Improper Award

In the first case, Florida's Fourth District Court of Appeal looked at United Automobile Insurance Company v. Alliance Spine and Joint I Inc, a/a/o/ Sharon McCartney, which had an advantageous outcome for the Miami Gardens personal injury protection, or PIP carrier.

It was a case in which insurance client Sharon McCarthy assigned her rights under the policy—through an assignment of benefits—to a medical facility, so it could sue on her behalf to be paid for her treatment.

The insurance, United Automobile appealed an adverse final judgment that awarded attorney fees and costs to the medical services provider, following McCartney's 2015 car accident, court records show.

At trial, Broward Circuit Court Judge Corey Amanda Cawthon ruled for the medical provider, but the appellate panel disagreed.

Judge Edward L. Artau, Florida Fouth District Court of Appeal (Photo: Courtesy Photo)

Citing State Farm Fire & Cas v. Palma Fla 1993, and writing for the Fourth District Court of Appeal Court, Judge Ed Artau reversed the portion of the judgment that was "improperly awarding the provider attorney's fees for litigating the amount to be awarded."

In other words: The medical provider should cover its own legal costs for the part of the litigation that dealt with who should have to foot the legal bill, the appellate court found.

"Given the insurer's stipulation to the provider's entitlement to attorney's fees, in this case, the attorney's fees spent addressing the compensability of the pre-suit work and defending against the insurer's attempt to dispense with the need for experts on the issue of the reasonableness of the amount claimed in fees should not have been included in the fee award because those fees were expended to address the proper amount of a fee award," Artau wrote.

Judges Melanie G. May and Jonathan D. Gerber, concurred.

While siding with the appellant on the "fees for fees" issue, the jurists upheld the trial judge's award of costs. They remanded the case for further proceedings.

Click here to read the full appellate court opinion

'The Clock Should Have Stopped'

Michael Neimand, general counsel with United Automobile Ins. Co. Courtesy photo

"This really makes good law," says Michael J. Neimand, house counsel of United Automobile Insurance Co., whose employer was the appellant in the Fourth DCA litigation.

But not everyone celebrated the result.

Chad A. Barr, principal of Chad Barr Law, appeared for the appellee.

Barr said he was not unhappy with the outcome for his client.

"It provides clarity that we can still enforce those attorneys fees," he said. "We just can't get time for enforcing them."

The Altamonte Springs lawyer added, "The victory is in that the court is saying we are entitled to pre-suit time; we are entitled to expert costs. We just aren't entitled to time spent litigating the entitlement to those items."

Related story: Attorney Fees Spotlighted in Dispute Over Scope of 'Reasonable Costs of Enforcement'

Counsel for the insurance company says this ruling is a win for them as well, because they conceded entitlement and the only issue was the amount of fees.

"So at that point in time, the clock … should have stopped on the amount of hours that the insured or attorney could claim," Neimand said. "As soon as we agreed that they were entitled to fees, that ended the ability for the attorney to add hours to his claim."

Eric J. Neuman of Neuman Law. Courtesy photo

Neuman Law Boca Raton managing partner Eric Neuman, who is not a part of the case, said this decision highlights the limitation on statutory provisions.

"Rarely do such statutory provisions provide for the recovery of attorneys' fees incurred in the course of proving up the amount of fees to which the prevailing party is entitled," he said. "Such fees could be substantial if an evidentiary hearing is held to determine the reasonableness of fees incurred. Parties should understand that even if they win their case and are deemed entitled to recover fees, such recovery will not include fees incurred in this last stage of the proceeding under most Florida statutes."

Billing for Pre-Suit Legal Fees

The reversal by the Florida appellate court was the latest victory for the insurer.

On that same day, the Fourth DCA issued another opinion, dealing with pre-suit time.

In-house lawyer Neimand was also at the helm of this case for United Automobile Insurance Co.

But instead of the appeal court dealing entitlement to fees, this time it weighed in on whether pre-suit time was recoverable.

This case took issue with a demand letter and alleged unreasonable conduct on the part of United Automobile, and whether such actions constituted unreasonable conduct.

The appeal pitted United Automobile against Dr. Xunda A. Gibson, doing business as Premier Urgent Care Center and Jean Baptiste Ochelin.

Records show Gibson asked for attorney fees based on section 627.428, Florida Statutes 2019 which in part states, compensation or fees of the attorney shall be included in the judgment or decree rendered in the case.

"At issue is whether the trial court abused its discretion in awarding pre-suit attorney's fees for time spent prior to the underlying suit being filed. We hold this was error and reverse," Chief Judge Mark W. Klingensmith wrote in his opinion for the appellate panel. "[The] Doctor's motion for attorney's fees was not founded upon Insurer's purported unreasonable conduct, nor does the trial court's order granting fees discuss whether Insurer acted unreasonably."

"While Insurer's failure to pay the claim detailed in the demand letter was admittedly wrong, actions of this type are common in many instances where an insurance company is named in a PIP lawsuit, and, standing alone, does not constitute unreasonable conduct." the panel found. "Therefore, we reverse the lower court's award of pre-suit attorney's fees and remand for entry of a judgment consistent with this opinion. We affirm on all other issues raised without comment."

Judges Jonathan D. Gerber and Ed Artau concurred.

Click here to read the court's full opinion

New Precedent

David Pakula, Attorney, Pakula Law Firm. Courtesy photo

Pembroke Pines attorney David B. Pakula represented Gibson.

"We disagree with the Fourth DCA's ruling regarding pre-suit time, and are evaluating whether to file a motion for rehearing," he said. "We do not believe Florida case law establishes any prohibition against awarding time spent by the attorney gathering information preliminary to filing suit."

But insurance company counsel Neimand lauded the court decision.

"For the industry this sets precedence for the first time," Neimand said. "This the first time a court has said this—on a district court level—that standing alone, without more than a mere denial of a demand letter by an insurer—which required the insured to file suit—is not in itself unreasonable conduct, and therefore it's not recoverable."

'That's a Lot of Money'

The appeal ruling noted that pre-suit fees in question arose from a total of 2.10 hours spent prior to the filing of the underlying suit.

While the fee's saved on appeal did not amount to a lot of money, Neimand said the resulting ruling has broader implications.

"The reason we challenge something like that is because if that was 2.1 hours in every case that we owe fees on, and there's going to be a lot of cases we owe fee's on, that's a lot of money," he said. "These cases are meant to establish the precedent and the law for all of the insurance companies for anything under the statute in question."

Also representing Gibson were Abraham Ovadia of Ovadia Law Group in Boca Raton, and Mac S. Phillips of Phillips Tadros in Fort Lauderdale.