20 Fla. L. Weekly Supp. 824a

Online Reference: FLWSUPP 2008COTTInsurance — Personal injury protection — Coverage — Medical expenses — Where policy provides that insurer will pay 80% of reasonable expenses, insurer cannot sytematically reimburse medical expenses at 200% of Medicare Part B fee schedule without any consideration of reasonableness of amounts charged

OPEN MAGNETIC SCANNING, LTD. d/b/a WINDSOR IMAGING, a/a/o Jose Cotto, Plaintiff(s), v. UNITED AUTOMOBILE INSURANCE COMPANY, Defendant. County Court, 17th Judicial Circuit in and for Broward County. Case No. 11-20957 COCE 55. May 24, 2013. Sharon Zeller, Judge. Counsel: Marc Finkelstein, Marc Finkelstein, P.A., for Plaintiff. Justin Cincola and Sean Sweeney, for Defendant.

ORDER GRANTING PLAINTIFF’S MOTION FORSUMMARY JUDGMENT REASONABLE RELATEDAND NECESSARY & DENYING DEFENDANT’SMOTION FOR SUMMARY JUDGMENT

THIS CAUSE came before the Court on Plaintiff’s Motion for Summary Judgment as to Reasonable, Related and Necessary and Defendant’s Motion for Summary Judgment as to the applicability of the Medicare Part B fee schedule on April 30, 2013. The Court having reviewed the motions and record evidence, heard argument of the parties’ respective counsel, and being otherwise duly advised in the premises, finds as follows:

I. Background

This lawsuit arises out of the reduction of Personal Injury Protection (“PIP”) benefits to OPEN MAGNETIC SCANNING, LTD d/b/a Windsor Imaging (hereinafter “OMI”) for diagnostic services provided to Jose Cotto, claimant under a policy of insurance issued by the Defendant, UNITED AUTOMOBILE INSURANCE COMPANY (hereinafter “UNITED”).

Plaintiff provided diagnostic services, an MRI of the of the lumbar spine, to UNITED’s insured. Plaintiff submitted a bill to UNITED for CPT Code 72148 in the amount of $1,900.00. UNITED reduced the amount it allowed to 200% of the Medicare Part B Fee Schedule, $1.140.92 and issued payment in the amount of $912.74. (80% of the amount allowed).

On or about October 10, 2011, Plaintiff filed the instant claim for breach of contract to recover the improperly reduced personal injury protection benefits. On or about February 3, 2012, Defendant served its Answer to Plaintiff’s Complaint. The parties engaged in pretrial discovery¹, the case was noticed for trial, and the Court’s pretrial order was issued on October 10, 2012. Pursuant to the parties joint pretrial stipulation the only remaining issue is whether the amount charged for the services provided by the Plaintiff was reasonable.

On or about February 14, 2013, Plaintiff served its motion for summary judgment. A hearing was then coordinated and properly noticed for Monday, April 22, 2013. On Friday, April 19, 2013, Defendant finally served its motion to grant relief from Plaintiff’s admissions² as well as its affidavit in opposition to Plaintiff’s motion for summary judgment. Plaintiff filed its response to Defendant’s motion for relief from admissions and its motion to strike the untimely filed affidavit. On April 22, 2013, a hearing was held on Defendant’s motion for relief and Plaintiff’s motion to strike at which time, the Court granted Defendant’s motion for relief and denied Plaintiff’s motion to strike untimely tiled affidavit. The hearing on Plaintiff’s motion for summary judgment as to reasonable, related and necessary was then rescheduled to April 30, 2013.

On April 30, 2013, a hearing was held on the parties motions for summary judgment. In support of its motion, Plaintiff relied on the affidavit of Susan Garrison, the Administrator for Open Magnetic Scanning, Ltd., the deposition transcript of Defendant’s corporate representative, John “Jack” O’Hara III, and the verified interrogatory answers of Defendant’s litigation adjuster. John “Jack” O’Hara III. Defendant filed an affidavit of John “Jack” O’Hara III and the deposition transcript of Raymond Windsor in opposition to Plaintiff’s motion for summary judgment.

