22 Fla. L. Weekly Supp. 937a

Online Reference: FLWSUPP 2208HARPInsurance — Personal injury protection — Coverage — Medical expenses — Reasonable, related, and necessary treatment — Discovery — Depositions — Provider’s representative — Further inquiry into whether claim was related and medically necessary or whether charge was reasonable is irrelevant and immaterial where bill was processed and paid under statutory fee schedule — Insurer’s motion to compel denied

EMERGENCY MEDICINE PROFESSIONALS, P.A., as assignee of Diana Harpel, Plaintiff, v. FIRST ACCEPTANCE INSURANCE COMPANY, Defendant. County Court, 7th Judicial Circuit in and for Volusia County. Case No. 2013 30525 COCI, Division 84. July 16, 2014. Dawn P. Fields, Judge.ORDER

THIS MATTER having come before this Honorable Court on May 8, 2014, pursuant to Defendant’s Motion to Compel Depositions, Plaintiff’s Motion for Protective Order (Certificate of Service Date of October 5, 2013) and Plaintiff’s Motion for Protective Order (Certificate of Service Date of February 19, 2014) and this Honorable Court having reviewed the file, heard and considered arguments of counsel and legal authority submitted by the parties, and being otherwise fully advised in the premises, does hereby make the following findings of fact and conclusions of law:

PROCEDURAL HISTORY

1. The subject action involves a claim for personal injury protection (hereinafter “PIP”) insurance benefits filed by the Plaintiff, EMERGENCY MEDICAL ASSOCIATES OF TAMPA BAY, L.L.C. (hereinafter “Plaintiff”) as assignee of Diana Harpel (hereinafter “Claimant”) against the Defendant, First Acceptance Insurance Company (hereinafter “Defendant”), arising out of an accident that occurred on September 17, 2012.

2. The Claimant was insured under a policy by the Defendant which provided PIP insurance coverage with limits of $10,000, subject to a deductible of $1,000. On October 9, 2012, the Defendant received Plaintiff’s medical bill submitted for reimbursement under the policy for emergency services and care rendered to Claimant on September 17, 2012. Defendant allowed the submitted medical bill in full and applied the full amount of the bill to the policy deductible of $1,000.00.

3. The Plaintiff filed the present lawsuit where it was alleged that it provided reasonable, necessary, and related medical treatment to the Claimant following her accident, that the claimant assigned her right to a cause of action for benefits to the Plaintiff, and that the Plaintiff otherwise performed all conditions precedent to recovery. Plaintiff contends that Defendant’s application of Plaintiff’s bill to the deductible violated the mandatory reserve requirements contained in Florida Statutes §627.736(4)(c) and, as a result, required Defendant to reimburse 80% of the charged amount because the charge constituted a “reasonable expense” under Florida Statute §627.736(1)(a).

4. The Defendant denied these allegations and affirmatively alleged that the Plaintiff did not provide a valid assignment of benefits and did not comply with the conditions precedent to the cause of action for PIP benefits.

5. To address the issues, the Defendant sought discovery from Plaintiff in the form of interrogatories, request to produce and depositions. The Plaintiff sought it own discovery but objected to discovery deposition of Defendant arguing that by accepting and allowing the bill in full and applying it to the deductible, the Defendant necessarily determined that the claim was related and medically necessary and that the charge was reasonable.

6. On August 4, 2013, this Court entered an Order requiring both parties to provide dates for a deposition of their respective representatives — Sheila Estes-Waugh, for the Defendant and Mandy McKinney for the Plaintiff.

7. The legal issue raised by the Plaintiff at the hearing on May 8, 2014, involved whether or not the enactment of Fla. Stat. §627.736(4)(c), which requires insurance carriers to set aside $5,000 in PIP benefits for payment to physician providers of emergency services and care rendered in a hospital setting, insulates those protected bills from application to a PIP policy deductible.

