Accident911 Help Medical Center Corp., et al. v. Direct general insurance, 3rd district, case no. 3D23-773. LT item no. 22-9836, August 23, 2023
The Third Circuit Court of Appeals rules that the trial court abused its discretion when it denied the physician and trustee’s request to intervene in the declaratory judgment action between the insurer and the insured. The claimant’s interest in the suit is of such a direct and immediate character that they will either gain or lose by the direct legal action and effect of the judgment where the insurer sought a declaration that the disputed policy was canceled and void ab initio.
This complaint related to a claim filed by Direct General against its insured, Yvette Caro and her son, Daniel Jose Álvare, who were involved in a car accident on September 8, 2021, while driving an insured vehicle. On September 21, 2021, Ivet Caro was involved in a traffic accident in which she was a passenger in a vehicle that was not insured under the direct policy. As a result of both accidents, Caro and Alvare filed a claim under this policy. Alvare assigned his rights to PIP benefits under the policy to East Coast Medical Rehab, while Caro assigned his rights to PIP benefits to both Accident911 and Rivero Diagnostic Center.
After receiving the two claims, Direct General filed a breach of contract and declaratory judgment action against Caro and Alvaro. In its appeal, Direct General alleged that it voided Caro’s insurance policy and sought a declaration that the policy was now void ab initio because Caro made a material misrepresentation on the insurance application by failing to disclose that her son Alvare was a householder. resident over the age of fifteen. Direct General argued that the misrepresentation was material because, if discovered, it would have resulted in an increase in the policy premium. In its prayer for relief, Direct General sought a declaration that because the policy is void ab initio, any award of PIP benefits from Caro and Alvaro to any medical provider, physician, or medical entity is void.
Following a default judgment against Alvaro, 911Help Medical Center Corp, East Coast Medical Rehab Ctr., Inc. and Rivero Diagnostic Center, Inc., all filed motions to intervene pursuant to Florida Rule of Civil Procedure 1.230 which provides: “Anyone asserting an interest in pending litigation may at any time be permitted to exercise his right by intervention, but the intervention will be subordinated and as recognition of the correctness of the main proceedings, unless the court determines otherwise.”
The lower court denied the motion and in its decision focused on the grantor’s claim that they were “necessary parties” to the proceeding, which was immediately appealed. In reaching its ruling, the Third Circuit ruled that the trial court abused its discretion because the providers clearly met the well-established test for intervention, which was established by the Florida Supreme Court’s decision in Union Cent. Life Ins. Co. c. Carlisle, 593 So. 2d 505, 507 (Fla. 1992). In Carlislethe court articulated a two-part test that requires the trial court to “first make a preliminary determination as to whether the interest shown is appropriate to support intervention” and, if so, must “exercise its discretion whether to permit intervention” by undertaking taking into account take into account “a number of factors, including the performance of the interest, any relevant contractual language, the amount of the interest, the potential for conflicts or new issues and any other relevant circumstances.”
In applying the test, the court noted that the allegations in Direct General’s complaint undermined any claim that the suppliers lacked the requisite interest in the litigation to require intervention. The Court analyzed several allegations in the complaint, including the following: (1) Plaintiff Direct General, Defendants Caro and Alvara, and Plaintiffs, Accident911 Help Medical Center Corp., East Coast Medical Rehab Ctr., Inc. and Rivero Diagnostic Center, “have a real, present, adverse and antagonistic interest in the subject matter described herein; (2) Direct General “seeks a statement of its rights and obligations under the automobile policy with respect to claims against [it]”; and (3) Direct General seeks a declaration that, since the insurance policy issued to Caro is canceled and void ab initio, “any assignment of personal injury protection (PIP) benefits” by Caro or Alvaro to any medical provider, doctor and/or medical practitioner is void.” Analyzing these allegations, the court noted that if Direct General were to succeed in obtaining a judgment declaring the policy void ab initio, the service provider’s right to the benefits of the policy pursuant to the assignments from Caro and Alvaro would be extinguished and that would, based on the same, turn out that the providers are the only entities that could adequately protect their rights in the lawsuit.
Ultimately, the court held that since the provider’s interest in the lawsuit was “of such a direct and immediate character that [it] will either gain or lose by direct legal effect and by the effect of the judgment,” the lower court committed reversible error and ordered that the order denying intervention be vacated.
The significance of this case is that it arguably gives any provider assigned the benefits of a policy to intervene in litigation between an insured and an insurer, even where the insurer alleges fraud or misrepresentation against its insured. SIU adjusters should be aware of this caveat when deciding whether to bring a declaratory action against an insured for a claim involving potential misrepresentation or fraud by the insured.
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