Flores v. Allstate Ins. Co.

• Decision Date: 23 May 2002
• Docket Number: No. SC00-2281.,SC00-2281.
• Citation: 819 So.2d 740
• Parties: Ruben FLORES, Petitioner, v. ALLSTATE INSURANCE COMPANY, Respondent.
• Court: Florida Supreme Court

819 So.2d 740

Ruben FLORES, Petitioner, v. ALLSTATE INSURANCE COMPANY, Respondent.

No. SC00-2281.

Supreme Court of Florida.

May 23, 2002.

D. Russell Stahl, Tampa, FL, for Petitioner.

Christopher J. Nicholas and Anthony J. Russo of Butler Burnette Pappas, Tampa, FL, for Respondent.

PARIENTE, J.

We have for review the decision of the Second District Court of Appeal in Flores v. Allstate Insurance Co., 772 So.2d 4, 7 (Fla. 2d DCA 2000), in which the Second District certified a question of great public importance:

DOES AN INSURED LOSE ALL BENEFITS UNDER A DIVISIBLE INSURANCE POLICY WHERE THE INSURED'S FRAUD IS COMMITTED WITH RESPECT TO ONE PART OF THE POLICY BUT THE APPLICABLE GENERAL FRAUD PROVISION OF THE POLICY PROVIDES THAT FRAUD IN ANY PORTION OF THE POLICY VOIDS THE ENTIRE POLICY?

We have jurisdiction. See art. V, § 3(b)(4), Fla. Const. The specific issue in this case is whether the insured's submission of a fraudulent bill under the personal injury protection ("PIP") portion of an automobile liability policy voided his right to claim uninsured motorist ("UM") benefits under the policy even where no fraud occurred in connection with the UM claim. Because the certified question neither reflects the fact that PIP and UM coverages are involved in this case, nor accurately reflects the actual terms of the policy provision set forth in the automobile liability insurance policy, we rephrase the certified question as follows:

DOES THE SUBMISSION OF A FRAUDULENT BILL UNDER THE PIP PORTION OF A DIVISIBLE AUTOMOBILE LIABILITY POLICY VOID UNINSURED MOTORIST COVERAGE WHERE THE POLICY CONTAINS A GENERAL CONDITION THAT PROVIDES THAT THE INSURER "WILL NOT PROVIDE COVERAGE FOR ANY LOSS THAT OCCURS IN CONNECTION WITH ANY MATERIAL MISREPRESENTATION, FRAUD OR CONCEALMENT OF MATERIAL FACTS, OR IF ANY MATERIAL MISREPRESENTATION OR OMISSION WAS MADE ON THE AUTO INSURANCE APPLICATION"?

FACTS

Ruben Flores ("Flores") and his son Bobby Flores were passengers in a vehicle owed by Antonio Meza ("Meza") and operated by Norma Flores, the wife of Flores and mother of Bobby Flores. The vehicle was involved in an accident in which Flores sustained facial injuries upon impacting the front windshield. As a result of the accident, the Flores family, as additional insureds, filed a four-count complaint against Meza's insurer, Allstate Insurance Company ("Allstate") for UM coverage.¹ The Allstate policy is a divisible automobile insurance policy with separate coverages and separate premiums charged for PIP and UM coverage.² The policy provides that the policy limit for PIP insurance was an aggregate total of "$10,000 each person." The policy limit for UM coverage is "$100,000 each person— $300,000 each accident."

The policy provision at issue in this case appears under the section entitled "General," and provides as follows:

Fraud or Misrepresentation

Your policy was issued in reliance on the information you provided on your Auto Insurance Application concerning autos and persons insured by the policy. Allstate will not provide coverage for any loss which occurs in connection with any material misrepresentation, fraud, or concealment of material facts, or if any material misrepresentation or omission was made on your Auto Insurance Application.

In its answer, Allstate raised affirmative defenses, including that Flores failed to use an operational and available seatbelt and that Flores perpetrated fraud and misrepresentation in his PIP claims by presenting altered physician and prescription billing statements to Allstate. Flores moved for summary judgment, arguing that Allstate's fraud and misrepresentation affirmative defense was legally insufficient as a defense to a UM claim because the fraud related only to the claim for PIP benefits. The trial court denied Flores' motion.

To support its affirmative defense, Allstate presented evidence at trial that Flores, who worked in a pharmacy, submitted three claims for reimbursement under the PIP coverage for three prescription bills that Flores received at no cost from his employer. The amounts of the three bills were $5, $10 and $27.50. Allstate also presented evidence of a physician's bill that had been altered from $30 to $130 by the insertion of a "1."

