21 Fla. L. Weekly Supp. 182a
Online Reference: FLWSUPP 2102GHERInsurance — Personal injury protection — Coverage — Medical expenses — Motion for summary judgment and judicial determination that insurer is obligated to pay 80% of entire medical bill because insurer is barred by stipulation from contesting reasonableness of charges, insurer did not expressly elect permissive statutory fee schedule as reimbursement method in policy, and policy is ambiguous as to whether insurer will pay unreasonable charges is denied — Insurer did not stipulate that it would not challenge reasonableness of charges, and reasonableness was always at issue — Insurer is not required to expressly elect permissive fee schedule as its reimbursement method in policy in order to dispute reasonableness of expenses in excess of that fee schedule — PIP policy is not ambiguous as to insurer’s duty to pay only reasonable charges where one part of policy states that insurer will pay 80% of all medically necessary expenses without mentioning a reasonableness requirement, but another part of policy unambiguously permits insurer to reduce or reject unreasonable charges — Even if policy were ambiguous, PIP statute allows medical providers to recover only reasonable charges
NEW MEDICAL GROUP, INC, a/a/o GLEDYS HERRERA, Plaintiff, vs. UNITED AUTOMOBILE INSURANCE COMPANY, a Florida corporation, Defendant. County Court, 11th Judicial Circuit in and for Miami-Dade County, Civil Division. Case No. 11-01870 SP 26 (04). October 8, 2013. Honorable Lawrence D. King, Judge. Counsel: Stuart Koenigsberg and Marlene Reiss, for Plaintiff. Thomas Scott, Norma Kassner, Jon Sorensen, and Thomas Hunker, Office of the General Counsel, United Automobile Insurance Co., Miami Gardens, for Defendant.
ORDER DENYING PLAINTIFF’S MOTION FORSUMMARY JUDGMENT AND JUDICIALDETERMINATION OF DEFENDANT’SPAYMENT OBLIGATIONS PURSUANTTO ITS INSURANCE CONTRACT
On October 3, 2013, this Court heard argument on Plaintiff’s Motion for Summary Judgment and Judicial Determination of Defendant’s Payment Obligations Pursuant to its Insurance Contract. In its motion, Plaintiff, New Medical Group, argues that Defendant, United Automobile Insurance Company (UAIC) cannot contest the reasonableness of Plaintiff’s charges because: (1) UAIC stipulated that the only issue in this case was whether UAIC was entitled to apply the Medicare Part B fee schedule; (2) UAIC’s policy does not expressly elect a particular payment methodology; and (3) UAIC’s policy contains an ambiguity regarding whether UAIC will pay unreasonable charges which should be resolved by requiring UAIC to pay 80% of Plaintiff’s entire bill regardless of whether its charges arc unreasonable. For the reasons stated herein, this Court denies Plaintiff’s motion.
I. UAIC did not Stipulate that it would not Challenge the Reasonableness of Plaintiff’s Charges
The record clearly shows that reasonableness is and always was at issue. This is clear from the September 12, 2011, Agreed Order Granting in Part Defendant’s Motion for Protective Order wherein both parties expressly agreed that the reasonableness of the charges is at issue. Further, in its March 15, 2013 order denying Plaintiff’s Motion for Summary Judgment on Count I of its Complaint, this Court specifically determined that UAIC disputes the reasonableness of the amount billed and the issue must be left to a fact-finder’s determination. In addition, the deposition of UAIC’s adjuster, Lizbeth Velazquez, reveals that she was questioned extensively on the reasonableness issue by both sides and gave an expert opinion concluding that Plaintiff’s charges were unreasonable and that 200% of Medicare was the reasonable amount.
II. UAIC was not Required to Expressly Elect a Particular Payment Methodology When Disputing Reasonableness
In Geico Gen. Ins. Co. v. Virtual Imaging Servs., Inc., 2013 WL 3332385 (Fla. 2013) [38 Fla. L. Weekly S517a], the Supreme Court explained that section 627.736(1)(a) provides a “coverage mandate” requiring coverage for “reasonable” expenses for necessary medical services. Id. at *5-6. In order to determine whether the medical provider’s charges are within the coverage mandate, the statute provides two alternative methodologies. The first methodology is found in section 627.736(5)(a)(1) of the 2008 statute and was already a part of the statute prior to the fee schedule amendment. That provision states:
. . . 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.
627.736(5)(a)(1), Fla. Stat. (2008) (emphasis added). “[P]ursuant to subsection (5)(a)1. of the PIP statute, reasonableness is a fact-dependent inquiry determined by consideration of various factors,” including state and federal fee schedules. Virtual, 2013 WL 3332385 at *7. Therefore, pursuant to statute, PIP insurers may rely on “federal and state medical fee schedules applicable to automobile and other insurance coverages.”
