County Civil Court: INSURANCE—PIP Benefits section 627.736(11)(d) did not require the insurer to pay a 10% penalty on the interest paid on the overdue claim,—Final Judgment affirmed. S.M.S. v. Nationwide Mutual Fire Insurance Company, No. 512005AP14WS (Fla. 6th Cir. Ct. App. Div. July 20, 2006).









                                                                        Case No: 512005AP14WS

V;                                                                    Lower No: 512004SC2985/512004SC2994








Appeal from Pasco County Court

County Judge Debra Roberts


Amy G. Cohen, Esq. 

Attorney for Appellant


Hinda Klein, Esq. 

Attorney for Appellee





This matter came before the court on Dangond’s appeal from an Order Granting

Citibank’s Motion for  Summary Judgment entered by the Pasco County Court . This Court has jurisdiction. Fla. R. App. P. 9.030(c).  The ruling of the trial court is affirmed.

                        The underlying facts are not in dispute.  Nationwide issued a PIP policy of insurance to Charles Colandria in the amount of $10,000.00.[1]  The policy was in full force and effect on or about June 28, 2004, when Colandria was involved in an automobile accident. Colandria assigned his medical benefits and rights to the plaintiff SMS Imaging, Inc..  Plaintiff does not dispute that it billed Nationwide a total of $1077.43 for CPT code 72121 for services rendered to Colandria. Nationwide, following current law at the time, determined SMS’ entitlement to be a percentage of the bill based on its coding, and thereafter, calculated the payment in accordance with Medicare Part B Fee Schedule to be $722.81.On or about October 27, 2004 Nationwide received plaintiff’s demand letter, dated October 19, 2004, which sought $177.05, plus interest, penalty and postage .  The demand letter stated “a claim for payment for treatment rendered…was received for date of loss: 6/28/04.  Pursuant to 627.736, Florida Statutes, payment of this claim in [sic] now overdue.”  In response, on or about November 1, 2004, Nationwide sent SMS a letter informing it that the actual remaining balance was $139.14 (80% of the total bill of $1077.43, which equaled $861.94-722.81 which had already been paid.) Nationwide issued payment in the amount of $139.14, plus $2.43 in interest, and $13.91 in penalty on the overdue claim, for a total of $155.48.

                        SMS subsequently filed its Complaint that Nationwide breached its obligations under the policy by failing to pay medical bills on a timely basis.  In its Complaint, SMS stated it served Nationwide a 15 day Notice of Intent to Initiate Litigation on or about October 19, 2004 and that more than fifteen days had passed without resolution of the demand.  In its Answer and Affirmative Defenses to SMS’ Complaint, Nationwide indicated that it fully and timely discharged SMS’ claim by making a payment $722.81 on July 29, 2004 and making an additional payment of $155.48 inclusive of interest and penalty, on November 1, 2001 ($139.14, plus $2.43 in interest and $13.91 in penalty on the underlying claim.) Nationwide does not dispute that it did not pay a penalty on the interest payment of $2.43.

Nationwide filed a motion for Summary Judgment asserting that it had paid all outstanding amounts under the policy of insurance and that the subject litigation was in violation of section 627.736(11)(d), Florida Statutes, which provides that no action may be brought against an insurer who has made timely payment of the overdue claim specified in the demand notice together with applicable interest and a ten percent penalty of the overdue amount. The Summary Judgment motion was granted by the trial court which found that the only issue remaining was whether Nationwide was required to pay a penalty on the interest because SMS no longer disputed that the correct amount of the overdue claim was $139.14 rather than $177.05. It did, however, argue that while Nationwide paid a penalty on the amount of the overdue claim, it did not pay and should have paid a 10% penalty on the interest amount of $2.43 or an additional amount of $0.24.  The trial court determined section 627.736(11)(d) did not require the insurer to pay a 10% penalty on the interest paid on the overdue claim, which in this case would have amounted to an additional 24 cents.  This Court agrees.

