18 Fla. L. Weekly Supp. 213a

Online Reference: FLWSUPP 1802LEE

Insurance — Personal injury protection — Coverage — 2007 version of PIP statute in effect at time policy was issued, rather than 2008 version in effect at time of accident and treatment, controls reimbursement where 2008 statute does not clearly express intent that it apply retroactively, and reimbursement schedule in 2008 statute is substantive change that would impair vested rights — Policy provision allowing insurer to pay in accordance with “Florida Motor Vehicle No-Fault Law and any amendments” does not allow insurer to rely on 2008 fee schedule where 2008 PIP statute did not truly amend former PIP statute, and ambiguous provision must be construed against insurer

HOLLYWOOD INJURY REHAB CENTER (A/A/O YVETTE LEE), Plaintiff, v. STATE FARM FIRE AND CASUALTY COMPANY, Defendant. County Court, 11th Judicial Circuit in and for Miami-Dade County. Case No. 09-1926 CC 21. December 2, 2010. Honorable Ana M. Pando, Judge. Counsel: Ryan Peterson, The PatiÑo Law Firm, Hialeah, for Plaintiff. Michael Rosenberg, Roig, Tutan, Rosenberg, & Zlotnick, P.A., for Defendant.

ORDER GRANTING PARTIAL SUMMARY JUDGMENT FOR PLAINTIFF

THIS CAUSE was before the Court on October 19, 2010 on the Plaintiff’s motion for summary judgment. The Court, having considered the motion, the admissible evidence of record, and the arguments of counsel, and being otherwise advised,

ORDERED AND ADJUDGED as follows:

1. This is an action to recover personal injury protection (“PIP”) benefits under a no fault insurance policy.

2. The Defendant claims it reimbursed the Plaintiff pursuant to the fee schedules as outlined in section 627.736(5)(a)2, Florida Statutes (2008). The Plaintiff moved for summary judgment, contending that section 627.736(5)(a)2 is inapplicable in this case. As explained below, this Court agrees with the Plaintiff.

3. The parties agreed that the subject insurance policy was issued to the insured on August 17, 2007, that the insured’s accident occurred on January 21, 2008, and that the Plaintiff subsequently provided treatment to the insured.

4. When the subject insurance policy was issued on August 17, 2007, section 627.736(5)(a)2, Florida Statutes (2008) did not yet exist. Effective on October 1, 2007, the entire of Florida Motor Vehicle No-Fault Law statutes (including the former PIP statute) was automatically repealed by a “sunset” provision. See, Ch. 2003-411, § 19, Laws of Fla. (2003). As a result, Florida went without any PIP statutes during the last 3 months of 2007. Thereafter, effective as of January 1, 2008, the Legislature enacted a new Florida Motor Vehicle No-Fault Law, with a new PIP statute.¹ See Ch. 2007-324, §§ 8-21, Laws of Fla. (2007). That new PIP statute includes the same reasonable amount payment methodology described in the former PIP statute, as well as a new subsection (5)(a)2, which describes a new alternative payment methodology that is based on Medicare fee schedules. In this case, the subject insurance policy was issued before the former PIP statute was repealed on October 1, 2007 and before the new PIP statute took effect on January 1, 2008.

5. Thus, the issue before this Court is whether section 627.736(5)(a)2, Florida Statutes (2008), can be applied retroactively to an insurance policy issued prior to the January 1, 2008 effective date of that statute. In this analysis, the Court “look[s] at the date the insurance policy was issued and not the date that the suit was filed or the accident occurred, because ‘the statute in effect at the time an insurance contract is executed governs substantive issues arising in connection with that contract.’ ” Menendez v. Progressive Express Ins. Co., Inc., 35 So.3d 873, 876 (Fla. 2010) [35 Fla. L. Weekly S222b], citing Hassen v. State Farm Mut. Auto. Ins. Co., 674 So.2d 106, 108 (Fla. 1996) [21 Fla. L. Weekly S102c]; Lumbermens Mut. Cas. Co. v. Ceballos, 440 So.2d 612, 613 (Fla. 3d DCA 1983); Hausler v. State Farm Mut. Auto. Ins. Co., 374 So.2d 1037, 1038 (Fla. 2d DCA 1979). Many other cases likewise hold that the date on which the insurance policy was issued governs the ability to apply a new or amended statute. See, e.g., Dewberry v. Auto-Owners Ins. Co., 363 So.2d 1077 (Fla.1978); State Farm Mut. Auto. Ins. Co. v. Gant, 478 So.2d 25 (Fla.1985); Allstate Ins. Co. v. Garrett, 550 So.2d 22 (Fla.2d DCA 1989), rev.den., 563 So.2d 631 (Fla.1990); Bunch v. Hartford Acc. & Indemn. Co., 370 So.2d 455 (Fla.4th DCA 1979); Metropolitan Prop. & Liab. Ins. Co. v. Gray, 446 So.2d 216 (Fla.5th DCA 1984).

