24 Fla. L. Weekly Supp. 715a
Online Reference: FLWSUPP 2409DTHONOT FINAL VERSION OF OPINION
Subsequent Changes at 25 Fla. L. Weekly Supp. 381aInsurance — Personal injury protection — Coverage — Medical expenses — Where definition of “reasonable charge” in PIP policy is hybrid of factors found in reasonable amount method of reimbursement and provisions from fee schedule method of reimbursement, policy is ambiguous as to reimbursement method and did not specifically elect fee schedule method of reimbursement — Approval of notice form or PIP policy form by Office of Insurance Regulation does not automatically validate legal sufficiency or enforceability of contents of policy
CRESPO & ASSOCIATES, P.A., as assignee of Debra Thompson, Plaintiff, vs. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant. County Court, 13th Judicial Circuit in and for Hillsborough County, General Civil Division. Case No. 16-CC-003030, Division I. September 19, 2016. Joelle Ann Ober, Judge. Counsel: Anthony T. Prieto, Prieto, Prieto & Goan, P.A., Tampa and David M. Caldevilla, de la Parte & Gilbert, P.A., Tampa, for Plaintiff. Scott Dutton and Steven T. Sock, Dutton Law Group, P.A., Tampa, for Defendant.
Rehearing Denied. 7/31/2017. FLW SUPP 2504DTHO
ORDER GRANTING PLAINTIFF’S MOTIONFOR SUMMARY JUDGMENT AS TOCOUNT I OF COMPLAINT
THIS MATTER came before the Court on August 16, 2016, concerning the “Motion for Summary Judgment as to Count I of Complaint” filed by the Plaintiff, Crespo & Associates, P.A., as assignee of Debra Thompson. After considering the motion, the admissible evidence in the record, the arguments of counsel, and the parties’ proposed orders, and being otherwise advised in the premises, this Court
ORDERS AND ADJUDGES as follows:
A. Introduction
1. This is an action concerning personal injury protection (“PIP”) insurance benefits for health care services provided by the Plaintiff to a patient insured by the Defendant, State Farm Mutual Automobile Insurance Company (“State Farm”), pursuant to its Policy Form 9810A.
2. Under Count I of the complaint, the Plaintiff seeks declaratory relief concerning the issue of whether State Farm Policy Form 9810A invokes the default fact-dependent reasonable amount payment calculation methodology set forth in Section 627.736(5)(a), Florida Statutes (2012-2015) (the “Reasonable Amount Method”), or the alternative permissive “schedule of maximum charges” payment calculation methodology set forth in Section 627.736(5)(a)1-5, Florida Statutes (2012-2015) (the “Medicare Fee Schedule Method”), or a hybrid method which includes elements from both of those methods. State Farm contends Policy Form 9810A lawfully elects the Medicare Fee Schedule Method, while the Plaintiff contends Policy Form 9810A contains an unlawful hybrid method, and as a result, the Reasonable Amount Method applies by default. Each party hotly contests the positions taken by the other, and there exists a bona fide controversy for which declaratory relief is available.
3. As explained below, this Court concludes the undisputed material facts demonstrate as a matter of law that the Plaintiff is entitled to a declaratory judgment against State Farm.
B. Undisputed Material Facts
4. At that time of the subject motor vehicle accident on December 22, 2014, the insured patient was covered by State Farm Policy Form 9810A, which provided PIP coverage.
5. State Farm’s Policy Form 9810A includes the following provisions concerning PIP coverage:
We will pay in accordance with the No-Fault Act properly billed and documented reasonable charges for bodily injury to an insured caused by an accident resulting from the ownership, maintenance, or use of a motor vehicle as follows:
1. Medical Expenses
We will pay 80% of properly billed and documented medical expenses . . . .
. . . . .
Limits
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 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 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 [thereafter setting forth (a.) through (f.) of the schedule of maximum charges] . . . .