Plaintiff relied upon the affidavit of Susan Garrison filed in support of Plaintiff’s motion for summary judgment. Ms. Garrison testified that she is the Administrator of Open Magnetic Scanning, Ltd. Ms. Garrison testified that the amount charged for the diagnostic services rendered by OMI was reasonable for the Broward County community based upon her personal knowledge in the industry. Ms. Garrison testified that she is familiar with what other MRI providers charge in the community for the CPT Code at issue and that amount ranges from $1,600 to $2,500.00. Ms. Garrison also testified that various insurers have reimbursed the Plaintiff the full 80% of the amount charged for the CPT Code at issue.

Plaintiff also relied upon Defendant’s verified answers to interrogatories, specifically, interrogatory 5 which addresses the issue of reasonableness: “[d]oes Defendant claim that the charges for medical services performed by the Plaintiff was unreasonable in amount?” Defendant untimely objected stating: “. . .pursuant to Derius v. Allstate Indem. Co., 723 So.2d 271 (Fla. 4th DCA 1998) [23 Fla. L. Weekly D1383a] and F.S. 627.736, it is the Plaintiff’s burden to prove that the medical expenses at issue were reasonable, necessary and related to the alleged automobile accident set forth in the complaint. Without waiving said objection, Defendant states, please refer to copy of the No Fault Payment Register, EOR attached to EOB Demand Responses dated October 14, 2010 and September 1, 2011 Response to Plaintiff’s Request for Production.” The explanation of review (“EOR”) stated: “Unless otherwise noted, all reductions are due to guidelines in Senate Bill SB 1092.” Mr. O’Hara acknowledged in his deposition Senate Bill 1092 is the new PIP statute passed in 2008. (O’Hara deposition page 12 lines 7-14). Defendant made no claim that the amount charged by the Plaintiff was “unreasonable”.

Plaintiff also relied upon the deposition testimony of UNITED’s corporate representative, and designated expert on the issue of reasonableness, John “Jack” O’Hara III, which was taken on August 23, 2012. Mr. O’Hara testified that he is familiar with the amounts charged by other MRI providers in the community and that the amount charged by the Plaintiff was in the “middle”. “Well, I’ve seen them from roughly 1,500 to — I’ve seen them as high as I think — trying to be accurate — 20 — at least 2,500, maybe a little more. Right in that ballpark. . . Most of them are more in the middle, 18, 19 you know 2000, you know, whatever.”

In opposition to OMI’s motion and affidavit, UNITED filed the affidavit of John “Jack” O’Hara, III, Defendant’s litigation adjuster and designated expert regarding the issue of reasonableness. Mr. O’Hara testified in his affidavit that it was his opinion that the amount charged by the Plaintiff was not reasonable based upon his “personal background, training and experience receiving, analyzing, adjusting and determining reimbursement dollar amounts for PIP claims in South Florida. . . coupled with my personal knowledge of reimbursement levels in the community and my personal knowledge of Medicare reimbursement fee schedules, Workman’s Compensation reimbursement fee schedules and the various federal and state medical fee schedules applicable to automobile and other insurance coverage’s.” Mr. O’Hara further averred: “[c]onsidering the factors listed above, I have determined the reasonable charge for the medical services rendered to Assignor by Plaintiff . . . $1,140.92”. Said amount being equal to 200% of the Medicare Part B Fee Schedule. Defendant also relied upon the deposition transcript of Raymond Windsor.

