23 Fla. L. Weekly Supp. 1050a
Online Reference: FLWSUPP 2310FINKInsurance — Personal injury protection — Coverage — Medical expenses — Where insurer placed insured’s claim in “auto process” mode, in which system automatically pays bills in accordance with statutory fee schedule without any individual reviewing bills for reasonableness, relatedness or necessity, insurer waived its right to investigate medical provider’s MRI bill and cannot challenge bill as unreasonable, unrelated or unnecessary in suit for unpaid balance of bill
ALL FAMILY CLINIC OF DAYTONA BEACH, INC. D/B/A FLORIDA MEDICAL ASSOCIATES A/A/O MICHAEL FINK, Plaintiff, vs. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant. County Court, 7th Judicial Circuit in and for Volusia County. Case No. 2015-20779-CONS. December 28, 2015. Honorable Shirley Green, Judge. Counsel: Kimberly P. Simoes, Simoes Law Group, P.A., Deland, for Plaintiff.
REVERSED. FLWSUPP 2507ALLF (State Farm Mut. Auto. Ins. Co. v. All Family Clinic of Daytona Beach, Inc., 2016-10002-APCC, 9-14-2017)
ORDER GRANTING PLAINTIFF’S MOTIONFOR FINAL SUMMARY DISPOSITION ANDFINAL JUDGMENT IN FAVOR OF PLAINTIFF
This cause came before the Court on Plaintiff’s Motion for Final Summary Disposition certificate date November 30, 2015, and Defendant’s Response and Memorandum of Law in Opposition to Plaintiff’s Motion for Final Summary Judgment certificate date December 11, 2015. The Court having considered same, having considered the submissions by each party, having considered the evidence submitted, having reviewed the Court record and heard oral argument made on behalf of the parties on December 14, 2015, and being otherwise duly advised in the premises, orders as follows:
I. Background.
On September 30, 2012, Michael Fink was involved in a motor vehicle accident and sustained injuries. At the time of the accident Mr. Fink had a policy with State Farm that provided him with $10,000.00 in No Fault coverage and $5,000.00 in Medical Payments coverage. Mr. Fink reported the accident to State Farm on September 30, 2012 and his claim was assigned to Barbara Fusco, a State Farm claims adjuster.
On October 15, 2012, Ms. Fusco made the decision to utilize State Farm’s “auto process tool.”1 After putting Mr. Fink’s claim on auto process, Ms. Fusco no longer reviewed medical bills for reasonableness, medical necessity or relatedness. Instead, the system would automatically pay medical bills submitted on behalf of Mr. Fink at the predetermined rate set forth by the Florida Fee Schedule a/k/a the “schedule of maximum charges.”
On November 12, 2012, AFC performed a cervical MRI for Mr. Fink and billed State Farm $1,835.24 for that service. State Farm received the bill for the MRI on November 30, 2012. As the auto process system had been activated, AFC’s bill was reduced and automatically paid at the 200% of Medicare Part B rate set forth by F.S. 627.736(5)(a)(2) which was $1,006.02. On December 4, 2012, State Farm generated an Explanation of Review (EOR) which assigned “Reason Code” C1282 to the reduced payment. Reason Code C1282 stated,
C1282 — FL Our payment for this service is based upon a reasonable amount pursuant to both the terms and conditions of the policy of insurance under which the subject claim is being made as well as F.S. 627.736(5)(a)1, which permits, when determining a reasonable charge for a service, and insurer to consider usual and customary charges and payments accepted by the provider, reimbursement levels in the community and various federal and state fee schedules applicable to automobile and other insurance coverages, and other information relevant to the reasonableness of the reimbursement for the service,. The payment for this service is based upon 200% of the 2007 Participating Level of Medicare physician fee schedule for the region in which the services were rendered.
On April 10, 2014, AFC submitted a demand letter to State Farm. When no further payment was received, the Plaintiff filed the present lawsuit.
The Plaintiff filed its motion for summary disposition asserting that State Farm had voluntarily and intentionally waived its statutory right to investigate the bill for the services performed by AFC on November 12, 2012. AFC argued that State Farm’s conduct in placing incoming bills on the “auto process” system was conclusive and indisputable evidence of State Farm’s clear intention to relinquish its statutory right to investigate whether a medical service is reasonable, related or necessary. AFC further argued that State Farm’s intentional relinquishment of its rights resulted in a waiver which precludes State Farm from attempting to investigate the claim for the first time three years later. According to AFC, Florida Statute 627.736 provides State Farm with 30 days to investigate a bill submitted for treatment to its policyholders. Additionally, Florida Statute provided State Farm with a procedure to request additional information to complete its investigation during that 30 day window should additional information be needed. See 627.736(6)(b). AFC contends that Florida law does not give State Farm the option of not investigating the claim whatsoever and delaying its initial investigation until after a lawsuit is filed.
