Post-Judgment Reductions 101

In its recent decision in Susan Matrisciani v. Garrison Property And Casualty Insurance Company, 2020 WL 3067749 (Fla. 4th DCA Jun. 10, 2020), the Florida Fourth District Court of Appeals dissected the computation of post-judgment reductions and the application of setoffs.

This case arises from an automobile accident where Susan Matrisciani allegedly sustained permanent injuries.  Matrisciani was an insured with Garrison Property and Casualty Insurance Company, which provided her $10,000 in personal injury protection benefits and $1,000 in medical payments coverage.  Matrisciani sued the other driver and Garrison for uninsured or underinsured motorists benefits (UIM benefits). As a caveat, the Garrison policy provided Garrison the right to recover any duplicate payments made to Matrisciani. In other words, Matrisciani was required to pay back Garrison the $10,000 in PIP benefits and $1,000 in Med-Pay benefits in the event she recovered from the other driver.

In suit, Garrison served a proposal for settlement (“PFS”) upon Matrisciani for $1,000 to resolve all claims against Garrison and satisfy all relevant liens (e.g., Matrisciani’s $29,211.12 Medicare lien). Matrisciani obtained a partial summary judgment ruling as to the medical expenses incurred from the accident ($19,461.31). At trial, the other driver was found negligent, and Matrisciani was awarded $92,000 in total damages, which was less than the other driver’s $100,000 auto liability insurance policy limits.

Garrison moved for costs and attorney’s fees pursuant to its proposal for settlement, as well as a setoff and remittitur.  Unbeknownst to Garrison, Matrisciani and the other driver reached a settlement agreement awarding $111,461.31 to Matrisciani, which included the $92,000 jury verdict plus the $19,461.31 summary judgment award.  Upon review of Garrison’s post-trial reduction motions, the trial court reduced Matrisciani’s past medical expenses award by the summary judgment award and the setoffs for PIP and Medicare benefits for a total of $62,147.73.  Furthermore, the court ruled that Garrison was not liable for UIM benefits because the net award was under the negligent driver’s $100,000 insurance policy limit, which resulted in a judgment against Garrison for $0 as well as an award of attorney’s fees pursuant to the proposal for settlement. 

The 4^th DCA reversed and remanded for the trial court to address the issues of setoff and remittitur.

In determining whether an award is excessive, the court must consider, among other things, “[w]hether the trier of fact took improper elements of damages into account” and “[w]hether the amount awarded is supported by the evidence.” § 768.74(5), Fla. Stat. (2017).  Here, the 4^th DCA found no error in the reduction of Matrisciani’s past medical expenses, but held that the the jury “took improper elements of damages” into account and the award was not “supported by the evidence” because it exceeded the amount of the bills in evidence (i.e., the $19,461.31 summary judgment award). See Adams v. Saavedra, 65 So. 3d 1185, 1188 (Fla. 4th DCA 2011); § 768.74(5), Fla. Stat.

Setoffs are another avenue for trial courts to reduce certain awards. See Goble v. Frohman, 901 So. 2d 830, 832 (Fla. 2005); Section 768.76(1), Florida Statutes (2017) (“the court shall reduce the amount of such award by the total of all amounts which have been paid for the benefit of the claimant . . . from all collateral sources”).  Florida law considers PIP benefits and contractual discounts off medical bills to be collateral sources and allows for their setoff post-verdict. See Geico Gen. Ins. Co. v. Cirillo-Meijer, 50 So. 3d 681, 683 (Fla. 4th DCA 2010); see also Aetna Cas. & Sur. Co. v. Langel, 587 So. 2d 1370, 1373 (Fla. 4th DCA 1991); Goble, 901 So. 2d at 833. Additionally, Florida law entitles a plaintiff recovery for past premium payments on PIP coverage. Forest v. Sutherland, 110 So. 3d 525, 526 (Fla. 4th DCA 2013); § 768.76(1), Fla. Stat. Here, the trial court erred in denying Matrisciani a credit for the premium payments made on her PIP policy.

Notably excluded as a collateral source are Medicare benefits, which are not entitled to a setoff. See § 768.76(2)(b), Fla. Stat. (2017); see also Thyssenkrupp Elevator Corp. v. Lasky, 868 So. 2d 547, 551 (Fla. 4th DCA 2003).  In Thyssenkrupp, the 4^th DCA reasoned: “When a provider charges for medical service or products and later accepts a lesser sum in full satisfaction by Medicare, the original charge becomes irrelevant because it does not tend to prove that the claimant has suffered any loss by reason of the charge.” Accordingly, the past medical expenses awarded by the jury are reduced “by the difference between the amounts charged by a provider and the amounts actually paid that provider by Medicare.” Here, the trial court erred in reducing the verdict pursuant to “Contractual Reductions and Medicare Disallowances.”

Furthermore, a plaintiff may not introduce into evidence the gross amount of medical bills rather than the lesser amount actually paid as a governmental or charitable benefit in full settlement of those bills. See Boyd v. Nationwide Mut. Fire Ins. Co., 890 So. 2d 1240 (Fla. 4th DCA 2005); Cooperative Leasing, Inc. v. Johnson, 872 So. 2d 956, 960 (Fla. 2d DCA 2004); Miami–Dade Cty. v. Laureiro, 894 So. 2d 268, 269 (Fla. 3d DCA 2004).

