24 Fla. L. Weekly Supp. 159b
Online Reference: FLWSUPP 2402ACEVInsurance — Personal injury protection — Coverage — Medical expenses — Statutory fee schedules — Clear and unambiguous election — PIP policy that gives insurer unbridled discretion to consider various factors found in reasonable amount method of reimbursement and in permissive fee schedule method of reimbursement does not provide clear and unambiguous notice of intent to limit reimbursement to fee schedule — Approval by Office of Insurance Regulation does not validate policy
A-PLUS MEDICAL & REHAB CENTER a/a/o CESAR ACEVEDO, Plaintiff, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant. County Court, 11th Judicial Circuit in and for Miami-Dade. Case No. 2014-15200-SP 25 (2). June 8, 2016. Gina Beovides, Judge. Counsel: Walter A. Arguelles, Arguelles Legal, P.L., Miami, for Plaintiff. Julie Hauf, law office of Julie Lewis Hauf, P.L., Fort Myers, for Defendant.
ORDER DENYING DEFENDANT’S MOTION FOR
PARTIAL SUMMARY JUDGMENT AND GRANTING
PLAINTIFF’S CROSS MOTION FOR SUMMARY
JUDGMENT AS TO THE APPLICATION
OF THE MEDICARE FEE SCHEDULE
THIS MATTER, came before the Court on April 28, 2016, on Cross Motions for Summary Judgment regarding Defendant’s reimbursement methodology. The Court has reviewed each party’s respective motions, Memorandums of law, applicable legal precedent and, after having heard argument of counsel of each party, finds that Defendant’s Motion for Partial Summary Judgment is DENIED, Plaintiffs Motion for Summary Judgment as to the Application of the Medicare Fee Schedule is GRANTED for the reasons set forth below:
Legal Issue
The legal issue for determination before the Court is whether State Farm’s Policy form. 9810A clearly and unambiguously adopts the reimbursement methodology expressed in §627.736(5)(a)(1) Florida Statutes (2013). A secondary issue raised by Defendant is whether the enactment of §627.736(5)(a)(5) and the “approval” of the policy by the Office of Insurance Regulation has divested this Court jurisdiction to review its legal sufficiency.
Procedural History and Factual Background
Pursuant to an assignment of benefits, A-PLUS MEDICAL & REHAB CENTER, submitted bills for medical services rendered to the insured resulting from injuries sustained in an automobile accident. For the bills STATE FARM determined were compensable under their applicable policy, they limited its payment to 80% of the schedule of maximum charges set forth in §627.736(5)(a)(1) Florida Statutes (2013), i.e., 200% of the Medicare Part B fee schedule.
A-PLUS MEDICAL & REHAB CENTER filed suit and contends that Defendant did not properly elect the Medicare Fee Schedule methodology in its policy, and as a result, was prohibited from using the “fee schedule” to reimburse Plaintiff’s bills.
STATE FARM submitted its policy to the Office of Insurance Regulation (hereinafter “OIR”) for approval. Defendant contends that the OIR “approval” of the 9810A policy conclusively establishes that STATE FARM could utilize the fee schedules set forth in §627.736(5)(a)(1) Florida Statutes (2013) to limit its reimbursement to Plaintiff’s bills. Defendant further argues that the Florida Legislature, in enacting §627.736 5(a)(5) Florida Statutes (2013), specifically delegated to the OIR the authority to review policy forms for legal sufficiency thus divesting this Court of jurisdiction to review the policy for that purposes.
STATE FARM’s policy, 9810A, contains two different payment methodologies: the “reasonableness” methodology (defined as various factors to consider on page 5, including the schedule of maximum charges, and utilized in the payment clause on page 14 and the payment limitation clause on pages 14-15) and the “Medicare Fee schedule” methodology (on pages 15-16). STATE FARM argues that the Florida Supreme Court’s holding in Geico General Insurance Company v. Virtual Imaging Service, Inc., 141 So.3d 147 (Fla. 2013) [38 Fla. L. Weekly S517a] (“Virtual III”) is no longer controlling after July 1, 2012 in light of the statutory language to §627.736(5)(a) Florida Statutes (2012) and that the OIR “approval” of their policy entitled Defendant to utilize a hybrid methodology.
