the confession of judgment doctrine would therefore never
apply. We disagree with that position.
Nevertheless, the record does not indicate exactly when State Farm paid the
medical bills. Accordingly, we reverse the final summary judgment and remand with
instructions for the lower court to determine when the payments were made. For the
claims paid after Tampa Chiropractic filed its counterclaim, the lower court should enter
judgment in favor of Tampa Chiropractic and award attorney’s fees under section
627.428. For the claims paid before the filing of the counterclaim, Tampa Chiropractic
will not be entitled to fees based upon a confession of judgment.
We affirm the other issue raised by Tampa Chiropractic without comment.
AFFIRMED IN PART; REVERSED IN PART; REMANDED FOR FURTHER
PROCEEDINGS.
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EVANDER, J., and SILVERMAN, D.E., Associate Judge, concur.
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