Sunset falls over the Florida Supreme Court building
Sunset falls over the Florida Supreme Court building (Phil Sears)

A Florida Supreme Court opinion on personal injury protection insurance policies put insurers on notice they cannot abuse the use of compulsory medical examinations.

The court ruled Thursday against State Farm Mutual Automobile Insurance Co., stating a policyholder does not forfeit benefits by failing to attend a compulsory medical examination unless the failure caused a material breach.

Also, the court said that if a material breach causing prejudice is alleged, it’s up to the insurer to prove it.

Justice Jorge Labarga wrote the 5-2 majority opinion with Justice R. Fred Lewis writing a concurring opinion. Chief Justice Ricky Polston dissented with an opinion in which Justice Charles Canady concurred.

Lewis said the court didn’t go far enough. He said the compulsory medical examination clause in PIP contracts are used in a way that goes beyond the scope of what the Legislature intended.

In this case, Robin Curran of Brevard County suffered from complex regional pain syndrome after being struck by an uninsured motorist. A jury awarded her $4.65 million, and the judgment was upheld by the Fifth District Court of Appeal.

The Supreme Court accepted State Farm’s petition based on a Fifth Circuit question of public importance: “When an insured breaches a compulsory medical examination provision in an uninsured motorist contract, does the insured forfeit benefits under the contract without regard to prejudice?”

The Supreme Court said no.

Lewis noted insurance companies stand in the shoes of the uninsured motorist, placing the insurer in a position adverse to the insured.

“The CME provision does not account for or protect the interests, requests or concerns of the insured,” Lewis wrote. “Rather, this provision attempts to vest an insurer with exclusive power to require medical examinations as long as the insurer desires medical examinations, with nothing in the provision that limits how many medical examinations the insurer can require or under what conditions the insurer may require an examination.”

Limits On Companies

The provision gave State Farm unfettered discretion and empowers the insurer with contractual authority to constrict the availability of benefits by precluding any action for such benefits, Lewis said.

“I would invalidate the compulsory examination provision as contained in Curran’s policy with State Farm along with the asserted result as an illegal contractual provision,” he wrote.

Labarga and the rest of the majority would not go that far, but the court let the Fifth District ruling stand. The district said, “The effect of Curran’s breach was clearly inconsequential.”

Labarga also said the court would not remand the case to trial court to hear evidence of whether State Farm was prejudiced—the alternative request the insurer made if it could not prevail on a breach of contract claim without having to argue it suffered prejudice.

Curran’s correspondence with State Farm offered conditions. For instance, she would only submit to the examination if it were the only examination State Farm would request. Labarga noted Curran later offered to submit to a medical examination on the day she filed her lawsuit, which was just seven days after the scheduled examination.

She was eventually seen by a doctor chosen by State Farm, but the company didn’t call that doctor as a witness at trial. Labarga said State Farm elected to defer the examination until after the trial court determined whether Curran had forfeited coverage under the policy.

“The record is devoid of evidence that would suggest that Curran’s refusal to submit to a CME prior to suit prejudiced State Farm,” Labarga said.

Voiding Policies

Polston’s 14-page dissent was essentially a defense of the contract, calling the “condition precedent” unambiguous.

“The linchpin of the majority’s decision is its determination that a CME provision is a condition subsequent—akin to a cooperation clause—and not a condition precedent,” Polston said. “The error originates from the majority’s definition of a condition precedent as a condition that must be performed before a contract becomes effective.”

By this definition, Polston said the majority implies every other type of condition is one where the insurance company must plead and prove to avoid liability.

Labarga said medical examinations in a PIP context are not scheduled before a policy is written or an injury occurs. They are scheduled after a policy is issued, after the injuries are suffered and after the insured is notified.

“We conclude that a CME provision in the (uninsured motorist) context is a post-loss obligation of the insured and is not a condition precedent to coverage,” Labaraga said.

In dissent, Polston also claimed the majority erred by extending its holding to all uninsured motorist policies “regardless of what those policies might actually say.”

Bard D. Rockenbach of Burlington & Rockenbach in West Palm Beach wrote a friend-of-the-court brief for the Florida Justice Association, a group of plaintiffs attorneys.

“We were concerned about how insurers have been using small violations of the contract as a basis to void coverage,” Rockenbach said. “We are happy with the decision because it balances the insurer’s right to information with the insureds’ right to use the insurance they purchased. It would be unfair to void the policy just because the insured failed to comply with a post-loss requirement.”

Gary Farmer Sr. of Farmer Jaffe Weissing Edwards Fistos & Lehrman in Fort Lauderdale represented Curran.

Elizabeth Koebel Russo of the Russo Appellate Firm in Miami represented State Farm.

Neither was available for comment by deadline.