24 Fla. L. Weekly Supp. 555c

Online Reference: FLWSUPP 2407VOLCInsurance — Personal injury protection — Demand letter in which medical provider failed to reduce unpaid charges to allowable amount under permissive statutory fee schedule elected in policy does not satisfy condition precedent to PIP suit — Insurer did not waive affirmative defense of defective demand letter by explaining reasons for adjustments or denials of claim in response to demand letter without mentioning letter’s deficiencies where insurer raised affirmative defense of defective demand letter in answer

ALLIANCE SPINE & JOINT I, INC. (a/a/o Paul Volcy), Plaintiff, v. USAA CASUALTY INSURANCE COMPANY, Defendant. County Court, 11th Judicial Circuit in and for Miami-Dade County. Case No. 2015-015878-SP-23. September 13, 2016. Caryn Schwartz, Judge. Counsel: Leandro Carvalho, Madalon Law, Fort Lauderdale, for Plaintiff. Scott W. Dutton, Dutton Law Group, P.A., Tampa, for Defendant.

ORDER GRANTING DEFENDANT’S MOTIONFOR SUMMARY JUDGMENT REGARDINGINVALID PRESUIT DEMAND LETTER

This Matter, having come before the Court on July 21, 2016 for hearing on Defendant’s USAA Casualty Insurance Company’s Motion for Summary Judgment, and after reviewing the Motion, matters of record on file with the Court, statutes and case law provided by counsel, and after having considered argument of counsel it is ordered and adjudged that the Court is GRANTING Defendant’s Motion For Summary Judgment Regarding Invalid Presuit Demand Letter for the reasons set forth, below:

FACTUAL FINDINGS

The subject action involves a claim for personal injury protection insurance benefits filed by the Plaintiff, Alliance Spine & Joint I, Inc. (hereinafter “Plaintiff”) as assignee of Paul Volcy (hereinafter “Claimant” or “insured”) against the Defendant, USAA Casualty Insurance Company (hereinafter “USAA” or “Defendant”), arising out of a motor-vehicle accident that allegedly occurred December 2, 2014.

The subject contract of automobile insurance number 022335275-003-000 was issued to Paul Volcy. The Defendant provided PIP benefits coverage in accordance with the Florida Motor Vehicle No-Fault Law for the policy period from July 17, 2014 through January 17, 2015. The policy by and between Mr. Volcy and USAA specifically limits the amount due to 80% of 200% of the allowable amount under participating fee schedule of Medicare Part B. The policy also contains a $1,000.00 deductible applicable to medical benefits or expenses.

The Plaintiff submitted charges to the Defendant for date of service March 14, 2015 for CPT codes 99204 ($500.00), 95831 (2 units at $236.00 total), 98960 ($95.00), 99080 ($150.00), 95832 (2 units at $118.00) and 95832/59 (2 units at $118.00). In total the charges were $1,217.00.

USAA responded to Plaintiff’s charges with an Explanation of Review (“EOR”) dated April 8, 2015. The EOR provided responses to CPT Code 99204, 95831, and 95832 (1 unit) as follows: “Per F.S.A. 627.736(5)(a)(2)(f) services, supplies and care are reimbursed at 200% of the applicable Medicare Part B fee schedule.” USAA’s response as to the other 3 units of 95832 was “Review of the submitted documentation does not support the submitted billing. Only one unit is allowed for each hand tested.”

USAA’s response to CPT Code 98960 was: “Per F.S.A. 627.736(5)(a)(2)(f) services, supplies, and care not reimbursable under Medicare Part B are reimbursed at 80% of the maximum reimbursable allowance under Florida Worker’s Compensation which are in effect at the time such services, supplies or care are provided.”

In the same EOR, USAA responded to CPT Code 99080 as follows: “Charges for Special Reports are not reimbursable.”

