15 Fla. L. Weekly Supp. 265c

Insurance — Personal injury protection — Coverage — Medical expenses — MRI — Allowable amount — Adjustment to Consumer Price Index for All Urban Consumers in South Region — Calculation — CPI calculation must be made annually and cumulatively, reflecting combined prior years’ increases from 2001 through August 1 of year MRI was performed — Where correct CPI adjustment calculation reveals insurer did not pay medical provider appropriate amount for MRI within 30 days, provider is entitled to statutory interest and attorney’s fees

ALTAMONTE SPRINGS IMAGING, INC., d/b/a MID-FLORIDA IMAGING, a/a/o Doug Wittmer, Plaintiff, vs. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant. County Court, 9th Judicial Circuit in and for Orange County. Case No. 04-SC-4156. November 19, 2007. Carolyn B. Freeman, Judge. Counsel: Todd E. Copeland and Robert J. Crohan, Jr., Todd E. Copeland & Associates, P.A., Orlando; and Eduardo Rodriguez, Kim, Pardy & Rodriguez, P.A., Orlando, for Plaintiff. John L. Morrow, for Defendant.

ORDER GRANTING PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT AND DENYING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT

THIS CAUSE came on for hearing before the Court on October 29, 2007, on the Motion for Summary Judgment filed by the Plaintiff, ALTAMONTE SPRINGS IMAGING, INC., d/b/a MID-FLORIDA IMAGING, a/a/o Doug Wittmer (“Plaintiff”), and the Motion for Summary Judgment filed by the Defendant, STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY (“Defendant” or “State Farm”). Having considered the motions and memoranda submitted by the parties, the court file, arguments of counsel, and being otherwise fully advised herein, the Court hereby makes the following findings of fact and conclusions of law:

FINDINGS OF FACT

1. The instant action was filed on or about May 10, 2004 and involves claims for personal injury protection (“PIP”) insurance benefits and medical payments (“medpay”) insurance benefits asserted by the Plaintiff against State Farm for magnetic resonance imaging (“MRI”) services rendered to State Farm’s insured, Doug Wittmer (hereinafter the “Insured”) as a result of the Insured’s involvement in an automobile accident on August 8, 2003.

2. Plaintiff, an American College of Radiology accredited facility, rendered an MRI of the Insured’s cervical spine, CPT Code 72141, on August 13, 2003, as a result of the injuries sustained by the Insured in the above-referenced motor vehicle accident.

3. The MRI services rendered by the Plaintiff to the Insured on August 13, 2003, were reasonable, medically necessary and related to the Insured’s motor vehicle accident of August 8, 2003.

4. In connection with receiving treatment, the Insured executed an assignment of benefits in favor of the Plaintiff. This assignment was in full force and effect at the time the MRI services were rendered to the Insured by the Plaintiff.

5. The Insured had medpay coverage under his policy of insurance with State Farm defendant and, therefore, was afforded 100% coverage under the policy of insurance with the defendant, up to the limits of his benefits.

6. Plaintiff timely submitted to State Farm the bill for the cervical spine MRI, CPT Code 72141, rendered to the Insured on August 13, 2003.

7. The amount billed to State Farm by Plaintiff for the cervical spine MRI rendered to the Insured, CPT Code 72141, was not in excess of the charge the facility customarily charged for this procedure during the relevant time period.

8. State Farm paid $1,093.06 in PIP and medpay benefits to Plaintiff for the cervical spine MRI, CPT Code 72141, rendered to the Insured on August 13, 2003.

9. State Farm’s payment amounts to 200 percent of the allowed amount under the 2001 Medicare Part B participating physician fee schedule for this geographic area for CPT Code 72141, plus a single consumer price index (“CPI”) adjustment of 5.61%.

10. The 5.61 figure was arrived at by State Farm by determining the percent change between the December 2001 index figure of 283.5 and the December 2002 index figure of 299.4 in the Medical Care Services item of the Consumer Price Index for all Urban Consumers, U.S. City Average (not seasonally adjusted) as determined by the Bureau of Labor Statistics for the United States Department of Labor.