Florida Statute 627.736(11) provides in pertinent part, “(11) Demand letter.--

 (a) As a condition precedent to filing any action for benefits under this section, the insurer must be provided with written notice of an intent to initiate litigation. Such notice may not be sent until the claim is overdue, including any additional time the insurer has to pay the claim pursuant to paragraph (4)(b).


                                                                 * * *

(d) If, within 15 days after receipt of notice by the insurer, the overdue claim specified in the notice is paid by the insurer together with applicable interest and a penalty of 10 percent of the overdue amount paid by the insurer, subject to a maximum penalty of $250, no action may be brought against the insurer. If the demand involves an insurer's withdrawal of payment under paragraph (7)(a) for future treatment not yet rendered, no action may be brought against the insurer if, within 15 days after its receipt of the notice, the insurer mails to the person filing the notice a written statement of the insurer's agreement to pay for such treatment in accordance with the notice and to pay a penalty of 10 percent, subject to a maximum penalty of $250, when it pays for such future treatment in accordance with the requirements of this section. To the extent the insurer determines not to pay any amount demanded, the penalty shall not be payable in any subsequent action. For purposes of this subsection, payment or the insurer's agreement shall be treated as being made on the date a draft or other valid instrument that is equivalent to payment, or the insurer's written statement of agreement, is placed in the United States mail in a properly addressed, postpaid envelope, or if not so posted, on the date of delivery. The insurer shall not be obligated to pay any attorney's fees if the insurer pays the claim or mails its agreement to pay for future treatment within the time prescribed by this subsection.

(e) The applicable statute of limitation for an action under this section shall be tolled for a period of 15 business days by the mailing of the notice required by this subsection.

Section 627.736(11)(d) states in no uncertain terms that if the overdue claim specified in the notice is paid by the insurer together with applicable interest and a penalty of 10 percent of the overdue amount, within fifteen days after receipt of the notice by the insurer, no action may be brought against the insurer.  As argued by appellee, the plain and ordinary meaning of the phrase “overdue amount” is the actual dollar figure of the loss sustained that is past due on which simple interest and penalties are calculated. United Automobile Ins. Co. v. Stat Technologies, 787 So. 2d 920 (Fla. 2001).   Thus, contrary to appellant’s argument, the overdue ‘amount’ is exclusive of interest because interest is considered due rather than overdue.  See United Auto. Ins. Co. v. Rodriguez, 808 So. 2d 82 (Fla. 2001) and January v. State Farm Mut. Ins. Co., 838 So. 2d 604 (Fla. 5th DCA 2003)(both holding that under section 627.736(4), if the PIP insurer fails to pay the claim or discover facts which warrant a refusal to pay within the allotted thirty day period, the claim is overdue and statutory penalties, consisting of interest and fees, are due.)  Orion Ins. Co. v, Magnetic Imaging Systems I, 696 So. 2d 475 (Fla. 3d DCA 1997)(held that if the PIP claims is overdue, the “overdue” amount bears interest at the rate of ten percent a year). As argued by appellee, interest rather than being included in the overdue amount is separate and apart from the overdue amount.  Here, the overdue amount was $139.17.  Appellee paid that claim within 15 days of notice, plus penalties and interest. It is therefore,

ORDERED and ADJUDGED that the ruling of the trial court be AFFIRMED.

DONE AND ORDERED in Chambers at New Port Richey, Pasco County, Florida this __ day of  July,  2006.                 


                                                                                    W. Lowell Bray, Circuit Judge

                                                                                    Primary Appellate Judge




                                                                                    Daniel D. Diskey

                                                                                    Circuit Judge




                                                                                    Stanley R. Mills

                                                                                    Circuit Judge



Copies furnished to:

Judge Debra Roberts

Amy G. Cohen, Esq. 

Hinda Klein, Esq.  

[1] This case was consolidated with case number 512004SC2985 for the purposes of appeal, pursuant to an Order  of this Court entered February 23, 2006.  Although there were slightly different amounts of money involved in each case as well as different dates of correspondence between the parties, the two appeals arise from identical trial court decisions on the same question of law.