See, State Farm Policy Form 9810A (filed with the Court under a Notice of Filing dated May 10, 2016), at p. 14-16. The insurance policy defines the term “medical expenses” as follows:
Medical Expenses means reasonable charges incurred for medically necessary, surgical, X-ray, dental, and rehabilitative services . . . . .
See, Policy Form 9810A at p. 4. In addition, the insurance policy defines the term “reasonable charge” as follows:
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.
See, Policy Form 9810A at p. 5 (emph. added).
6. The Plaintiff provided medical treatment to the insured patient on January 7, 2015, and obtained an assignment of benefits from the insured patient. See, Assignment of Benefits as Exhibit A to Complaint.
7. Instead of paying 80% of the Plaintiff’s billed charges, State Farm paid 80% of 200% of the allowable amount under participating physicians fee schedule of Medicare Part B.
8. The Plaintiff has filed a two count complaint. In Count I, the Plaintiff seeks declaratory relief, and in Count II, the Plaintiff seeks damages for breach of contract. The Plaintiff’s motion for summary judgment and this order are directed only to Count I for declaratory relief.
C. Standards for Summary Judgment
9. Summary judgment is proper if the genuine material facts are undisputed and the issue before the court can be decided as a matter of law. See, Fla. R. Civ. P. 1.510(c). If the pleadings and evidence reveal no genuine disputed issues of material fact, summary judgment is appropriate. See, e.g., Moore v. Morris, 475 So.2d 666 (Fla. 1985).
10. Disputes concerning statutory interpretation and contract interpretation present questions of law, which are properly resolved by summary judgment. See, e.g., Almand Constr. Co., Inc. v. Evans, 547 So. 2d 626, 628 (Fla. 1989) (“summary judgment was properly entered under the construction of the statute”); Volusia County v. Aberdeen at Ormond Beach, L.P., 760 So.2d 126, 131 (Fla. 2000) [25 Fla. L. Weekly S390a] (“where the determination of the issues of a lawsuit depends upon the construction of a written instrument and the legal effect to be drawn therefrom, the question at issue is essentially one of law only and determinable by entry of summary judgment”).
11. Further, disputes concerning the terms of an insurance policy are the proper subjects for declaratory relief under the Florida Declaratory Judgment Act. Tindall v. Allstate Ins. Co., 472 So.2d 1291, 1292 (Fla. 2d DCA 1985).
D. Legal Analysis
12. The subject claim is governed by the version of Section 627.736, Florida Statutes (2012-2015), as amended in 2012 and in effect since January 1, 2013. However, the PIP statute has been amended numerous times, and a brief history of that law is helpful to understand the context of the controversy in this case.
13. The Florida Motor Vehicle No-Fault Law was originally enacted in 1971, and is found in Sections 627.730 through 627.7405, Florida Statutes. See, Ch. 71-252, Laws of Fla. (1971). Since then, Florida has operated under as a “no-fault” system, whereby motor vehicle operators must secure PIP insurance with $10,000.00 in combined medical expense and lost wages coverage. See, e.g., § 627.736(1)(a), Fla. Stat. The PIP statute has always required insurers to cover “reasonable expenses” for medical expenses. Id.
14. Under the versions of Section 627.736 in effect from January 1, 2008 through June 30, 2012, the Legislature gave PIP insurers two alternative options for calculating the reasonable medical expenses coverage amount payable: (a) the original longstanding methodology of paying 80% of the reasonable amount of the charges based on various fact-dependent elements, referred to herein as the Reasonable Amount Method, or (b) a new alternative permissive methodology of paying 80% of various predetermined fixed amounts derived from a list of Medicare fee schedules and various other terms and conditions set forth in Section 627.736(5)(a)2 through 5, referred to herein as the Medicare Fee Schedule Method.
15. Under the 2008 version of Section 627.736, the following concepts are clear:
(a) Under the Reasonable Amount Method described in Section 627.736(5)(a)1 (2008), PIP insurers must pay 80% of all reasonable expenses charged by a health care provider, based on a fact-dependent methodology, but not “in excess of the amount the person or institution customarily charges for like services or supplies.”
