16 Fla. L. Weekly Supp. 317a
Online Reference: FLWSUPP 164EXPLO
Insurance — Personal injury protection — Declaratory judgment — Although legislature intended that new fee schedule that allows PIP insurers to limit reimbursement to 80% of 200% of Medicare Part B fee schedule rather than paying 80% of reasonable expenses would apply retroactively, application of new fee schedule to medical services under PIP contract that was in effect prior to effective date of amended PIP statute would be unconstitutional — Medical provider that has assignment of rights and benefits under policies has standing to raise constitutional issue
EXPLORER INSURANCE COMPANY, Plaintiff, v. PHYSICIANS GROUP, LLC, Defendant. Circuit Court, 13th Judicial Circuit in and for Hillsborough County. Case No. 08-CA-010710, Division C. January 21, 2009. James M. Barton, II, Judge. Counsel: Robert Lyerly. Anthony D. Barak, Barak & Zitani, L.L.C., Sarasota.
ORDER GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT AND DENYING PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT
THIS CAUSE having come to be heard on November 24, 2008 on Plaintiff’s Motion for Summary Judgment and Defendant’s Motion for Summary Judgment. The parties stipulated for the purposes of these motions, only an issue of law is presented. Specifically, whether Plaintiff can apply the fee schedule contained in the revised and amended No-Fault Act, F.S. 627.736 (“PIP statute”), that took effect on January 1, 2008, in payment of medical services that occurred in 2008 if the policy of insurance went into effect prior to the effective date of the new statute, or was Plaintiff required to pay for the medical services according to the law that was in effect at the time the subject insurance policies became effective, which was in 2007.
Plaintiff filed a declaratory relief action regarding two patients of Defendant and whether or not the new permissive fee schedule applies to dates of service that occurred in 2008 when the subject policies of insurance went into effect in mid 2007.
The amendment to the revised Florida Motor Vehicle No-Fault Law that took effect on January 1, 2008 that is at issue is the limitation on reimbursement of claims. Pursuant to the revised Florida Motor Vehicle No-Fault Law, Florida Statute §627.736(5)(a)2.f. allows insurers to limit reimbursement to 80% of the 200% of the applicable Medicare Part B fee schedule.
On November 15, 2007, Connie DeLorenzo was involved in a motor vehicle accident, for which Plaintiff provided personal injury protection (PIP) coverage. The policy period that provided PIP coverage to Ms. DeLorenzo was from June 10, 2007 through December 10, 2007. Ms. DeLorenzo’s accident in this case occurred during the subject policy period. The policy that covered Ms. DeLorenzo states that it will pay according to the Florida Motor Vehicle No-Fault law and medical benefits will be paid at 80% of the reasonable medical expenses.
From November 16, 2007 to February 6, 2008 Defendant treated Ms. DeLorenzo as a result of injuries sustained in the November 15, 2007 motor vehicle accident. Ms. DeLorenzo assigned her rights and benefits under the subject policy to Defendant on November 16, 2007.
Additionally, on December 6, 2007, Desiree Stewartson was involved in a motor vehicle accident, for which Plaintiff provided personal injury protection (PIP) coverage. The policy period that provided PIP coverage to Ms. Stewartson was from July 30, 2007 through January 30, 2008. Ms. Stewartson’s accident in this case occurred during the subject policy period. The policy that covered Ms. Stewartson states that it will pay according to the Florida Motor Vehicle No-Fault law and medical benefits will be paid at 80% of the reasonable medical expenses.
From December 7, 2007 through July 3, 2008 Defendant treated Ms. Stewartson as a result of injuries sustained in the December 6, 2007 motor vehicle accident. Ms. Stewartson assigned her rights and benefits under the subject policy to Defendant on December 7, 2007.
For treatment that Defendant rendered to its patients in this matter that occurred in 2007, Plaintiff paid Defendant’s bills at 80% of the reasonable billed amount as required under Florida Statute §627.736 that was in effect at the time the subject policies were executed.
Florida Statute §627.736 that was in place at the time the subject policies became effective in 2007 mandated payment of bills at 80% of the reasonable charge. In this case, for any treatment that Defendant rendered in 2008 that Plaintiff paid, it was based upon the permissive fee schedule under the revised and amended version of Florida Statute §627.736 that took effect on January 1, 2008.