11. State Farm did not make a second CPI adjustment when determining the amount to be paid to Plaintiff for the MRI.

12. At the time the August 13, 2003, MRI was rendered to the Insured, the 2001 version of Section 627.736(5)(b)5, Florida Statutes, was in effect. However, the 2003 amendments to the statute contained in ch. 2003-411, Laws of Fla., had been passed by the Florida Legislature, and signed by the Governor on July 11, 2003.

13. The amount of PIP and medpay benefits paid by State Farm was less than the amount of benefits sought by Plaintiff.

14. By demand letter dated February 10, 2004, Plaintiff demanded payment of additional insurance benefits, postage, interest and the statutory penalty.

15. Defendant did not pay any additional PIP or medpay benefits for the cervical spine MRI in response to the Plaintiff’s demand letter.

16. Plaintiff commenced this action on May 10, 2004 to recover the overdue PIP and medpay benefits owed by State Farm for the August 13, 2003, cervical spine MRI, CPT Code 72141, rendered to the Insured, as well as interest and attorneys’ fees and costs.

CONCLUSIONS OF LAW

The Court is called upon in this case to determine whether Section 627.736(5)(b)5, Florida Statutes (2001), required the Defendant to make a single CPI adjustment or two CPI adjustments when paying Plaintiff’s bill for the August 13, 2003, MRI rendered to Defendant’s insured. Plaintiff contends that it was entitled to two CPI adjustments. Plaintiff argues the first CPI adjustment was to be made on August 1, 2002, to reflect the percentage change in the applicable consumer price index for the 12-month period ending June 30, 2002. A second cumulative CPI adjustment was to be made on August 1, 2003, to reflect the percentage change in the consumer price index for the 12-month period ending June 30, 2003, according to the Plaintiff. The Defendant contends that only a single CPI adjustment was required for the August 13, 2003 date of service. According to State Farm, the one and only CPI adjustment was to be made on August 1, 2003, to reflect the percentage change in the consumer price index for the 12-month period ending December 31, 2002. For the reasons discussed below, the Court agrees with the Plaintiff on this issue and rejects the argument of the Defendant.

A. Plaintiff Was Entitled to Annual and Cumulative CPI Adjustments on August 1, 2002, and August 1, 2003.

At the time the August 13, 2003, MRI at issue in this case was rendered to State Farm’s insured, the pertinent statutory provision provided, in pertinent part, as follows:

Beginning November 1, 2001 . . . allowable amounts that may be charged to a personal injury protection insurance insurer and insured for magnetic resonance imaging services provided in facilities accredited by the American College of Radiology or the Joint Commission on Accreditation of Healthcare Organizations shall not exceed 200 percent of the allowable amount under Medicare Part B for year 2001, for the area in which the treatment was rendered, adjusted annually by an additional amount equal to the medical Consumer Price Index for Florida.

§ 627.736(5)(b)5, Fla. Stat. (2001).

Because there was not and is not a consumer price index titled “the medical Consumer Price Index for Florida,” this provision resulted in much confusion and litigation regarding the CPI issue. Following the “cavalcade of litigation” regarding this section, the Legislature amended the statute in 2003. Millennium Diagnostic Imaging Center, Inc. v. Security Nat’l Ins. Co., 882 So. 2d 1027, 1029-30 (Fla. 3d DCA 2004). As amended in 2003, the statute provided, and continues to provide, in pertinent part:

Beginning November 1, 2001, allowable amounts that may be charged to a personal injury protection insurance insurer and insured for . . . magnetic resonance imaging services provided in facilities accredited by the Accreditation Association for Ambulatory Health Care, the American College of Radiology, or the Joint Commission on Accreditation of Healthcare Organizations shall not exceed 200 percent of the allowable amount under the participating physician fee schedule of Medicare Part B for year 2001, for the area in which the treatment was rendered, adjusted annually on August 1 to reflect the prior calendar year’s changes in the annual Medical Care Item of the Consumer Price Index for All Urban Consumers in the South Region as determined by the Bureau of Labor Statistics of the United States Department of Labor for the 12-month period ending June 30 of that year.

627.736(5)(b)5, Fla. Stat. (2003).