6. Most recently, in Menendez, the Florida Supreme Court considered whether a 2001 amendment to the PIP statute could be retroactively applied to insurance policies issued before the statute’s effective date. The Court held that the 2001 amendment “cannot be retroactively applied to insurance policies issued before the effective date of that amendment[.]” Id., at 875. (emph. added). Consistent with abundant well settled case law, Menendez held that a statute cannot be applied retroactively to a previously existing insurance policy if it “constitutes a substantive change to the statute in effect at the time the insureds’ insurance policy was issued.” Id., at 879 (emph. added).

7. As explained in Menendez, when the statute was enacted after the insurance policy was issued,

. . . the operative inquiry is whether the statute should apply retroactively. In this regard, the Court applies a two-pronged test. First, the Court must ascertain whether the Legislature intended for the statute to apply retroactively. Second, if such an intent is clearly expressed, the Court must determine whether retroactive application would violate any constitutional principles.

Id. at 877. Because the insurance policy in this case was issued well before the January 1, 2008 effective date of the new PIP statute, this two-pronged test applies here.

8. With respect to the first prong of the Menendez test, it is not entirely clear that the Legislature truly intended the new PIP statute to be retroactively applied to insurance policies issued before the October 1, 2007 repeal date of the former PIP statute, or even insurance policies issued before the January 1, 2008 effective date of the new PIP statute. When the Legislature intends for a new statute or amendment to be applied retroactively, the Legislature knows how to unambiguously express that intent in the session law.² Notably, however, the words “retroactive” and “retrospective” (and any derivations thereof) are not found anywhere in Chapter 2007-324. To the contrary, Chapter 2007-324 repeatedly suggests that the new PIP statutes, which were enacted on October 11, 2007, would not actually take effect until January 1, 2008. For example, Section 21(6) states, “This section does not apply the Florida Motor Vehicle No-Fault law, as revived and amended by this act, prior to January 1, 2008” Section 23 further confirms that “sections 8 through 20 of this act shall take effect January 1, 2008.”

9. If the Legislature did intend to require retroactive application of the new PIP statute to insurance policies (like the one in this case) that were issued before the October 1, 2007 repeal of the former PIP statute, that intent is not clearly expressed. This is important because there is a “presumption that a legislative act operates prospectively unless the intent that it operate retrospectively is clearly expressed.” State ex rel. Riverside Bank v. Green, 101 So.2d 805, 807 (Fla.1958). If the Legislature does not provide a clear expression of intent for retroactive application, the statute can “never be the subject of retroactive application.” Royal v. Clemons, 394 So.2d 155, 158 (Fla.4th DCA 1981). See also, Hotelera Naco, Inc. v. Chinea, 708 So.2d 961, 962 (Fla.3d DCA 1998) [23 Fla. L. Weekly D1024c]. Because Chapter 2007-327 does not clearly express the intent to retroactively apply the new PIP statute to insurance policies issued before the former PIP statute was repealed on October 1, 2007, it does not appear that the first prong of the Menendez test is satisfied with respect to the insurance policy in this case, which was issued on August 17, 2007.

11. In any event, assuming arguendo that the Legislature did intend for the new PIP statute to retroactively apply to the insurance policies which were issued before January 1, 2008 and which remained in effect thereafter, this Court will also address the second prong of the Menendez test. Under that second prong, this Court must “determine whether retroactive application would violate any constitutional principals.” Id., at 877. “Even where the Legislature has expressly stated that a statute will have retroactive application, this Court will reject such an application if the statute impairs a vested right, creates a new obligation, or imposes a new penalty”, as such an impairment would be in violation of Article I, Section 10 of the Florida Constitution. Menendez, at 877, citing State Farm Mut. Auto. Ins. Co. v. Laforet, 658 So.2d 55, 61 (Fla. 1995) [20 Fla. L. Weekly S173a]. In Menendez, the Florida Supreme Court held that the PIP statute “when viewed as a whole, is a substantive statute.” Id. at 880. Likewise, this Court concludes that subsection (5)(a)2 of the new PIP statute is “substantive” in nature, and that it impairs vested rights and create new obligations and penalties.

