Case NotesTrucking, Auto & Motorcycle

Case Note – PIP Insurer was Liable for Attorney’s Fees Because the Insurer Confessed Judgment When it Paid the Medical Bills

By July 22, 2014 September 15th, 2014 No Comments

By: Dawn M. Myers, Esq.

The Fifth District Court of Appeal ruled that a PIP insurer was liable for attorney’s fees because the insurer confessed judgment when it paid the medical bills at issue before the litigation was resolved.

In Tampa Chiropractic Center, Inc., v. State Farm Mutual Automobile Insurance Co., __ So. 3d. __, 2014 WL 3375017 (Fla. 5th DCA July 11, 2014), the insurer refused to pay a claim to a treatment provider until that facility provided certain documents relating to the ownership and management of the medical facility. A dispute arose over the statutory obligation of the facility to provide the documents and the insurer’s right to withhold funds in this circumstance. The insurer further threatened to institute legal proceedings against the facility if it continued to refuse to provide said documents and noted that the insurer would seek legal fees for such litigation. The insurer filed suit regarding other issues and the medical facility filed a counterclaim regarding the insurer improperly refusing to pay their claim.

During the pendency of the litigation, the insurer paid the bill to the medical facility and then filed a motion for summary judgment claiming that the court lacked subject matter jurisdiction to rule on the case since the issue was now resolved. The trial court granted the motion and awarded final summary judgment in the favor of the insurer. The Fifth District Court ruled that the payment of the claim, after the filing of the claim, was a confession of judgment. Under Florida Statute 627.428, the provider was entitled to attorney’s fees.

The confession of judgment doctrine applies when (1) an insurer unreasonably withholds payment and then (2) settles a disputed claim after litigation is commenced but prior to the entry of final judgment in the case. This doctrine exists to penalize an insurer for not promptly resolving legitimate claims when they have the opportunity to do so. Courts have ruled that a failure on the part of an insurance company to resolve these claims breed needless litigation.

Here, the Fifth District ruled that withholding payment based on an entitlement to receive documents was unreasonable. The Court further commented on the insurer’s threat of litigation. The insurer’s position left the provider with no other alternative than to institute litigation to resolve their claim. The Court reversed the lower court’s order granting final summary judgment in favor of the insurer and ordered attorney’s fees to the provider for all claims that were paid after the commencement of the litigation.

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