“Subsection (5)(a)2. of the statute, however, provides an alternative mechanism for determining reasonableness.” Id. This methodology allows the insurer to shield itself from costly litigation over the reasonableness of the charges by simply “limit[ing] reimbursement” to the provided fee schedules. In case of a dispute, the insurer would be entitled to judgment as a matter of law by demonstrating that the reimbursement was consistent with the statutory fee schedules. Unlike the (5)(a)(1) method, subsection (5)(a)(2) avoids submission of the reasonableness issue to the trier of fact. However, in Virtual, the Supreme Court determined that, unlike (5)(a)(1), the fee schedule provision of (5)(a)(2) is “permissive” rather than mandatory. Virtual, 2013 WL 3332385 at *7. Therefore, according to the Supreme Court, the insurer cannot “limit reimbursement” to the permissive statutory fee schedules of (5)(a)(2) unless it makes an express election in its policy to do so. Id.
The Court went on to explain that if the insurer does not utilize the (5)(a)(2) fee schedules, the insurer must have “recourse to some alternative means for determining a reimbursement amount.” Id. In fact, the Supreme Court concluded that “we do not conclude that payment under section 627.736(5)(a)2. could never satisfy the PIP statute’s basic ‘reasonable expenses’ coverage mandate, set forth in section 627.736(1)”. Virtual, 2013 WL 3332385 at *8. Thus, the Virtual opinion did not alter existing precedent which holds that it is the plaintiff’s burden to prove the reasonableness of its charges on a case-by-case basis and courts may not declare across the board that an insurer’s method of reimbursement is unreasonable. See Derius v. Allstate Indemnity Co., 723 So. 2d 271, 272 (Fla. 4th DCA 1998) [23 Fla. L. Weekly D1383a] (“In a lawsuit seeking benefits under the statute, both reasonableness and necessity arc essential elements of a plaintiff’s case. There is nothing in the PIP statute suggesting a legislative intent to alter the normal dynamics of a lawsuit by placing the burden on the defendant in a PIP case to prove that a proposed charge was unreasonable or that a given service was not necessary.”); State Farm Mutual Automobile Insurance Co. v. Sestile, 821 So. 2d 1244 (Fla. 2d DCA 2002) [27 Fla. L. Weekly D1757a] (holding that the “reasonableness” of a PIP provider’s bill must be determined on a case-by-case basis and a court may not determine across the board that an insurer’s particular method of reimbursement is “unreasonable”); accord All Family Clinic of Daytona Beach, Inc. v. State Farm Mut. Auto. Ins. Co., 280 F.R.D. 688 (S.D. Fla. 2012) (holding that although insurer was not permitted to apply OPPS fee schedule as a matter of law, it could nevertheless present evidence on a case-by-case basis to demonstrate that the OPPS rate was the reasonable rate); MRI Associates of St. Pete, Inc. v. State Farm Mutual Auto. Ins. Co., 755 F. Supp. 2d 1205 (M.D. Fla. 2010); Shenandoah Chiropractic, PA v. National Specialty Ins. Co., 526 F. Supp. 2d 1283 (S.D. Fla. 2007).
In sum, contrary to Plaintiff’s argument, Florida law does not require PIP insurers to designate a particular payment methodology under § 627.736(5)(a)(1), which is mandatory and not permissive. Pursuant to Virtual, such an election is only required for an insurer to “limit reimbursement” as a matter of law to the fee schedule provision of section 627.736(5)(a)(2), Fla. Stat. (2008). In the absence of such an election, the issue of reasonableness is a fact question for the jury under the factored methodology described in section 627.736(5)(a)(1), Fla. Stat. (2008). Neither Virtual nor any other statement of Florida law requires a PIP insurer to expressly elect the default methodology of (5)(a)(1).
III. UAIC’s Policy Authorizes it to Refuse to Pay Unreasonable Charges
Lastly, Plaintiff argues that UAIC’s policy contains an ambiguity regarding whether UAIC will pay unreasonable charges which should be resolved by forcing UAIC to pay 80% of Plaintiff’s entire bill regardless of whether its charges are unreasonable. However, as stated previously, section 627.736(5)(a)(1) expressly prohibits medical providers from submitting unreasonable charges. Further, in Virtual, the Supreme Court explained that section 627.736(1)(a), Florida Statutes, mandates that the insurer provide coverage for “reasonable” expenses. “[W]here a contract of insurance is entered into on a matter surrounded by statutory limitations and requirements, the parties are presumed to have entered into such agreement with reference to the statute, and the statutory provisions become a part of the contract.” Standard Acc. Ins. Co. v. Gavin, 184 So. 2d 229, 232 (Fla. 1st DCA 1966). Pursuant to Gavin, these provisions are considered part of UAIC’s policy and require UAIC to make adjustments to eliminate unreasonable charges. Indeed, it is UAIC’s prerogative to reduce unreasonable charges in the course of fulfilling its duly to attempt to settle as many claims as possible within policy limits. See Progressive American Ins. Co. v. Stand-Up MRI of Orlando , 990 So. 2d 3, 6 (Fla. 5th DCA 2008) [33 Fla. L. Weekly D1746a]; Simon v. Progressive Express Ins. Co., 904 So. 2d 449, 450 (Fla. 4th DCA 2005) [30 Fla. L. Weekly D1156b]; Farinas v. Florida Farm Bureau Gen. Ins. Co., 850 So. 2d 555, 560 (Fla. 4th DCA 2003) [28 Fla. L. Weekly D1023b]. Therefore, regardless of UAIC’s policy language, the statute permits Plaintiff to recover only reasonable charges.
