19 Fla. L. Weekly Supp. 14b
Online Reference: FLWSUPP 1901LIMAInsurance — Personal injury protection — Coverage — By including language in PIP policy that provides for both payment of 80% of reasonable expenses and limitation of reimbursement to 80% of 200% of Medicare fee schedule, insurer has created ambiguity that must be resolved in favor of insured
AMERICAN INDEPENDENT INSURANCE COMPANY, Appellant, v. GABLES INS. RECOVERY INC. a/a/o Orlay Lima, Appellee. Circuit Court, 11th Judicial Circuit (Appellate) in and for Miami-Dade County. Case No. 10-346 AP. L.C. Case No. 08-6839 CC 26. October 12, 2011. An Appeal from the County Court of the Eleventh Judicial Circuit of Florida in and for Miami-Dade County. Gladys Perez, Judge. Counsel: Jose Pagan and Kimberly Hart Mutchnik, Allen, Kopet & Associates, PLLC, for Appellant. G. Bart Billbrough, Billbrough & Marks, P.A., for Appellee.[Lower Court Opinion at 17 Fla. L. Weekly Supp. 685a]
(Before SCOLA, BERNSTEIN and RODRIGUEZ, R., JJ.)
(SCOLA, JR., Judge.) This appeal involves the interplay between two statutory provisions relating to the method for calculation of payment for Personal Injury Protection (PIP) claims: §627.736(1)(a), Fla. Stat. (2008) which requires the insurer to pay 80% of reasonable and necessary medical expenses and §627.736(5)(a)2.f., Fla. Stat. (2008) which gives the insurer the option of limiting reimbursement to 80% of 200% of the Medicare Part B Schedule. The issue in this case is whether an insurer was obligated to pay 80% of the reasonable medical expenses incurred or whether, by including the language of both methods of calculations in its policy, it could choose to reimburse the insured for the lesser amount of 80% of 200% of the Medicare Schedule authorized by §627.736(5)(a)2.f., Fla. Stat. (2008). For reasons more fully set forth below, we hold that by including the language of both methods for reimbursement under §§627.736(1)(a), Fla. Stat. (2008) and 627.736(5)(a)2.f., Fla. Stat. (2008) in its policy the insurer has created an ambiguity which must be resolved in favor of the insured. Thus, the insurer must pay the higher amount. The trial court’s order which granted summary judgment for the insured and denied summary judgment for the insurer on this issue is, therefore, affirmed.FACTS
In January 2008, Orlay Lima (Lima) purchased an insurance policy from American Independent Insurance Company (American) that contained Personal Injury Protection (PIP) benefits. The Application for the insurance provided by American to Lima states:
Medical Benefits– pays 80% of all reasonable expenses incurred for medically necessary surgical, x-ray, etc. services.
Although the Application refers to the terms of the policy of insurance, nowhere does the Application itself mention any limitation of reimbursement based upon 80% of 200% of the Medicare Schedule.
The policy of insurance also contains a Matrix Box setting forth the coverages and limitations which provides:
Medical Expenses: No specific dollar amount but in no event greater than the Maximum Limit for the Total of All Personal Injury Protection Benefits set forth below.
In the Box Entitled “Maximum Limit for the Total of All Personal Injury Protection Benefits” set forth below in the Matrix Box it states “$10,000.00.” There is no limitation concerning 80% of 200% of the Medicare Schedule.
The policy at issue clearly sets forth that American will pay in accordance with section 627.736(1)(a); i.e., 80% of the reasonable medical services. However, the policy further contains a “Limit of Liability” section which alludes to the insurer’s right to limit recovery pursuant to section 627.736(5)(a)2.f.; i.e.: 80% of 200% of the applicable Medicare Part B fee schedule.
On February 27, 2008, Lima was involved in a motor vehicle accident. Two days after the accident, Lima went to All X Ray Diagnostic Services to have x-rays taken of his spine.
American sent a letter to Lima after the accident informing him: “Under the Personal Injury Protection Coverage, your policy will provide reimbursement for 80 percent of charges incurred for reasonable, medically necessary treatment of auto accident-related injuries.” (emphasis added)
After American received the bill from All X Ray, it paid only 80% of 200% of the Medicare Schedule — not 80% of the reasonable and necessary medical expenses. Thereafter, American was served with a demand letter for the difference between 80% of the amount billed and the amount paid by American. The claim was eventually assigned to the Appellee, Gables Insurance Recovery, Inc. (“Gables”), and it brought suit for breach of contract against American seeking to recover the outstanding PIP benefits allegedly due for the x-rays taken of Lima on February 29, 2008.
At the trial level, both parties stipulated that there were no facts in dispute and filed motions for summary judgment seeking a legal ruling from the court on the proper interpretation of the policy.
The trial court heard arguments of the parties and, in a well-reasoned order, granted Gables’ motion for summary judgment and denied American’s motion for summary judgment.