(b) Alternatively, under the Medicare Fee Schedule Method described in Section 627.736(5)(a)2-5 (2008), the PIP insurer “may” limit payment of medical bills “to” 80% of amounts derived from a list of Medicare fee schedules and other applicable terms and conditions. Under the Medicare Fee Schedule Method, any lawfully provided treatment that is not covered by Medicare or workers’ compensation is not required to be reimbursed by the insurer, and therefore, must be paid by the insured patient himself. See, § 627.736(5)(a)1.f (2008). Additionally, the health care provider may not balance-bill the insured for any amount in excess of such limits, except for amounts not covered by PIP due to coinsurance or maximum policy limits. See, § 627.736(5)(a)4 (2008).
16. The Reasonable Amount Method is the “default methodology for calculating PIP benefits” and typically generates the highest level of PIP benefits recoverable under the PIP statute.1 In contrast, the alternative Medicare Fee Schedule Method typically generates the “minimum” level of PIP benefits recoverable under the PIP statute.2 Under both methods, however, the insurer is not required to pay more than the health care provider actually charged.
17. After the PIP statute was amended in 2008, a series of appellate decisions was issued by the Second, Third and Fourth DCAs concerning the Medicare Fee Schedule Method. See, Geico Indemnity Co. v. Physicians Group, LLC, a.a.o, Paul Androski, 47 So.3d 354, 356 (Fla. 2d DCA 2010) [35 Fla. L. Weekly D2448a]; Kingsway Amigo Ins. Co. v. Ocean Health, Inc., 63 So.3d 63 (Fla. 4th DCA 2011) [36 Fla. L. Weekly D1062a]; Nationwide Mut. Ins. Co. v. AFO Imaging, Inc., 71 So.3d 134, 137 (Fla. 2d DCA 2011) [36 Fla. L. Weekly D1463b]; Geico Indem. Co. v. Virtual Imaging Servs., Inc., 79 So.3d 55 (Fla. 3d DCA 2011) [36 Fla. L. Weekly D2597a] (“Virtual I”); DCI MRI, Inc. v. Geico Indem. Co., 79 So.3d 840 (Fla. 4th DCA 2012) [37 Fla. L. Weekly D170e]; Geico General Insurance Co. v. Virtual Imaging Services, Inc. 90 So.3d 321 (Fla. 3d DCA 2012) [37 Fla. L. Weekly D985b] (“Virtual I”).
18. In Nationwide, the Second DCA held that the Medicare Fee Schedule Method was the “minimum” amount payable and that PIP insurers could not rely on a Medicare fee schedule (i.e., the OPD fee schedule) that was not listed in the Medicare Fee Schedule Method provisions of the PIP statute. In four other district court cases (Kingsway, Virtual I, DCI MRI, and Virtual II), the Third and Fourth DCAs generally held that PIP insurers must make a clear and unambiguous election in the policy to rely on the Medicare Fee Schedule Method.
19. More specifically, in Kingsway, the Fourth DCA held the PIP statute “allows an insurer to choose between two different payment calculation methodology options” and “anticipates that an insurer will make a choice” which must be “clearly and unambiguously” elected. Kingsway, 63 So.3d at 67-68 (emph. added). Thereafter, in DCI MRI, the Fourth DCA explained that its prior decision in Kingsway required the PIP insurers to provide adequate “notice” to insureds and their health care providers of the intent to adopt the Medicare Fee Schedule Method. DCI MRI, 79 So.3d at 842.
20. After these district court appellate decisions, the Legislature amended the PIP statute again in mid-2012. Among other things, some of the subsections were renumbered and modified as of July 1, 2012 and January 1, 2013. The substance of subsection (5) remained largely unchanged, but the subsections were renumbered and a new subsection (5)(a)5 was added. See, Ch. 2012-197, Laws of Fla. (2012).