By utilizing the 2008 permissive fee schedule contained in Florida Statute §627.736(5)(a)2.f., the payments to Defendant regarding both patients was substantially less than 80% of Defendant’s billed amount. Plaintiff has taken the position that the 2008 permissive fee schedule simply clarified the reasonable amount to be charged by a medical provider and was simply a remedial and procedural change in the law. This Court does not agree with Plaintiff and it finds that the term “reasonable” may be proved through the elements described in Florida Statute §627.736(5)(a) (. . .With respect to a determination of whether a charge for a particular service, treatment, or otherwise is reasonable, consideration may be given to evidence of usual and customary charges and payments accepted by the provider involved in the dispute, reimbursement levels in the community and various federal and state medical fee schedules applicable to automobile and other insurance coverages, and other information relevant to the reasonableness of the reimbursement for the service, treatment, or supply), rather than based upon the permissive fee schedule.
The Court finds that it is delegated to first see if it can resolve the issue without making a constitutional analysis. Unless the Legislature clearly intends by its statutory language that a statute be applied retroactively, it operates prospectively. In this case, this Court finds that since the Legislature intended the changes in the new PIP statute to apply to policies in effect on or after January 1, 2008, it must take the next step on determining whether the addition of the fee schedule is a substantive or a procedural change.
In this case, the Court finds that altering the amount paid to medical providers under the new PIP statute is a substantive change, not procedural, that imposes new obligations on policyholders and their medical providers. Therefore, applying the fee schedule to medical services under a contract of insurance that was in effect prior to the effective date of the new PIP statute is unconstitutional.
The general rule is that a substantive statute will not operate retrospectively absent clear legislative intent to the contrary, but that a procedural or remedial statute is to operate retrospectively. See State Farm Mutual Automobile Insurance Company v. Laforet, 658 So.2d 55, 61 (Fla. 1995). It is a well-established rule of law that Courts will refuse to apply a statute retroactively if it impairs vested rights, creates new obligations, or imposes new penalties, even if the Legislature states that the statute is to have retroactive application. Id.
Accordingly, while this Court finds that the Legislature intended to apply the revised and amended PIP statute retroactively, this Court cannot as the new permissive fee schedule is a substantive change in the law. Applying the fee schedule in the new PIP statute to contracts entered into before the effective date of the statute, which was January 1, 2008, would constitute a legislative impairment of contract in violation of Article I, Section 10 of the Florida Constitution. See Lumbermens Mutual Casualty Company v. Ceballos, 440 So.2d 612 (Fla. 3rd DCA 1983) (The law in effect at the time the insurance contract is executed controls); see also Allstate Insurance Company v. Garrett, 550 So.2d 22 (Fla. 2nd DCA 1989) (Personal injury protection benefits could not be withdrawn unless the insurer obtained report from a physician licensed under the same section of the statute as the treating physician that treatment was no longer necessary or reasonable impaired the obligation of contract contained in the policy issued prior to the effective date of the statute).
Additionally, changes in a statute that occur between insurance policy renewals cannot be incorporated into an insurance policy without unconstitutionally impairing the obligations of the parties to the insurance contract. See Esancy v. Hodges, 727 So.2d 308 (Fla. 2nd DCA 1999).
This Court finds that the revised and amended PIP statute contains substantive changes regarding payment of bills, and cannot be applied retroactively to policies that were in effect prior to the effective date of the revised and amended PIP statute. See Laforet, supra. Therefore, the Court finds that the law in effect at the time the insurance contract was executed governs the rights arising under that contract. See Lumbermens, supra, Garrett, supra, and Esancy, supra.
Finally, Plaintiff has argued that Defendant does not have standing to challenge the constitutionality of applying the statute retroactively when substantive rights are affected. This court disagrees with that argument as Defendant had an assignment of rights and benefits under those policies and stands in the shoes of the insured. Additionally, Florida law recognizes medical service providers as intended beneficiaries of insurance contracts. See Foundation Health et al. v. Westside EKG Associates, 944 So.2d 188 (Fla. 2006). As a result, the Court finds that Defendant has standing to raise a constitutional issue regarding applying the substantive changes in the new PIP statute to policies that were in effect prior to the effective date of the new law as it impairs the obligations of the contract in violation of Article I, section 10 of the Florida Constitution.
The Court reserves jurisdiction to award Defendant reasonable attorney’s fees and costs.
ORDERED AND ADJUDGED that based upon the foregoing Defendant’s Motion for Summary Judgment is granted and Plaintiff’s Motion for Summary Judgment is denied.