The jury verdict form contained special interrogatories. As to the fraud defense, the verdict contained the following question: "Did the Plaintiff, RUBEN FLORES, make a material misrepresentation, false statement, commit fraud, or otherwise conceal material facts in connection with his claim against the Defendant, ALLSTATE INSURANCE COMPANY? (YES or NO)." The jury checked "YES". Regarding Allstate's affirmative defense that Flores failed to wear a seat belt, the jury also answered "YES" to a special interrogatory that there was "negligence on the part of the Plaintiff, RUBEN FLORES, in failing to wear a seat belt, which was a legal cause of loss, injury or damage to RUBEN FLORES." The jury found that Flores' negligence was "100%" the cause of his damages.³

The trial court entered final judgment in favor of Allstate and taxed costs against Flores. On appeal, the Second District framed the "core issue" as "whether evidence of Ruben Flores' fraudulent acts was sufficiently egregious to justify trial by jury with respect to whether Allstate was relieved of paying any sums under the policy." Flores, 772 So.2d at 5. In affirming the judgment for Allstate, the Second District reasoned that the "law in Florida is clear that a policy provision which voids the insurance policy for misrepresentation of a material fact is given full force and effect." Id. at 6.

ANALYSIS

The issue in this case is whether Flores forfeited his right to make a claim for UM benefits under the Allstate policy after he submitted fraudulent bills for reimbursement under the PIP benefits provision of the policy. We begin our analysis with the general principles governing interpretations of insurance policies.

As a fundamental proposition, where the language in an insurance policy is subject to differing interpretations, the policy language "should be construed liberally in favor of the insured and strictly against the insurer." State Farm Fire & Cas. Co. v. CTC Dev. Corp., 720 So.2d 1072, 1076 (Fla.1998). See Auto-Owners Ins. Co. v. Anderson, 756 So.2d 29, 34 (Fla.2000). Moreover, it is axiomatic that "[i]f the relevant policy language is susceptible to more than one reasonable interpretation, one providing coverage and the other limiting coverage, the insurance policy is ambiguous." Auto-Owners, 756 So.2d at 34. Policy provisions that tend to limit or avoid liability are interpreted liberally in favor of the insured and strictly against the drafter who prepared the policy, and exclusions to coverage are construed even more strictly against the insurer than coverage clauses. See id. With these basic principles in mind, we consider the general law regarding both PIP and UM coverage.

PIP insurance is a statutorily required coverage for those policies complying with the security requirement of the Florida Motor Vehicle No-Fault law. See § 627.736(1), Fla. Stat. (1997); see also Allstate Ins. Co. v. Rudnick, 761 So.2d 289, 291 (Fla.2000). The purpose of PIP benefits is to provide up to $10,000 for medical bills and lost wages without regard to fault. See, e.g., §§ 627.731, 627.736, Fla. Stat (1997). PIP benefits are an integral part of the no-fault statutory scheme.

Separate and apart from the purpose of requiring insurers to provide PIP benefits for their insureds who are injured in automobile accidents, insurers issuing motor vehicle policies in Florida also are mandated by statute to offer UM coverage unless the insured has expressly rejected the coverage. See generally § 627.727, Fla. Stat. (1997). UM coverage serves a different purpose than no-fault benefits and is intended to protect persons who are injured as a result of negligence by uninsured motorists.

In Mullis v. State Farm Mutual Automobile Insurance Co., 252 So.2d 229, 237-38 (Fla.1971), we explained that "uninsured motorist coverage ... is statutorily intended to provide the reciprocal or mutual equivalent of automobile liability coverage prescribed by the Financial Responsibility Law." Further, as we elaborated in Allstate Insurance Co. v. Boynton, 486 So.2d 552, 557 (Fla.1986):

The legislature wisely enacted a scheme whereby a motorist may obtain a limited form of insurance coverage for the uninsured motorist, by requiring that every insurer doing business in this state offer and make available to its automobile liability policyholders UM coverage in an amount equal to the policyholder's automobile liability insurance. The policyholder pays an additional premium for such coverage.

More recently, this Court again emphasized that the reason insurers are statutorily required to offer UM coverage to the insured is to protect individuals "who are injured or damaged by other motorists who in turn are not insured and cannot make whole the injured party. The statute is designed for the protection of injured persons, not for the benefit of insurance companies or motorists who cause damage to others." Young v. Progressive Southeastern Ins. Co., 753 So.2d 80, 83 (Fla.2000) (citing Brown v. Progressive Mut. Ins. Co., 249 So.2d 429, 430 (Fla. 1971)).

Regarding attempts by insurers to limit UM coverage, we explained in Salas v. Liberty Mutual Fire Insurance Co., 272 So.2d 1, 5 (Fla.1972), that

the intention of the Legislature, as mirrored by the decisions of this Court, is plain to provide for the broad protection of the citizens of this State against uninsured motorists. As a creature of statute rather than a matter for contemplation of the parties in creating insurance policies, the uninsured motorist protection is not susceptible to the attempts of the insurer to limit or negate that protection.

(Emphasis supplied.) "Because the uninsured motorist statute was enacted to provide relief to innocent...