Under Florida’s proposal for settlement statute, a party may receive attorney’s fees when the following requirements are met: “(1) when [that] party has served a demand or offer for judgment, and (2) that party has recovered a judgment at least 25 percent more or less than the demand or offer.” Schmidt v. Fortner, 629 So. 2d 1036, 1040 (Fla. 4^th DCA 1993). To meet the first requirement, the offer for judgment must be legally sufficient. See Fla. R. Civ. P. 1.422(c); § 768.79(2), Fla. Stat. (2017). Moreover, the terms of the proposal must be sufficiently clear and definite to allow the offeree “to make an informed decision without needing clarification.” See Am. Home Assurance Co. v. D’Agostino, 211 So. 3d 63, 66 (Fla. 4th DCA 2017) (quoting State Farm Mut. Auto. Ins. Co. v. Nichols, 932 So. 2d 1067, 1079 (Fla. 2006)). 

The standard of review in determining whether a proposal for settlement is ambiguous is de novo. See Nationwide Mut. Fire Ins. Co. v. Pollinger, 42 So. 3d 890, 891 (Fla. 4th DCA 2010).  Here, the PFS required Matrisciani to “satisfy all relevant liens” but did not specify which liens she needed to satisfy. However, the Medicare lien was clearly the only “relevant lien” that needed to be satisfied since no other payor had asserted a claim of lien at the time the proposal for settlement was served.

Proposals for settlement may be found deficient where they extinguish other pending unrelated claims. See, Nichols, 932 So. 2d at 1079 (“At the time of the offer, [the plaintiff] not only had a pending PIP claim against [the defendant], but also a UM claim arising from the same accident and of greater value.”); Palm Beach Polo Holdings, Inc. v. Vill. of Wellington, 904 So. 2d 652, 653 (Fla. 4th DCA 2005).  Although the proposal for settlement included the phrase “resolve all claims,” the court noted that the subject proposal for settlement did not mention the other driver (i.e., the only other defendant), which should have given Matrisciani the indication that the proposal had nothing to do with that driver and would not have terminated that part of her lawsuit.

In evaluating the threshold amount for an award of attorney’s fees under section 768.79(6), a UIM carrier’s settlement offer should be viewed in relation to the plaintiff’s potential recovery over the tortfeasor’s insurance limits. See Allstate Ins. Co. v. Silow, 714 So. 2d 647, 650 (Fla. 4th DCA 1998). If the judgment recovered against the tortfeasor is within that tortfeasor’s liability limits, the UIM carrier has no liability and is entitled to a $0 judgment in their favor. See Allstate Ins. Co. v. Staszower, 61 So. 3d 1245, 1246 (Fla. 4th DCA 2011). Thus, any settlement offer made by a UIM carrier in such a case will be greater than the plaintiff’s recovery. Here, the trial court did not err in considering the judgment obtained against Garrison rather than the judgment obtained through negotiation with the negligent driver.

The court may, in its discretion, determine that a proposal for settlement was not made in good faith. See Sharaby v. KLV Gems Co., 45 So. 3d 560, 563 (Fla. 4th DCA 2010); see also § 768.79(7)(a), Fla. Stat. (2017); Fla. R. Civ. P. 1.442(h)(1). “The offeree bears the burden of proving the offeror’s proposal was not made in good faith.” Sharaby, 45 So. 3d at 563. Additionally, “a minimal offer can be made in good faith if the evidence demonstrates that, at the time it was made, the offeror had a reasonable basis to conclude that its exposure was nominal.” State Farm Mut. Auto. Ins. Co. v. Sharkey, 928 So. 2d 1263, 1264 (Fla. 4th DCA 2006); Fox v. McCaw Cellular Commc’ns of Fla., Inc., 745 So. 2d 330, 333 (Fla. 4th DCA 1998); see also Dep’t of Highway Safety & Motor Vehicles, Fla. Highway Patrol v. Weinstein, 747 So. 2d 1019, 1021 (Fla. 3d DCA 1999). The 4^th DCA recognized good faith is “determined by the subjective motivations and beliefs of the pertinent actor.” Weinstein, 747 So. 2d at 1021.

Here, Garrison “had a reasonable basis at the time of the offer to conclude that [its] exposure [as to its UIM coverage] was nominal.” Fox, 745 So. 2d at 333. Garrison’s proposal for settlement bore a reasonable relationship to the amount of damages and a realistic assessment of its liability, especially since it was made after two years of litigation and extensive discovery, which included an assessment of medical bills previously incurred, the extent of Matrisciani’s injuries, her pain and suffering and future medical needs.  As such, the court found the $1,000 proposal for settlement was made in good faith. See Land & Sea Petroleum, Inc. v. Bus. Specialists, Inc., 53 So. 3d 348, 354-55 (Fla. 4th DCA 2010); Mount Vernon Fire Ins. Co. v. New Moon Mgmt., Inc., 239 So. 3d 183 (Fla. 3d DCA 2018).

The 4^th DCA sets general guidelines to calculate post-judgment reductions, including determining collateral sources and applying setoffs.  This case particularly emphasizes the importance of appropriate post-judgment calculations in the consideration of a party’s proposal for settlement and its entitlement to attorney’s fees.  Moreover, the 4^th DCA notes that a determination of whether a proposal for settlement meets the threshold amount to trigger entitlement to attorney’s fees cannot be made until a net judgment against the offeror is calculated considering all legally authorized reductions. See Fla. Gas Transmission Co. v. Lauderdale Sand & Fill, Inc., 813 So. 2d 1013, 1015 (Fla. 4th DCA 2002).

*Jordan is an associate in our Fort Lauderdale, Florida office. He can be reached at jpgoldman@mdwcg.com or 954-905-3795.

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