8. The Plaintiff took the Deposition of Estes-Waugh on September 19, 2013. During her deposition, Estes-Waugh testified that:

a. Diana Harpel was covered under a policy issued to Matthew Harpel.

b. All of the bills submitted on behalf of Diana Harpel were processed, paid and reviewed pursuant to the permissive fee schedule under Florida Statute §627.736(5)(a)(2).

9. The Plaintiff argues that once Defendant utilize Florida Statute §627.736(5)(a)(2) as its basis for reimbursement, it cannot now challenge reasonableness,therefore making the requested depositions irrelevant and Defendant’s actions in allowing the bill in full to the policy deductible has framed the issue for this Court. Essentially, the Plaintiff states the matter is a pure legal issue to be decided based on the statute, policy language and actions taken by the Defendant in processing the Plaintiff’s claim.

10. The Defendant contends while the deductible application is an issue, it is not the sole legal issue. More specifically, the Defendant argues that reasonableness of Plaintiff’s charge, relatedness and medical necessity of the services provided are still unresolved; that depositions requested were targeted to address reasonableness of the Plaintiff’s charge and were permitted given the Florida Rules of Civil Procedure and binding case law. The Defendants also argue that that the Plaintiff must prove by the preponderance of the evidence that its medical bills were reasonable, necessary and related to an automobile accident to prevail in litigation. As such, it argues, that regardless of the testimony of Ms. Estes-Waugh, the information sought in the Defendant’s discovery is relevant and, at the least, reasonably calculated to lead to the discovery of admissible evidence.

FINDING OF FACT AND CONCLUSIONS OF LAW

11. Florida’s PIP statute from its inception has been “a complicated piece of legislation, but the successive years of constant amendment and revision have both added to its complexity and detracted from its clarity.” Chiropractic One, Inc. v. State Farm Mutual Auto., 92 So. 3d 871 (Fla. 5th DCA 2012) [37 Fla. L. Weekly D1565a] citing Fla. Med. & Injury Ctr., Inc. v. Progressive Express, Ins. Co., 29 So. 3d 329 (Fla. 5th DCA 2010) [35 Fla. L. Weekly D215b]. The observations by the Fifth are certainly applicable to the case at bar.

12. The legislative intent of the no-fault insurance statute is to “provide swift and virtually automatic payment so that the injured insured may get on with his life without undue financial interruption.” Allstate Ins. Co. v. Kaklamanos, 843 So. 2d 885 at 897 (Fla. 2003) [28 Fla. L. Weekly S287a], quoting Ivey v. Allstate Ins. Co., 774 So. 2d 679 at 683 (Fla. 2000) [25 Fla. L. Weekly S1103a].

13. In furtherance of the goal to promote resolution and avoidance of unnecessary litigation by the parties, the statutory scheme places duties upon both an insurer and a medical provider seeking reimbursement.

14. It is the duty of the insurance carrier, the insurer, to determine coverage under the policy of insurance. This duty is owed to the carrier’s customer, the Claimant, who contracted for certain benefits and rights under the statute. At the point and time of processing a medical bill the legal issues are framed by the insurance carrier. Defendant/Insurer, will approve the claim, deny the claim or reduce the claim. Each of these options have specific ramifications for both the insurer and the insured/medical provider. See generally, Glenn V. Quintana, D.C., P.A. a/a/o Melissa Evans v. State Farm Mutual Automobile Ins. Co., 19 Fla. L. Weekly Supp. 882a (Fla. 11th Jud. Cir. Miami-Dade Co. 2012); United Automobile Insurance Co. V. Riverside Medical Associates, Inc. a/a/o Normandel Burke, 20 Fla. L. Weekly Supp. 389a (Fla. 17th Jud. Cir. Appellate 2012).

15. As pointed out by the Fifth District Court of Appeal, in reference to Florida Statute 627.736, “under (4)(b) a defect in a submitted claim has to be brought to the provider’s attention by the insurer so it can be rectified.” Fla. Med. & Injury Ctr., Inc. v. Progressive Express, Ins. Co., 29 So. 3d 329 (Fla. 5th DCA 2010) [35 Fla. L. Weekly D215b]. “If the insurer fails to specify the defect in the form so that it can be rectified as contemplated by section (4), it will be deemed to have waived its objection to payment.” Id.