In support of its Motion, the Plaintiff filed the transcript of Dean Rogers, State Farm’s designated corporate representative. The testimony of Mr. Rogers established that Ms. Fusco had placed Mr. Fink’s claim on auto process prior to State Farm receiving AFC’s bill. Mr. Rogers also testified that no individual reviewed AFC’s bill for reasonableness, relatedness or medical necessity prior to payment. Instead, the auto process paid the bill at the predetermined rate. Mr. Rogers conceded that the first time the bill was reviewed for reasonableness, relatedness or medical necessity was after the lawsuit was filed in mid-2015.
In conclusion, AFC contends that State Farm clearly and unequivocally waived its right to investigate the claim within the statutory thirty (30) days by implementing the auto pay process. As admitted by State Farm’s corporate representative, State Farm made no determination as to whether the bill was reasonable, related or medically necessary when it was received or within the thirty days thereafter. Therefore, AFC contends, State Farm’s conduct is a waiver of its statutory right to challenge reasonableness, medical necessity and relatedness of the MRI services in this case.
State Farm filed a response to the Plaintiff’s Motion for Summary Disposition on December 11, 2015. State Farm contended in its response that it had not violated the terms of its contract because it utilized the fee schedule in determining reimbursement. Additionally, State Farm contended that only the finder of fact could decide whether AFC’s charge was reasonable. In sum, State Farm contended that the determination of “reasonableness” is within “the sole province of a fact finder or jury.” Additionally, State Farm suggested that the affidavit2 of Michael Foley, M.D. supported its contention that AFC’s charge was not reasonable. State Farm’s response did not address the Plaintiff’s argument that State Farm had waived its right to challenge reasonableness, relatedness or medical necessity due to its intentional relinquishment of its right to investigate the bill.
On December 15, 2015, AFC filed the affidavit of Ken Howe, its operations manager. In that Affidavit, Mr. Howe provided testimony regarding AFC’s charges and affirmed that the charges for the MRI billed on the Michael Fink claim was reasonable in price.
II. The Summary Judgment Hearing.
The hearing on Plaintiff’s motion for summary disposition commenced on December 14, 2015. At the hearing the Plaintiff contended that the undisputed record evidence established that State Farm intentionally and knowingly relinquished its statutory right to investigate and review the bill for the MRI services submitted by AFC. The Plaintiff presented the deposition of Dean Rogers, the corporate representative for State Farm in support of this position. This testimony established that the MRI bill was not investigated or reviewed by any adjuster prior to payment and the bill was paid solely through the auto pay process. Mr. Rogers confirmed that it was an active decision by Ms. Fusco to put Mr. Fink’s claim on auto process and that she was aware that by implementing this process she would no longer review bills submitted for Mr. Fink. AFC argued that the implementation of this procedure resulted in a knowing and intentional waiver of State Farm’s statutory right to investigate the claim within thirty (30) days and make an informed decision. Furthermore, AFC argued that the timeframe between the bill submission in November 2012 and the first review of the bill in mid-2015 is not a reasonable time frame and is clear evidence of an intentional and knowing waiver. Last, the Plaintiff contended that State Farm cannot adjust and investigate the bill for the first time three years after receipt. AFC argued that the statutory right to challenge reasonableness, necessity and relatedness “at any time” presupposes that the insurance carrier has not voluntarily and intentionally waived its right to investigate the claim during the initial submission.
In response, State Farm suggested that there was no requirement for it to adjust the claim within any specific timeframe. Additionally, State Farm contended that the Plaintiff had not met its prima facie burden of proof and, thus, State Farm had no obligation to respond to Plaintiff’s Motion. Notwithstanding this argument, State Farm offered the affidavit of Dr. Foley, a medical doctor, to suggest that the charge for the MRI service was not reasonable. Notwithstanding State Farm’s reference to Dr. Foley’s affidavit, the Affidavit was not filed prior to the hearing.
In response, the Plaintiff argued that the affidavit of Dr. Foley was irrelevant to the issue of State Farm’s waiver and if the Court found waiver, State Farm was not permitted to challenge AFC’s bill.