13. On November 3, 2010, the Second District Court of Appeal issued a slip opinion, expressly holding that the fee schedule provisions of the new PIP statute could not be retroactively applied to a PIP insurance policy that had been issued, and had already expired, before January 1, 2008. See, Geico Indem. Co. v. Physicians Group, LLC, __ So.3d __, 35 Fla. L. Weekly D2448a, 2010 WL 4321569 (Fla. 2d DCA Nov. 3, 2010). In that case, the Second DCA expressly limited its decision to insurance policies that had already expired before January 1, 2008, and declined to “address whether the 2008 statute retroactively applies to a policy that was issued prior to but was ‘in effect on’ January 1, 2008.” Because the insurance policy in this case was still in effect on January 1, 2008, the Androski decision is inapplicable to the case at bar.

14. Nonetheless, this Court concludes that the expiration date of the insurance policy is not a relevant factor. Neither Menendez, nor any of the other appellate decisions cited herein, draw any consideration to the insurance policy’s expiration date. Under those controlling decisions, the issues of when the insurance policy expired and whether the insurance policy was still in effect after the new statute’s effective date, are not addressed and are not dispositive or controlling. Rather, according to the Florida Supreme Court, it is only the policy’s issuance date that “governs” which version of the statute applies. Menendez, at 876. There is no case law supporting the proposition that an insurance policy is governed by the statutes in effect at the time that the policy expires. There is no case law supporting the proposition that an insurance policy issued prior to the effective date of a new statute, is governed by that new statute if the policy still remains in effect as of the effective date of the new statute. Both of those situations amount to an unlawful retroactive application of a new or amended statute to a previously issued insurance policy. As explained in Esancy v. Hodges, 727 So.2d 308 (Fla. 2d DCA 1999) [24 Fla. L. Weekly D483a], “changes in statutes that occur between policy renewals cannot be incorporated into an [existing] insurance policy without unconstitutionally impairing the obligations of the parties to the insurance contract.” Id., at 309-310.

14. In this case, this Court concludes that the new PIP statute’s significant new limitations on the amount an insurer will reimburse health care providers for medical expenses is clearly a substantive change that would impair the vested rights of the insured if applied retroactively. As such, it is patently clear that the option to limit reimbursement pursuant to the new fee schedule provisions of Section 627.736(5)(a)2 is a substantive change which impairs vested rights under any PIP insurance policies that were issued before the January 1, 2008 effective date and still remained in effect thereafter. Thus, applying that new statute to PIP policies issued before January 1, 2008 would not pass the second prong of the Menendez test.

15. The Defendant argues that the addition of fee schedules does not impair vested rights, because the language of the insurance policy mentioned “fee schedules” and allowed the Defendant to pay in accordance with the “Florida Motor Vehicle No-Fault Law and any amendments.” The Defendant argued that the policy itself, specifically Amendatory Endorsement 6910.3, had language which allowed the insurer to utilize the fee schedule, to wit:

“To determine whether a charge is reasonable we may consider usual and customary charges and payments accepted by the provider, 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.”

The Defendant reasons that because this paragraph mentions fee schedules, that the parties had bargained that fee schedules should apply, and that no rights are impaired. This Court disagrees.

16. First, the language from the Defendant’s endorsement mimics the reasonable amount provision contained in subsection (5)(a) of the former PIP statute, which was repealed on October 1, 2007, and in subsection (5)(a)1 of the new PIP statute.³ The endorsement does not state that, instead of paying 80% of the reasonable amount, the Defendant will pay health care providers 80% of 200% of the particular Medicare fee schedule amounts now described in subsection (5)(a)2 of the new PIP statute. Thus, the insurance policy merely adopts the reasonable amount methodology of the former PIP statute which was in effect when that policy was issued, and does not adopt the alternative fee schedule methodology of the new PIP statute.

17. Second, the courts have held that the reasonable amount methodology has not been replaced with, or defined by, the fee schedule methodology of subsection (5)(a)2 of the new PIP statute. Rather, the plain language of the new PIP statute, as found in subsections (1)(a) and (5)(a)1, clearly contradicts that proposition. The same method for determining a reasonable amount, exists in both subsection (5)(a) of the former PIP statute and subsection (5)(a)1 of the new PIP statute. See, e.g., Explorer Ins. Co. v. Physicians Group, 16 Fla. Law Weekly Supp. 317a (Fla.13th Cir.Ct. Jan. 21, 2009) (reasonable amount “may be proved through the elements described in . . . §627.736(5)(a) . . ., rather than based on the permissive fee schedule”, and insurance company erroneously contended that the new fee schedule provision “clarified the reasonable amount”); MRI Associates of St. Pete, a.a.o. Craig Volpe v. Safeco Insurance Company of Illinios, 17 Fla. L. Weekly Supp. 686a, ¶19 (Fla. Hillsborough County Ct. May 20, 2010) (rejecting insurance company’s contention that the reasonable amount test of the former version of section 627.736(5)(a) is now replaced, substituted, clarified, or defined by the permissive fee schedule of the new version of section 627.736(5)(a)2). Adopting the Defendant’s argument would essentially render subsections (1)(a) and (5)(a)1 meaningless, in violation of well-settled principles of statutory construction. See, MRI Associates of St. Pete, a.a.o. Craig Volpe, 17 Fla. L. Weekly Supp. 686a, at ¶19, citing Murray v. Mariner Health, 994 So.2d 1051, 1061 (Fla. 2008) [33 Fla. L. Weekly S845a] (court declined to adopt interpretation of formula in one subsection of the worker’s compensation statute that would rendered meaningless a reasonable amount provision in another subsection of that same statute).