Analysis
The Florida “No-Fault” law (PIP statute) requires insurers to pay a “reasonable” amount of an insured’s medical treatment for lawfully rendered services. In 2008, the Legislature amended the “PIP Statute” and created a second payment methodology which is a permissive method of calculating PIP benefits (commonly referred to as the “Medicare Fee Schedule”). The statutory amendment still required insurers pay 80% of reasonable charges, but if elected in its policy, an insurer may utilize the Medicare fee schedule. The Florida Supreme Court in Virtual III explained that there are two different payment methodologies for calculating reimbursements to satisfy the PIP statute’s reasonable medical expenses coverage mandate. The first “default” payment methodology is a “fact-dependent inquiry determined by consideration of various,” and the second “permissive” payment methodology relies merely on the application of the “schedule of maximum charges” to the charges submitted for a particular service or supply. However, in order to avail itself of the option in (5)(a)2, the insurer must provide notice in the policy of its election to use the fee schedules. Virtual, at 159. The Court essentially found, consistent with Kingsway Amigo Ins. Co. v. Ocean Health, Inc., 63 So.3d 63 (Fla. 4th DCA 2011) [36 Fla. L. Weekly D1062a], that the PIP statute:
“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 insurer based on the factors enumerated in section 627.736(5)(a)(1) (emphasis added).
This Court finds that the Florida Supreme Court’s ruling in Virtual III continues to be good law and is controlling in this matter. The Court, in Virtual III, did acknowledge that its holding, requiring that notice of an election to utilize the Medicare fee schedules must be contained within the policy, applied only to policies in effect prior to July 1, 2012. The 2012 amendment to the PIP statute, however, codified Virtual III notice requirement through the enactment of §627.736(5)(a)(5). Florida’s well-settled rule of statutory construction [is] that the legislature is presumed to know the existing law when a statute is enacted, including judicial decisions on the subject concerning which it subsequently enacts a statute. Seagrave v. State, 802 So.2d 281 (Fla. 2001) [26 Fla. L. Weekly S481a] (quoting Wood v. Fraser, 677 So.2d 15, 18 (Fla. 2d DCA 1996) [21 Fla. L. Weekly D1387c].
Regardless of whether required by statute or case law, an insurer’s obligation to provide in its policy unambiguous notice of an exclusive election to utilize the Medicare fee schedule remains a requirement. By virtue of the existence of a “choice,” there are clearly two separate methodologies available to the insurer when addressing reimbursements. Nothing in the 2012 amendments to the PIP statute reverses the Florida Supreme Court’s ruling that the PIP statute establishes two distinct methodologies that PIP insurers may choose to incorporate in their insurance policies. The fee schedule was, and still is, permissive, and is only available to insurers who unambiguously elected it to the exclusion of the reasonable method. See, e.g. Geico Gen. Ins. Co. v. Virtual Imaging Services, Inc., 141 So.3d 147 (Fla. 2013) [38 Fla. L. Weekly S517a]; Kingsway Amigo Insurance Company v. Ocean Health, Inc. 63 So. 3d 63 (Fla. 4th DCA 2011) [36 Fla. L. Weekly D1062a].
STATE FARM relies on Allstate Fire and Casualty Insurance v. Stand-Up MRI of Tallahassee, 2015 WL 1223701 FLA. 1st DCA (Opinion of March 18, 2015). In Stand-Up MRI, the First DCA found the policy language in Allstate’s policy places the insured on notice of its reimbursement methodology with a “plain statement that reimbursement shall be subject to the limitations in §627.736, including all fee schedules.” This Court has likewise made the same finding regarding Allstate’s policy. However, unlike the Allstate policy, State Farm 9810A Policy contains an unauthorized “hybrid methodology” for calculating PIP benefit reimbursement. STATE FARM’s policy 9810A has incorporated both the “reasonableness” methodology and the “Medicare fee schedule” methodology. STATE FARM on page 5 of its policy, in defining the phrase “reasonable charge,” has chosen to comingle factors found within both §627.736(5)(a) and §627.736(5)(a)(1):
Reasonable Charge, which includes reasonable expense, means an amount determined by us to be reasonable in accordance with the No-Fault Act, considering one or more of the following:
1. Usual and customary charges;
2. Payments accepted by the provider;
3. Reimbursement levels in the community;
4. Various federal and state medical fee schedules applicable to motor vehicle and other insurance coverages;
5. The schedule of maximum charges in the No-Fault Act,
6. Other information relevant to the reasonableness of the charge for the service, treatment, or supply; or
7. Medicare coding policies and payment methodologies of the federal Centers for Medicare and Medicaid Services, including applicable modifiers, if the coding policy or payment methodology does not constitute a utilization limit.
On pages 15-16 of the policy, under the “Limits” section, STATE FARM lists factors found within the Medicare fee schedule methodology found in §627.736(5)(a)(1):
1. We will not pay any charge that the No-Fault Act does not require us to pay, or the amount of any charge that exceeds the amount the No-Fault Act allows us to be charged.
2. The most we will pay for each injured insured as a result of any one accident is $10,000 for all combined Medical Expenses, Income Loss, and Replacement Services Loss, described in the Insuring Agreement of this policy’s No-Fault Coverage.
We will limit payment of the Medical Expenses described in the Insuring Agreement of this policy’s No-Fault Coverage to 80% of a properly billed and documented reasonable charge, but in no event will we pay more than 80% of the following No-Fault Act “schedule of maximum charges” including the use of Medicare coding policies and payment methodologies of the federal Centers for Medicare and Medicaid Services, including applicable modifiers.
f. For all other medical services, supplies and care, 200 percent of the allowable amount under:
(1) The participating physicians fee schedule of Medicare Part B. . .