21. Notably, the 2012 amendments maintained the same two different alternative methods established by the 2008 amendments, and did nothing to abrogate the pre-existing case law such as Kingsway, which required PIP insurers “to choose between two different payment calculation methodology options,” or DCI MRI, which explained that PIP insurance companies must provide adequate “notice” to adopt the Medicare Fee Schedule Method. See, Ch. 2012-197, Laws of Fla. (2012). Indeed, the 2012 amendments codified the DCI MRI notice requirement in the new subsection (5)(a)5. Nothing in the 2012 amendments authorized PIP insurers to combine the two alternative methods, or to pick and choose among the terms and conditions to create a single amalgamated or hybrid method.
22. About one year after the new 2012 amendments took effect, the Florida Supreme Court issued its decision in Geico Gen. Ins. Co. v. Virtual Imaging Services, Inc.,141 So.3d 147 (Fla. 2013) [38 Fla. L. Weekly S517a] (“Virtual III”). Even though the 2008 version of the PIP statute did not include the new subsection (5)(a)5 notice provision created in the 2012 amendment, the Florida Supreme Court repeatedly explained, consistent with the Fourth DCA’s prior holdings in Kingsway and DCI MRI, that “notice” to insureds and their health care providers is required under the 2008 version of the PIP statute:
. . . We rephrase the certified question because the specific legal issue in this case is not whether an insurer can compute reimbursements based on the Medicare fee schedules “rather than” provide “reasonable medical expenses” coverage, as the question certified by the Third District frames the issue, but whether the insurer can use the Medicare fee schedules as a method for calculating the “reasonable medical expenses” coverage[3] the insurer is required by section 627.736 to provide, when the policy does not provide notice of the insurer’s election to use the fee schedules.
. . . . .
. . . We conclude that notice to the insured, through an election in the policy, is necessary because the PIP statute, section 627.736, requires the insurer to pay for “reasonable expenses . . . for medically necessary . . . services,” § 627.736(1)(a), Fla. Stat., but merely permits the insurer to use the Medicare fee schedules as a basis for limiting reimbursements, see § 627.736(5)(a)2., Fla. Stat. . . . .
Accordingly, we conclude that the insurer was required to give notice to its insured by electing the permissive Medicare fee schedules in its policy before taking advantage of the Medicare fee schedule methodology to limit reimbursements. . . .
Virtual III, 141 So.3d at 150 (emph. added; footnote omitted).
23. Besides this notice-of-election requirement, one of the main issues decided in Virtual III was whether the 2008 amendments to the PIP statute created one amalgamated method or two separate and distinct methods. The Florida Supreme Court confirmed that there are two separate and distinct methods, and consistent with the Fourth DCA’s prior holding in Kingsway, the Florida Supreme Court held that the PIP insurer must make “a choice” between one method “or” the other in its insurance policy:
. . . GEICO contends that there are not two methodologies for determining reasonableness. Four district courts of appeal cases, however, have all concluded the opposite; that is, that there are two methodologies. See Virtual II, 90 So.3d at 323; DCI MRI, 79 So.3d at 842; Virtual I, 79 So.3d at 57-58; Kingsway, 63 So.3d at 67. We agree with the district court decisions in this line of cases and conclude that the 2008 amendments provided an alternative, permissive way for an insurer to calculate reimbursements to satisfy the PIP statute’s reasonable medical expenses coverage mandate, but did not set forth the only methodology for doing so.
The 2008 fee schedule amendments used the word “may” to describe an insurer’s ability to limit reimbursements based on the Medicare fee schedules. See [former] § 627.736(5)(a)2. [now (5)(a)1], Fla. Stat. As the Third District observed in Virtual I, if an insurer is not required to use the Medicare fee schedules as a method of calculating reimbursements, the insurer must have “recourse to some alternative means for determining a reimbursement amount” if it chooses not to use the Medicare fee schedules. Virtual I, 79 So.3d at 58; see also Kingsway, 63 So.3d at 67 (stating that the 2008 amendments plainly allow an insurer “to choose between two different payment calculation methodology options” based on the Legislature’s use of the word “may,” which “indicates that this option choice is not mandatory”).
