19 Fla. L. Weekly Supp. 60a

Online Reference: FLWSUPP 1901TOMOInsurance — Personal injury protection — Coverage — Where insurer elected to reimburse medical provider pursuant to permissive statutory fee schedule and applied Outpatient Prospective Payment System cap, insurer cannot belatedly contest reasonableness of charge submitted by provider following opinion by district court of appeal disallowing use of OPPS cap

TOMOKA DIAGNOSTICS a/a/o KELLYE McCALL, Plaintiff, vs. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant. County Court, 7th Judicial Circuit in and for Volusia County. Case No. 2010-30614-COCI, Division 82. October 5, 2011. Honorable Robert A. Sanders, Jr., Judge. Counsel: Kimberly P. Simoes, The Simoes Law Group, P.A., Deland, for Plaintiff. John Morrow, Conroy Simberg, Orlando, for Defendant.

ORDER GRANTING PLAINTIFF’S MOTIONFOR FINAL SUMMARY JUDGMENT ANDFINAL JUDGMENT IN FAVOR OF PLAINTIFF

THIS CAUSE is before the Court on Plaintiff’s Motion for Final Summary Disposition certificate date April 29, 2010, and its Supplemental Memorandum in Support of Motion for Final Summary Judgment, certificate date September 7, 2011. The Court having considered same, having considered the submissions by each party, having considered the evidence submitted, having heard oral argument made on behalf of the parties on September 9, 2011, and being otherwise duly advised in the premises, orders as follows:

I. Background.

On April 21, 2009, State Farm’s insured received an MRI from Tomoka Diagnostics (Tomoka). Tomoka submitted a bill in the amount of $1400.00 to State Farm and State Farm allowed reimbursement in the amount of $808.08. On the Explanation of Review provided to Tomoka, State Farm advised,

“337 Effective January 1, 2007, the payment for the technical portion has been capped at the Outpatient Prospective Payment System (OPPS) amount multiplied by the applicable fee schedule percentage pursuant to regulatory statute(s).”

Furthermore, the Explanation of Review advised the Plaintiff as follows:

“For date of accident 1/1/08 and after, if an insurer limits payment as authorized by subparagraph 2., the person providing such services, supplies, or care may not bill or attempt to collect from the insured any amount in excess of such limits, except for amounts that are not covered by the insured’s personal injury protection coverage due to the coinsure amount or maximum policy limits. F.S. 627.736(5)(a)5.”

Thereafter, Tomoka submitted a demand letter to State Farm and, when no additional payment was forthcoming, the present lawsuit was filed on February 17, 2010. The Plaintiff filed its Motion for Summary Judgment on April 29, 2010, asserting that State Farm had miscalculated the minimum reimbursement due for the MRI services by applying the “OPPS cap.” Agreeing that the only issue was one of statutory interpretation¹, State Farm filed a cross motion for summary judgment on July 21, 2010, asserting that it was proper to utilize the OPPS cap in the reimbursement calculations under F.S. 627.736(5)(a)2.f.

On July 6, 2011, the Second District Court of Appeals rendered its opinion in the case of Nationwide Mut. Fire Ins. Co. et al vs. AFO Imaging, Inc., Nos. 2D10-929, 2D10-2274 2011 WL 2622311 (Fla. 2d DCA July 6, 2011) [36 Fla. L. Weekly D1463b]. In that case the Court held that automobile insurers such as State Farm could not cap their reimbursement of MRI services by using the Medicare Hospital Outpatient Prospective Payment System (OPPS). Additionally the Court held that the minimum amount due under Section 627.736, Florida Statutes, for MRI services performed in a nonemergency, nonhospital setting is 200% of the participating physicians fee schedule of Medicare Part B.

On July 21, 2011, Tomoka noticed its motion for final summary disposition for hearing to occur on September 9, 2011. On August 23, 2011, Tomoka filed State Farm’s Verified Answers to Interrogatories and the deposition of Daniel Merrigan, a State Farm employee, taken in All Family Clinic of Daytona Beach. Inc. vs. State Farm Mut. Auto. Ins. Co., 685 F. Supp. 2d 1297 (S.D.Fla 2010). On September 7, 2011, Tomoka filed its Request for Judicial Notice of these documents pursuant to F.S. 90.202 and 90.203.

II. The Summary Judgment Hearing

The hearing on Tomoka’s motion for final summary disposition commenced on September 9, 2011. Over State Farm’s objection, the Court granted Tomoka’s request for judicial notice and admitted the evidence of State Farm’s Verified Answers to Interrogatories and the deposition of Daniel Merrigan, taken in the All Family case. At the hearing Tomoka established through uncontroverted record evidence that State Farm reimbursed all No Fault and Medical Payment claims pursuant to the methodology set forth in 627.736(5)(a)2.f. State Farm presented no affidavit or other evidence to challenge the Plaintiffs evidence that State Farm invoked and selected the permissive fee schedule in calculating reimbursement under its policy provisions.

