Echo v. MGA Insurance Company, Inc., ___ So. 3d ___, 40 Fla. L. Weekly D442 (Fla. 1st DCA February 16, 2015)
After the plaintiff sustained injuries in a motor vehicle accident, her insurer rescinded her auto policy because her application misrepresented that she owned the accident vehicle. The plaintiff filed an action for breach of contract in which she claimed an entitlement to PIP and collision coverages and a legal defense in the event of a liability claim. The insurer asserted the affirmative defense of revocation and cancellation, under Section 627.409, Florida Statutes, based upon the insured’s material misrepresentation. Despite this defense, the insured paid over $10,000 to the plaintiff’s health care providers approximately one year after her lawsuit was filed. After the insurer’s payment, the plaintiff amended her complaint to drop her claim for PIP coverage, and she moved for summary judgment based upon the doctrines of waiver and confession of judgment. The trial court refused to consider the issues of waiver and confession of judgment, based on lack of standing, because the plaintiff assigned her PIP coverage to her health care providers. In addition, the trial court refused to consider the issue of confession of judgment based upon Section 90.409, Florida Statutes, which prohibits evidence of the payment of medical expenses “to prove liability for the injury or accident.” With the removal of these obstacles, the trial court entered judgment for the insurer based upon the plaintiff’s material misrepresentation in her application for insurance. The appellate court affirmed the trial court’s finding of material misrepresentation but reversed and remanded for a determination whether the insurer waived its right to revoke the policy or confessed judgment. The appellate court rejected the insurer’s argument that it could not resurrect the policy because it was void ab initio. Section 627.409(1), Florida Statutes, “gives an insurer the right to rescind an insurance contract if the statutory criteria are met.” Thus, the statute makes the contract voidable, rather than void, and “the case law establishes the principle that an insurer can forfeit its right of rescission.” Although the plaintiff may not have had standing to sue for PIP benefits based upon her assignment of this coverage to the health care providers, she did have standing to assert that the insurer’s payment of PIP benefits was inconsistent with its defense that the policy was void ab initio, and the trial court erred by refusing to consider the issues of waiver and confession of judgment based on lack of standing. The trial court also erred by concluding that Section 90.409, Florida Statutes, barred evidence of the payment of PIP benefits. The statute applies to evidence of payment of medical expenses “to prove liability for the injury or accident.” “Here, however, [the plaintiff] sought to admit [the insurer’s] PIP payout ledger, not as evidence of liability for an injury or accident, but as evidence that [the insurer] waived its affirmative defense of misrepresentation and resultant rescission. To put it another way, [the plaintiff] sought to use the evidence to prove that a contract existed despite [the insurer’s] claim to the contrary.” The word “liability” in the statute refers to “responsibility for causing injury or accident, not for an insurer’s obligations to its insured pursuant to an insurance contract.”
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