21 Fla. L. Weekly Supp. 800a

Online Reference: FLWSUPP 2108EUMInsurance — Personal injury protection — Coverage — Medical expenses — Reasonableness of charge — Permissive fee schedules — Policy language stating that amounts payable shall be subject to any and all limitations authorized by section 627.736 or any other provision of No-Fault Law, including, but not limited to, all fee schedules, did not constitute a clear and unambiguous election to limit reimbursement to 200% of Medicare Fee Schedule — Insurer required to reimburse provider at contracted rate of 80% of reasonable charges for medical services provided

FLORIDA HOSPITAL MEDICAL CENTER, as assignee of Esther Eum, Plaintiff, v. ALLSTATE PROPERTY AND CASUALTY INSURANCE COMPANY, Defendant. County Court, 9th Judicial Circuit in and for Orange County. Case No. 2012-SC-12166-O. March 14, 2014. Faye L. Allen, Judge. Counsel: Rutledge M. Bradford, Bradford Cederberg, P.A., Orlando, for Plaintiff. Anthony Parrino, St. Petersburg, for Defendant.

ORDER AND FINAL SUMMARYJUDGMENT ON CROSS MOTIONS

This case came before the court on February 20, 2014, after due notice to the parties, on the cross motions for summary judgment of Florida Hospital and Allstate. The only issue in dispute is the reasonableness of the charge in this action for personal injury protection benefits brought pursuant to the Florida No Fault Law, Section 627.736, Florida Statutes (2008). Medical necessity and relatedness having been admitted. At issue is the sufficiency of Allstate’s policy language. The coverage section of the policy promises Allstate will pay eighty percent of reasonable charges. Instead of paying at eighty percent, Allstate limited reimbursement to 200% of the Medicare Fee Schedule, contending it could do so pursuant to a limitation of liability clause of the policy.

The Court has received memoranda from both parties and has held a hearing on the issue of law raised by the competing motions. Both sides have also furnished the Court with copies of decisions by other County and Circuit courts involving this issue.

The coverage clause for PIP medical benefits states that Allstate “will pay . . . eighty percent of reasonable expenses for medically necessary” specified services. The policy further states:

“Any amounts payable under this coverage shall be subject to any and all limitations authorized by section 627.736 or any other provisions of the Florida Motor Vehicle No-Fault Law, as enacted, amended or otherwise continued in the law, including, but not limited to, all fee schedules.”

Allstate contends that this latter provision is a clear and unambiguous election rejecting reimbursement of 80% of reasonable charges for medically necessary services and, instead, to reimburse PIP medical benefits only as allowed under the Medicare fee schedules. FLORIDA HOSPITAL MEDICAL CENTER contends that it is ambiguous.

In Geico General Insurance Company v. Virtual Imaging Services Inc., __ So.3d __, 2013 WL 3332385, 38 Fla. L. Weekly S517a (Fla. Jul. 3, 2013) — referred to as Virtual Imaging — the Court held that a PIP Insurer’s election adopting the Medicare fee schedules must be clear and unambiguous. Virtual Imaging applies to cases involving policies effective during January 1, 2008 through June 30, 2012. Id. (“our holding applies only to policies that were in effect from the effective date of the 2008 amendments to the PIP statute that first provided for the Medicare fee schedule methodology, which was January 1, 2008, through the effective date of the 2012 amendment, which was July 1, 2012”). Allstate’s policy became effective on June 3, 2011.

As the Supreme Court explained in U.S. Fire Insurance Company v. J.S.U.B. Inc., 979 So.2d 871, 877 (Fla. 2007) [32 Fla. L. Weekly S811a]:

“Insurance contracts are construed according to their plain meaning, with any ambiguities construed against the insurer and in favor of coverage. Further, ‘in construing insurance policies, courts should read each policy as a whole, endeavoring to give every provision its full meaning and operative effect.”’ [citations omitted]

And in Travelers Indemnity Co. v. PCR Inc., 889 So.2d 779 (Fla. 2004) [29 Fla. L. Weekly S774a], the Court explained:

“Policy language is considered to be ambiguous . . . if the language ‘is susceptible to more than one reasonable interpretation, one providing coverage and the other limiting coverage.’ When language in an insurance policy is ambiguous, a court will resolve the ambiguity in favor of the insured by adopting the reasonable interpretation of the policy’s language that provides coverage, as opposed to the reasonable interpretation that would limit coverage.” [citations omitted]

