Friday, October 23, 2009

Examination Under Oath (EUO) Is A Condition Precedent To Assignee's Recovery - Question Certified To Florida Supreme Court

[UPDATE: The Court withdrew this opinion in an en banc opinion which was discussed HERE.]

In Shaw v. State Farm Fire and Casualty Company (5D07-3136), a divided panel of the Fifth District certified a question to the Florida Supreme Court and resolved "whether an Examination Under Oath (EUO) clause in an insurance policy is binding on an assignee of the No-Fault benefits and the cause of action to recover those benefits, thereby prohibiting a noncompliant assignee from making a claim or seeking payment under the policy. The clause provides in pertinent part that 'any person or organization making claim or seeking payment . . . must, at our option, submit to an examination under oath, provide a statement under oath, or do both, as reasonably often as we require.' (Emphasis omitted). The trial court held that this EUO provision is a condition precedent with which the assignee must comply in order to make a claim and file suit. Because the assignee refused to comply, the trial court rendered summary judgment in favor of the insurer. We affirm."

The court continued:
The courts have consistently held that an EUO provision in an insurance policy is a condition precedent that must be complied with in order to maintain an action to recover policy benefits...Courts in other jurisdictions also interpret EUO provisions to be conditions precedent to making a claim and filing suit to recover the claim under the policy.
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The dissent contends that because the EUO provision is included in a section of the policy captioned “Reporting A Claim - Insured’s Duties,” only the insured is required to attend an EUO. We note that is an argument that the Appellants did not assert. In any event, the dissent further contends that, therefore, the assignees must specifically agree to be bound by that duty or take an assignment of the entire policy. We disagree. The plain language of the EUO provision states that “any person or organization making claim or seeking payment” may be required to attend the examination. “An assignment is a transfer of all the interests and rights to the thing assigned.”
The majority certified the following to the Florida Supreme Court:
We certify to the Florida Supreme Court the following question of great public importance:

WHETHER THE EUO PROVISION IN STATE FARM’S POLICIES IS A CONDITION PRECEDENT THAT MUST BE COMPLIED WITH WHEN A MEDICAL CARE PROVIDER TAKES AN ASSIGNMENT OF NO-FAULT BENEFITS AND CAUSE OF ACTION FROM THE INSURED WITHOUT SPECIFICALLY AGREEING TO BE BOUND BY THAT CONDITION?
The dissent begins:
The majority is wrong for two reasons. First, under the law of assignments, State Farm, as obligor, does not have the power to create conditions with which an assignee of the obligee's right to payment must comply. Second, even if such were possible, the language of the policy does not accomplish what State Farm claims.

My principal view of this case is based on my understanding of the law of assignments. If my understanding is wrong, then perhaps my conclusion is wrong, but to borrow from Gertrude Stein, "If not, not."

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