Tomoka argued that irrespective of the policy language, the minimum reimbursement under Florida No Fault is the amount set forth under 627,736(5)(a)2.f. Tomoka argued to the Court that pursuant to Kingsway Amigo Ins. Co. v. Ocean Health, Inc., 63 So. 3d 63 (Fla 4th DCA 2011) [36 Fla. L. Weekly D1062a]. State Farm’s failure to incorporate the language of 627.736(5)(a)2.f. into its policy can only increase State Farm’s liability to its policyholder. Tomoka argued that State Farm’s failure to comply with Kingsway did not negate the floor of reimbursement which is the amount specified by 627.736(5)(a)2.f. Furthermore, Tomoka argued that although State Farm may not be contractually entitled to take advantage of the limitations in 627.736(5)(a)2.f., by adopting that fee schedule as an across-the-board policy in making payments under the PIP statutes, State Farm was bound to its reimbursement methodology.

In response, State Farm conceded that pursuant to AFO Imaging, it could not utilize the OPPS cap to calculate reimbursement under F.S. 627.736(5)(a)2.f. However, State Farm contended that it could not be found to have “elected” to utilize the permissive fee schedule in 627.736(5)(a)2.f. because it was not legally entitled to do so pursuant to Kingsway. Instead, State Farm argued that because it could not invoke the permissive fee schedule of 627.736(5)(a)2.f., it was forced to rely on its policy language which allows it to pay a “reasonable charge” pursuant to F.S. 627.736(5)(a)1. Thus, State Farm argued that summary judgment was inappropriate because Tomoka had the burden of proof that its charge is reasonable which is an issue of fact for the jury.

III. Findings of Fact and Law

In this lawsuit Tomoka contends that State Farm failed to properly reimburse it for the MRI services performed on State Farm’s policyholder. Tomoka contends that State Farm utilized the statutory fee schedule to determine the reimbursement rate under its policy, but did not pay the correct amount under F.S. 627.736(5)(a)2.f. because State Farm erroneously applied the “OPPS cap” to the allowable reimbursement. Tomoka further contends that the minimum reimbursement for MRI services under Florida No Fault is the amount proscribed in F.S. 627.736(5)(a)2.f. This Court agrees.

As the record evidence clearly and unequivocally indicates, at the time the bills were incurred, submitted to and paid by State Farm, State Farm utilized the provisions of F.S. 627.736(5)(a)2.f. to determine the reimbursement for MRI services under its policy. State Farm’s position was that it was entitled to avail itself of the limitations in 627.736(5)(a)2.f. in adjusting its claims and State Farm did, in fact, utilize the fee schedule set forth in 627.736(5)(a)2.f. in calculating the reasonable reimbursement rates under its policy. Upon learning that it may not be entitled to contractually invoke the payment limitations of 627.736(5)(a)2.f., State Farm receded from its reliance upon the statutory fee schedule and argued that it should be exposed to potentially owing more than the amount proscribed by the fee schedule in 627.736(5)(a)2.f. or potentially owing less than the minimum amount allowed under 627.736(5)(a)2.f.

Florida’s No-Fault Statute is designed to provide insurance without regard to fault. Fla. Stat. § 627.731 (2006). Every policy under the No-Fault Statute must provide up to $10,000 for loss sustained as a result of “bodily injury, sickness, disease, or death arising out of ownership, maintenance, or use of a motor vehicle . . .” Fla. Stat § 627.736(1). In 2008, the Florida legislature amended § 627.736(5)(a)(2)(f) and (a)(3) to clarify that the “participating fee schedule” of Medicare Part B is the proper schedule to be used when reimbursing providers under the No-Fault Statute. See, Ch. 2008, 220, Laws of Fla. (2008). See, Florida Senate’s House Message Summary dated May 1, 2008. As amended, § 627.736(5) states:

(5) CHARGES FOR TREATMENT OF INJURED PERSONS.-

[(a)2.]f. For all other medical services, supplies, and care, 200 percent of the allowable amount under the participating physicians schedule of applicable

 Medicare Part B fee schedule

. However, if such services, supplies, or care are 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 are provided. Services, supplies, or care that are not reimbursable under Medicare or workers’ compensation are not required to be reimbursed by the insurer.

3. For purposes of subparagraph 2., the applicable fee schedule or payment limitation under Medicare is the fee schedule or payment limitation in effect at the time the services, supplies or care were rendered and for the area in which such services were rendered, except that it may not be less than the allowable amount under the participating physicians schedule applicable 2007

 Medicare Part B for 2007 fee schedule

 for medical services, supplies, and care subject to Medicare Part B.

Ch. 2008-220, Laws of Fla. (2008)(changes in original). The amendment clarifies that PIP reimbursement for medical services would be based on 200 percent of the “allowable amount under the ‘participating physicians’ schedule of Medicare Part B for 2007.” No other fee schedule, or limitations on the same, are specified in the No-Fault Statute, or are mentioned in any legislative history of the clarified No-Fault Statute.