Courts have held that the 2003 amendment, which was signed into law on July 11, 2003 to have an effective date of October 1, 2003,¹ simply clarified the 2001 version of the statute, did not effect a retroactive change in substantive law, and thus, may be applied to dates of service rendered prior to October 1, 2003. See Clearview Imaging, L.L.C. v. State Farm Mutual Automobile Ins. Co., 932 So. 2d 423 (Fla. 2d DCA 2006), rev. denied, 2007 WL 1062945 (Fla. Mar. 13, 2007) (applying 2003 amendment to January 2003 date of service); Millennium Diagnostic Imaging Center, Inc. v. Security Nat’l Ins. Co., 882 So. 2d 1027, 1030 (Fla. 3d DCA 2004) (applying 2003 amendment to February 22, 2002 date of service); Open MRI of Orlando, Inc. v. Federated National Insurance Co., 13 Fla. L. Weekly Supp. 785a (Fla. 9th Cir. Ct. App. March 31, 2006) (applying 2003 amendment to November 1, 2002 date of service). These decisions are binding on this Court. See Stanfill v. State, 384 So. 2d 141, 143 (Fla. 1980) (“The decisions of the district courts of appeal represent that law of Florida unless and until they are overruled by this Court.”); Pardo v. State, 596 So. 2d 665, 666 (Fla. 1992) (instructing that “in the absence of interdistrict conflict, district court decisions bind all Florida trial courts.”); State v. Lopez, 633 So. 2d 1150, 1150 (Fla. 5th DCA 1994) (“The decision of a circuit court acting in its appellate capacity is binding upon all county courts within that circuit.”). Thus, this Court may look to the provisions of the 2003 version of the statute in determining the methodology by which the CPI adjustment should have been applied to the August 13, 2003 MRI in this case.²

In determining the method and manner by which CPI adjustments are to be made to MRI charges submitted to PIP insurers under Section 627.736(5)(b)5, Florida courts have held, almost universally, that the first CPI adjustment of 4.1% is to be made as of August 1, 2002, to reflect the percentage change in the applicable consumer price index for the 12-month period ending June 30, 2002. A second annual, cumulative CPI adjustment of 4.0% is then to be made on August 1, 2003, to reflect the percentage change in the consumer price index for the 12-month period ending June 30, 2003. See, e.g., A1 Open MRI, Inc. v. Artisan & Truckers Casualty Company, 14 Fla. L. Weekly Supp. 798a (Fla. Broward Cty. Ct. June 18, 2007) (Spechler, J.); AFO Imaging, Inc. v. Horace Mann Insurance Company, 14 Fla. L. Weekly Supp. 788b (Fla. Hillsborough Cty. Ct. Jan. 8, 2007) (Myers, J.); All Family Clinic of Daytona Beach, Inc. v. State Farm Mutual Automobile Insurance Company, 14 Fla. L. Weekly Supp. 171a (Fla. Volusia Cty. Ct. Dec. 27, 2006) (Hamrick, J.); National Nuclear Center, Inc. v. Progressive Auto Pro Insurance Company, 13 Fla. L. Weekly Supp. 912b (Fla. Broward Cty. Ct. June 30, 2006) (Lee, J.); Diagnostic Clinical Imaging, Inc. v. Progressive Express Insurance Company, 14 Fla. L. Weekly Supp. 87a (Fla. Palm Beach Cty. Ct. Oct. 24, 2006) (Stephens, J.); One Stop Medical, Inc. v. State Farm Fire & Casualty Company, 13 Fla. L. Weekly Supp. 1099a (Fla. Broward Cty. Ct. June 5, 2006) (Dishowitz, J.); One Stop Medical, Inc. v. Progressive Auto Pro Insurance Co., 13 Fla. L. Weekly Supp. 1097a (Fla. Broward Cty. Ct. May 15, 2006) (Spechler, J.).

This Court agrees with the foregoing cases and holds that, with respect to the August 13, 2003 MRI at issue in the present case, State Farm was required to make two CPI adjustments. The first CPI adjustment of 4.1% was required as of August 1, 2002, to reflect the percentage change in the applicable consumer price index for the 12-month period ending June 30, 2002. The second annual, cumulative CPI adjustment of 4.0% was required as of August 1, 2003, to reflect the percentage change in the consumer price index for the 12-month period ending June 30, 2003.³

