21 Fla. L. Weekly Supp. 339a

Online Reference: FLWSUPP 2104SETAInsurance — Personal injury protection — Coverage — Medical expenses — Insurer that elected to reimburse medical provider pursuant to permissive statutory fee schedule erred in adjusting charges downward by applying coding policies and payment methodologies used on Medicare claims — No merit to argument that exhaustion of PIP benefits renders insured’s motion for summary judgment for balance of unpaid bills moot where insured seeks to recover 20% not paid by PIP benefits under Medpay coverage — Where insurer paid 80% of charges because it determined charges were reasonable, it cannot argue remaining 20% of charges is not reasonable — No merit to argument that fact that insurer did not pay 80% of full 200% of Medicare Part B fee schedule indicates that reasonableness of charges is at issue where reduction was not based on reasonableness of charges, but on insurer’s improper application of Medicare payment methodologies

MICHAEL SETARO, Plaintiff, vs. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant. County Court, 7th Judicial Circuit in and for Volusia County. Case No. 2011 33243 COCI. August 20, 2013. Dawn P. Fields, Judge. Counsel: Luis R. Gracia, Rue, Ziffra & Caldwell, Port Orange, for Plaintiff. James C. Rinaman, III, James C. Rinaman, III & Associates, P.A., Jacksonville, for Defendant. Gregory D. Snell, Snell Legal, Ormond Beach, for Orthopaedic Clinic of Daytona Beach (non-party).

ORDER GRANTING PLAINTIFF’S MOTION FOR FINAL SUMMARY JUDGMENT AND DENYING DEFENDANT’S MOTION FORPARTIAL SUMMARY JUDGMENT

THIS CAUSE IS BEFORE THE COURT ON Plaintiff’s Motion for Final Summary Judgment asserting that Defendant made payments for PIP benefits based upon improper payment methodology and upon Defendants Motion for Partial Summary Judgment, RE: Exhaustion of PIP Benefits, and the Court, having considered the Motion, the Memorandum’s filed in support of the Motions, depositions, affidavits and arguments of both Counsel, and being otherwise sufficiently advised in the premises, finds and Orders and follows:

FINDINGS OF FACT

On February 4, 2011, Michael Setaro, a State Farm insured, was involved in a motor vehicle accident with injuries. As a result of his injuries, Mr. Setaro underwent medical treatment under the care of Orthopaedic Clinic of Daytona Beach (hereafter “Orthopaedic Clinic”) from February 10, 2011 to March, 2, 2011. At all times material hereto, Mr. Setaro had an automobile insurance policy in full force and effect with State Farm Mutual Automobile Insurance Company (hereafter “State Farm”), which provided personal injury protection (PIP) benefits in the amount of $10,000.00 and medical payments (Med Pay) coverage in the amount of $5,000.00. Orthopaedic Clinic submitted charges to State Farm for the medical services rendered to Mr. Setaro, which included physical therapy provided under CPT code 97001, therapeutic procedures to improve range of motion under CPT code 97110, and therapeutic activities to improve functional performance under CPT code 97530. State Farm’s Explanations of Review confirm that the CPT codes used by Orthopaedic Clinic correctly correspond to the medical procedures it billed for.

Orthopaedic Clinic submitted to State Farm amounts based on 200% of the allowable amount under the participating physicians’ schedule of Medicare Part B pursuant to section 627.736(5)(a)(2)(f) of the Florida Statutes (2012). State Farm accepted the treatment rendered to the Plaintiff as medically necessary and related to his automobile accident, but did not fully reimburse Orthopaedic Clinic for the charges it submitted.

On July 5, 2011, Plaintiff’s PIP benefits became exhausted, but not his Med Pay coverage. The Court notes that all of the charges presented by Orthopaedic Clinic to State Farm were submitted while Mr. Setaro’s PIP coverage was available.

Plaintiff submitted a demand letter to State Farm requesting full reimbursement of his medical charges on behalf of Orthopaedic Clinic but State Farm stood by the payment made. As a result, Plaintiff filed the underlying lawsuit in this matter seeking to recover full payment of the medical bills incurred as a result of the treatment received at Orthopaedic Clinic.

