FLORIDA LAW WEEKLY
VOLUME 39, NUMBER 11
CASES FROM THE WEEK OF MAR. 14, 2014

FLORIDA SUPREME COURT STRIKES DOWN MEDICAL MALPRACTICE CAPS AS UNCONSTITUTIONAL ON WRONGFUL DEATH CASES, BASED ON A VIOLATION OF EQUAL PROTECTION

Estate of McCall v. U.S.,, 39 Fla. L. Weekly S104 (Fla. March 13, 2014):

In one of the more momentous Florida Supreme Court cases in recent memory, the majority struck down the caps on non-economic damages set forth in §766.118, as violative of the right to equal protection under Article I, Section 2, of the Florida Constitution. The court limited its holding to medical malpractice cases arising out of wrongful death.

The case arose after Ms. McCall, who was being cared for by an Air Force Hospital’s family practice department throughout her pregnancy, died. Ms. McCall had a healthy, normal pregnancy until the last trimester, and then began suffering from high blood pressure demonstrating severe preeclampsia.

Through a series of missteps at the Air Force hospital, Ms. McCall was never transferred to the OB/GYN department. Ms. McCall did deliver a healthy baby boy, but despite family members’ expressed concerns about the amount of blood she had lost during delivery, and her appearance, no one at the Air Force hospital did anything to attend to the condition. Ultimately, Ms. McCall died from extremely low blood pressure which the hospital failed to sufficiently monitor or treat.

The court concluded that §766.118 violates equal protection under the rational basis, test because it imposes unfair and illogical burdens on injured parties when an act of medical negligence gives rise to multiple claimants. In such circumstances, medical malpractice claimants do not receive the same rights to full compensation, because of arbitrarily diminished compensation for legally cognizable claims. Additionally, the statutory cap on these damages does not bear a rational relationship to the stated purpose that the cap was purported to address, which is the alleged malpractice crisis in Florida (this is only part of the plurality opinion).

Ultimately, the narrow holding in the case is that §766.118 has the effect of saving a modest amount for many, by imposing devastating costs on a few–those who are most grievously injured and sustain the greatest damage and loss and multiple claimants for whom judiciously determined non-economic damages are subject to division and reduction simply based on the existence of the cap. Under the equal protection clause, the court held that to reduce damages in that fashion was not only arbitrary, but irrational, and offends the fundamental notion of equal justice under the law.

Justice Lewis also engaged in an extensive analysis debunking the Legislature’s finding of a “medical malpractice crisis” in Florida (but the remaining justices did not sign off on the plurality’s independent evaluation of the legislative work done before the declaration of the crisis).

THE CME PROVISION IN THE UM CONTEXT IS A “POST-LOSS” OBLIGATION OF THE INSURED, NOT A CONDITION PRECEDENT TO COVERAGE–THE INSURER IS NOT PREJUDICED BY THE INSURED’S REFUSAL TO SUBMIT TO THE CME AND DOES NOT RESULT IN AN AUTOMATIC FORFEITURE OF BENEFITS

State Farm v. Curran, 39 Fla. L. Weekly S123 (Fla. March 13, 2014):

The Fifth District certified a question asking the supreme court to answer the question of whether when an insured breaches a compulsory medical examination provision in a UM contract, the insured forfeits benefits under the contract without regard to prejudice, and further, if prejudice is considered, who bears the burden of pleading and proving the issue?

The supreme court found a breach does not automatically forfeit benefits, in that it is the insurer who must plead the issue as an affirmative defense, and then has the burden of pleading and proving the prejudice.

In this case, plaintiffs issued a 30 day demand for the UM policy limits of $100,000, noting that the damages were in excess of $3.5 million because the plaintiff was suffering from RSD. The day before the time to pay the limits was to expire, State Farm contacted the plaintiff’s attorney to schedule a CME pursuant to the terms of the policy.

After the initial letter, the plaintiff and State Farm exchanged several contentious letters regarding the scheduling, and ultimately, the plaintiff refused to attend the CME despite receipt of a reservation of rights letter from State Farm, indicating that her failure to assist and cooperate could result in the denial of coverage. State Farm contended that the plaintiff’s failure to attend the CME was a breach of the “condition precedent” to coverage, and constituted a material breach of the policy resulting in a forfeiture of coverage.

The result also conformed with the UM’s statute’s intended purpose of protecting persons who are legally entitled to recover damages for injuries caused by owners or operators of uninsured motor vehicles.