State Farm’s argument that no CPI adjustment was required until August 1, 2003, and that this adjustment was to be the percentage change in the index for the 12-month period ending December 31st of 2002, is without merit. The Defendant has provided the Court with no cases wherein a court has interpreted the statute in this manner. Indeed, one of the cases argued by State Farm at the summary judgment hearing explicitly rejects this argument. In Open MRI of Miami-Dade Ltd. v. Progressive American Insurance Company, 13 Fla. L. Weekly Supp. 901a (Fla. Miami-Dade Cty. Ct. June 27, 2006), aff’d without op., 954 So. 2d 1176 (Fla. 3d DCA 2007), the insurer made its first CPI adjustment on August 1, 2003 (the date argued for by State Farm here), and applied the same 4.3% CPI adjustment that State Farm contends was due to Plaintiff.⁴ The court held that the insurer had improperly failed to make a CPI adjustment during 2002 and that it had applied the incorrect percentage increase. The court entered summary judgment for the provider, holding that it was entitled to a 4.8% CPI adjustment as of November 1, 2002⁵ and a second CPI adjustment of 4.0% as of August 1, 2003.

The other case presented by State Farm at the summary judgment hearing similarly fails to bolster its argument. In Allstate Insurance Company v. S.M.S., D.O., P.A., 13 Fla. L. Weekly Supp. 416a (Fla. 5th Cir. Ct. App. Jan. 18, 2006), the court held that the first annual CPI adjustment under the 2001 statute was to take place on November 1, 2002. This case lends no credence to State Farm’s argument that the first CPI adjustment was to take place on August 1, 2003 by the increase in the index for the 12-month period ending December 31, 2002.

Notwithstanding that the courts in these two cases ruled that the first CPI adjustment was to be made on November 1, 2002, this Court holds that the initial CPI adjustment was due to be made as of August 1, 2002. This interpretation best comports with the holdings and directives of the numerous authorities cited above and the binding precedent instructing that the 2003 amendment to the statute simply “clarified” the 2001 version of the law and the provisions of the amended statute are to be applied to MRIs rendered before October 1, 2003. See Clearview Imaging, L.L.C. v. State Farm Mutual Automobile Ins. Co., 923 So. 2d 423, 426 (Fla. 2d DCA 2006); Millennium Diagnostic Imaging Center, Inc. v. Security Nat’l Ins. Co., 882 So. 2d 1027, 1030 (Fla. 3d DCA 2004); Open MRI of Orlando, Inc. v. Federated National Insurance Co., 13 Fla. L. Weekly. Supp. 785a (Fla. 9th Cir. Ct. App. March 31, 2006); see also Florida MRI, Inc. v. Progressive Express Insurance Company, 12 Fla. L. Weekly Supp. 681a (Fla. Broward Cty. Ct. May 2, 2005) (holding that insurer was obligated to make initial CPI adjustment on August 1, 2002 for MRI rendered on October 24, 2002).

B. State Farm Owes Plaintiff $27.48 in Overdue PIP and Medpay Benefits For the Cervical Spine MRI.

Based on the methodology herein adopted by the Court for making CPI adjustments pursuant to Section 627.736(5)(b)5, Florida Statutes, the total amount owed to Plaintiff for the cervical spine MRI, CPT Code 72141, rendered by the Plaintiff on August 13, 2003, was $1,120.54, calculated as follows: Amount allowed for CPT Code 72141 under 2001 Medicare Part B physician fee schedule = $517.50. Two hundred percent of this amount = $1,035.00. This amount, $1,035.00, plus a 4.1% CPI adjustment made August 1, 2002, to reflect the prior calendar year’s change in the annual Medical Care Item of the Consumer Price Index for All Urban Consumers in the South Region as determined by the Bureau of Labor Statistics of the United States Department of Labor for the 12-month period ending June 30 of that year (4.1% of $1,035.00 = $42.44; cumulative total of $1,077.44), plus a 4.0% cumulative CPI adjustment made as of August 1, 2003, to reflect the prior calendar year’s change in the annual Medical Care Item of the Consumer Price Index for All Urban Consumers in the South Region as determined by the Bureau of Labor Statistics of the United States Department of Labor for the 12-month period ending June 30 of that year (4.0% of $1,077.44 = $43.10) for a cumulative total of $1,120.54.