As part of the discovery process during the litigation in this case, Plaintiff’s counsel took the deposition of State Farm’s representative, Mary Downes.¹ Asked to clarify the basis for State Farm’s reimbursement payments to Orthopaedic Clinic, which were identified on the carrier’s Explanations of Review under codes 305 and X3566, Ms. Downes stated that reason code 305 explained that the amount allowed for the procedure reviewed is based on 200 percent of the participating level Medicare Part B fee schedule for the region. Addressing reason code X3566, Ms. Downes explained that such refers to a reduction of 20 percent of the practice expense component for certain therapeutic services rendered in an office setting. Ms. Downes further stated that said explanation code is based on language used by the CMS (Centers for Medicare and Medicaid Services) as part of a Medicare claim.

PROCEDURAL POSTURE OF THE PARTIES

On July 16, 2012, Plaintiff filed a Motion for Final Summary Judgment arguing that State Farm incorrectly reduced reimbursement payments to Orthopaedic Clinic. Plaintiff filed State Farm’s own Explanations of Review as well as the deposition of its representative, Mary Downes, in support of their argument that there were no issues of material fact remaining to be decided in regards to this matter. According to Plaintiff, State Farm’s decision to pay charges the way it did violated Florida law.

As legal authority for his position, Plaintiff cited Nationwide Mutual Fire Ins. Co., et.al vs. AFO Imaging, Inc., 71 So.3d 134 (Fla. 2d DCA 2011) [36 Fla. L. Weekly D1463b], where the Second District Court of Appeal held that subsections 627.736(5)(a)(2)(f), (5)(a)(3) and (5)(a)(4) did not authorize PIP carriers to utilize any restrictions or limitations applicable to the Medicare program when determining the amounts due for MRI services provided in a non-emergency, non-hospital setting. Plaintiff further cited SOCC, P.L., D/B/A South Orange Wellness, Etc. vs. State Farm Mutual Automobile Insurance Co., 95 So. 3d 903 (Fla.5th DCA 2012) [37 Fla. L. Weekly D1663a]. In SOCC, the Fifth District Court of Appeals ruled that the fact that the Florida legislature only incorporated the participating physicians’ schedule of Medicare Part B in the statute and not any other part of the Medicare system, suggested that it intended only to incorporate the participating physicians’ fee schedule of Medicare in the Florida No-Fault statute and not the entire Medicare statute. In both cases the insurance carriers’ arguments were rejected and the Plaintiffs, which were assignees of individuals insured by the carriers, prevailed. Plaintiff argued that these cases were directly on point and, thus, he should prevail as a matter of law.

State Farm filed a Motion for Partial Summary Judgment on December 21, 2012, arguing that since Plaintiff’s PIP benefits were exhausted on July 5, 2011, State Farm satisfied its PIP contractual obligation to render $10,000.00 in PIP benefits and had no further obligation to pay additional benefits pursuant to the contract between it and the Plaintiff. Further, citing several cases, including Progressive American Insurance Company vs. Stand-Up MRI of Orlando a/a/o Eusebio Isaac, 990 So. 2d. 3 (Fla. 5th DCA 2008) [33 Fla. L. Weekly D1746a], State Farm argued that in the absence of a showing of bad faith, a PIP carrier is not liable for benefits once benefits have been exhausted. As no bad faith has been proven or even alleged in this case, it is State Farm’s position that any claims by the Plaintiff under the PIP portion of the policy are precluded as a matter of law and therefore, Plaintiff’s was moot.

A hearing on Plaintiff’s and Defendant’s Motions for Final and Partial Summary Judgment respectively was set for February 14, 2013. Counsels for Mr. Setaro, State Farm and Orthopaedic Clinic were present and made arguments supportive of their respective positions.

Defendant argued that Plaintiff’s Motion for Final Summary Judgment was moot since PIP benefits were exhausted and that since the only available benefits left for the Plaintiff were Med Pay benefits, the reasonableness of Orthopaedic Clinic’s charges was an issue of material fact for which more discoveries needed to take place. Citing the language of State Farm’s policy and, specifically, the portion relating to Med Pay coverage, Defendant’s counsel pointed out that the definition of reasonableness in the policy plainly states that State Farm may consider usual and customary charges and payments made and accepted by the provider as well as reimbursement levels in the community. These include federal and state fee schedules applicable to automobile and other insurance coverages and information relevant to the reasonableness of the reimbursement for the services, treatment or supply being charged. Therefore, Defendant’s counsel argued that it is State Farm’s right under the policy to continue to seek discovery related to the reasonableness of Orthopaedic Clinic’s charges in the form of reimbursement agreements, contracts or any other documentation that relates to the issue of the reimbursements and payments accepted by Orthopaedic Clinic from other insurance carriers.

