In the case of Vasques v. Mercury Casualty Company, (No. 5D06-1705) District Court of Appeal of Florida, Fifth District, Feb. 2, 2007, the court overturned earlier decisions denying PIP coverage. On December 29, 2001, Vasques severely injured his hand while working on an automobile in the garage of Maida L. Shehata. As a result of the accident, Vasques incurred hospital bills and orthopedic surgery bills in excess of $25,000. Vasques sought personal injury protection [“PIP”] benefits under Shehata's private passenger automobile policy with Mercury. His claim was denied.
During the investigation of this claim by Mercury, the insured and her son gave statements in which they denied being aware of the December 29, 2001, incident or even knowing Ernesto Vasques. However, in depositions taken two years after the claim was denied, both admitted that they knew Vasques and were aware of the accident. In their testimony, they suggested they lied to protect themselves from any claim by Vasques. Mercury moved for summary judgment, contending that condition number 10 of the Mercury policy concerning misrepresentations relieved it of any liability in this case. Mercury has acknowledged that, but for the Shehatas' misrepresentations, Vasques would be entitled to coverage. Mercury also concedes that Vasques made no misrepresentations concerning his claim.
The trial court granted Mercury's “Motion for Final Summary Judgment,” agreeing that condition 10 relieved Mercury of liability under the policy. From that summary final judgment, Vasques appealed to the circuit court which affirmed the summary judgment in favor of Mercury. However, the District Court agreed with Vasques and granted the writ to quash the circuit court's decision.
The policy language at issue provides: “We may deny coverage of an accident or loss if you or an insured person has concealed or misrepresented any material fact or circumstance, or engaged in fraudulent conduct, in connection with the presentation or settlement of a claim.”
All acknowledged that Vasques did not conceal or misrepresent anything, nor did he engage in any fraudulent conduct regarding his injury and/or claim. The only misrepresentation was on the part of the Shehatas, who denied that the incident that caused Vasques' injury ever occurred. The district court ruled that because the party making the claim for PIP coverage, did not make any misrepresentations regarding his claim, the above-quoted policy provision does not authorize Mercury to deny coverage. The language has to mean a misrepresentation by the person who is making the claim.
The court noted that fraud committed by a coinsured will not void the coverage of the innocent co-insured. The purpose of the “innocent insured” doctrine is especially pertinent where the claimant is innocent. Vasques had no connection to the Shehatas, except to work on their car. He had no exposure to or control over their actions. Unlike coinsureds that had some close connection to a “guilty” insured, yet were deemed “innocent” by the courts. Vasques was almost a stranger to the Shehatas and their lies were designed to thwart his recovery for his injuries.
The court's decision found that the lower courts impermissibly disregarded Florida's public policy as expressed in the PIP statute to provide for speedy payment of medical bills and compensation for lost income for accident victims. The court stated that it makes no sense that this mandated coverage for an injured person could evaporate simply because someone designated as an “insured” under the policy lied. To allow insurers to deny coverage of PIP benefits where someone other than the claimant makes a false statement for the purpose of defeating coverage would violate the well-articulated public policy considerations giving rise to personal injury protection benefits.