ARGUMENT

OMI argues the Florida legislature established two separate and distinct payment methodologies. The first methodology is found at 627.736(5)(a)(1), which provides:

(5) Charges for Treatment of Injured Persons:

(a)1. Any physician. hospital, clinic, or other person or institution lawfully rendering treatment to an injured person for a bodily injury covered by personal injury protection insurance may charge the insurer and injured party only a reasonable amount pursuant to this section for the services and supplies rendered, and the insurer providing such coverage may pay for such charges directly to such person or institution lawfully rendering such treatment, if the insured receiving such treatment or his or her guardian has countersigned the properly completed invoice, bill. or claim form approved by the office upon which such charges are to be paid for as having actually been rendered, to the best knowledge of the insured or his or her guardian. In no event. however, may such a charge be in excess of the amount the person or institution customarily charges for like services or supplies. 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. (emphasis added)

The second methodology is found at 627.736(5)(a)2.1. and provides:

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.

UNITED concedes that it did not elect to utilize 627.736(5)(a)2.f., but instead incorporated the methodology found at 627.736(5)(a)1 into the policy applicable to this case.

OMI argues that the payment methodology of 627.736(5)(a)1 requires the insurance carrier to pay the medical providers charge so long as the charge is reasonable. OMI contends that under this payment methodology, the inquiry is not whether UNITED’s reimbursement was reasonable and that UNITED’s reimbursement is irrelevant under the parameters of 627.736(5)(a)1. OMI Further contends that without complying with the endorsement requirements set forth in Kingsway v. Ocean Health Inc., 63 So.3d 63 (Fla. 4th DCA 2011) [36 Fla. L. Weekly D1062a], UNITED is not allowed to utilize the reimbursement limitations of 627.736(5)(a)2.f. for any purpose. OMI argues that UNITED is given a choice of payment methodologies and under 627.736(5)(a)1 it must pay a reasonable charge. UNITED’s reimbursement rate would only be relevant under the alternative methodology of 627.736(5)(a)2.f. which is inapplicable in this case.

OMI Further states that since UNITED did not consider usual and customary charges, payments accepted by the provider, reimbursement levels in the community or any other fee schedule other than 200 percent of Medicare when it adjusted the claim, that UNITED is precluded from relying upon these additional elements to defeat Plaintiff’s summary judgment by challenging the reasonableness of Plaintiff’s charges. Moreover, OMI points out that UNITED has presented no record evidence that the additional information would have resulted in UNITED actually making a determination that OMI’s bills were not reasonable in price.

In response, UNITED argues that because the applicable insurance contract inception, date of loss and date(s) of service at issue occurred on or after January 1, 2008, the Defendant is permitted to pay Plaintiff’s bill(s) at 200% of the applicable fee schedules as set forth in the provisions of F.S. 627.736(5)(a)2.f., 627.736(5)(a)3 and 627.7407. UNITED argues it’s only obligation under its policy is to pay a reasonable amount for the services, and it is not required to determine if OMI’s charges were unreasonable to pay a lesser amount. UNITED contends it utilized the reimbursement limitations of 627.736(5)(a)2.f. in determining the reimbursement amount it would apply to the Plaintiff’s bills and that 627.736(5)(a)1 allows it to do so. Although UNITED did not consider any additional information the statute said it “may consider” when the claim was originally paid, UNITED contends it can now challenge the reasonableness of OMI’s charges by obtaining additional information which it could have originally considered under 627.736(5)(a)1. Thus, UNITED asserts that summary judgment is inappropriate because the issue of the reasonableness of OMI’s charge is a fact question for the jury.

FINDINGS OF FACT AND LAW

In the instant case, OMI contends UNITED failed to pay its reasonable charges for the diagnostic services performed on it’s insured. OMI provided evidence through the affidavit of Susan Garrison that OMI’s charge for the lumbar MRI, CPT Code 72148, was reasonable, usual and customary in the Broward County community. OMI also provided record evidence, through the deposition testimony of UNITED’s corporate representative, that UNITED made no determination as to whether or not OMI’s charge was reasonable, but instead, utilized the statutory fee schedule found at 627.736(5)(a)2.f. to reimburse all services in an across the board manner. OMI contends that under 627.736(5)(a)1 UNITED was required to make a determination regarding the reasonableness of OMI’s charges and it made no such determination. Instead, UNITED improperly implemented an automatic process for reimbursing medical bills at 200 percent of Medicare Part 13 rather than complying with the terms of its policy to pay 80% of reasonable expenses. This Court agrees with OMI and the reasoning set forth in New Smyrna Imaging, Inc. a/a/o Francis Horgan v. State Farm Mutual Automobile Insurance Company, County Court case number 2012-20804 CONS Div. 71 (Volusia County 2013)[20 Fla. L. Weekly Supp. 671a]

