VOLUME XVI, NUMBER 2
February, 2004

FROM THE CORNER OFFICE

We welcome Donna Wilson-Sampson, our newest associate, to the firm. Donna is a graduate of Pace University School of Law, New York. She is practicing as a civil litigation associate primarily to all aspects of general first party insurance defense, including property damage claims, fraud defense and fraud investigation.

WHEN IS A PHYSICIAN AN EXPERT WITNESS?

In Simon v. Progressive Express Insurance Company, 10 FLW Supp. 933, October 31, 2003, involves a Personal Injury Protection (PIP) suit by treating physician (Dr. Simon) who sued the defendant insurer for nonpayment of medical bills pursuant to an assignment of benefits given by the insured patient. The defendant insurer sought to depose the plaintiff’s treating physician. The plaintiff filed a motion for protective order objecting to his deposition and in the alternative requested that the defendant be required to pay him an expert witness fee as treating physician. The matter was heard before Judge Peter Evans, in the county court for Palm Beach County. The motion for protective order was denied, the court ruling that a physician who has accepted an assignment of benefits and who sues to recover for the payment of services rendered is a fact witness, not an expert entitled to an expert fee for his testimony.

The county court distinguished between an expert and a treating physician. A treating physician does not acquire expert knowledge for the purpose of litigation but rather gathers facts in regards to providing the proper medical care to his/her patient and is therefore a fact witness. On the other hand, when a physician is retained in anticipation of litigation then the physician is considered an expert. An expert responds to the needs of the litigation process, rather than the patient’s needs.

However, this line is blurred dramatically when a treating physician accepts the assignment of PIP benefits and later brings an action if the insurance carrier refuses or reduces the payment. Obviously, in defense of the suit, the insurance carrier will want to depose the treating physician. Florida Courts have various standards on whether a physician should be declared an expert witness or merely a fact witness in a PIP suit creating a pell-mell of legal analysis.

Due to the helter skelter nature of the Florida courts’ opinions on the issue, the county court in Simon certified to the Fourth District Court of Appeal the following question to be of great public importance pursuant to the Florida Rule of Appellate Procedure 9.160: “Is a treating physician, who has accepted an assignment of benefits from a patient, and has brought action to collect those benefits entitled to be paid an ‘expert witness’ fee when deposed by the defendant insurance carrier on the facts surrounding the treatment of the insured assignor patient?”

Jacqueline A. Grady

PAYMENT OF POLICY LIMITS AND AGREEMENT TO PAY ATTORNEY'S FEES DOES NOT DISCHARGE AN INSURER FROM FURTHER LIABILITY UNDER FLORIDA’S BAD FAITH STATUTE

In Phillip Marraccini, Jr. v. Clarendon National Ins. Co., 16 FLW Fed. D717 (S.D. Fla., September 30, 2003), an insured filed suit against its insurer after the parties could not reach an agreement on costs required to repair the insured's residence after a fire loss. Marraccini filed a Civil Remedy Notice of Insurer Violation under Florida’s “bad faith” Statute, Fla. Stat. §624.155, which allows an insurer a window of sixty (60) days to correct alleged insurer violations and/or to pay an insureds claim. After Marraccini filed its Civil Remedy Notice, the matter continued to remain unresolved well beyond the expiration of the 60-day period. A few months later Marraccini filed suit against Clarendon. The parties eventually entered into a settlement agreement whereby Clarendon paid policy limits to Marraccini and agreed to pay Marraccini’s attorney’s fees. Despite Clarendon’s tender of the policy limits and agreement to pay Marraccini's attorney’s fees Marraccini still filed a motion seeking leave to amend its original complaint to add a bad faith claim against Clarendon.

Clarendon sought to dismiss Marraccini’s amended complaint and claim for punitive damages asserting that 1) Marraccini's amended cause of action failed to state a claim upon which relief could be granted; 2) the court lacked subject matter jurisdiction to hear the issues; and 3) the “bad faith” claim was premature as the underlying contract action had not yet been fully resolved. Contrary to Clarendon’s contentions, the U.S. District Court held that Marraccini’s amended complaint stated a valid cause of action. Clarendon’s decision to issue payment of the policy proceeds to Marraccini after it filed suit but prior to the court entering final judgment, did not in and of itself extinguish Marraccini’s statutory right to pursue a bad faith claim. The court reasoned to hold otherwise would render the portion of the statute requiring damages to be paid within sixty (60) days meaningless. The court also noted that Marraccini and Clarendon’s settlement agreement did not address or contemplate plaintiff’s bad faith cause of action or plaintiff’s claim for punitive damages.

In addition, the U.S. District Court retained jurisdiction of Marraccini’s claim. Federal courts have diversity jurisdiction over an action if the amount in controversy requirement, $75,000.00, is alleged at the time that the complaint is filed. Clarendon creatively argued that due to its settlement agreement with Marraccini, the claim for damages in its bad faith cause of action was below the amount in controversy required to sustain a diversity case in federal court. Clarendon never contested the fact that the federal court had jurisdiction at the time Marraccini filed its initial complaint. Contrary to Clarendon’s contentions, the amount remaining in controversy at the time Marraccini amended its complaint, does not oust the federal court's jurisdiction to rule on Marraccini's bad faith claim.