DISCUSSION
It is well-established that a trial court’s ruling on a motion for summary judgment posing a pure question of law is subject to de novo review. Major League Baseball v. Morsani, 790 So. 2d 1071, 1074 (Fla. 2001) [26 Fla. L. Weekly S465a]. The interpretation of a contract is also an issue of law which is reviewed under a de novo standard by the appellate court. See United States Fire v. J.S.U.B., Inc., 979 So.2d 871, 877 (Fla. 2007) [32 Fla. L. Weekly S811a].
The issue in this case arose from the 2008 version of the PIP Statute. §627.736(1)(a) Fla. Stat. (2008) provides:
(1) Required benefits. — Every insurance policy complying with the security requirements of s. 627.733 shall provide personal injury protection to the named insured, relatives residing in the same household, persons operating the insured motor vehicle, passengers in such motor vehicle, and other persons struck by such motor vehicle and suffering bodily injury while not an occupant of a self-propelled vehicle, subject to the provisions of subsection (2) and paragraph (4)(e), to a limit of $10,000 for loss sustained by any such person as a result of bodily injury, sickness, disease, or death arising out of the ownership, maintenance, or use of a motor vehicle as follows:
(a) Medical benefits. — Eighty percent of all reasonable expenses for medically necessary medical, surgical, X-ray, dental, and rehabilitative services, including prosthetic devices, and medically necessary ambulance, hospital, and nursing services.
Newly enacted §627.736(5)(a)2.f., Fla. Stat. (2008) gives the insurer the option to limit reimbursement as follows:
2. The insurer may limit reimbursement to 80 percent of the following schedule of maximum charges:
f. For all other medical services, supplies, and care, 200 percent of the allowable amount under the participating physicians schedule of Medicare Part B. However, if such services, supplies, or care is not reimbursable under Medicare Part B, the insurer may limit reimbursement to 80 percent of the maximum reimbursable allowance under workers’ compensation, as determined under s. 440.13 and rules adopted thereunder which are in effect at the time such services, supplies, or care is provided. Services, supplies, or care that is not reimbursable under Medicare or workers’ compensation is not required to be reimbursed by the insurer.
The policy at issue sets forth both that American would pay in accordance with section 627.736(1)(a); i.e., 80% of the reasonable medical services and that the insurer had a right to limit recovery pursuant to section 627.736(5)(a)2.f.; i.e.: 80% of 200% of the applicable Medicare Part B fee schedule.
American’s position is that the inclusion of the language of 627.736(5)(a)2.f.) (80% of 200% of Medicare Schedule) in its policy acts as a limitation of the earlier language reflecting it would pay 80% of the reasonable medical expenses. Gables’ position is that the two provisions conflict with each other and create an ambiguity which must be resolved in favor of the insured.
The recent case of Kingsway Amigo Insurance Company v. Ocean Health, Inc., a/a/o Belizaire Gomez, 63 So. 3d 63 (Fla. 4th DCA 2011) [36 Fla. L. Weekly D1062a], addressed the issues at dispute in the instant matter. The Kingsway court found that a PIP insurer cannot elect to use the Medicare Part B fee schedules set forth in section 627.736(5)(a)(2) when the subject PIP policy specifies that the PIP insurer will pay 80% of medically necessary expenses. Kingsway, 63 So. 3d at 64.
The Kingsway court went on to recognize that, after the 2008 amendment to the PIP statute, an insurer has a right to choose between the two coverage methodologies: paying the 80% of reasonable medical services, or the limitation of liability reflected by paying 80% of 200% of Medicare Part B Schedule. Kingsway, 63 So. 3d at 67. However, the court pointed out that if an insurer wants to take advantage of the permissive fee schedule, it should clearly and unambiguously select that payment methodology so that the insured patient and health care providers would be aware of it. Kingsway, 63 So. 3d at 68.
“We agree with the trial court that these statutes are unambiguous and that their plain language allows an insurer to choose between the two different payment calculation methodology options. Significantly, subsection 627.736(5)(a)2. provides that the insurer “may limit reimbursement,” language that indicates this option choice is not mandatory; subsection 627.736(5)(a)5. States, “[i]f an insurer limits payment as authorized by subparagraph 2.” language that anticipates an insurer will make a choice.” Id. (emphasis added)
Thus, the new statute gives the insurer an option to use the 200% of Medicare calculation instead of the 80% of reasonable medical expenses methodology. The statute was not intended to create a “200% of Medicare limitation” on the “reasonable medical expenses” calculation.
Furthermore, the letter sent to Lima by American after the accident informs him that the policy will provide reimbursement for 80 percent of charges incurred for reasonable, medically necessary treatment of auto accident-related injuries. Even after the accident, American not only fails to notify its insured of the 80% of the 200% of Medicare limitation, it specifically and affirmatively informs him that it will pay 80% of reasonable medical services.
American expressly included language in its Application, its policy and its post-accident correspondence that it would pay 80% of all reasonable expenses in accordance with section 627.736(1)(a). The fact that the policy simultaneously included language purporting to give American the option for limitation under 627.736(5)(a)2.f. at best makes the policy ambiguous. While Kingsway acknowledged an insurer’s right to choose, it found that it also must be “unambiguous” in this choice. This ambiguity, then, inures to the benefit of the insured and coverage. “If the relevant policy language is susceptible to more than one reasonable interpretation, one providing coverage and the [other] limiting coverage, the insurance policy is considered ambiguous.” Auto-Owners Ins. Co. v. Anderson, 756 So. 2d 29, 34 (Fla. 2000) [25 Fla. L. Weekly S211a]. The court interprets ambiguous provisions liberally in favor of the insured and strictly against the drafter. Id.
