Tuesday, May 4, 2010

Assignee's Requirement to Sit for An Examination Under Oath

In Shaw v. State Farm Fire and Casualty Company (5D07-3136), the Fifth District issued a divided en banc opinion and certified a question of great public importance to the Florida Supreme Court.  The divided panel opinion, which is now vacated by the en banc opinion, was discussed HERE.  Notably, the trial Judge whose decision was under review is now Florida Supreme Court Justice James E.C. Perry.

The en banc opinion was written by Judge Griffin, who was joined by Chief Judge Monaco, Judge Orfinger, Judge Torpy, Judge Lawson, Judge Evander, Judge Cohen and Judge Jacobus.  The dissent was written by Judge Sawaya, who was joined by Judge Palmer.  Judge Sawaya wrote the original panel opinion which was discussed HERE.

The majority stated that the "issue before the court is whether an EUO clause in an automobile insurance policy is binding on an assignee of the right to payment of no-fault benefits."  The facts were described as follows:
After St. Louis was involved in a motor vehicle accident, he received medical care from Appellants, David Shaw, David G. Shaw, D.C., P.A., d/b/a Central Florida Chiropractic Center, DC Services, LLC, DC Supply, LLC, and Charles Machler [collectively, “Shaw”]. At the time of treatment, St. Louis assigned his no-fault benefits under the State Farm policy, to the extent of the services provided, to Shaw.  When Shaw sought payment from State Farm under the assignments for the services rendered to St. Louis, State Farm demanded that Shaw appear for an EUO. Shaw refused to submit to the EUO and State Farm refused payment. Shaw subsequently filed suit seeking a declaratory judgment that, as assignees of the right to payment, they are not required to attend an EUO. The trial court entered judgment in favor of State Farm. We reverse.
The court noted that:
It is undisputed that a provision in an insurance policy that requires the insured to submit to an EUO qualifies as a condition precedent to recovery of policy benefits....The question that arises in this case is whether an insurer can include in the policy a provision that extends the duty to submit to an EUO to assignees of the insured's right to insurance proceeds. Under Florida law, the assignment of a contract right does not entail the transfer of any duty to the assignee, unless the assignee assents to assume the duty.  See Dependable Ins. Co. v. Landers, 421 So. 2d 175, 179 (Fla. 5th DCA 1982). Assignment of a right to payment under a contract does not eliminate the duty of compliance with contract conditions, but a third-party assignee is not liable for performance of any duty under a contract, unless he was a party to the agreement or has become a party by subsequent agreement. Absent such an event, which is in the nature of a novation, the duty of performance of the conditions to the right of payment remains with the assignor. In other words, the assignee of a contract right owes no duty of performance to the obligor.
Here, St. Louis has agreed that whatever monies he is entitled to receive from his automobile insurance policy on account of the care he has been given is payable to Shaw. If no monies are due and owing because of the failure of St. Louis to perform some covenant under the policy, including the examination under oath, then Shaw has no claim against State Farm, precisely because it is subject to State Farm's defenses against the insured. But State Farm may not include in the insurance contract any requirement of performance on the part of the assignee that conditions the right to payment. To the extent that State Farm's policy may have such a provision, it is simply unenforceable. It does not matter whether it is the requirement to submit to an examination under oath, to pay a fee, to accept a discount or anything else. Shaw did not undertake any duty of performance, and State Farm cannot unilaterally impose an obligation on the assignee by putting it in the policy.
As the policy expressly recognizes by classifying the duty to submit to an EUO as an "insured's dut[y]," the duty can only belong to the insured. The duty was never delegated by St. Louis, and Shaw never agreed to assume it. Both as a matter of contract law and common sense, State Farm's attempt to impose it on Shaw cannot succeed. Nevertheless, because this en banc decision is not unanimous and because of the potentially wide-ranging impact of this issue, we certify to the Florida Supreme Court the following question of great public importance:
The introductionof the dissents 18 page opinion stated:
The majority erroneously eliminates a valuable contract provision that State Farm Fire and Casualty Company has every right to enforce against a claimant making a claim for PIP benefits; the majority fails to properly distinguish a condition precedent to recovery or suit that must be complied with by a claimant from a contract obligation that an assignee of benefits must otherwise agree to be bound by; the majority misinterprets section 627.736(6), Florida Statutes (2007), to require State Farm to obtain what is in essence a bill of discovery in order to receive information regarding the validity of a claim from the very person or organization making the claim or seeking payment from State Farm; the majority misinterprets the clear and unambiguous examination under oath (EUO) clause in the insurance policy issued by State Farm; and the majority cites cases that do not stand for the proposition for which they are cited. Indeed, there is no precedent that the majority can cite for its general holding that an assignee of PIP benefits must actually agree to be bound by an EUO clause in an insurance contract that is a condition precedent to recovery.


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