16. Insurers communicate with medical providers primarily through explanations of benefits, (hereinafter “EOB”). The EOB in this matter gives no indication that the insurer found the services, unrelated, unnecessary or unreasonable as to the amount charged. To the contrary, the Defendant made a determination that the Plaintiff’s bill was compensable and processed the bill, in full, by applying it to the deductible. Accordingly, “such a loss, by definition, will not be later challengeable.” United Auto. Ins. Co. V. A 1st Choice Healthcare Systems, 21 So. 3d 124 (Fla. 3d DCA 2009) [34 Fla. L. Weekly D2268a].

17. The Florida Rules of Civil Procedure provides for a broad scope for discovery. Rule 1.280(b)(1) states that “[p]arties may obtain discovery regarding any matter, not privileged, that is relevant to the subject matter of the pending action, whether it relates to the claim or defense of the party seeking discovery or the claim or defense of any other party, including the existence, description, nature, custody, condition, and location of any books documents, or other tangible things and the identity and location of persons having knowledge of any discoverable matter. It is not ground for objection that the information sought will be inadmissible at the trial if the information sought appears reasonably calculated to lead to the discovery of admissible evidence.” Id.

18. Courts are required to follow and interpret this rule as it applies to each case’s specific facts. As noted by the Supreme Court “we do not believe that a litigant is entitled carte blanche to irrelevant discovery.” Allstate Ins. Co. v. Langston, 655 So. 2d 91 (Fla. 1995) [20 Fla. L. Weekly S217a]. The Court went on to quash the district court decision “to the extent that it permits discovery even when it has been affirmatively established that such discovery is neither relevant nor will lead to the discovery of relevant information.” Id.

19. In the past, it has been argued that the obligation of the Plaintiff in a PIP suit is to prove by a preponderance of the evidence that the medical bills at issue were reasonable in amount, related, and medically necessary. This obligation has been set forth in Derius v. Allstate Indem. Co., 723 So. 2d 271 (Fla. 4th DCA 1998) [23 Fla. L. Weekly D1383a] when the Court noted that “in a lawsuit seeking benefits under the statute, both reasonableness and necessity are essential elements of a plaintiff’s case.”

20. Defendant argues that Derius applies to the instant case. This Court disagrees based on the factual distinctions in the Derius case and the current applicable version of the PIP statute. Defendant’s reliance on the statutory language, Derius v. Allstate Indem. Ins. Co., 723 So. 2d 271 (Fla. 4th DCA 1998) [23 Fla. L. Weekly D1383a], and State Farm Mut. Auto. Ins. Co. v. Sestile, 821 So. 2d 1244 (Fla. 2nd DCA 2002) [27 Fla. L. Weekly D1757a] is misplaced for the instant matter. First and foremost, the cases cited and opinions rendered were interpreting a previous version of the PIP statute which was before the enactment of the permissive fee schedule. Additionally, the Plaintiff’s argument that Derius and Sestile involved fact dependent inquiries into what was a “reasonable” charge and what were “necessary” services is well-received. The permissive fee schedule eliminated any fact dependent inquiries. Therefore, Derius and Sestile are not applicable to permissive cases.