While American had the choice, and perhaps the desire, to limit its coverage, its poorly drafted policy served to defeat this end. Under the policy as well as the applicable statutes, Gables was entitled to 80% of the reasonable cost of Lima’s x-rays, and American was not entitled to pay the lesser amount under the Medicare Schedule.
AFFIRMED
The Appellee’s Motion for Appellate Attorney’s Fees and Costs is granted and the matter is remanded to the trial court to fix the amount.
The Appellant’s Motion for Appellate Attorney’s Fees and Costs is denied. (RODRIGUEZ, R., J, concurs. BERNSTEIN, J. dissents in separate opinion.)
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(BERNSTEIN, Judge, dissenting). I respectfully dissent. Orlay Lima was injured in an automobile accident and sought medical treatment. American Independent Insurance Company paid for some of the treatment, but the medical provider wanted even more. The insurance company said no, because its policy said it did not have to pay any more. The medical provider filed suit and the trial judge required the insurance company to pay for more treatment than it was required to pay under the policy. Because I do not believe judges should re-write terms of contracts voluntarily entered into between consenting parties, I would reverse.
The majority finds the language in the insurance policy ambiguous. This conclusion is not supported by the facts or the law. The majority acknowledges that there are two statutory provisions which govern how much this insurer is supposed to pay this medical provider for PIP claims. The majority also acknowledges that these two statutes are unambiguous. Yet the majority finds that the same unambiguous statutory language somehow morphs into an ambiguity when it is recited almost ver batim in an insurance contract.
Florida Statute §627.736(1)(a) requires the insurer to pay 80% of “reasonable and necessary” medical expenses. Recently enacted §627.736(5)(a)(2)(f) now provides a formula (based on Medicare reimbursements) which may be used to define what is reasonable. The majority refers to the new statutory provision as an “option” the insurer may take to limit its liability. The majority quotes favorably from the recent opinion in Kingsway Amigo Insurance Company v. Ocean Health, Inc., a/a/o Belizaire Gomez, 63 So. 3d 63 (Fla. 4th DCA 2011) [36 Fla. L. Weekly D1062a], which finds these two statutory provisions unambiguous and acknowledges that the insurer has an option of choosing how to calculate reimbursement. In this case, the insurer chose the option, and included the new statutory language in its contract.
Florida Statute §627.736(5)(a)(2)(f), Fla. Stat. (2008) allows an insurer to limit its liability for “reasonable and necessary” expenses to:
. . . 200 percent of the allowable amount under the participating physicians schedule of Medicare Part B. However, if such services, supplies, or care is not reimbursable under Medicare Part B, the insurer may limit reimbursement to 80 percent of the maximum reimbursable allowance under workers’ compensation, as determined under s. 440.13 and rules adopted thereunder which are in effect at the time such services, supplies, or care is provided.
Similarly, the insurance contract here allows the insurer to limit its liability to:
. . . 200% of the applicable Medicare Part B fee schedule. However, if such services, supplies, or care are not reimbursable under Medicare Part B, reimbursement shall be limited to 80% of the maximum reimbursable allowance under workers’ compensation, as determined under section 440.13 of the Florida Statutes and rules adopted thereunder which are in effect at the time such services, supplies or care are provided.
It is inconceivable how the majority can find the language unambiguous in one place, yet find essentially the same language ambiguous in another.
The majority also seems bothered by the fact that the “reasonable and necessary” language is included in a letter sent by the insurer after that accident, but the remaining option language is not. But the insurance policy here is 71 pages long. Would the majority have the insurer repeat the entire policy in its correspondence?
Finally, the majority’s reliance on Kingsway Amigo Insurance Company v. Ocean Health, Inc., a/a/o Belizaire Gomez, 63 So. 3d 63 (Fla. 4th DCA 2011) [36 Fla. L. Weekly D1062a] is entirely misplaced. The insurer in Kingsway did not exercise any option to limit liability according to a formula. Rather, the insurer argued that it could simply rely on the new statute to limit its liability and did not have to include the Medicare formula language in its policy. The 4th DCA disagreed, and found that the insurer could not rely on the statutory language unless the language exercising the Medicare formula option were also included in the actual insurance contract. Yet that is precisely what the insurer did here; it included the actual statutory language in its contract and exercised its option to use the Medicare formula. But the majority fails to recognize this significant distinction. If the majority’s analysis is allowed to stand, the law is left in an untenable position: an insurer cannot exercise its statutory option if the language is NOT contained in its polity, and it cannot exercise its statutory option even if the language IS contained in the policy. This would leave the statute completely useless. Courts simply cannot engage in statutory interpretation which leads to such absurd results.
The trial judge here essentially rewrote the insurance policy to delete the limitation of liability option the insurer clearly and unambiguously exercised. For this reason, I would reverse the trial court and remand for further proceedings.
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