Thereafter, prior to filing this lawsuit, the Plaintiff sent the Defendant an alleged pre-suit demand letter dated April 27, 2015. In the demand letter Plaintiff listed the “outstanding balance” as $520.10, which was calculated by taking 80% of the billed amount and subtracting previous payments of $453.50. The “patient visit report” attached to the demand letter indicates charges of $1,217.00, insurance payment of $402.93 (different from what was alleged on the pre-suit demand letter itself), and a “balance” of $814.07. That demand letter did not limit the amount claimed to be due to 80% of the allowable amount under the applicable fee schedules. (As a note: The Defendant included argument regarding its position that CPT Code 99080 is not reimbursable, however, that argument was not included in Defendant’s Motion For Summary Judgment, rather it was included in a supplemental memorandum that was untimely filed with the Court under Rule 1.510, Florida Rules of Civil Procedure, and therefore the Court will not consider any argument by Defendant regarding CPT Code 99080).LEGAL ANALYSIS AND DISCUSSION

§ 627.736(10), Fla. Stat. states that “[a]s a condition precedent to filing any action for benefits under this section, written notice of an intent to initiate litigation must be provided to the insurer.” § 627.736(10)(a), Fla. Stat. (2015). The notice must state that it is a “demand letter” pursuant to the statute and must state with specificity:

1. The name of the insured upon which such benefits are being sought, including a copy of the assignment giving rights to the claimant if the claimant is not the insured.

2. The claim number or policy number upon which such claim was originally submitted to the insurer.

3. To the extent applicable, the name of any medical provider who rendered to an insured the treatment, services, accommodations, or supplies that form the basis of such claim; and an itemized statement specifying each exact amount, the date of treatment, service, or accommodation, and the type of benefit claimed to be due. . . .

§ 627.736(10)(b), Fla. Stat. (2015).

Before a Plaintiff may file suit for a PIP claim, it must first comply with conditions precedent in the form of a pre-suit demand letter. Under the plain language of the statute, the pre-suit demand letter “shall state with specificity” an “itemized statement specifying each exact amount” due. See Id. Florida courts have held that this language is unambiguous and places the burden upon the Plaintiff to fulfill the requirements outlined. MRI Associates of Am., LLC v. State Farm Fire & Cas. Co., 61 So. 3d 462, 465 (Fla. 4th DCA 2011) [36 Fla. L. Weekly D960b], reh’g denied (June 24, 2011).

In MRI Associates of Am., LLC v. State Farm Fire & Cas. Co., 61 So. 3d 462, 465 (Fla. 4th DCA 2011), the Fourth District Court of Appeal stated “The language of subsection 627.736(10)(b)3 requires precision in a demand letter by its requirement of an “itemized statement specifying each exact amount” . . . .” This requirement is logical because the PIP statute seeks to encourage “the speedy payment of medical bills arising out of an auto accident by subjecting an insurer who pays late to penalties and imposing attorney’s fees if suit is required.” The PIP statute mandates that the amount at issue for a bill be specified early in the claims process. The statutory requirements surrounding a demand letter are therefore significant, substantive preconditions to bringing a cause of action for PIP benefits. See Menendez v. Progressive Exp. Ins. Co., Inc., 35 So. 3d 873, 879-80 (Fla. 2010) [35 Fla. L. Weekly S222b]. Id. at 465. (Emphasis added and citations omitted).

In interpreting the language of Fla. Stat. § 627.736, trial courts and appellate courts across the state have imposed a duty on medical care providers, like Plaintiff, to specify the proper compensable amount owed by insurers in order to satisfy the notice requirements of the demand letter provision in the PIP statute. Id.; see also § 627.736(10) (2015). An insurer is not properly placed on notice if the wrong amount is stated in the demand letter. See Id.; see also Lake Worth Emergency Chiropractic Center, P. A., (a/a/o Garter), v. State Farm Mut. Auto. Ins. Co., 22 Fla. L. Weekly Supp. 65a (Fla. 15th Cir. Ct. (App.) July 14, 2014) (“a single incorrect entry as part of its itemized demands is a sufficient basis to require summary judgment for the Defendant”); Wide Open MRI (a/a/o Hinestroza) v. Mercury Ins. Group, 16 Fla. L. Weekly Supp. 513b (Fla. 17th Cir. Ct. App. March 13, 2009). The Florida Eleventh Judicial Circuit, acting in its appellate capacity, has repeatedly held that a demand letter that does not satisfy the statutory condition of specifying the exact amount due fails to comply with the condition precedent to filing suit. Venus Health Ctr. (a/a/o Rojas) v. State Farm Fire and Cas.Co., 21 Fla. L. Weekly Supp. 496a (Fla. 11th Cir. (App.) March 13, 2014), citing to GEICO v. Open MRI of Miami-Dade, Ltd., 18 Fla. L. Weekly Supp. 337a (Fla. 11th Cir., (App.) Feb. 16, 2011), and Hernandez v. Progressive Exp. Ins. Co., (14 Fla. L. Weekly Supp. 232c. Fla. 11th Cir. (App.) 2007).