18. As the Plaintiff points out, there are several other factors aside from the fee schedule listed in the Defendant’s endorsement (and in the former subsection (5)(a) and the new subsection (5)(a)1) that may be considered in determining a reasonable charge. In contrast, the new subsection (5)(a)2.f contemplates that the Medicare and workers compensation fee schedules are the only factors which the insurer may apply, and by omission, this prohibits consideration of other factors, such as usual and customary charges. In 2007, under this policy and the statutes then in effect, a determination of the reasonableness of the charges would involve consideration of all those factors. In contrast, the fee schedule methodology of the new PIP statute gives the insurance company the option of only considering a fixed, rigid fee schedule, which is oftentimes much less than the actual charges billed. It is this Court’s opinion that such a change is most certainly substantive, and impairs vested rights. As such, section 627.736(5)(a)2, Florida Statutes (2008) is inapplicable to this action.

19. This Court finds no merit in the Defendant’s contention that it can rely on the new PIP statute’s fee schedule methodology, because the insurance policy states the Defendant will pay claims in accordance with the “Florida Motor Vehicle No-Fault Law and any amendments.” First, it is erroneous to suggest the new PIP Statute actually “amended” the former PIP statute. The former PIP statute was repealed on October 1, 2007, and there was a 3-month gap between October 1, 2007 and the January 1, 2008 effective date of the new PIP statute. Therefore, the new PIP statute did not truly “amend” the former PIP statute referenced in the Defendant’s insurance policy.⁴ See, Geico Indemnity Co., __ So.3d __, 35 Fla. L. Weekly D2448a, 2010 WL 4321569, *2 (“On January 1, 2008, the new Florida Motor Vehicle No-Fault Law, including a new PIP statute, went into effect”) (emph. added). Second, the “any amendments” provision in the insurance policy is ambiguous, and must be construed against the Defendant. See, Ronald J. Trapana, M.D., P.A. v. Government Employees Insurance Co., (Fla. Broward County Ct. May 14, 2010).

20. For these reasons, the Plaintiff is hereby granted partial summary judgment. This is a non-final order, and the Court reserves jurisdiction to determine all remaining claims and defenses.

__________________

¹See, Geico Indemnity Co. v. Physicians Group, LLC, __ So.3d __, 35 Fla. L. Weekly D2448a, 2010 WL 4321569, *2 (Fla. 2d DCA Nov. 3, 2010) (“On January 1, 2008, the new Florida Motor Vehicle No-Fault Law, including a new PIP statute, went into effect”) (emph. added).

²Indeed, the 2007 session laws are replete with examples where the Legislature clearly expressed the intent to retroactively apply a new statute or amendment. See, e.g., Ch. 2007-4, §3, Laws of Fla. (“This act shall take effect upon becoming a law and shall apply retroactively. . . .”); Ch. 2007-5, §96, Laws of Fla. (“payment at the recalculated rate shall be effected retroactively”); Ch. 2007-35, §2, Laws of Fla. (“This act shall take effect upon becoming a law and shall operate retroactively. . . .”); Ch. 2007-36, §3, Laws of Fla. (“This act shall take effect upon becoming a law and shall apply retroactively. . . .”).

³Subsection (5)(a) of the former PIP statute and subsection (5)(a)1 of the new PIP statute both include the following language, “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, and 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.” This provision pertains to the reasonable amount methodology of subsections (1)(a) and (5)(a)1 of the new PIP statute, and does not pertain to the alternative fee schedule methodology described in subsection (5)(a)2 of the new PIP statute.

⁴The Florida Supreme Court has held that legislation which purports to amend a statute that has already been repealed is “void.” Oldham v. Rooks, 361 So.2d 140, 143 (Fla. 1978). Thus, if this Court were to agree with the Defendant’s suggestion that the new PIP statute is an “amendment” of the former PIP statute that was repealed on October 1, 2007, this Court would be required to declare that the new PIP statute is void.