Pursuant to Section 627.736(5)(b)5, State Farm was required to pay Plaintiff $1,120.54 for the August 13, 2003, cervical spine MRI. It is undisputed that State Farm paid Plaintiff only $1,093.06. Therefore, $27.48 in PIP and medpay benefits remains overdue and owing to the Plaintiff.

C. Because Defendant Did Not Pay the Plaintiff the Appropriate Amount Within 30 days, The Payment is “Overdue,” and Plaintiff Is Entitled to Statutory Interest and Attorney’s Fees.

Section 627.736, Florida Statutes, provides in relevant part that PIP benefits are “overdue” if not paid within 30 days after the insurer is furnished written notice of the fact of a covered loss and of the amount of such loss. See § 627.736(4)(b), Fla. Stat. The statute provides that an insurer is subject to specific penalties for an “overdue” payment: i.e., interest and attorney’s fees. See § 627.736(4)(c), Fla. Stat. (providing for interest on overdue payment); § 627.736(8), Fla. Stat. (incorporating provisions of Florida Statutes providing for an award of attorney’s fees in favor of insured who recovers benefits). See also United Automobile Ins. Co. v. Rodriguez, 808 So. 2d 82, 87 (Fla. 2001). “The legislative intent evinced in the penalty provisions is clear. The provisions were intended to promote the prompt resolution of PIP claims by imposing several reasonable penalties on insurers who pay late.” United Automobile, 808 So. 2d at 86.

The Court has held that there remains an overdue balance of benefits owing to Plaintiff with respect to the MRI. Accordingly, Plaintiff is entitled to interest on these overdue payments, and is entitled to an award of attorney’s fees and costs. See Ivey v. Allstate Ins. Co., 774 So. 2d 679, 684 (Fla. 2000) (“If a dispute arises between an insurer and an insured, and judgment is entered in favor of the insured, he or she is entitled to attorney’s fees.”). As our Supreme Court explained in Ivey, “It is the incorrect denial of benefits, not the presence of some sinister concept of ‘wrongfulness,’ that generates the basic entitlement to the fees if such denial [of PIP benefits] is incorrect.” Id. at 684. Therefore, regardless of any good faith belief the Defendant may have held that it was making payment of benefits in accordance with the statute, the Plaintiff is entitled to a fee award because State Farm was incorrect in its payment. See id.; United Automobile, 808 So. 2d at 87 (instructing that “whenever an insured files an action for payment of PIP benefits and prevails, the insured is entitled to attorneys’ fees”); § 627.736(8), Fla. Stat.

It is therefore, ORDERED and ADJUDGED as follows:

(1) Plaintiff’s Motion For Summary Judgment is GRANTED.

(2) Plaintiff is entitled to recover from the Defendant the sum of $27.48, together with prejudgment interest at the rate of 6 percent.

(3) Plaintiff is entitled to reasonable attorneys’ fees and costs as the prevailing party pursuant to § 627.736 and § 627.428, Florida Statutes.

(4) The Court reserves jurisdiction to determine the amount of attorneys’ fees and costs in favor of the Plaintiff.

(5) Defendant’s Motion For Summary Judgment is DENIED.

__________________

¹See Ch. 2003-411, § 22, Laws of Fla.

²The Court notes that the date of service in this case, August 13, 2003, is later in time than the dates at issue in the foregoing cases, and falls in the period of time after the 2003 clarification was passed by the legislature and signed into law.

³It is undisputed that the applicable index is the Medical Care Item of the Consumer Price Index for All Urban Consumers in the South Region as determined by the Bureau of Labor Statistics of the United States Department of Labor. It is also undisputed that 4.1% and 4.0% are the correct percentage changes in the index for these 12-month periods.

⁴While not explicitly identified as such in the court’s decision, it is manifest that this 4.3% figure represents the increase in the index during the 12-month period ending December 31, 2002. This is the same figure State Farm urges the Court to apply in the present case, although it was not the adjustment actually made by State Farm when making payment on the services rendered by Plaintiff.

⁵The 4.8 figure applied by the court in Open MRI of Miami-Dade Ltd. appears to reflect the prior calendar year’s change in the annual Medical Care Item of the Consumer Price Index for All Urban Consumers in the South Region as determined by the Bureau of Labor Statistics of the United States Department of Labor for the 12-month period ending October 31, 2002, the last measurable CPI period prior to November 1, 2002.