In this case, the definition of “reasonable charge” in the 9810A policy comingles some elements from the reasonable amount method, and some elements from the fee schedule method, and specifically says that State Farm will consider “one or more” of those various and conflicting factors. “Reasonable charge” is expressly referenced in the payment clause and the limitation clause. By its use of the definition of “reasonable charge,” STATE FARM permits itself discretion to pick and choose it method of reimbursement. This “hybrid methodology” for calculating PIP benefits is in violation of §627.736(5)(a)(5) and the Florida Supreme Court’s holding and rationale in Virtual III. Accordingly, this Court finds that STATE FARM’s policy 9810A does not clearly, unambiguously, and exclusively elect the Fee Schedule payment methodology.
The Court has also considered STATE FARM’s argument that the OIR’s stamping of the word “Approved” on STATE FARM’s policy on October 5, 2012, by itself, establishes an unambiguous election by STATE FARM and, simultaneously, divests the Court of jurisdiction to ensure that its policy is not contrary to the plain statutory intent.
First, a review of the OIR Informational Memorandum, which contains the sample form for “Use of Medical Fee Schedule claims”, contains disclaimers by the OIR before and after the form at issue. The OIR states:
“It should be noted that the fee schedule in the sample language is the fee schedule that is effective at the time notice requirement is established in Florida Statutes (July 1, 2012). It does not include the revisions in House Bill 119 to the fee schedule that became effective on January 1, 2013.”
In the next paragraph, the memorandum continues:
“Depending upon the existing language, the same language may be suitable to address the notice requirements of House Bill 119 or the insurer may already have approved language that satisfies the notice requirement. Ultimately, it is the insurer’s responsibility to develop its own language after researching the law, reviewing its contract forms, and conferring with its legal staff.”
Therefore, based on the memorandum by the OIR, inclusion of the approved form in an insurer’s policy is not dispositive of the issue of election and notice. The OIR directs insurers to review its forms, research the law, and confer with counsel in addition to using its “sample form” as a notice mechanism.
Second, even if this Court were to find that the OIR’s “approval” of the policy authorized STATE FARM to utilize both the reasonableness and the Medicare Fee schedule payment methodologies, this Court will still retain jurisdiction to review the policy to ensure that it is in compliance with the law. Florida Farm Bureau Casualty Ins. Co. v. State of Fla. Office of Insurance Regulation, 109 So.3d 860, 861 (Fla. lst DCA 2013) [38 Fla. L. Weekly D597b]. While the legislature may assign to an agency the responsibility of establishing certain procedures, legislative authority to an administrative agency is always open to judicial review. The Courts have full jurisdiction to determine if the administrative agency has performed in accordance with the Legislature’s mandate. See, e.g., Askew v. Cross Key Waterways, 372 So. 2d 913, 924 (Fla. 1978).
Further, the argument that OIR “approval” permitted an insurer to utilize a policy that contains provisions that are in conflict with the statutory requirements has been rejected by the Third District Court of Appeal. In Gonzalez v. Associates Life Insurance Company, 641 So. 2d 895 n.1 (Fla. 3d DCA 1994), the court made it clear that the mere approval by the Department of Insurance (OIR’s predecessor agency) does not automatically validate the contents of an insurance policy. See also, Kaufman v. Mutual of Omaha Ins. Co., 681 So. 2d 747, n.4 (Fla. 3d DCA 1996) [21 Fla. L. Weekly D1716b](finding Department of Insurance approval of a policy form does not override the explicit terms of a statutory requirement). For these reasons, this Court also rejects the STATE FARM’s argument that “approval” from the OIR of the policy form at issue permits the insurer to utilize a policy that is in direct conflict with the law.
Finally, the Court acknowledges that STATE FARM, in opposition to Plaintiff’s Motion for Summary Judgment, filed the deposition of Plaintiff’s representative, Carla Perez. Defendant argued that Ms. Perez’s testimony revealed that the Plaintiff was not challenging the amount that STATE FARM reimbursed for the dates of service that it did pay. While Ms. Perez’s testimony is relevant to this suit, and can be properly addressed by the Defendant at another hearing, it does not address the legal question brought before the Court on the Cross-Motion for Partial Summary Judgment. The basis for Plaintiff’s Partial Summary Judgment rested solely on whether, as a matter of law, STATE FARM may avail itself of the permissive payment methodology. Thus, this ruling is limited the application of the Medicare Fee Schedule.
Accordingly, it is hereby:
Ordered and ADJUDGED that Defendant’s Motion for Partial Summary Judgment is DENIED and Plaintiff’s Motion for Summary Judgment as to the Application of the Medicare Fee Schedule is GRANTED.
