June 20, 2023

Does Post Payment of Interest Constitute a Confession of Judgment?

In the realm of personal injury protection (“PIP”) insurance claims, legal disputes can arise when an insurer fails to timely pay the benefits owed to a healthcare provider. One area of contention I have dealt with throughout my practice centers around the question of whether post payment of interest constitutes a confession of judgment. If you are ever confronted with a situation that has a similar issue, these particular cases may help: Liberty Mutual Insurance Co. v Pan Am Diagnostic (2022) and South Florida Pain and Rehab of West Dade v. Infinity Auto Insurance Company (2021); but, just how do claims adjusters apply the holdings of these cases to the cases on their desks?  

Here are some helpful insights on what to look for when wondering whether post payment of interest constitutes a confession of judgment:   

  1. What constitutes a PIP Benefit for purposes of attorney’s fees? Ask yourself the following question: Were benefits payable for medical, surgical, funeral, or disability insurance benefits? 
  2. If yes, then it is a PIP Benefit, and you can get attorney’s fees. 
  3. If not, then it is not a PIP Benefit, and you cannot get attorney’s fees. 

This seems straightforward, and this simple guide will likely lead you to the correct conclusion. A more complicated analysis centers on what we call, “The Thirty-Day Rule.”   

  1. The Thirty-Day Rule-What is it? In general, the thirty-day rule requires individuals insurance providers to respond to demand letters within thirty days from the date they are received. If thirty days are past due, then attorney’s fees can be issued. 
  2. How do I apply the Thirty-Day Rule when adjusting my cases? 
  3. First, check if a demand letter was sent. If so, make note of the date it was sent. 
  4. Next, check whether the insurer paid the provider for PIP Benefits, as stated in the pre- suit demand letter, within thirty days. 

It is important to note the insurer does not have to pay the exact amount stated in the demand letter, or any amount at all. Rather, it must respond to the demand letter within thirty days of its receipt. Without response, if the insurer does not pay PIP benefits within thirty days after it receives the written notice, the benefits are deemed “overdue,” and attorney’s fees can be awarded. However, if the PIP benefits are paid within thirty days of the demand letter being received, then Plaintiff’s counsel is not entitled to attorney’s fees.  

If you follow the two steps above, you will be on the right track towards knowing whether to settle or defend your case.  

How did these governing principles come to be the prevailing standard in Florida? Earlier, I mentioned looking toward two cases to determine whether post payment of interest constitutes a confession of judgment. A brief description of these cases is provided below:   

Liberty Mutual Insurance Co. v. Pan Am Diagnostic  

In Liberty Mutual Insurance Co. v Pan Am Diagnostic, the Court addressed the issue of whether interest payable on overdue PIP benefits constitutes a PIP “benefit” under Florida statute section 627.736(4)(d). The Court ruled that the statutory entitlement to interest on overdue PIP benefits is not a PIP benefit for which attorney’s fees are payable. Thus, litigation over the payment of interest does not trigger entitlement to attorney’s fees for the claimant. The key factor in determining eligibility for attorney’s fees in PIP cases is whether benefits were payable for medical, surgical, funeral, and disability insurance benefits.  

South Florida Pain and Rehab of West Dade v. Infinity Auto Insurance Company  

In the case of South Florida Pain and Rehab of West Dade v. Infinity Auto Insurance Company, the Court considered whether a healthcare provider was entitled to attorney’s fees under section 627.736(8), Florida Statutes (2018), after obtaining a judgment solely on the statutory penalty and postage costs authorized by section 627.736(10), Florida Statutes (2018). The Court held that the provider was not entitled to attorney’s fees under the thirty-day rule. If an insurer pays PIP benefits within thirty days of receiving written notice, the benefits are not considered overdue. Filing a confession of judgment for penalty and postage without including a claim for PIP benefits does not trigger an award for attorney’s fees. The Court emphasized that penalty and postage are not considered PIP “benefits” under the statute.  

While these are the main cases to consider, when evaluating cases referred for defense representation, I also find it necessary to consider the distinguishing case opinion of Baker Family Chiro v. Liberty Mutual. In this case, the Court examined the issue of “swift payment” and the protection provided under the safe harbor provisions of section 627.736(10)(d). The Court found that Liberty Mutual’s delayed payment, which included an underpayment of interest, went beyond the safe harbor provisions, and made the insurer liable for attorney’s fees under section 627.736(10)(d). Unlike in the South Florida Pain case, where the insurer paid all PIP benefits within the stipulated time but failed to pay penalty and postage, Liberty Mutual’s late payment made it ineligible for the safe harbor protections. Consequently, the Court ruled in favor of the healthcare provider’s right to attorney’s fees.  

While somewhat beyond the scope of this post, it is important to mention that the Baker Family Chiro case also addressed the de minimis defense, concluding the Legislature’s enactment, of sections 627.736(8) and (10)(d), which allow for attorney’s fees in “any dispute” outside the safe harbors, nullified the de minimis defense. This indicates that even if the amount in question is minimal, the statutory provisions permit the awarding of attorney’s fees.  

Click here https://www.kelleykronenberg.com/conflict-alert-the-doctrine-of-de-minimum-non-curat-lex/ to read more about the de minimis defense in Florida.  

Are You Prepared?  

You are staring at documents on your desk, trying to determine whether a post payment of interest qualifies as a confession of judgment. Before you panic, you think back to this blog and go through the questions asking whether the payments qualify as a PIP benefit for the purpose of fees and whether it complied with the thirty-day rule, and you confidently exhale.  

Understanding these legal nuances is crucial for insurers involved in PIP cases to navigate the complexities of attorney’s fees and confession of judgment, and I hope this post is the first step toward claims handlers arriving at the right answers. However, the framework I provided for decision making is just that, a framework. It is important to remember that every decision should be made on a case-by-case basis.  

If you are ever unsure of what to do, or if you have any questions at all, please don’t hesitate to contact me and I will be happy to answer all your questions. I can be reached by calling (954) 370-9970. 

Ryan A. Becker
Attorney, Personal Injury Protection Defense
Kelley Kronenberg-Fort Lauderdale, FL.
(954) 370-9970