Strict compliance with the notice requirements of § 627.736(10) is required to effect the purpose of the statute. Florida Courts have also held that the specifications of § 627.736(10), Fla. Stat. [previously §627.736(11)], requiring a pre-suit demand to specify the exact amount due or owing, must be strictly construed. See Lake Worth Emergency Chiropractic Center, P. A., (a/a/o Garter), v. State Farm Mut. Auto. Ins. Co., 22 Fla. L. Weekly Supp. 65a (Fla. 15th Cir. Ct. (App.) July 14, 2014) (“a single incorrect entry as part of its itemized demands is a sufficient basis to require summary judgment for the Defendant”); Chambers Medical Group, Inc. (a/a/o St. Hillare) v. Progressive Express Ins. Co., 14 Fla. L. Weekly Supp. 207a (Fla. 13th Cir. Ct., (App.) December 1, 2006); MRI Associates of America, LLC, 61 So. 3d at 465, citing to Fountain Imaging of West Palm Beach, LLC v. Progressive Express Ins. Co., 14 Fla. L. Weekly Supp. 614a (Fla. 15th Cir. Ct. (App.) March 30, 2007). According to the Florida Thirteenth Judicial Circuit Court acting in its appellate capacity in Chambers Medical Group, Inc. (a/a/a Hillare), 14 Fla. L. Weekly Supp. 207a, a “substantial compliance” standard would trigger significant litigation as to sufficiency of the papers attached to a demand letter, the result of which would be that payment of claims would cease to be automatic, and providers would be relieved of their obligation under the statute. Id. Inaccurate, misleading, illegible, or stale information contained in a demand does not strictly comply with the statutory requirement. Id. The entire purpose of submitting a demand letter would be defeated unless the insurer is put on notice of the exact amount to pay. See Mercury Ins. Co. of Fla. v. Nelson, 20 Fla. L. Weekly Supp. 122a (Fla. 17th Cir. [App.] Sept. 12, 2012).

In regard to the issue of reimbursement of medical expenses under the policy issued to Mr. Volcy, the PIP statute’s “schedule of maximum charges” applies because the policy notifies the insured of USAA’s intent to rely upon it when adjusting PIP medical benefits claims. See § 627.736(5)(a) (2015). In Geico Gen. Ins. Co. v. Virtual Imaging Services, Inc., 141 So. 3d 147 (Fla. 2013) [38 Fla. L. Weekly S517a], the Supreme Court held that subsection 627.736(5) describes two distinct methodologies for the insurer to determine a reasonable charge for medical services. Virtual Imaging, 141 So. 3d at 155-58. The first method, the “reasonableness method,” determines reasonableness by “a fact-dependent inquiry determined by consideration of various [enumerated] factors.” Virtual Imaging, 141 So. 3d at 155-56. Alternatively, under “fee schedule method,” reasonableness is determined “by limiting reimbursement to the applicable [Medicare or workers compensation] fee schedules.” Virtual Imaging, 141 So. 3d at 156. Use of these fee schedules predetermines “reasonable expenses” for covered services. This predetermination promotes a key purpose of the PIP statute, to provide “swift and virtually automatic payment” of benefits. See Ivey v. Allstate Ins. Co., 774 So. 2d 679, 683-84 (Fla. 2000) [25 Fla. L. Weekly S1103a] (quoting Gov’t Employees Ins. Co. v. Gonzalez, 512 So. 2d 269, 271 (Fla. 3d DCA 1987)).

Here, USAA and its insured, Mr. Volcy, predetermined reimbursement of medical expenses by the language in the insurance policy by and between them. They agreed by contract that Plaintiff’s charges would be limited to the allowable amount under the applicable fee schedule. This contractual agreement controls not only how much the insurer shall pay for medical expenses, but also the insured, Mr. Volcy’s, co-payment.

By the clear terms of the statute, service of a compliant demand letter is a mandatory condition precedent to the filing and maintenance of a claim for benefits under the Florida Motor Vehicle No-Fault Law. § 627.736(10)(a), Fla. Stat. “§ 627.736[(10)] must be complied with before the complaint is filed. With the foregoing in mind, the purpose of the demand statute is to specifically notify an insurer of the exact amount claimed to be due, and to give the insurer the opportunity to pay claims it overlooked or are overdue within the safe harbor period without incurring attorneys’ fees or the costs of litigation. Here the amount set forth in the pre-suit demand would never have been due or owing from the insurer because the pre-suit demand failed to reduce the amount demanded to the allowable amount under the applicable fee schedules.

