Opinion
C.A. No. 04C-04-264-JEB.
Submitted: August 28, 2006.
Decided: November 17, 2006.
Upon Cross Motions for Summary Judgment on the Issue of Plaintiff's Standing. Plaintiff's Motion Granted. Defendants' Motion Denied.
John S. Spadaro, Esquire, Murphy Sapadaro Landon. Attorney for Spine Care Delaware.
Colin M. Shalk, Esquire, Thomas P. Leff, Esquire Attorneys for State Farm Mutual Automobile Insurance Company.
OPINION
Plaintiff Spine Care Delaware is a medical facility that provides treatment to individuals with orthopedic injuries. Defendant State Farm Automobile Insurance Company provided automobile insurance to some of Plaintiff's patients who were injured in automobile accidents and were entitled to Personal Injury Protection (PIP) benefits. This case pertains a facility fee that is charged to all of Spine Care's patients and which State Farm has declined to pay. Spine Care alleges that the facility fee is part of the medical bill and that patients are informed of the facility fee by way of a Form which must be signed by each patient prior to receiving treatment at Spine Care. This Form also contains an assignment clause which authorizes Spine Care to take legal action against patients' insurance carriers to recover unpaid fee balances.
As assignee of its patients, Spine Care alleges breach of contract, bad faith breach of contract and violation of Delaware's Consumer Fraud Act. Spine Care seeks compensatory damages and declaratory relief, as well as punitive damages. The parties have filed cross motions for summary judgment on the issue of whether Spine C are has standing under the assignment clause to seek punitive damages for bad faith breach of contract and statutory consumer fraud. When opposing parties make cross motions for summary judgment, neither party's motion will be granted unless no genuine issue of material fact exists and one of the parties is entitled to judgment as a matter of law.
Emmons v. Hartford Underwriters Ins. Co., 697 A.2d 742, 745 (Del. 1997).
The disputed assignment clause is contained in a four-part Form that provides billing information to patients and must be signed by each Spine Care patient. The parties do not dispute that the form states that the patient is ultimately responsible for unpaid fee balances if all other avenues fail. The relevant portions of the Form provide as follows:
Spine Care Fees
Spine Care Delaware, LLC, is a free standing surgery facility where diagnostic and pain management procedures are performed. You will receive a separate billing from Spine Care Delaware for a facility fee and an equipment fee for fluoroscopic imaging. You will also receive a separate equipment billing from First State Orthopaedics, P.A. If a CAT scan was performed on you.
* * *
Financial Responsibility Statement/Insurance Assignment
Spine Care Delaware, LLC, is hereby authorized to take any legal action which may be necessary either in law or in equity in my name against any insurance company for any and all fee balances, and I covenant and agree to cooperate fully with Spine Care Delaware, LLC, in the presentation of such claims and to furnish all papers and documents necessary in such proceedings and to attend court and testify if Spine Care Delaware, LLC, deems such to be necessary.
State Farm concedes that the above-quoted language assigns to Spine Care the right to take legal action for unpaid medical bills, but argues that medical bills do not include facility fees. In the alternative, State Farm argues that the language of the assignment clause is ambiguous in regard to anything other than medical bills. Spine Care argues that the assignment clause is unambiguous and precisely assigns to Spine C are the right to bring any legal action against any insurance company to collect any unpaid fees balances, including facility fees.
All written con tracts are to be read, understood and interpreted according to the plain and ordinary meaning and import of the language employed in them. If the language is clear and unambiguous, the court must give the language its plain meaning. The test for ambiguity is whether the provisions in controversy are reasonably or fairly susceptible of different interpretations or may have two or more different meanings.
Phillips Home Builders v. Travelers Ins. Co, 700 A.2d 127, 129 (Del. 1997).
Id. (citing Rhone-Poulenc Basic Chemical Co. v. American Motorists Ins. Co., 616 A.2d 1192, 1196 (Del. 1992).
Id.