Plaintiff argued that the fact that PIP benefits were exhausted did not preclude him from continuing to maintain his claim since Med Pay benefits were still available. Further, Plaintiff stated that the amount he is seeking State Farm to pay his provider is limited to the 20% not covered by the PIP portion of his policy but available under the Med Pay coverage. Plaintiff argued that since the Med Pay portion of the policy has to cover the 20% not included within the 80% paid by PIP benefits, it is the reasonableness of those original PIP charges what is relevant in this matter as Plaintiff is not seeking payments for any dates of serviceafter his PIP benefits became exhausted. As a result, his Motion for Final Summary Judgment is not moot.

Regarding the issue of the reasonableness of the charges, Plaintiff pointed out that since, according to State Farm’s own representative and Explanations of Review, State Farm chose to adjust the charges at issue based on the Medicare Part B fee schedule as provided by Florida Statute 627.736 (5) (a), such is undisputed evidence that State Farm determined that the Medicare Part B fee schedule represented the reasonable reimbursement rates to be applicable in this matter. Therefore, it is Plaintiff’s position that State Farm should be bound by its own decision to use the Medicare Part B fee schedule to pay the charges at issue in this case as the rates included within the schedule are reasonable. Thus, there is no need for further discovery.

The Court decided to take the matter under advisement and encouraged the parties to submit proposed Orders and additional memoranda in support of their respective positions.²

CONCLUSIONS OF LAW AND RULING

Summary Judgment is proper if there is no genuine issue of material fact and if the moving party is entitled to judgment as a matter of law. Volusia County vs. Aberdeen at Ormond Beach, 760 So. 2d 126 (Fla. 2000) [25 Fla. L. Weekly S390a]. After a thorough review and consideration of the evidence and arguments presented in this case, the Court finds that Plaintiff has met his burden of proof on Summary Judgment to demonstrate that the charges at issue in this matter were reasonable and related to necessary medical treatment provided to him as a result of his February 4, 2011, motor vehicle accident.

The evidence shows that State Farm decided to reimburse Orthopaedic Clinic using the Medicare Part B fee schedule as provided by Florida Statute 627.736 (5)(a). However, it chose to adjust the charges down as a result of using coding policies and payment methodologies used by the Centers for Medicare and Medicaid Services (CMS) to handle Medicare claims. As held by the Fifth District Court of Appeal in SOCC, P.L., D/B/A South Orange Wellness, Etc. vs. State Farm Mutual Automobile Insurance Co., 95 So. 3d 903 (Fla.5th DCA 2012) [37 Fla. L. Weekly D1663a], this was incorrect.

The Court finds the case of All Family Clinic of Daytona Beach, Inc. d/b/a/ Florida Medical Associates a/a/o Briana Newby vs. State Farm Mutual Automobile Insurance Company, 19 Fla. L. Weekly Supp. 127a (County Ct. 2011) to be similar to the case at bar as it pertains to this issue and to be supportive of Plaintiff’s position. In that case, State Farm adjusted down the provider’s charges using the Outpatient Prospective Payment System (OPPS), a payment schedule used by the CMS. After the Second District Court of Appeal issued its decision in the case of Nationwide Mutual Fire Ins. Co., et.al vs. AFO Imaging, Inc., 71 So.3d 134 (Fla. 2d DCA 2011) [36 Fla. L. Weekly D1463b], holding that PIP carriers cannot use any restrictions or limitations applicable to the Medicare program when determining the amounts due for MRI services provided in a non-emergency, non-hospital setting, State Farm nevertheless argued that it was entitled to determine whether the provider’s charges were reasonable. In rejecting State Farm’s argument, the Court stated as follows:

“It is undisputed that State Farm made a business decision to utilize the provisions of Fla. Stat. §627.736(5)(a)2.f. for all claims when determining what the reasonable reimbursement rate would be under its insurance policy. The Plaintiff did not force this choice. 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 Fla. Stat. §627.736(5)(a)2.f. and State Farm must pay the rates provided by the participating fee schedule of Medicare Part B. . .”

State Farm’s own representative and Explanations of Review demonstrate that it decided to adjust the charges based on the Medicare Part B fee schedule as provided by Florida Statute 627.736 (5)(a) because it determined that such schedule represented the reasonable reimbursement rates to be applicable in the case. Consequently, State Farm cannot attempt to dismiss its decision in favor of what it now considers to be a more favorable payment methodology for the purpose of obtaining a better financial outcome.

