In my October 13, 2012, blog post, I gave an overview of what will be an ongoing blog topic – post-claim / pre-suit insurance policy conditions. Today’s topic is compliance with examination requests. It is clear from the case law that examination policy conditions (e.g., Examination Under Oath (“EUO”) and Compulsory Medical Examination (“CME”) policy conditions) must be strictly complied with in Florida.1 What is not quite clear in Florida, however, is the consequence of failing to comply with an insurer’s examination request.
My research revealed divergent views amongst Florida’s state courts. On the one hand, for example, the Fourth District Court of Appeal’s Goldman v. State Farm Fire General Insurance Company decision.2 On the other hand, the Fifth District Court of Appeal’s State Farm Mutual Automobile Insurance Company v. Curran decision.3 In Goldman, the Fourth District Court of Appeal held “that the [EUO] policy provision at issue is a condition precedent to suit and that [the insured’s] noncompliance precludes an action on the policy regardless of a showing of prejudice by the insurer.” This, in my opinion and in the words of Couch on Insurance,4 is a “harsh view,” and the Fifth District Court of Appeal agrees.
In Curran, the Fifth District Court of Appeal was dealing with a CME.5 The Curran court factored prejudice into the equation – in playground basketball terms, if there is no harm, there is no foul. The Curran opinion read, in part, as follows:
Our conclusion that a breach occurred [via the insured’s non-compliance with a CME request] does not end our labor… . While the policy provides that no action against the insurer exists until all policy terms have been met, nothing in the language of the policy imposes a forfeiture of benefits in the event of a breach of the duty to submit to a CME. … In the absence of policy language imposing a penalty or forfeiture in the event of non-compliance with [policy conditions,] we think the remedy must be proportionate to the harm that results from the breach, just as it is in other contractual disputes.
Regarding the remedy being proportionate to the harm, the Curran court noted that if an insurer is materially prejudiced by an insured’s failure to oblige a post-claim / pre-suit policy condition, the sensible remedy is to abate legal proceedings and allow the insured an opportunity to cure (e.g., submit to the insurer’s requested examination). The Curran court also noted the converse – if an insured’s “breach [i]s clearly inconsequential as it pertain[s] to the merits of [the insured’s] claim,” there is no need to abate pending litigation.
In recognizing its conflict with the Fourth District Court of Appeal, the Fifth District Court of Appeal certified these questions to the Florida Supreme Court:
When an insured breaches a CME provision … (in the absence of contractual language specifying the consequences of the breach) does the insured forfeit benefits under the contract without regard to prejudice, or does the prejudice analysis described in Bankers Insurance Co. v. Macias, 475 So. 2d 1216, 1218 (Fla. 1985) apply? If prejudice must be considered, who bears the burden of pleading and proving that issue?
On February 29, 2012, the Florida Supreme Court granted review of these certified questions, and on October 2, 2012 , heard oral argument in the case.6 It will be interesting to see what Florida’s highest court has to say about things.
1 Subsequent posts will address whether policyholders are required to strictly or substantially comply with other kinds of policy conditions.
2 Goldman v. State Farm Fire Gen. Ins. Co., 660 So. 2d 300 (Fla. 4th DCA 1995).
3 State Farm Mut. Auto. Ins. Co. v. Curran, 83 So. 3d 793 (Fla. 5th DCA 2011).
5 For purposes of this discussion and the discussion that Florida Supreme Court Justices will be having (discussed below), the distinction between an EUO and a CME is without difference.
6 You can watch the oral argument before the Florida Supreme Court here.