The plain language of the first quoted paragraph provides that Spine Care patients receive a bill for a facility fee and an equipment fee. This language is not ambiguous because its plain meaning is clear and is not susceptible to more than one reasonable meaning. The next excerpted paragraph, entitled "Financial Responsibility Statement/Insurance Assignment," is equally clear. It gives Spine Care the right to bring legal action "for any and all fee balances . . . against any insurance company for any and all fee balances." This is an unambiguous assignment clause and could hardly be more clearly stated.
Twin City Fire Ins. Co. v. Delaware Racing Ass'n, 840 A.2d 624, 628 (Del. 2003).
State Farm concedes that an individual Spine C are patient could not bring a separate action for bad faith breach of contract because such a claim is part of the contract case, and alleges not only a breach of contract warranting compensatory damages, but also a bad faith breach warranting punitive damages. State Farm argues that Spine Care does not have standing to plead bad faith because the assignment clause does not specifically assign such a claim and that, even if it did, the right to take such a claim is not assignable .
Spine Care argues that the assignment clause pertains to any necessary legal action and that all of the claims are assignable. In support of this position, Spine Care relies on Champlost Family Medical Practice v. State Farm Insurance, where the court held that the medical provider was entitled to pursue a bad faith claim against an insurance provider even though the assignment agreement did not specifically address bad faith. This Court agrees. All insurance contracts contain an implied duty of good faith and fair dealing, and the Court finds nothing in Delaware law, either statutory or case law, that prevents assignment of claims based on breach of these duties. A contrary ruling would eliminate claims for bad faith breach of contract from this type of case because neither the assignee nor the assignor could bring them.
2002 WL 31424398, at *2 (E.D. Pa. 2002). The Court notes that while Pennsylvania has a bad faith statute and Delaware does not, this difference does not affect the comparison of Champlost to the case at bar because the standing issue in both cases rests on the language of the assignment clauses.
Tackett v. State Farm Fire Casualty Ins. Co., 653 A.2d 254, 264-65 (Del. 1995).
Spine Care also seeks compensatory and punitive damages for State Farm's alleged violation of Delaware's Consumer Fraud Act. See DEL. CODE ANN. tit. 6, § 2511 — § 2527 (2005). Both parties argue that they are entitled to summary judgment on the issue of Spine Care's standing to bring an action against an insurance company under this Act.
Section 2513(a) prohibits acts of "deception, fraud, false pretense, false promise, misrepresentation, or the concealment, suppression, or omission of any material fact with intent that others rely upon such concealment, suppression or omission, in connection with the sale, lease or advertisement of any merchandise." Subsection (b)(3) states that these prohibitions shall not apply to matters that are subject to the jurisdiction of the Insurance Commissioner. This Court has previously held that the legislative intent of this exception was not to preempt all other methods of redressing unfair trade practices, but to provide an additional, supplementary means of controlling misconduct by insurers. Section 2525 creates a private right of action for any victim of an alleged violation of the prohibited acts, and nothing in either the statute or case law suggests that such a right may not be assigned.
Section 2513(a).
Mentis v. Delaware American Life Ins. Co., 1999 WL 744430, at *6 (Del.Super.) (citing DiSimplico v. Equitable Variable Life Ins. Co., 1988 WL 15394 (Del.Super.)).
In construing the Consumer Fraud Act, the Delaware Supreme Court has held that where a plaintiff receives compensatory damages, he may also re cover punitive damages if he has shown that the fraud was gross, oppressive or aggravated. In this case, where the right to sue for breach of contract and to receive compensatory damages has been assigned to Spine Care, it follows that Spine Care can also seek punitive damages for gross, oppressive or aggravated fraud.
Stephenson v. Capano Dev't, Inc., 462 A.2d 1069, 1076-77 (Del. 1983).
The Court concludes that by virtue of a valid assignment clause Plaintiff Spine Care has standing to seek punitive damages for bad faith breach of contract and for gross violation of the Consumer Fraud Act. Plaintiff's motion for summary judgment on the issue of standing is granted, and Defendant's cross motion is denied.
It Is So ORDERED.