Finally, the insurer must be the one to plead and prove the prejudice as an element of its affirmative defense to fully comport with the statutory purpose. This then places the injured party in the same position as the injured party would have been had the tortfeasor been insured.

COURT HOLDS THAT THE POST-SUIT EXHAUSTION OF PIP BENEFITS SHOULD BE TREATED NO DIFFERENTLY THAN THE PRE-SUIT EXHAUSTION OF BENEFITS–ONCE THE BENEFITS ARE EXHAUSTED THROUGH THE PAYMENT OF VALID CLAIMS, HOWEVER, THE INSURER HAS NO FURTHER LIABILITY OR UNRESOLVED PENDING CLAIMS ABSENT BAD FAITH IN THE HANDLING OF THE CLAIM BY THE INSURANCE COMPANY

Northwoods Sports Medicine v. State Farm, 39 Fla. L. Weekly D491 (Fla. 4th DCA March 5, 2014):

This case arose after State Farm impermissibly reduced the payment of the provider’s bills to 80% of 200% of the Medicare fee schedule pursuant to §627.736(5)(a)2, Fla. Stat. (2008). By the time the provider filed suit, less than $14 in unpaid PIP benefits remained. While the lawsuit was pending, USAA paid other medical providers the remaining amount, exhausting the PIP benefits.

The trial court then entered summary judgment in favor of USAA based on the exhaustion of benefits in the final judgment, relying on Simon v. Progressive, 904 So. 2d 449 (Fla. 4th DCA 2005). The trial court rejected the provider’s argument that the PIP statute mandated a “first in/first out” order of payment, meaning that the later submitted claims could not exhaust benefits so as to prevent payment of an earlier submitted claim.

The Fourth District agreed that Simon applied, and rejected the “reserve or hold” theory of the medical provider, i.e., that when an insurance company reduces a provider’s claim, it must set up a reserve in case it later is required to pay the full claim. The court agreed that this requirement undermines the prompt payment promise of the PIP statute.

The Fourth District then concluded that where the reasonableness of the provider’s claim is still in dispute, a “post-suit” exhaustion of benefits extinguishes the provider’s right to further payments, as long as exhaustion is part of the establishment of the amount to which the medical provider is entitled under PIP.

Thus, the post-suit exhaustion of benefits is treated the same way as the pre-suit exhaustion, and once their PIP benefits are exhausted through the payment of valid claims, an insurer has no further liability on unresolved pending claims absent bad faith.

COURT COMPELS LAW FIRM TO PRODUCE DOCUMENTS ABOUT ITS RELATIONSHIP WITH DOCTOR WHOSE OWN RECORDS WERE INCOMPLETE

Lytal Reiter v. Malay, 39 Fla. L. Weekly D495 (Fla. 4th DCA March 5, 2014):

The trial court ordered Lytal, Reiter to provide a list of all payments made to Dr. Theofilos (the plaintiff’s treating physician) over the three preceding years, allowing for the redaction of client and/or patient information. The discovery encompassed all payments made in connection with past or present litigation.

The Fourth District reminded us that a law firm’s financial relationship with a doctor is discoverable on the issue of bias. At his deposition, Dr. Theofilos denied having any records and provided nebulous testimony in connection with the number of his patients who are represented by the law firm. Under those circumstances, the law firm was an appropriate source of the information for the party to turn to.

DEFENDANT’S PROPOSAL FOR SETTLEMENT WHICH OFFERED TO PAY PLAINTIFF A HUNDRED DOLLARS TO SETTLE ACTION “PAYABLE WITHIN TEN DAYS OF ENTRY OF THE ORDER OF DISMISSAL WITH PREJUDICE,” WAS NOT AMBIGUOUS

Ekonomides v. Sharaka, 39 Fla. L. Weekly D498 (Fla. 2nd DCA March 5, 2014):

A paragraph in the PFS offered to pay the plaintiff a hundred dollars to settle the action, payable within ten days of the entry of order of dismissal with prejudice. The plaintiff argued among other things that the paragraph was ambiguous, because the offer made an illusory promise to pay only after the case was dismissed with prejudice. According to the plaintiff, if the defendant failed to pay the hundred dollars, the trial court would not have had jurisdiction to enforce the settlement agreement after entry of a final order of dismissal.

Because there was only one meaning to this condition, the proposal was not ambiguous. The fact that plaintiff was concerned that defendant might breach the agreement and fail to pay did not make the proposal ambiguous.

Please feel free to contact me with any questions about appellate issues you may have.

Best Regards,

Julie Littky-Rubin