On Borrowed Time: The Examination Under Oath Explained

By
Jeffrey G. Rapattoni

Florida – SIU/Fraud

Key Points:

  • The court's misinterpretation of a carrier's policy language will be short lived based upon past precedents from across the country.
  • The best advice is to wait and see before engaging in a protocol revision.

 

A recent Florida Supreme Court opinion has drawn industry-wide attention concerning the contractual provisions requiring an insured to attend an examination under oath as a pre-requisite to coverage. Interestingly, Custer Medical Center v. United Auto Insurance Company, SC-08-2036 (Fla. Nov. 4, 2010) is limited on the topic of examinations under oath as the case primarily focuses on the refusal of a claimant to attend an independent medical examination. Regardless, the case has the plaintiff's bar rejuvenated in what it undoubtedly construes as one of the more pertinent victories in recent Florida PIP history. Despite this turn of events, from a defense perspective, this matter is greatly unresolved and subject to interpretation.

The Supreme Court decision was a review of the Third District Court of Appeals' decision in United Automobile Insurance Company v. Custer Medical Center, 990 So. 2d 633, 635 (Fla. 3d DCA 2008). Custer Medical Center appealed to a higher court on the basis that the lower court's decision was contrary to the status of the law. In order to clarify the application of law, the Supreme Court heard this matter and expanded the primary issues beyond the initial case controversy. That primary issue focused upon whether or not the non-appearance of the claimant at a PIP independent medical examination could legally be construed as a breach of the insurance contract, thereby negating coverage. While this issue seemed to drive the controversy, the court likely took liberty in discussing general policy obligations as applied to Florida's No Fault Statute. It is these liberties that stirred the present controversy as it now exists.

Following the procedural history and topical discussion regarding PIP independent medical examinations, footnote #1 of the decision appears to suggest that the insurance policy requirement that an insured submit to an examination under oath, as a condition precedent, is likely invalid as it is contrary to the intention of Florida's No Fault Statute. Tellingly, it is this single footnote that has sent the insurance industry into action by way of motions seeking authorization to file briefs to better address or clarify the court's position regarding the examination under oath issue. Despite this fervor of attention, the fact remains that the plaintiff's bar has already embraced this decision, making it difficult for the carrier community to conduct meaningful investigations into PIP claims. This encroachment upon the contractual obligation of the insured is particularly dangerous to the industry for a number of reasons. While the examination under oath is often used as a tool to combat and investigate fraud, it has a broader application in terms of PIP claim investigations. Causation, medical necessity and eligibility are all factors often in need of review in order to determine whether or not a benefit is actually due and owed. Without clarification from the high court, a carrier's ability to determine coverage will be greatly hindered.

The dicta in Custer suggests that the contractual obligation of a claimant is only secondary to Florida's statutory scheme. In doing so, the court appears to suggest that the existence of the No Fault Statute itself serves as a reformation of any and all policy conditions that are in conflict with Florida's PIP Statute. To that end, it appears as though the court has now created a divergence in opinion as to what is and what is not a reasonable condition to be imposed upon an insured.

To clarify the controversy, Florida's legislature is actively considering legislation to clarify and/or modify the Custer decision. The Senate Banking and Insurance Committee passed Senate Bill 1930, sponsored by Senator Ellyn Bogdanoff, R-Ft. Lauderdale, which provides consumer protection against staged automobile accidents. This bill also offers tools to help law enforcement officers fight motor vehicle PIP fraud, which will greatly assist the insurance community as a whole. Highlights of Senate Bill 1930 include extending from 30 to 90 days the amount of time insureds have to pay claims when an insurer suspects the claim may not be legitimate, capping attorney's fees on personal injury cases and allowing insurance companies to tour clinics and other health facilities where treatment is occurring. Interestingly, this bill is a companion measure to House Bill 1411, sponsored by Representative Jim Boyd, R-Bradenton. This House Bill seeks to expand the police reporting of motor vehicle accidents, permitting more discovery from health care providers and expanding a carrier's ability to request documentation from a claimant. The controversy surrounding Custer may likely be moot by legislative mandate. Of course, at this time, it is too early to tell which laws or versions will actually be enacted, however, it appears that the legislature is looking for an enactment to begin in July of 2011.

Given these developments, the insurance community must remain diligent moving forward. As is the case with the passing of any new legislation, the case law has yet to be written or interpreted. The installment of these new laws will more likely than not bring about a whole host of new decisions concerning the contractual right to an examination under oath. I would look for the next twelve to eighteen months to be a period of comment and review by the courts which will ultimately act as further interpretation on Custer, one way or another.

*Jeff is a shareholder in our Cherry Hill, New Jersey, office and can be reached at 856.414.6076 or jgrapattoni@mdwcg.com.

Defense Digest, Vol. 17, No. 4, December 2011