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Star Casualty Insurance Company cross-appealed for summary judgment and attorney’s fees in favor of Gables Insurance Recovery, Inc., as holder of Star Casualty’s insured, Ana Maria Correa. Star Casualty argues that the trial court erred in granting summary judgment due to genuine issues of material fact as to whether Correa’s medical bills for diagnostic imaging procedures were medically necessary and related to the underlying accident pursuant to section 627.736, Florida Statutes. Star Casualty further argued that the trial court committed reversible error by striking four affirmative defenses from its amended answer that could have relieved it of liability on the claim.
IN Star Casualty Insurance Company v. Gables Insurance Recovery, Inc., a/a/o Ana Maria Correa, no. 3D21-0033, 3D21-0377, Florida Court of Appeals, Third District (July 20, 2022), the Court of Appeals was faced with an attempt to avoid the consequences of being caught for a partial fraud only to have the plaintiff withdraw the claim and assert that the rest of the claim was honest.
Correa was involved in a vehicle accident on January 19, 2009 and sustained injuries. Subsequently, Correa received diagnostic imaging procedures costing a total of $3,375.00, and Gables, as her retainer, filed a claim with the insurer for reimbursement of eighty percent of reasonable medical expenses pursuant to section 627.736(1)(a). After the insurer paid only $400.71 and denied the rest of the claim, Gables sued to recover the remaining costs.
Star Casualty presented an affidavit by Edward A. Dauer, MD, stating that the allegations were not medically necessary or related to the accident. This affidavit also noted that three of the imaging procedures performed on Correa appeared to have been incorrectly coded or split with other procedures.
Based on Dr. Dauer’s affidavit, Star Casualty amended its answer to add affirmative defenses asserting that it was excused from paying in full because the three charges were fraudulent, codified or compartmentalized. Prior to summary judgment, Gables voluntarily withdrew its claims for reimbursement of the three counts upon which Star Casualty based its affirmative defenses. Gables then moved to the defenses from Star Casualty’s answer, arguing that the withdrawal of the pleadings on these three counts rendered the corresponding defenses irrelevant and moot.
The trial court granted partial summary judgment on the relativity and necessity issues and granted Gable’s motion to strike affirmative defenses based on plaintiff’s withdrawal of the portion of the claim found to be fraudulent.
The Court of Appeal noted that the trial court erred in finding that Dr. Dauer’s affidavit did not create a genuine issue of material fact. An issue of fact is “genuine” for summary judgment purposes when a reasonable jury could potentially return a verdict in favor of the nonmoving party. A factual dispute is “material” when it can affect the outcome of the case according to the applicable substantive law.
The sole basis for Star Casualty’s claims of a factual dispute of relatedness and necessity comes from Drs. Dauer’s certificate. In the certificate, Dr. Dauer that the images taken were “not medically necessary and unrelated to the 1/19/2009 accident” because “there were no objective findings and documentation to justify the ordering of the x-rays in this case.” Because these observations created a genuine issue of material fact as to relatedness and necessity, the Court of Appeals concluded that the summary judgment must be vacated and remanded.
On remand, the trial court’s order striking Star Casualty’s affirmative defenses was reversed because the defenses were not wholly irrelevant to the allegations in the operative complaint. An affirmative defense may not be attacked merely because it appears to a judge that the defendant may not be able to present evidence at trial to support such a defense.
The district court’s reasoning for striking out the counterclaims was based solely on the fact that the requests for repayment of the charges relating to these counterclaims had been voluntarily withdrawn. Conversely, Star Casualty argues that because the defenses alleged fraud, codification, and segregation, such defenses applied to the remaining charges.
All insurance fraud voids all coverage. arising out of the claim related to such fraud under the personal injury coverage of the insured person who committed the fraud, regardless of whether any part of the insured’s claim may be justified.
An insurer is not obligated to pay a claim or charges that are coded up, or that are split when such treatment or services are to be combined and Florida law exempts both the insurer and the insured from paying the claims of any person who knowingly submits a false or misleading statement of the claim or charges.
Proof of insurance fraud required summary judgment in favor of an insurer of the entire PIP claim, which includes two separate and distinct claims for medical expenses and lost wages, because allowing payment of part of a nonsense injury claim would allow an insured to engage in a cost-benefit analysis with respect to the consideration of such fraud.
A party seeking insurance benefits must commit no more fraud than he or she can be a little dead. Once fraud is caught, as proven by an expert, the attempted fraud cannot be ignored by simply removing it from the claim because the insurer, by proving any fraud, will convince the examinee that the entire claim was fraudulent or that the attempted fraud voided entitlement to benefits of the insurance. Attempted fraud whether large or small; whether related to one part of a claim or another.
Random Thoughts on Insurance Volume XIV: A collection of blog posts from Zalma on insurance —
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Barry Zalma, Esq., CFE, now limits his practice to serving as an insurance consultant specializing in insurance coverage, insurance claims management, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims attorney and more than 54 years in the insurance industry. He can be reached at http://www.zalma.com and firstname.lastname@example.org.
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