. . . The permissive language of the 2008 amendments, therefore, plainly demonstrates that there are two different methodologies for calculating reimbursements to satisfy the PIP statute’s reasonable medical expenses coverage mandate. See Kingsway, 63 So.3d at 67.
Accordingly, we conclude that the 2008 amendments were clearly permissive and 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 insured based on the factors enumerated in section 627.736(5)(a)1.
Virtual III, 141 So.3d at 156-157 (italics in original; bold and underline added). Moreover, the Florida Supreme Court also held that in making this “choice,” PIP insurers cannot rely on the Medicare fee schedules unless their policy “clearly and unambiguously” adopts the Medicare Fee Schedule Method. Virtual III, 141 So.3d at 158.
24. As illustrated by the Florida Supreme Court’s refusal to give Geico the option to use both methods in the same policy, PIP insurers do not have the option of alternating between or combining the two methods to create an amalgamated or hybrid method. See, Crespo & Associates, P.A. a.a.o. Veronica Rondon v. State Farm Mut. Auto. Ins. Co., 23 Fla. L. Weekly Supp. 982b, ¶¶ 12-13 (Fla. Hillsborough County Ct. Dec. 18, 2015) (Hon. Frances M. Perrone); University Community Hosp. a/a/o v. Mercury Ins. Co. of Fla., 21 Fla. L. Weekly Supp. 89a, ¶¶ 8-11 (Fla. Hillsborough County Ct., Sept. 16, 2013) (Hon. Scott Farr).
25. A “hybrid” method is not only contrary to Virtual III, but also creates significant problems for insureds and their health care providers. The biggest problem caused by a hybrid method is its effect on the applicability of various terms and conditions in Section 627.736(5)(a)1 through 5 (2012-2015). For example, under the default Reasonable Amount Method, the health care provider may balance-bill the patient for the difference left unpaid by the PIP insurer. But if the PIP insurer properly elects the Medicare Fee Schedule Method, such balance-billing is prohibited. See, § 627.736(5)(a)4 (2012-2015). As another example, under the Reasonable Amount Method, the PIP insurer must pay a reasonable amount, even if the type of service rendered would not be paid by Medicare or worker’s compensation. But under the Medicare Fee Schedule Method, the PIP insurer can pay nothing in that situation and the insured patient would be left responsible for paying the entire bill. See, § 627.736(5)(a)1.f and 4 (2012-2015). As another example, under the Medicare Fee Schedule Method, the PIP insurer may, in appropriate circumstances, avail itself to certain other Medicare coding policies and payment methodologies, but cannot do so under the Reasonable Amount Method. See, § 627.736(5)(a)3 (2012-2015). Thus, the structure of the PIP statute’s payment provisions and the governing case law require the PIP insurer to choose one method or the other.
E. State Farm Policy Form 9810A adopts a hybrid method
26. Most PIP disputes are decided by the county courts. As of the date of the summary judgment hearing, dozens of different county court judges across the State of Florida have issued numerous persuasive and well-reasoned decisions concluding that State Farm has improperly adopted a hybrid method or otherwise failed to lawfully elect the Medicare Fee Schedule Method in its PIP insurance policies.4 One of those decisions was issued last year by the Honorable Frances J. Perrone of the County Court for Hillsborough County. See, Crespo & Associates, P.A. a.a.o. Veronica Rondon v. State Farm Mut. Auto. Ins. Co., 23 Fla. L. Weekly Supp. 982b (Fla. Hillsborough County Ct. Dec. 18, 2015). Most recently, a Hillsborough Circuit Judge, the Honorable Claudia R. Isom also entered an order against State Farm on the same issue. See, State Farm Mut. Auto. Ins. Co. v. MRI Associates of Tampa, Inc., Case No. 14-CA-8634, “Order Granting MRI Associates, Inc.’s Motion for Final Summary Judgment, and Denying State Farm Mutual Automobile Insurance Company’s Motion for Final Summary Judgment” (Fla. 13th Jud. Cir. Ct. Aug. 18, 2016). A very similar decision was issued against another PIP insurer by another Hillsborough County Judge, the Honorable Scott Farr, concerning another insurance company. See, University Community Hosp. a/a/o v. Mercury Ins. Co. of Fla., 21 Fla. L. Weekly Supp. 89a (Fla. Hillsborough County Ct., Sept. 16, 2013). This Court generally agrees with those decisions.