889 So.2d at 786.

A statute mandates that PIP medical benefits cover at least 80% of the reasonable costs for such services. § 627.736(1)(a), Fla. Stat. (2011) (“An insurance policy complying with the security requirements of s. 627.733 must provide personal injury protection [for] eighty percent of all reasonable expenses for medically necessary” services). But subsections (5)(a)2-5 of the statute also allow — i.e., do not mandate — the Insurer to elect to limit medical benefits as provided in the Medicare fee schedules.

When Allstate drafted this policy, section 627.736(5)(a) provided that:

(5)(a)2. The insurer may limit reimbursement to 80 percent of the following schedule of maximum charges:

a. For emergency transport and treatment by providers licensed under chapter 401, 200 percent of Medicare.

b. For emergency services and care provided by a hospital licensed under chapter 395, 75 percent of the hospital’s usual and customary charges.

c. For emergency services and care as defined by s. 395.029(9) provided in a facility licensed under chapter 395 rendered by a physician or dentist, and related hospital inpatient services rendered by a physician or dentist, the usual and customary charges in the community.

d. For hospital inpatient services, other than emergency services and care, 200 percent of the Medicare Part A prospective payment applicable to the specific hospital providing the inpatient services.

e. For hospital outpatient services, other than emergency services and care, 200 percent of the Medicare Part A Ambulatory Payment Classification for the specific hospital providing the outpatient services.

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.

§ 627.736(5)(a)2a-f, Fla. Stat. (2011).¹

Unlike the mandatory medical benefits coverage, these limitations may be ignored by the Insurer. As Justice Pariente explained in Virtual Imaging:

“we conclude that the 2008 amendments were clearly permissive and offered insurers a choice in dealing with their insureds as to whether to limit reimbursements based on the Medicare fee schedules or whether to continue to determine the reasonableness of provider charges for necessary medical services rendered to a PIP insured based on the factors enumerated in section 627.736(5)(a) 1.”

2013 WL 3332385 at *8.

Applying the Supreme Court’s principles of construction, this Court concludes that Allstate’s text is ambiguous in attempting to limit reimbursement to the Medicare fee schedules. Giving due recognizance to all the words in the policy bearing on the issue, the Allstate policy fails to positively state anywhere that reimbursements are actually being limited — just that they are “subject to” being limited by specified provisions. And the limitations to which the policy is subject include: “any and all limitations authorized by” the statutes. [emphasis added]

The policy’s term subject to has several possible meanings. See Affinity Internet Inc. v. Consolidated Credit Counseling Serv. Inc., 920 So.2d 1286, 1289 (Fla. 4th DCA 2006) [31 Fla. L. Weekly D662a] (subject to means “liable, subordinate, subservient, inferior, obedient to; governed or affected by; provided that; provided; answerable” (citing BLACK’S LAW DICTIONARY 1425 (6th ed. 1990)). In fact the customary use is to “indicate a condition to one party’s duty of performance and not a promise by the other.” BGT Group Inc. v. Tradewinds Eng. Serv. LLC, 62 So.3d 1192 (Fla. 4th DCA 2011) [36 Fla. L. Weekly D1207a] (because of lack of detailed description of terms in document referred to as subject to, terms could not be deemed binding on party).

As BLACK’s illustrations show, subject to creates uncertainty about the intended meaning. In context, one meaning fairly implied is that all the various limitations allowed by the statute are “affected,” in the sense that the limitations are being incorporated into the policy for possible application to any specific claim for medical benefits.

Indeed, the election us does little more than repeat a statutory truism: all PIP policies are subject to the PIP statute. While there is nothing distinctly wrong in repeating statutory truisms in a contract, the Insurer’s duty of clarity and its burden to eliminate ambiguity in drafting policy limitations and conditions, compel the PIP Insurer to state something quite different if it wants to make a clear and unambiguous election confining coverage to the Medicare fee schedules.