Based on the evidence discussed above, the Court agrees with Plaintiff that the fact that State Farm decided to use the Medicare Part B fee schedule provided in Florida Stature 627.736 (5) (a) to pay charges, just like Orthopaedic Clinic decided to use the schedule to submit the charges,³ is proof that the reasonableness of the charges has already been decided by the parties and no other determination regarding payment procedures or methodologies to determine reasonableness is required.

The Court rejects State Farm’s argument that exhaustion of PIP benefits in this case renders Plaintiff’s Motion for Final Summary Judgment moot and entitles it, under the Med Pay portion of the policy, to conduct further discovery from Orthopaedic Clinic in regards to the rates that it accepts from other insurance carriers in order to determine the reasonableness of the charges. Plaintiff has made it clear that what he is seeking to recover under his Med Pay coverage is the 20% not paid by his policy’s PIP benefits due to the 80% statutory restriction on the payment of PIP charges. He is not seeking payments for dates of service beyond the date when his PIP benefits became exhausted and, thus, is not making Med Pay the sole method of payment under the policy.

The Court takes notice that State Farm’s own policy contains the following language in its amendatory endorsement under the Med Pay portion:

“There is no coverage until the medical expense benefits of all no-fault coverage available from all sources has been exhausted. However, this does not apply to the 20% of expenses that are not paid under no-fault coverage because of the 80% limitation.”

The Court agrees with Plaintiff that, under the policy, Med Pay coverage will be triggered to cover the 20% that PIP benefits do not cover as a result of the 80% statutory limitation. The Court finds it obvious that the 20% the policy refers to is the unpaid 20% of the original charges submitted under the PIP portion of the policy but capped at 80%. As all of the charges at issue in this case were originally submitted under the PIP portion of the coverage, the Med Pay portion of the policy simply has to cover the 20% not included within the 80% paid by PIP benefits. Therefore, it is the reasonableness of those original PIP charges what is relevant in this matter. As a result, Plaintiff’s Motion for Final Summary Judgment, which, based on the complaint he filed seeks State Farm to correctly pay for all of his covered losses, and which necessarily include all loses that would be covered under the Med Pay portion of his policy, is not moot.

Further, the Court holds that since State Farm paid 80% of the charges using the Medicare Part B fee schedule contained in Florida’s PIP statute because it determined that such schedule represented the reasonable reimbursement rates applicable in the case, it cannot argue that the remaining 20% of the charges are not reasonable and, therefore, further discovery in regards to reasonableness has to take place. Such an inconsistent position is undermined by State Farm’s payment history in this case as well as the plain language of the policy under the section dealing with Med Pay coverage.

The Court also rejects State Farm’s argument made at the hearing that it actually did not pay 200% of the Medicare Part B fee schedule, making the reasonableness of the charges a disputed issue of material fact. As already pointed out, the reason why State Farm failed to pay the charges at the full 200% of the Medicare Part B fee schedule was because it incorrectly applied payment methodologies used by the CMS. Accordingly, the Court finds that Plaintiff has met his burden of proving that there are no genuine issues of material fact and that he is entitled to judgment as a matter of law.

WHEREFORE, Plaintiff’s Motion for Final Summary Judgment is hereby GRANTED. Defendant’s Motion for Partial Summary Judgment is DENIED. The Court holds that Plaintiff is entitled to Final Judgment in the amount of $142.64, plus prejudgment interest in the amount of $32.89 for a total Final Judgment in the amount of $175.53 against State Farm Mutual Insurance Automobile Company for which let execution issue.

This Court reserves jurisdiction for an award of attorney’s fees and costs incurred by Plaintiff.

__________________

¹The deposition of Mary Downes was filed for review in connection to his Motion for Final Summary Judgment.

²Counsels for Plaintiff and Orthopaedic Clinic of Daytona Beach submitted memorandums on February 27 and February 28, 2013, respectively.

³Plaintiff filed the sworn affidavits of Michelle Clough, which supervises the billing at Orthopaedic Clinic, and Dr. Brian Hatten. The affidavits state that the bills submitted by Orthopaedic Clinic to State Farm were reasonable and based on 200% of the allowable amount of the participating physicians’ schedule of Medicare Part B.

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