27. As correctly explained by Judge Perrone’s decision against State Farm in the Rondon case and in dozens of other persuasive county court decisions against State Farm, the definition of “reasonable charge” in Policy Form 9810A is a hybrid of various elements of the Reasonable Amount Method of Section 627.736(5)(a) and the Medicare Fee Schedule Method of Section 627.736(5)(a)1-5, and specifically states that State Farm will consider “one or more” of those various elements. Paragraphs 1, 2, 3, 4, and 6 of the State Farm’s “reasonable charge” definition correspond to elements of the Reasonable Amount Method listed in Section 627.736(5)(a). However, paragraphs 5 and 7 of the definition correspond to elements of the Medicare Fee Schedule Method found in Section 627.736(5)(a)1 and 3. See, e.g., Rondon, 23 Fla. L. Weekly Supp. 982b at ¶16. See also, e.g., DNA Center, LLC, a.a.o. Helen Roy v. State Farm Mut. Auto. Ins. Co., 23 Fla. L. Weekly Supp. 1043a (Fla. Volusia County Ct. Feb. 24, 2016) (table illustrating how the “reasonable charge” definition is comprised of elements of the Reasonable Amount Method and of the Medicare Fee Schedule Method). As explained by Judge Farr, a PIP insurer cannot alternate between the two statutory methodologies at its whim. University Community Hosp., 21 Fla. L. Weekly Supp. 89a at ¶¶ 9-11.
28. State Farm suggests that the “reasonable charge” definition in Policy Form 9810A is rendered meaningless or moot because other policy language clearly states “in no event will we pay more than 80% of the following No-Fault Act ‘schedule of maximum charges’. . . .” First, by stating that State Farm will never “pay more” than the fee schedule amount, State Farm is clearly attempting to reserve the ability to pay less than the minimum fee schedule amount.
29. Moreover, this provision that State Farm will never “pay more” is contradicted by State Farm’s own conduct. The Third DCA has repeatedly held that the limiting charge fee schedule pays higher amounts than the participating physicians fee schedule. See, Millennium Diagnostic Imaging Ctr., Inc. v. Sec. Nat. Ins. Co., 882 So.2d 1027 (Fla. 3d DCA 2004) [29 Fla. L. Weekly D1817b]; Advanced Diagnostics Testing v. Allstate Ins. Co., 888 So.2d 663 (Fla. 3d DCA 2004) [29 Fla. L. Weekly D2342c]. Nonetheless, in other cases involving Policy 9810A, State Farm has paid PIP claims based on Medicare’s limiting charge fee schedule, which pays more than the Medicare participating physicians fee schedule. For example, in Judge Isom’s recent decision, footnote 1 explains that State Farm relied on the limiting charge fee schedule. See, State Farm Mut. Auto. Ins. Co. v. MRI Associates of Tampa, Inc., Case No. 14-CA-8634, “Order Granting MRI Associates, Inc.’s Motion for Final Summary Judgment, and Denying State Farm Mutual Automobile Insurance Company’s Motion for Final Summary Judgment” (Fla. 13th Jud. Cir. Ct. Aug. 18, 2016). See also, AFO Imaging, Inc., a.a.o. Asha Brown v. State Farm Mut. Auto. Ins. Co., 24 Fla. L. Weekly Supp. 165b (Hillsborough County Ct. March 15, 2016) (noting that State Farm’s payment was based upon the limiting charge fee schedule); New Smyrna Imaging, LLC, a.a.o. Randy Durgin v. State Farm Mut. Auto. Ins. Co., 22 Fla. L. Weekly Supp. 717a (Volusia County Ct. Oct. 21, 2014) (noting that State Farm’s payment was based upon the limiting charge fee schedule). So, sometimes, State Farm does “pay more” than the “schedule of maximum charges.” Moreover, in Millennium Diagnostic and Advanced Diagnostics, the Third DCA held that the limiting charge fee schedule is not authorized by the PIP statute. In fact, the limiting charge fee schedule is not mentioned anywhere in the PIP statute or in Policy Form 9810A. Thus, besides sometimes paying “more” than the schedule of maximum charges, State Farm is relying on a fee schedule that is not mentioned anywhere in the PIP statute or its insurance policy.
