22 Fla. L. Weekly Supp. 934a

Online Reference: FLWSUPP 2208BAYFInsurance — Personal injury protection — Coverage — Medical expenses — Deductible — No merit to argument that insurer was required to apply deductible to 100% of medical provider’s billed expenses — Deductible is required to be applied to 100% of provider’s reasonable expenses — Insurer that did not unambiguously elect permissive statutory fee schedule in PIP policy is not entitled to limit reimbursement to fee schedule — Insurer is nonetheless entitled to prove that it paid only reasonable, necessary and related expenses

BAYFRONT HEALTH EDUCATION AND RESEARCH ORGANIZATION INC., Plaintiff, v. PROGRESSIVE AMERICAN INSURANCE COMPANY, Defendant. County Court, 6th Judicial Circuit in and for Pinellas County. Case No. 12-5556-SC. February 20, 2015. Kathleen T. Hessinger, Judge. Counsel: James Douglas Underwood, Law Office of Russel Lazega, P.A., Dania Beach, for Plaintiff. Brian M. Giddings, Adams & Diaco, P.A., Tampa, for Defendant.

ORDER DENYING PLAINTIFF’S MOTION FOR SUMMARYJUDGMENT, IN PART, AND GRANTING, IN PART

This Cause came to be heard before this Court on Plaintiff’s Motion for Summary Judgment with the Parties present, through counsel, and this Court having heard argument and reviewed the motion, the pleadings, and the law and being otherwise advised of the premises, it is hereby Ordered and Adjudged as follows,

1. Plaintiff sued Defendant for breach of contract for failing to pay the full amount billed for services, to the insured/assignor, on August 25, 2009 as a result of a motor vehicle accident occurring on August 24, 2009. As an affirmative defense, Defendant alleged that pursuant to §627.736, Fla. Stat. (2008), only reasonable, necessary and related medical expenses are reimbursable and likewise applicable to any deductible.

2. Plaintiff filed a Motion for Summary Judgment claiming that Defendant misapplied the deductible and that Defendant improperly reduced payment, pursuant to §627.736(5), Fla. Stat., as its policy of insurance did not address the new statutory change.

3. As to the deductible, Plaintiff claims that it should be applied before any reduction in the amount of the medical bills. Plaintiff relies on the policy of insurance and §627.739(2), Fla. Stat. to support its claim.

4. In the present case, Plaintiff billed Defendant $3,683.90 for services, and Defendant reduced the bills to $2,762.96, applied the insured’s $1,000.00 deductible and paid 80% of $1,762.96 for P.I.P benefits.

5. Section 627.739(2), Fla. Stat. states “. . .The deductible amount must be applied to 100 percent of the expenses and losses described in §627.736.” As §627.739(2), Fla. Stat. refers to the “expenses and losses described in §627.736,” this Court must look to §627.736 to determine the expenses and losses described. Section 627.736 describes the payable expenses as “reasonable expenses for medically necessary medical, surgical, X-ray, dental and rehabilitative services. . .” and payable losses as “any loss of gross income and loss of earning capacity per individual from inability to work. . .” As such, the statute requires the deductible be applied to 100 percent of the reasonable expenses for medically necessary medical, surgical, etc. services and loss of gross income and loss of earning capacity related to the accident. If the insurer, Defendant, reduced the medical expenses to a “reasonable” amount, then the deductible should be applied to 100% of the reasonable amounts, not necessarily the amount billed by the medical provider.

6. Plaintiff argues that §627.739(2), Fla. Stat. requires that the deductible be applied to “100% of all expenses and losses,” but it fails to reference the remaining part of the statute that states “described in §627.736.” Plaintiff argues the deductible should be applied to 100% of all expenses billed by the medical provider. (emphasis added) Plaintiff suggests that the Legislature’s amendment to §627.739, in 2003, supports this argument. However, Plaintiff is incorrect; prior to 2003, the deductible was being applied after the reasonable expenses were reduced by the 80% P.I.P. coverage. See Bankers Ins. Co. v. Arnone, 552 So. 2d 908 (Fla. 1989). Now, the insurer is required to apply the deductible to 100% of the reasonable expenses (not necessarily the billed expenses), before the expenses are reduced for the 80% P.I.P coverage. As such, Plaintiff’s argument fails as it relates to §627.739(2), Fla. Stat.

7. Plaintiff further argues that Defendant incorrectly applied the deductible, pursuant to the policy of insurance. The policy of insurance applicable to this matter states as follows:

PART II(A) — PERSONAL INJURYPROTECTION COVERAGE

INSURING AGREEMENT

. . .

Personal Injury Protection Coverage benefits consist of:

1. medical benefits;

2. disability benefits; and

3. death benefits.

ADDITIONAL DEFINITIONS

. . .

4. “Medical benefits” means 80% of all reasonable expenses incurred for medically necessary medical, surgical, . . . and medically necessary ambulance, hospital, and nursing services. . .

LIMIT OF LIABILITY

. . . When a deductible applies, the deductible will be applied to 100% of the expenses and losses covered under Personal Injury Protection Coverage.

8. The deductible is applied the same way under the policy of insurance as under §627.739(2), Fla. Stat. Pursuant to the policy of insurance, the deductible is applied to 100% of the expenses covered under the Personal Injury Protection Coverage. Medical benefits are part of the Personal Injury Protection Coverage and defined as 80% of all reasonable expenses for medically necessary services, including hospital services. As such, the deductible is applied to 100% of all reasonable expenses, before the 80% payable benefits. (emphasis added)

9. Plaintiff’s argument, to this Court, is that Defendant was first required to apply the deductible to 100% of the provider’s billed expenses based on the language of §627.739(2), Fla. Stat. and the policy of insurance. Based on this argument, the motion is DENIED as a matter of law as the deductible is applied to 100% of the provider’s reasonable expenses. (emphasis added)

10. Plaintiff’s second claim for summary judgment addresses Defendant’s reduction of medical expenses based on the fee schedule methodology of §627.736(5), Fla. Stat. (2008). Defendant paid Plaintiff’s bill for emergency services, pursuant to §627.736(5), Fla. Stat., by limiting reimbursement to 80% of 75% of Defendant’s usual and customary charges.

11. However, after making the reductions pursuant to §627.736(5), Fla. Stat., the Florida Supreme Court ruled, in Geico Ins. Co. v. Virtual Imaging Serv., Inc., 141 So.3d 147 (Fla. 2013) [38 Fla. L. Weekly S517a], that the insurance companies could not reduce bills pursuant to §627.736(5), Fla. Stat., unless their policies of insurance also stated that the medical providers’ bills may be reduced pursuant to this statute. In 2009, although the Legislature changed the statute to create a more precise payment system, the insurance company had not changed its policy to coincide with the statutory change. As a result, the Defendant was left with having improperly paid the medical providers pursuant to the statutory change. Thereafter, Defendant took the position that, although it paid pursuant to the statutory change in §627.736(5), Fla. Stat., the reasonable amount that should be paid is 80% of 75% of the expenses billed by Plaintiff; thus, bringing the issue back to Defendant paying 80% of the reasonable expenses for medically necessary treatment provided by Plaintiff, pursuant to §627.736(1)(a), Fla. Stat.

12. As such, as a matter of law, Defendant was not entitled to make reductions pursuant to §627.736(5), Fla. Stat. (2008); therefore, Defendant cannot rely on this statute to support the basis for its reductions. Therefore, Plaintiff’s motion is GRANTED as to this limited issue. However, Defendant is entitled to prove its defense that it paid only reasonable, necessary and related medical expenses, pursuant to §627.736(1)(a), Fla. Stat. (2008).

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