Clarendon also unsuccessfully argued that Marraccini’s bad faith claim was premature as there had been no final determination on the amount of attorney fees to be paid in the underlying insurance claim. The U.S. District Court did not agree with Clarendon’s argument. Instead, the court found that Marraccini’s claim was ripe for litigation. A bad faith action actually accrues when an insured has demonstrated a breach on the part of its insurer. Clarendon’s payment of policy limits to Marraccini established that the insured had a valid claim and acted as a verdict in favor of the insured. The court reasoned Marraccini’s bad faith claim became ripe when the parties settled the underlying breach of contract action.

Finally, Clarendon contended that Marraccini’s claim for punitive damages was not properly plead and should be dismissed. According to Florida Statute 624.155(4), recovery of punitive damages is permissible when acts giving rise to the violation occur with such frequency as to indicate a general business practice and these acts are: (a) willful, wanton, and malicious; or (b) in reckless disregard for the rights of the insured.

Marraccini’s amended complaint clearly alleged that the acts complained therein constituted Clarendon’s general business practices and procedures occurring with such frequency as to indicate general practices. In addition, Marraccini alleged that Clarendon’s actions were in reckless disregard for the rights of its insured. Such allegations are in conformity with the requirements listed in Section 624.155(4) of the Florida Statutes. As a result, the U.S. District Court also denied Clarendon’s motion to dismiss Marraccini's claim for punitive damages.

Tana R. Sachs Copple

FALSE STATEMENTS MAY RESULT IN DISMISSAL OF PLAINTIFF’S CASE

A recent appellate decision highlights the critical importance of conducting aggressive and comprehensive discovery in insurance defense cases.

Plaintiffs who give false or misleading testimony material facts in personal injury litigation may be hit with severe sanctions, up to and including having their cases dismissed.

In Carrie K. Distefano v. State Farm Mutual Automobile Ins. Co., 28 FLW D1077 (Fla. 1st DCA April 28, 2003), the First Circuit Court of Appeal found that a trial court did not abuse its discretion in dismissing an uninsured motorist lawsuit after finding that the plaintiff gave false information or omitted information during discovery on matters that were central to the litigation.

Following a November 23, 1998 motor vehicle accident, Carrie Distefano initiated an uninsured motorists lawsuit against State Farm, claiming that she suffered a torn rotator cuff as well as various musculoskeletal injuries to her wrist, back and legs. Distefano alleged in her February 10, 2000 lawsuit that she experienced continuing medical problems as a result of the 1998 accident, most especially in her lower back area.

In a June 2000 deposition, Distefano was asked by counsel for the insurance carrier if she had been involved in any accidents other than the one on November 23, 1998. Although Distefano indicated that she had been involved in other accidents, she failed to disclose that she had in fact been involved in an accident in 1999. During her deposition, Distefano also alleged that she suffered no medical problems as a result of a 1992 accident. Additionally, Distefano failed to disclose in interrogatories that she had been involved in an accident in 1999.

However, the defendant uncovered evidence of an accident involving Distefano which occurred in late 1999, just two months before the plaintiff filed her February 2000 lawsuit against State Farm. It was only after the defendant confronted Distefano with an accident report that she finally admitted that she had in fact been involved in an accident in 1999. Furthermore, Distefano's medical records demonstrated that she underwent treatment from a number of physicians after the 1992 accident. In fact, she sought treatment from a chiropractor after the 1992 accident and expressly complained of pain in her neck and lower back and was prescribed a prescription pain medication and muscle relaxant. As a result of the 1992 accident, Distefano ultimately received a three percent increase in her permanent impairment.

In determining what type of sanction to impose against Distefano, Florida courts have held that a judge may dismiss a lawsuit grounded in fraud of collusion. See Young v. Curgil, 358 So. 2d 58, 59 (Fla. 3d DCA 1978) and Morgan v. Campbell, 816 So. 2d 251, 253 (Fla. 2d DCA 2002). When a plaintiff makes untrue declarations on issues directly related to damages, dismissal of the cause of action is an appropriate sanction. Desimone v. Old Dominion Ins. Co., 740 So. 2d 1233, 1234 (Fla. 4th DCA 1999).

When considering the appropriate sanction in Distefano’s case, the court relied on the framework developed in Baker v. Myers Tractor Servs., Inc., 765 So. 2d 149, 150 (Fla. 1st DCA 2000). There, the plaintiff sued the defendant for injuries sustained to his right knee. The plaintiff was asked under oath on numerous occasions if he had sustained any prior injuries and consistently denied that he had. However, the defendant subsequently obtained the plaintiff’s employment records which showed that he had in fact sustained right knee injuries during two prior accidents. There, the First Circuit affirmed the trial court’s order dismissing the plaintiff’s lawsuit.

Because Distefano failed on two separate occasions to disclose relevant accidents and injuries during the discovery process, the appellate court found that the trial court rendered an appropriate sanction when it dismissed Distefano’s lawsuit.

Distefano and cases cited therein highlight the importance of aggressive and comprehensive discovery.

Steven C. Teebagy