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Case Law Alerts

Defendant’s Motion for Summary Disposition/Judgment Granted Because Demand Letter Did Not Comply with Statute Where Ledger Attached to Demand Letter Reflected a Zero Dollar Balance

Integrity Medical Group, LLC, a/a/o Maria Herrada v. Depositors Ins. Co., County Court, 7th Judicial Circuit in and for Volusia County, Case No: 2018-16478-CODL

January 1, 2023

The instant suit involved a plaintiff’s contention that a physician’s assistant reduction in a bill balance was improper. The bill in question was for date of service May 26, 2016, and involved CPT code 99204. The defendant had paid $225.43 by applying the physician assistant’s payment methodology to the 200% of Medicare fee schedule amount. The plaintiff alleged that this was improper and, therefore, an additional $40.59 was due and owing. The court previously heard the plaintiff’s argument as to that issue and ruled in favor of the plaintiff. 

However, the defendant had also pled a demand letter defense, which was outstanding. The court ended up ruling in favor of the defendant on the demand letter issue because the plaintiff’s demand letter included a ledger showing a zero dollar balance owed. The court found that the $40.59 alleged to be owed was never alleged in its pre-suit demand letter. The court further analyzed the ledger, which stated: “Maria has 1 claims (SIC) totaling $662.12 with an outstanding balance of $0.00.” 

The court then analyzed the purpose of Fla. Stat. 627.736(10) and found that the purpose of the pre-suit demand letter provision of the statute is to give the insurer notice of what its potential liability would be and to give the insurer one last chance to cure the claim at issue. The court concluded that in this case, the medical provider clearly notified the insurer that there was no money owed by submitting a ledger attached to the demand letter showing a $0 balance. The court went on to state: “Any reasonable person that receives a bill or statement stating there is no money owed would not make a payment on that bill or statement.” When analyzing the Statute, the court found that Section 627.736(4)(b) provides that no payment shall be overdue, notwithstanding written notice, “when the insurer has reasonable proof to establish that the insurer is not responsible for payment,” which in the instant suit is surely the case when the provider does not know what “payment” is due. 

The court then analyzed other DCA decisions on the issue and cited MRI Associates of America, LLC v. State Farm Fire & Casualty Co., 61 So. 3d 462, 465 (Fla. 4th DCA 2011) in which the 4th DCA held that the pre-suit demand letter of section 627.736(10) requires precision in a demand letter by the requirement that it must include an itemized statement specifying each exact amount owed. The court also analyzed a recent 3rd DCA decision in Rivera v. State Farm Mut. Auto. Ins. Co., 317 So. 3d 197, 204-205 (Fla. 3d DCA 2021), in which the court also held that section 627.736(10) requires precision, which includes the provider putting the insurer on notice of “the exact amount for which it will be sued if the insurer does not pay the claim.” Finally, the court analyzed other County Court decisions that have ruled that when a demand letter states that $0.00 is owed, it fails to comply with Fla. Stat. 627.736(10). Florida Injury Longwood, LLC a/a/o Aaron Clements v. USAA Case. Ins. Co., 25 Fla. L. Weekly Supp. 970b (Fla. Cty. Ct. 9th Cir. 2017); Injury Centers of St. Pete., Inc. a/a/o Stetson Estes v. Garrison Property and Cas. Ins. Co., 25 Fla. L. Weekly Supp. 192a (Fla. Cty. Ct. 13th Cir. 2017). 

This ruling is significant because it further codifies the requirements of Fla. Stat. 627.736(10) that a demand letter must identify the exact amount being demanded. As such, each and every single PIP suit should have an affirmative defense for failure to comply with Fla. Stat. 627.736(10) due to the ever-evolving nature of the case law regarding demand letters. Also of note is how the plaintiff technically prevailed on its improper reduction argument, but because of the demand letter issue, the carrier won the day.
 

Case Law Alerts, 1st Quarter, January 2023 is prepared by Marshall Dennehey to provide information on recent developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. Copyright © 2032 Marshall Dennehey, all rights reserved. This article may not be reprinted without the express written permission of our firm.

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The Supreme Court of Ohio has clarified that an administrative appeal under Ohio Revised Code Chapter 2506 does not bar a separate action for damages and declaratory relief that could not have been pursued in the administrative appeal. The Ohio Supreme Court considered Sheetz, Inc. v. Centerville (2026-Ohio-3531) as a result of a certified question from the Southern District of Ohio. The question was whether Sheetz, the gas station/convenience store brand, was barred from seeking damages in a separate action since damages were not sought in their administrative appeal. Ultimately, the Ohio Supreme Court ruled that res judicata does not bar a separate action for damages after ruling on an administrative appeal because R.C. Chapter 2506 is limited to judicial review and cannot grant affirmative relief. The case arose after Centerville’s city council rejected a site plan proposed by Sheetz, Inc. that had received unanimous approval from the City’s planning commission. Sheetz filed an administrative appeal pursuant to R.C. 2506 in the Montgomery County Court of Common Pleas, and two months later filed a complaint for damages and declaratory relief under 42 USC § 1983 as a takings action with the city, city council, and other objectors as improper takings and a violation of due process, as well as interference with business and contractual relationship. The city and city council removed the § 1983 action for damages to federal court. Montgomery County Court of Common Pleas reversed the city council’s denial, and allowed the Sheetz project to move forward. Upon that ruling, the federal court issued a show-cause order questioning whether the § 1983 action was barred by the doctrine of res judicata via claim preclusion (which includes all theories of recovery).  Sheetz argued that Ohio courts of common pleas do not have authority to award damages or declaratory relief as party of the R.C. Ch. 2506 appeal, therefore res judicata could not be triggered to apply to the § 1983 action. Additionally, Sheetz moved to certify the issue to the Ohio Supreme Court, citing differing results between the second and sixth districts on this same issue. Centerville approached the question, not from a claim preclusion standpoint, but from the holding in Grava v. Parkman, Twp which states that a final judgment rendered on the merits bars all subsequent action based on the same transaction or occurrence.  In yet another approach, an objector argued that claim preclusion was satisfied because Sheetz could have raised its damages claims in the administrative appeal – Sheetz disagrees. In their analysis, the Supreme Court of Ohio broke down the elements of a claim preclusion analysis: 1) a prior final, valid decision on the merits by a court of competent jurisdiction; (2) a second action involving the same parties, or their privies, as the first; (3) a second action raising claims that were or could have been litigated in the first action; and (4) a second action arising out of the transaction or occurrence that was the subject matter of the previous action. The Court held that R.C. Ch. 2506 does not permit a party to argue damages as R.C. Ch. 2506 limits the common pleas jurisdiction as if it were sitting on appeal, and therefore can only affirm, reverse, vacate, or modify the appealed order, or can remand the case to the administrative body. 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