As the record evidence clearly and unequivocally indicates, prior to the time the bills were incurred, submitted and paid, UNITED had implemented a process whereby it would “re-price” claims to be reimbursed at 200 percent of Medicare Part B. It is without dispute that UNITED had already made a determination to reimburse the Plaintiff’s charges at 200 percent of Medicare Part B without any consideration of the “reasonableness” of the charge. Pursuant to Mr. O’Hara’s deposition testimony, UNITED made the decision to limit the reimbursement of all medical providers’ bills to the fee schedule amount which UNITED now claims is a “reasonable” amount. This decision was made sometime after the effective date of the 2008 amendment to the PIP statute. Thus, the decision had nothing to do with the instant claim; it was simply a business decision made by Defendant. Mr. O’Hara testified during the questioning of its own lawyer as follows: “Q. It would he a fair and accurate statement to say that United pays its MRI bills at 200 percent of medicare, double medicare and then, obviously, an 80 percent copay obligation? A. Yes, we do. In this case, that’s our policy at this point.” (O’Hara deposition, page 19, lines 6-11).

UNITED does not believe it has any obligation under its policy to determine whether the provider’s bill is reasonable in price. Instead, UNITED erroneously relies upon the reimbursement limitations of 627.736(5)(a)2.f. to suggest that it reimbursed a reasonable amount to OMI. The relevant inquiry under 627.736(5)(a)1 is the reasonableness of the provider’s charge, not the reasonableness of UNITED reimbursement. If UNITED had elected to utilize the payment methodology found at 627.736(5)(a)2.f. then it’s reimbursement would be the relevant inquiry because under the provisions of 627.736(5)(a)2.f. the provider’s charge is irrelevant.

Because UNITED elected to pay the reasonable charges incurred, UNITED could have considered numerous factors in making that determination. UNITED did not consider any of the permissible factors contained in 627.736(5)(a)1 to determine if OMI’s charges were reasonable. During his deposition, Mr. O’Hara testified that “we paid the claim at what we felt was a fair and reasonable amount and it was cashed” (page 9 lines 19-20). When asked how UNITED determined the amount it paid, Mr. O’Hara testified “[b]asically after many years of doing this and facing that and paying it and — actually, the previous statutes where that was the law, where payment was made at the fee schedule. And then after the new statute and part of the statute’s there’s a provision that indicates that you could determine at various fee scheduled, et cetera, it could be reasonable that the company made a determination. And again, after looking at what the — what other health care providers paid, you know, et cetera, et cetera, that they felt that 200 percent of Medicare was more than fair and in many cases double and triple what many of these providers got paid by other, you know, providers and whatever. So it’s probably just one of those things. There’s no exact thing, but they just felt that was fair and reasonable. Q. So basically what you’re saying is double Medicare times 80 percent? A. Yeah.” (Page 10 lines 13 though page 11 line 5). Thus, UNITED simply applied 200 percent of Medicare Part B and reimbursed the services at that rate. UNITED’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 UNITED 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. However, UNITED is not permitted to invoke the payment limitations of 627.736(5)(a)2.f. without complying with the provisions of Kingsway. F.S. 627.736(5)(a)2.f. is a payment limitation.

This Court also rejects the affidavit testimony of UNITED’s expert, John “Jack” O’hara III. Mr. O’Hara’s opinions are not relevant to the issues being litigation in this case, his opinions are not consistent with his deposition testimony, and the basis for his opinions are without a foundation and cannot be authenticated. Furthermore, the basis for Mr. O’Hara’s opinion is limited to the Medicare Part B fee schedule which is not authorized due to UNITED’s selection of the “reasonableness” methodology rather than the “payment limitation” methodology.