In fact, Section 627.736(5)(a)(4) specifically limits a PIP insurer’s ability to rely on Medicare for any purpose other than using “the allowable amount under the participating physicians schedule of Medicare Part B” as a baseline reimbursement level. Section 627.736(5)(a)(4) states:

(5) CHARGES FOR TREATMENT OF INJURED PERSON.-

(a)(4) Subparagraph 2. does not allow the insurer to apply any limitation on the number of treatments or other utilization limits that apply under Medicare or workers’ compensation. An insurer that applies the allowable payment limitations of subparagraph 2. must reimburse a provider who lawfully provided care or treatment under the scope of his or her license, regardless of whether such provider would be entitled to reimbursement under Medicare due to restrictions or limitations on the types or discipline of health care providers who may be reimbursed for particular procedures or procedure codes.

IV. Opinion of the Court.

As found by the Second District Court in AFO Imaging, under F.S. 627.736(5)(a), the allowable amount under the participating physicians schedule of Medicare Part B sets the baseline value of MRI services which must be reimbursed by PIP insurers to MRI facilities in Florida. AFO Imaging, 2011 WL 2622311 at *2. Additionally, the participating physicians fee schedule Medicare Part B for 2007 must be used when the Medicare fee schedule in effect at the time the MRI services are rendered is “less than the allowable amount under the participating physicians fee schedule Medicare Part B for 2007.” Accordingly, the participating physicians schedule is the proper schedule under Medicare Part B. The minimum reimbursement a PIP insurer must pay an MRI provider is 200% of the schedule for 2007. Section 627.735(5)(a)(4) further prohibits a PIP insurer from applying any other Medicare limitations, “regardless of whether such provider would be entitled to reimbursement under Medicare.”

The evidence shows that State Farm availed itself of the provisions of F.S. 627.736(5)(a)2.f., State Farm’s Explanation of Review identifies §627.726(5)(a)2 as its basis for the reimbursement rate selected. State Farm’s Verified Answers to Interrogatories in the All Family matter affirmed that this was the payment methodology utilized by State Farm in the payment of No Fault claims. The deposition of Daniel Merrigan conclusively established that State Farm made a business decision to reimburse all MRI providers based upon the permissive fee schedule of 627.736(5)(a)2.f. Thus, this Court finds that the methodology selected and utilized by State Farm under the contract of insurance at issue in this case is the fee schedule established at 627.736(5)(a)2.f.

It is without dispute that State Farm applied the “OPPS cap” to the reimbursement rate for the MRI services which resulted in a difference of $223.08 between the 200% of the participating physicians fee schedule Medicare Part B and the OPPS amount paid by State Farm. Tomoka seeks the difference in these amounts and no more. As reflected in the preceding paragraphs, subsections (5)(a)(2)(f) and (5)(a)(3), as amended by the Florida Legislature in 2008, expressly designated “the participating physicians schedule of Medicare Part B” as the operative fee schedule to be utilized in computing the minimum amount the insurance companies were statutorily allowed to remit for the type of medical services, supplies, and care provided to the PIP insureds by the MRI providers. AFO Imaging, Inc., 2011 WL 2622311. Thus, Tomoka is entitled to the minimum reimbursement rate allowed under Florida No Fault and the amount calculated as reasonable by State Farm under its policy of insurance.

Although State Farm now, relying on Kingsway, argues that it had no right to use the fee schedule in F.S. 627.736(5)(a)2, as its policy did not provide for it, that is not dispositive of the issue presented. State Farm’s reliance on Kingsway is misplaced. As noted in the Kingsway opinion, the trial Court “relied on case law holding that, when a policy provides for coverage greater than that required by statute, the terms of the policy control.” Kingsway, 63 So.3d at 66. In sum, based on Kingsway, State Farm can be found to owe more than the minimum fee schedule set forth by (5)(a)2.f., but not less. The payment methodology found at F.S. 627.736(5)(a)1. provides broader coverage to the policyholder than the coverage under F.S. 627.736(5)(a)2. Therefore, logically, the limiting and permissive fee schedule found in section (5)(a)2 provides the minimum coverage afforded under the No Fault law.

Notwithstanding this Court’s determination that the fee schedule in F.S. 627.736(5)(a)2.f, is the minimum or floor of reimbursement, it is undisputed that State Farm made a business decision to utilize the provisions of F.S. 627.736(5)(a)2.f for all claims when determining what the reasonable reimbursement rate would be under its insurance policy. This was State Farm’s determination of what a reasonable reimbursement rate would be and State Farm is bound by its decision to utilize that methodology. Therefore, it is neither unfair nor inequitable for State Farm to be bound by its decision to use the fee schedule set forth by 627.736(5)(a)2.f and State Farm must pay the rates provided by the participating fee schedule of Medicare Part B, not the OPPS rates. See AFO Imaging, 2011 WL 2622311.

WHEREFORE, the Court finds that Plaintiff is entitled to Final Judgment in the amount of $223.08 (200% of Medicare Part B = $1031.16 – $808.08), plus prejudgment interest in the amount of $26.77 for a total Final Judgment in the amount of $249.85. This Court reserves jurisdiction for an award of attorney’s fees and costs incurred by Plaintiff.

FOR WHICH LET EXECUTION ISSUE

__________________

¹“The legal issue in this case involves the interpretation of Fla. Stat. §627.736(5)(a)(2) and §627.736(5)(a)3).” (State Farm’s Motion for Final Summary Judgment, P. 3)

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