Tower Radiology Center, Appellant v. Direct General Insurance Company, Appellee. 4th District Case No. 4d21-3119. 47. Fla. L. Weekly D1927

Trial court erred in dismissing medical provider-assignee’s statement of claim alleging breach of contract by insurer after considering consent judgment entered against a named insured in declaratory judgment action to which provider was not a party.

The 4th District Court of Appeal reversed and remanded the lower court’s order granting the defendant’s motion to dismiss against the plaintiff. The suit involved a policy which afforded coverage to Jamar Reid, who was involved in a motor vehicle accident and made a claim for PIP benefits. Reid assigned his benefits to the plaintiff radiology company in exchange for treatment. 

The policy that afforded coverage was issued by the defendant to its insured, Angela Carson. However, the defendant filed a separate declaratory action against Carson in another jurisdiction, where it alleged that Carson had committed a material misrepresentation on the application for insurance, and requested the court to declare the policy void ab initio. The defendant obtained a consent final judgment in the declaratory action, declaring the subject insurance policy was void ab initio due to material misrepresentation. The consent final judgment also declared that the insurer “has no duty to defend or indemnify any named or omnibus insured on the Insurance Contract for any claim(s) for benefits…”. The judgment was dated March 5, 2021, two months after the plaintiff radiology company had filed its statement of claim. 

In its motion to dismiss, the defendant argued that the consent final judgment’s declaration that the subject policy was void ab initio. The lower court granted the motion to dismiss. In its order, the court took judicial notice of the declaratory action and consent final judgment and found that the radiology company did not have a cause of action to recover under the policy at issue as it had been deemed void ab initio. 

The 4th DCA found that the trial court erred by considering the consent final judgment because the final judgment was not attached to, referenced in or alluded to in the statement of claim, nor was a policy number or named insured Angela Carson, the party who allegedly committed the material misrepresentation. Therefore, the insurer’s defense that the policy was void ab initio could not be determined as a matter of law from the four corners of the statement of claim. More importantly, the court agreed with the radiology company’s argument that the trial court violated Fla. Stat. 86.091 by relying on the final consent judgment to dismiss the case as the radiology company was not a named party to the declaratory action. Section 86.091 reads: “When declaratory relief is sought, all persons may be made parties who have or claim any interest which would be affected by the declaration. No declaration shall prejudice the rights of persons not parties to the proceedings.” 

For the above reasons, the court ruled that in light of the limited allegations of the statement of claim and the radiology company’s status as a non-party to the declaratory action, the consent final judgment should not have been enforced against the defendant as a matter of res judicata to grant the insurer’s motion to dismiss. 

The significance of this order is that it affirms the fact that an insurer cannot rely on a judgment against an assignee of the insured, unless that assignee was a party to the proceeding that declared the policy void.

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