21. Additionally, Defendant’s Corporate Representative testified that the Defendant paid pursuant to the permissive fee schedule of Florida Statute §627.736(5)(a)(2). With regard to the Defendant’s use of the permissive fee schedule, the Florida Legislature set forth two methods to determine a reasonable expense under §627.736(1)(a), Florida Statutes and effectively set the parameters on relevancy regarding reasonableness of a charge. These two distinct payment methodologies were analyzed by the Florida Supreme Court as “pursuant to subsection (5)(a)1 of the PIP statute, reasonableness is a fact-dependent inquiry determined by consideration of various factors. Subsection (5)(a)2 of the statute, however, provides an alternative mechanism for determining reasonableness: by use of fee schedules.”¹ (Emphasis applied). The legislative intent behind the establishment of the permissive fee schedule was to provide insurers with a choice in how to process PIP claims. Insurers could either challenge reasonableness of charge, relatedness and/or medical necessity by processing claims under (5)(a)(1) or insurers could forego their right to challenge reasonableness of the charge, relatedness and/or medical necessity by processing claims under (5)(a)(2) and paying a specified amount for medical treatment. By paying the guaranteed specified amount for medical treatment under (5)(a)(2), insurers were essentially buying their peace in order to avoid pip litigation. Once an insurer elects to reimburse a medical provider pursuant to the permissive fee schedule, it cannot belatedly challenge reasonableness of the charge . See Tomoka Diagnostics a/a/o Kellye McCall v. State Farm Mutual Automobile Insurance Company, 19 Fla. L. Weekly Supp. 60a (Fla. 7th Jud. Cir. October 5, 2011).

22. The relatedness and/or medical necessity of the services are immaterial given the Defendant’s handling of this claim (by allowing the bill in full and applying the bill in full to the policy deductible). See e.g. Glenn V. Quintana, D.C., P.A. a/a/o Melissa Evans v. State Farm Mutual Automobile Insurance Company, 19 Fla. L. Weekly Supp. 882a (Fla. 11th Jud. Cir. Miami-Dade Co. 2012); United Automobile Insurance Company v. Riverside Medical Associates, Inc. a/a/o Normandel Burke, 20 Fla. L. Weekly Supp. 389a (Fla. 17th Jud. Cir. App. 2012); United Auto. Ins. Co. v A 1st Choice Healthcare Systems, 21 So. 3d 124 (Fla. 3d DCA 2009) [34 Fla. L. Weekly D2268a] and General Star Indemnity Company v. West Florida Village Inn, Inc., 874 So. 2d 26 (Fla. 2d DCA 2004) [29 Fla. L. Weekly D348a]. To allow Defendant to compel discovery on unrelated, immaterial or irrelevant legal matters frustrates the clear intent of the statute and judicial economy.

23. The Defendant’s actions of processing the bill at issue under the permissive fee schedule and applying it to the deductible, and the acknowledgement by the corporate representative that the bill was both processed and paid under the fee schedule enumerated in Florida Statute 627.736(5)(a)(2), renders any inquiry into whether the claim was related, medically necessary, or whether the charge was unreasonable irrelevant under the facts of this case.

24. Since Defendant utilized the permissive factors contained in (5)(a)(2), it unilaterally determined reasonableness. It cannot now seek to fall back on (5)(a)(1) to challenge reasonableness. See e.g. Emergency Physicians of Central Florida a/a/o Rodney Hansen v. Progressive Select Insurance Company, Orange County Case No. 2013-1199-0; Emergency Medicine Professionals P.A. v. Progressive American Insurance Company, Orange County Case No. 2013-SC-6875-O; Florida Hospital Medical Center v. Progressive American Insurance Company, Case No. 2013-SC-6527-O.

25. Under the facts of this case, any further inquiry into whether the claim was related and medically necessary, or whether the charge was reasonable is irrelevant and immaterial; therefore, a deposition of Plaintiff’s representative(s) is not relevant nor necessary as the deposition can add nothing to the legal issue of whether Defendant properly applied the bill to the deductible.

It is therefore ORDERED AND ADJUDGED that:

A. Defendant’s Motion to Compel Depositions is DENIED.

B. Plaintiff’s Motion for Protective Order

(Certificate of Service date of October 5, 2013) is GRANTED.

C. Plaintiff’s Motion for Protective Order

(Certificate of Service date of February 19, 2014) is GRANTED.

__________________

¹Geico Gen. Ins. Co. v. Virtual Imaging, Services, Inc., 2013WL3332385, 38 Fla. L. Weekly S517a (Fla. 2013).

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