This Court notes that in Plaintiff’s Demand Letter, Plaintiff requested a copy of the policy and other documents in the event the claim was denied for material misrepresentation. Therefore, it would appear that Plaintiff never requested the policy to review prior to serving its pre-suit demand to determine whether or not the policy had applicable fee schedules.

Finally, Plaintiff has argued that Defendant waived requirements of the pre-suit demand statute by failing to indicate that the letter was invalid in its response. This Court disagrees with Plaintiff’s argument regarding waiver under the facts and circumstances of this case and denies the applicability of the waiver argument. The PIP statute imposes no legal duty on an insurer to send a response to a demand letter, much less one that would anticipate every potential legal defense to a lawsuit. As a practical matter, it is the role of a claims adjuster to adjust a claim and explain the reason for the adjustment or denial of a claim to a medical provider. See § 627.736(4)(b). However, it is neither required nor legally permissible to require a non-attorney, claims adjuster to anticipate every legal defense to a potential suit when explaining why a claim was being denied, especially when the majority of the reasons for the denial or reduction were already determined and communicated to the Plaintiff through EORs prior to receipt of Plaintiff’s demand.

In order for Plaintiff to demonstrate that Defendant waived its affirmative defenses pertaining to the pre-suit demand, it would have had to produce evidence of the following three elements of waiver: “(1) the existence at the time of the waiver of a right, privilege, advantage, or benefit which may be waived; (2) the actual or constructive knowledge of the right; and (3) the intention to relinquish the right.” Husky Rose, Inc. d/b/a Danny’s 19th Hole Restaurant and Lounge v. Allstate Ins. Co., 19 So. 3d 1085 (Fla. 4th DCA 2009) [34 Fla. L. Weekly D2037a]. Plaintiff, however, did not provide any evidence of these elements in support of its assertion that a waiver occurred.

Defendant’s response to the pre-suit demand letter explains why any further claim by the Plaintiff was being denied in a manner consistent with the reasons already stated on the EORs, including that the Plaintiff had already been paid in accordance with the guidelines set forth by the statutory fee schedule. Defendant’s response to the demand letter also stated that “These may or may not be the only issues specifically identified. We do not waive our right to defense of this claim for any additional issues.”

Counsel for Defendant then properly pled affirmative defenses pertaining to the deficiencies in Plaintiff’s pre-suit demand letter. In cases like this, where the insurer responded to a pre-suit demand by explaining the reasons for adjustments or denials of a claim, this does not constitute a waiver of an affirmative defense pertaining to legal deficiencies in the pre-suit demand letter where those defenses were properly pleaded in an answer. See Ted Berger, D.C., P.A., INC., a/a/o Giselle Victor v. GEICO General Insurance Company, 18 Fla. L. Weekly Supp. 545c (Fla. 17th Jud. Cir. (Broward Cty. Ct.) Feb. 28, 2011) (finding that the pre-suit demand letter was invalid and that the insurer did not waive its affirmative defense regarding the insufficiency of the demand letter by failing to articulate any perceived deficiencies when it responded to the letter where the insurer plead the affirmative defense pertaining to the demand letter’s deficiencies in its initial answer); First Health Chiropractic a/a/o Sheila Gholami v. State Farm Mutual Automobile Ins. Co., 18 Fla. L. Weekly Supp. 484a (Fla. 9th Jud. Cir. (Orange Cty. Ct.) Oct. 25, 2010) (finding that the insurer did not waive its affirmative defense pertaining to the insufficiency of the pre-suit demand letter where the insurer’s answer included a general denial to the plaintiff’s allegation that all conditions precedent had been met.)FINAL JUDGMENT

IT IS THEREFORE ORDERED AND ADJUDGED that USAA Casualty Insurance Company’s Motion for Final Summary Judgment be and is hereby is GRANTED, and Final Judgment is hereby entered on behalf of Defendant, USAA Casualty Insurance Company. The Plaintiff, Alliance Spine & Joint I, Inc., shall take nothing by this action and the Defendant, USAA Casualty Insurance Company, shall go hence without day. The Court retains jurisdiction for the purpose of determining any motion by the Defendant to tax fees and costs.