CONCLUSION

Florida Statute 627.736(5)(a)2.f. established a minimum reimbursement schedule which insurance carriers were permitted to elect if they properly followed the mandates set forth by Kingsway. UNITED did not elect to follow 627.736(5)(a)2.f. and, as described herein, UNITED’s policy of insurance stated that it would pay “80% of all reasonable expenses incurred.” By electing to follow the provision of 627.736(5)(a)1., UNITED was required to pay 80 percent of all “reasonable charges” billed by its insured’s providers. Instead of engaging in this analysis and making that determination when the claim was processed, UNITED set its reimbursements according to the provisions of 627.736(5)(a)2.f. UNITED systematically reimbursed medical expenses at 200 percent of Medicare Part B and admits that it made no determination as to whether the charge billed was reasonable.

Under the provisions of 627.736(5)(a)1, the purported reasonableness of UNITED’s reimbursement is irrelevant. UNITED’s suggestion that it may avoid further liability because it paid a reasonable amount is inaccurate as a matter of law under 627.736(5)(a)1. The sole consideration under this section is whether OMI charges a reasonable amount. The evidence in this case reveals that OMI’s charges were reasonable and UNITED has proffered no evidence which disputes this fact. It is without dispute that UNITED did not make any determination that OMI’s charges were not reasonable before, during or after the claim was paid. This Court rejects UNITED’s proffer of evidence from John “Jack” O’Hara III as Mr. O’Hara’s opinions are inconsistent with his deposition testimony, they are not based on personal knowledge and the information cannot be authenticated and is therefore, inadmissible hearsay. Furthermore, Mr. O’Hara’s opinion is based on 200 percent of the Medicare Part B fee schedule which this Court finds insufficient to challenge the reasonableness of the Plaintiff’s charges.

The function of a summary judgment procedure is to determine if there is sufficient evidence to justify a trial upon the issues made by the pleadings, to expedite litigation, and to obviate expenses. Page v. Staley, 226 So.2d 129 (Fla. 4th DCA 1969). Where the material facts are not in dispute and the moving party is entitled to judgment as a matter of law, it is the Court’s duty to enter summary judgment. Castellano v. Raymor, 725 So.2d 1197 (Fla 2nd DCA 1999) [24 Fla. L. Weekly D161b]. Defendant’s mere assertion that the Plaintiff’s charges were unreasonable is insufficient to create a genuine issue of material fact. See Slachter v. Abundio Inv. Co., 566 So.2d 348 (Fla 3rd DCA 1990). A Defendant may not defeat a motion for summary judgment by raising purely paper issues where the pleadings and evidentiary matters before the trial court show that defenses are without substance in fact or law. Reflex, N.V. v. UMET Trust, 336 So.2d 473 (Fla 3rd DCA 1976).

This Court finds no genuine issues of material fact regarding whether the Plaintiff’s charge for CPT Code 72148 was reasonable in amount and that the amount charged was reasonable, usual and customary in the Broward County community.

Therefore it is,

ORDERED AND ADJUDGED that Plaintiff’s motion for summary judgment as to reasonable, related and necessary be and the same is hereby GRANTED and final judgment shall be entered in favor of the Plaintiff.

It is further,

ORDERED AND ADJUDGED that Defendant’s Motion for Summary Judgment be and the same is hereby DENIED.

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¹On January 4, 2012, Plaintiff served its Request for Admissions. Defendant failed to respond to Plaintiff’s admissions. On June 11, 2012 Plaintiff’s served its Notice of Intent to Rely Upon Defendant’s Imputed Admissions.

²Defendant’s motion for relief was filed 440 days after its answers were due pursuant to the Florida Rules of Civil Procedure rule 1.370.

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