III. Findings of Fact and Law
In this lawsuit All Family Clinic contends that State Farm failed to pay the reasonable charge for the cervical MRI in the amount of $1,835.24. All Family Clinic contends that State Farm presented no evidence to combat the Plaintiff’s evidence that State Farm had waived its right to investigate the bill and to challenge whether the charge was a reasonable charge and was related and medically necessary. The Plaintiff further contends that the statute provides the insurer with thirty (30) days to investigate the claim and if the insurer voluntary and intentionally relinquishes that right, then it cannot investigate and challenge the service for the first time three years after submission. Furthermore, AFC contends that State Farm provided no evidence whatsoever to challenge the Plaintiff’s evidence that State Farm had knowingly, intentionally and voluntarily relinquished its right to investigate the claim within the statutory time frame by placing the bill on the auto process system. Therefore, All Family Clinic suggests that it is entitled to summary disposition in the amount of $829.22 which is the difference between the billed amount and the amount allowed by State Farm’s auto pay process. This Court agrees with the Plaintiff.
IV. Opinion of the Court.
Pursuant to Fla. Sm. Cl. R. 7.135, if the court finds that there is no triable issue, the court shall summarily enter an appropriate order of judgment.
As the record evidence clearly and unequivocally indicates, All Family Clinic timely billed State Farm $1,835.24 for a cervical MRI performed on November 12, 2012. The undisputed testimony of State Farm’s corporate representative established that prior to receipt of the MRI bill from AFC, State Farm’s adjuster had placed the Michael Fink claim on the auto process system. This system provides for a medical bill to be received by State Farm and paid by State Farm without any adjuster involvement. In the current case, it is undisputed that Ms. Fusco did not review the bill prior to payment and made no determination as to whether the services were reasonable, necessary or related. Instead, the AFC bill was received by State Farm and simply flowed through the system without any voluntary action by any licensed claims adjuster. It is also significant that the auto process system predetermines the amount that will be paid on a bill based upon the schedule of maximum charges. As clearly articulated on the EOR for the MRI bill at issue, State Farm utilized “200% of the 2007 Participating Level of Medicare physician fee schedule for the region in which the services were rendered” to calculate reimbursement. State Farm’s corporate representative also conceded that the allowable amount for all medical expenses was based upon the schedule of maximum charges and that those figures were calculated by Mitchell International rather than a licensed claims adjuster.
“Waiver” is an intentional relinquishment of a known right or voluntary relinquishment of a known right or conduct which warrants an inference of relinquishment of a known right. Fireman’s Fund Ins. Co. v. Vogel, 195 So. 2d 20 (Fla. 2d DCA 1967). When waiver is implied from conduct, the acts, conduct or circumstances relied upon to show waiver must make out a clear case. Gilman v. Butzloff, 155 Fla. 888 (1945). Further, waiver does not arise from forbearance for a reasonable time.
It is undisputed that State Farm made no attempts to investigate whether the MRI was reasonable, necessary or related until after the current lawsuit was filed. It is also clear based on the evidence presented that State Farm intentionally and voluntarily decided to forego any of those determinations when it placed the claim on auto process. During the deposition of State Farm’s corporate representative it was clear that no licensed claims adjuster ever reviewed the MRI bill and that, in fact, that was the goal of placing Mr. Fink’s claim on auto process. By placing the claim on auto process the adjuster was voluntarily relinquishing any adjusting responsibility for the claim and allowed any bills that were received for Mr. Fink to be paid without review or oversight.
Florida’s No Fault law obligates an insurance carrier to investigate a claim within thirty (30) days of receipt of a bill. In the even the insurance carrier has insufficient information, F.S. 627.736(6)(b) provides the insurer a remedy to toll its payment decision to obtain additional information. Likewise, Florida’s No Fault law obligates a medical provider to submit bills on a specific form, using a specific CPT code and within a specific timeframe. This court rejects State Farm’s suggestion that it is permitted to indefinitely delay its investigation and adjusting of No Fault bills until litigation ensues or some other contingency makes the adjusting process more convenient. Based upon the specific facts presented in this case the court finds that State Farm’s conduct evidences a knowing and voluntary waiver of its right to investigate the MRI bill and, therefore, State Farm cannot challenge the bill as being unreasonable, unnecessary or unrelated at this juncture.
WHEREFORE, the Court finds that Plaintiff is entitled to Final Judgment in the amount of $829.22, plus prejudgment interest in the amount of $112.04 for a total Final Judgment in the amount of $941.26. This Court reserves jurisdiction for an award of attorney’s fees and costs incurred by Plaintiff.
FOR WHICH LET EXECUTION ISSUE
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1As explained by State Farm’s corporate representative, the auto process tool is a system where payment is automated without any input or review by the claims adjuster. When the auto process tool is activated, the system pays medical bills without any adjuster’s review or oversight.
2State Farm did not file the Affidavit of Michael Foley, M.D. until after the hearing was already in progress.
