Florida Supreme Court Rules Insured’s Failure to Attend Compulsory Medical Exam Does Not Result in Forfeiture of Insurance Benefits Absent Carrier’s Proof of Prejudice

By Maria Elena Abate
Shareholder

In a widely anticipated opinion released March 13, 2014, the Florida Supreme Court held in State Farm v. Curran that an insured’s failure to attend a compulsory medical examination (“CME”) does not result in an automatic forfeiture of uninsured motorist (“UM”) benefits unless the carrier pleads and proves it was prejudiced.  In so ruling, the court answered the Fifth District Court of Appeal’s question certified to be of “great public importance” but did not address the appellate court’s claimed conflict with the Third and Fourth District Courts of Appeal. 

Curran sought uninsured motorist benefits but failed to submit to a CME. State Farm contended the CME provision was a condition precedent to coverage, therefore precluding recovery to the insured as a matter of law. Curran argued the CME provision was a condition subsequent to coverage, thereby requiring proof of prejudice to the carrier. The Florida Supreme Court agreed with the insured and relied on the opinions in Bankers Ins. Co. v. Macias and Custer Medical Center v. United Auto. Ins. Co. The court held that the CME provision is a condition subsequent for which the carrier has the burden to prove and plead an insured’s breach prejudiced its investigation.

The court found the “CME provision in the UM context is a post-loss obligation of the insured and is not a condition precedent to coverage.” The court provided the same analysis as it previously did in Custer with regard to an insured’s attendance at a medical exam for PIP benefits. Since the CME may be requested after a policy has been issued, the insured sustained injuries, and the insured submitted a claim for benefits, the court stated “an unreasonable failure to attend a requested medical examination may be a condition subsequent that divests the insured’s right to receive further . . . benefits.”

The court also discussed the policy’s “no action” clause. The court interpreted the term “until all the terms of the policy are met” to suggest that any action filed before compliance with the terms of the policy is premature, and can result in an abatement of the action. Thus, in the event of an insured’s breach, the carrier may seek to abate the action until a CME is completed, or, if the carrier was prejudiced, it may raise the breach as an affirmative defense to coverage. The court discussed the UM statute’s intended purpose of protecting injured persons, and found placing the burden on State Farm  to prove prejudice “fully comports with this purpose.”

This opinion may impact other “post-loss” obligations and the requirement to comply as a condition precedent to coverage and suit. The court was clear that the CME provision, which enables the carrier to gather additional information following a loss, is a “post-loss obligation” and not a condition precedent to coverage. This case may lay the foundation for future arguments that an insured is not automatically barred from coverage for not complying with a post-loss obligation absent proof of prejudice to the carrier.

Two justices, including the chief justice, dissented from the majority. The chief justice wrote a lengthy opinion arguing the policy “unambiguously includes a condition precedent that was not satisfied.” To read the court’s full opinion, click here.

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