The Allstate provision plainly incorporates, not just the Medicare fee schedules, but every possible limitation found in section 627.736 as well. In fact, the very first limitation in the statute is actually its mandatory coverage provision, which itself obviously limits reimbursement to just “eighty percent” of the reasonable charge billed, instead of the entire reasonable amount charged. To be sure, a central purpose of PIP medical services benefits was to provide security for payment at a discounted rate. But if that mandatory limitation has not been expressly rejected within, the policy would functionally prohibit simultaneous application of any other limitation yielding a lesser sum,² such as the Medicare fee schedules.

The formulation of text generated by the PIP statute’s unique mandatory coverage with permissible limitations creates a dilemma. Altogether as phrased, section 627.736 appears to tell the Insurer: “you absolutely must pay the higher rate, except if you decide to pay the lower one.” At the same time, however, section 627.412, Florida Statutes (2011), tells Insurers that all PIP insurance contracts“shall [e.s.]contain such standard or uniform provisions as are required by” section 627.736(1)(a); and since 2008 the PIP statute also explicitly incorporates the mandatory provision in section 627.736(1)(a) into every policy whether the Insurer has included it or not. See § 627.7407(2), Fla. Stat. (2012) (“Any personal injury protection policy in effect on or after January 1, 2008, shall be deemed to incorporate the provisions of the Florida Motor Vehicle No-Fault Law, as revived and amended by this act.”). So even if Allstate had deliberately omitted including that mandatory text within the policy, the statute unavoidably reads it into the policy anyway. The mandatory coverage is always present to confound the subject to method of incorporating the Medicare fee schedules and other limitations.

Because of this odd statutory formulation in section 627.736, a clear and unambiguous election of the permissive Medicare fee schedules to replace the mandatory coverage requires that a PIP Insurer’s policy state clearly and unambiguously that the policy rejects paying the mandatory coverage. Correspondingly, it must state in equally plain terms that the only amounts the Insurer will reimburse for medical services shall not exceed the amounts allowed by the Medicare fee schedules. Without a clear rejection of the mandatory rate, combined with an express declaration of the maximum amounts covered, the election to limit coverage to the Medicare fee schedules is fundamentally ambiguous.

Allstate’s policy thus fails to satisfy the Virtual Imaging requirements for a clear and unambiguous election of the Medicare fee schedules and related limitations. The cases require that the policy be construed against Allstate and in favor of the insured/provider.

This Court holds that the ambiguity in attempting to elect the Medicare statutory fee schedules means that Allstate must reimburse FLORIDA HOSPITAL MEDICAL CENTER at the contracted rate of eighty percent of the reasonable charges for the medical services provided. Florida Hospital’s motion for final summary judgment is granted; Allstate’s motion is denied; judgment should be entered accordingly.Final Judgment

It is, therefore, Adjudged that plaintiff FLORIDA HOSPITAL MEDICAL CENTER MEDICAL Center shall have and recover from:

Defendant Allstate Property and Casualty Insurance Company as assignee of Esther Eum the sum of $358.00 and interest thereon at the judgment rate from the signing of this Final Judgment, together with the costs of this action and reasonable attorneys fees under section 627.428, Florida Statutes, for all of which sums let execution issue;Retention of Jurisdiction

This Court retains jurisdiction to determine the amounts of costs and attorneys fees and to enter separate judgment accordingly. Any motion to tax costs and attorneys fees shall be filed within 30 days of this Judgment.

__________________

¹If the insurance company elects to rely on the permissive limitations of subsection (5)(a)2, there are a number of corresponding terms and conditions in subsections (5)(a)3-5 of the PIP statute which also apply in calculating the amount of PIP benefits due. See § 627.736(5)(a)3-5, Fla. Stat. (2011). For example, subsection (5)(a)3 explains that the fee schedule amount relied upon by the insurance company can never be less than the applicable 2007 Medicare fee schedule for medical services, supplies, and care subject to Medicare Part B. Subsection (5)(a)4 states that the insurance company is not allowed to rely on other Medicare or workers’ compensation limitations or utilization limits. Subsection (5)(a)5 states that if an insurance company limits payment under subsection (5)(a)2, the health care provider may not bill or attempt to collect the balance from the insured, except for amounts not covered by PIP due to coinsurance or maximum policy limits.

²Giving the permissive limitations their intended effect, the statute must now be understood as impliedly permitting the Insurer to expressly reject the mandatory coverage.

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