15 Fla. L. Weekly Supp. 1207c

Insurance — Personal injury protection — Coverage — Version of PIP statute in effect at time PIP policy was executed, which provided for payment of 80% of reasonable charges, rather than version of statute in effect at time of treatment after expiration of policy, which provides for payment of 80% of Medicare fee schedule, is applicable — Provision in policy stating that it is controlled by PIP statute “as amended” cannot reasonably be construed to refer to amendments occurring after policy’s expiration — At best, “as amended” language is ambiguous and construed against drafter — Amendment at issue is not remedial amendment but substantive amendment that should not be applied retroactively — No merit to argument that version of statute at time claim was actually reduced controls

PHYSICIANS GROUP LLC, as assignee of PAUL ANDROSKI, Plaintiff, vs. GEICO INDEMNITY CO., Defendant. County Court, 12th Judicial Circuit in and for Sarasota County. Case No. 2008 CC 002210. October 22, 2008. Kimberly C. Bonner, Judge. Counsel: Anthony D. Barak, Barak & Zitani, L.L.C., Sarasota. Dale Parker, Fowler White Boggs Banker P.A., St. Petersburg.

AMENDED ORDER ON MOTIONS FOR SUMMARY JUDGMENT

[Affirmed at 35 Fla. L. Weekly D2448a.]

The above case came on for hearing on the Plaintiff’s and Defendant’s Motion for Summary Judgment. The parties stipulate that, for purposes of this motion, only an issue of law is presented, namely, whether the 2007 or the 2008 version of Florida Statute §627.736 applies to this action. The Court has reviewed the pleadings, the applicable case law, and has considered the arguments of counsel.

This case arises out of a contract for Personal Injury Protection Insurance (PIP), which was in effect from August 23rd, 2006 to February 23rd, 2007. The subject accident occurred during this policy period on September 5, 2006. It should be noted that the policy did not renew. At the time of the accident, the relevant portion of the PIP statute provided that an insurer shall provide medical benefits consisting of:

. . .Eighty percent of all reasonable expenses for medically necessary medical, surgical, x-ray, dental and rehabilitative services. . . .

Fla. Stat. §627.736(1)(a)

The current version of the statute, which took effect on January 1, 2008, amended section 627.736 to add the following provision:¹

The insurer may limit reimbursement to 80 percent of the following schedule of maximum charges Fla. Stat. 627.736(5)(a)(2)

This new provision incorporates the Medicare fee schedule as its benchmark.

The treatment at issue in the present case, an arthroscopy, occurred on January 7, 2008. The Defendant received a bill for this procedure in the amount of $13,500.00 on January 25, 2008. The Defendant subsequently paid $1000.00, which would comply with the 2008 fee schedule; however, it does not represent 80% of the charge (assuming such charge was deemed medically reasonable, necessary and related to the accident).

While the Defendant argues that the 2008 provision applies to this case because the treatment was rendered in 2008, the Plaintiff contends that the prior version of the statute controls because the insurance contract is governed by the law in effect at the time of its execution. Both sides presented argument in support of their position. After review of the applicable case law, the court finds that the Plaintiff’s position is correct.

The law in effect at the time an insurance contract is executed controls the rights and liabilities of the parties to that contract. Lumbermen’s Mutual Casualty Co. v. Ceballos, 440 So. 2d 612 (Fla. 3rd DCA 1983). Thus, the result in this action does not depend on when the claim arose or actually became ripe, i.e., when the benefits were denied or reduced. Hausler v. State Farm Mutual Automobile Ins. Co., 374 So. 2d 1037 (Fla. 2d DCA 1979). Additionally, the contract did not renew, and therefore, the amendments to the PIP statute were not incorporated into a newcontract. See Dewberry v. Auto Owners Ins. Co., 363 So. 2d 1077 (Fla. 1978).

The Defendant opines that the amended statutory language applies because the insurance policy references that the PIP statute “as amended” governs the contract. The court is not convinced that inclusion of this “as amended” can reasonably be construed to mean “as amended” after the policy’s expiration. The argument appears to be that this language incorporates all future changes in the law after the policy’s expiration, as opposed to merely incorporating statutory changes upon renewal of the contract. However, if the parties intended to enter into a contract in derogation of the standard rules of contractual interpretation, then the Defendant, as the drafter of the contract, could have specifically included such a provision. At best, it is ambiguous and thus construed against the drafter.

In addition, upon reviewing the amendments to the statute, the court finds that these were substantive, not remedial changes in the law that should not be applied retroactively. The statutory changes do not merely define or clarify the term “reasonable” in relation to medical benefits; it imposes new obligations on the policyholders and their medical providers. The amended statute further provides a fee schedule, which as applied in this case, would allow the insurance company to pay thousands of dollars less in benefits than under the prior “80%” version of the statute. Such a change, which affects the rights and obligations of both the insurance companies and the policyholders, cannot fairly be deemed a remedial amendment. See State Farm Mutual Automobile Ins. Co. v. Laforet, 658 So. 2d 55 (Fla. 1995). The amendments do not merely alter the process of applying and enforcing the parties’ rights and liabilities; they substantially re-define the actual rights and liabilities. See Alamo Rent-A-Car Inc. v. Mancusi, 632 So. 2d 1352, 1358 (Fla. 1994).

The Defendant further argues that the 2008 statute should apply because the actual cause of action, i.e. the reduction in payment, occurred in 2008. However, this dispute nonetheless pertains to rights and obligations pursuant to a contract; the date when the claim became ripe does not determine the law to be applied. See Hausler, supra.

Therefore, the Court GRANTS the Plaintiff’s Motion for Summary judgment as to the applicable law in this matter, finding that the 2007 version of the PIP statute controls this action. The court DENIES the defendant’s Motion for Summary Judgment.

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¹The amendments also added new requirements regarding licensure of the medical providers and health care clinics.