Plaintiff argues that Part E Section, Section I of UAIC’s policy conflicts with Part E, Section IV of the policy and creates an ambiguity regarding whether UAIC would pay for unreasonable charges. Therefore, Plaintiff asserts that UAIC should be required to pay 80% of its charges regardless of whether they are reasonable.
“[I]n construing insurance policies, courts should read each policy as a whole, endeavoring to give every provision its full meaning and operative effect.” Auto-Owners Ins. Co. v. Anderson, 756 So. 2d 29, 34 (Fla. 2000) [25 Fla. L. Weekly S211a]. “A single policy provision should not be considered in isolation, but rather, the ‘contract shall be construed according to the entirety of its terms . . as set forth in the policy and as amplified’ by the policy application, endorsements, or riders.” The Doctors Co. v. Health Management Associates, Inc., 943 So. 2d 807, 810 (Fla. 2d DCA 2006) [31 Fla. L. Weekly D2350a]; Swire Pac. Holdings, Inc., v. Zurich Ins. Co., 845 So. 2d 161, 166 (Fla. 2003) [28 Fla. L. Weekly S307d] (quoting § 627.419(1), Fla. Stat. (2002)). “Ambiguity does not exist merely because an insurance contract is complex and requires analysis to interpret it.” The Doctors Co., 943 So. 2d at 810; Swire, 845 So. 2d at 165. “Where no ambiguity exists, the policy shall be construed according to the plain language of the policy as bargained for by the parties.” The Doctors Co., 943 So. 2d at 810; Anderson, 756 So. 2d at 34. “Finally, absent ambiguity, waiver, estoppel or contradiction of public policy, courts are not authorized to extend coverage beyond the plain language of the policy.” The Doctors Co., 943 So. 2d at 810; Velasquez v. Am. Mfrs. Mut. Ins. Co., 387 So. 2d 427, 428 (Fla. 3d DCA. 1980).
With these principles in mind, Part E, Section I of UAIC’s policy states:
The Company will pay, in accordance with the Florida Motor Vehicle No-Fault Law, to or for the benefit of the injured person:
(a) medical benefits — eighty percent of all medically necessary expenses defined as a medical service or supply that a prudent physician would provide for the purpose of preventing, diagnosing, or treating an illness, injury, disease, or symptom that is:
(a) In accordance with generally accepted standards of medical practice;
(b) Clinically appropriate in terms of type, frequency, extent, site and duration; and
(c) not primarily for the convenience of the patient, physician or health care provider.
(UAIC policy at p.13).
Further, Part E, Section IV of UAIC’ s policy states:
UNREASONABLE AND UNNECESSARYMEDICAL EXPENSES
If an insured person incurs medical expenses which “we” deem to be unreasonable or unnecessary, we may refuse to pay for those medical expenses and contest them.
“We” may reduce any payment to a medical provider under this Part by any amounts “we” deem to be unreasonable or unnecessary medical expenses. Any reductions taken will not affect the rights of an insured person for coverage under this Part. Whenever a medical provider agrees to a reduction of medical expenses charged, any co-payment owed by an insured person will be reduced.
The insured person shall not be responsible for payment of any reductions applied by “us”. If a lawsuit is initiated against an insured person as a result of the reduction of a medical bill by “us”, “we” will provide the insured person with a legal defense by counsel of “our” choice, and pay any resulting judgment. The insured person must cooperate with “us” in the defense of any claim or lawsuit. If “we” ask an insured person to attend hearings or trials, we will pay up to $50.00 per day for loss of wages and salary. “We” will also pay other reasonable expenses incurred at “our” cost.
(UAIC policy at p.17),
This Court concludes that Plaintiff is attempting to create an ambiguity where none exists. Pursuant to the foregoing policy interpretation principles, the court must read both provisions together. Anderson, 756 So. 2d at 34; The Doctors Co., 943 So. 2d at 810; Swire Pac. Holdings, Inc., 845 So. 2d at 166. Nothing in Part E, Section I of the policy states that UAIC will pay for unreasonable charges. The provision is silent on the issue of reasonableness. However, reasonableness is addressed in Part E, Section IV which unambiguously permits UAIC to reduce or reject unreasonable charges. It also provides a benefit to the insured in the form of a legal defense to any attempt by the medical provider to recover the unreasonable portion of its bill from the insured.CONCLUSION
Accordingly, it is hereby ORDERED AND ADJUDGED that Plaintiff’s Motion for Judicial Determination of Defendant’s Payment Obligations Pursuant to the Language of its Insurance Contract is hereby DENIED.
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