30. There are also published cases where State Farm paid less than 80% of 200% of the participating physicians fee schedule amount. See, e.g., Rondon, 23 Fla. L. Weekly Supp. 982b at ¶7; Florida Emergency Physicians Kang & Associates, M.D., P.A., a.a.o. Jonathan Sias v. State Farm Mut. Auto. Ins. Co., Case No. 2014-SC-9502-O, “Order Granting Plaintiff’s Motion for Summary Judgment and Denying Defendant’s Motion for Summary Judgment” at ¶5 (Fla. Orange County Ct. Feb. 10, 2016). State Farm’s attempt to give itself authority to pay less than the fee schedule amount is problematic, because the Second DCA has clearly held that the Medicare Fee Schedule Method generates the “minimum” amount payable. Nationwide, 71 So.3d at 137.
31. So, sometimes State Farm pays more than the schedule of maximum benefits amount, sometimes State Farm pays less than the schedule of maximum benefits amount, and sometimes (like in this case) State Farm pays the schedule of maximum benefits amount. Simply stated, if State Farm had actually elected the “schedule of maximum charges,” then State Farm would be paying all PIP claims at the precise amount identified by that “schedule of maximum charges,” instead of sometimes paying less and sometimes paying more than that amount. This situation leaves the insured patient and the health care provider unable to know or predict the amount of PIP reimbursement that State Farm will pay.
32. State Farm argues that Virtual III and Kingsway do not apply to Policy Form 9810A because those cases construed the 2008 version of the PIP statute, before the Legislature adopted the notice provision in subsection (5)(a)5 in the 2012 amendments. State Farm relies on the portion of the Florida Supreme Court’s statement in Virtual III that its “holding applies only to policies that were in effect from the effective date of the 2008 amendments to the PIP statute that first provided for the Medicare fee schedule methodology, which was January 1, 2008, through the effective date of the 2012 amendment, which was July 1, 2012.” Id., 141 So.3d at 150. However, in the introductory portion of that same sentence, the Florida Supreme Court explained that the PIP insurance company in that case (Geico) had recently amended its policy “to include an election of the Medicare fee schedules as the method of calculating reimbursements” and as a result, the Virtual III decision “applies only to policies” (i.e., Geico policies) that were in effect before Geico amended its policy to include a precise “election” of “the” method it would use. In other words, the Florida Supreme Court explained the Virtual III decision did not apply to Geico’s amended policies. State Farm Policy Form 9810A does not include such an election.
33. Moreover, in Virtual III, the Florida Supreme Court held that notice of the election was required “because” the 2008 version of PIP statute had two different methods — not because the 2012 version of the PIP statute now specifically incorporated a notice requirement. Virtual III, 141 So.3d at 150. When the new notice provision of subsection (5)(a)5 was adopted on July 1, 2012, the Legislature simply codified what the Fourth DCA had already held in DCI MRI, and did not otherwise amend the two-method system. And, as the Florida Supreme Court explained in Virtual III, it is the existence of that two-method system which requires an insurer to make a clear and unambiguous notice of election between one method or the other. The same clear and unambiguous notice of election is still required “because” even after the 2012 amendments, the PIP statute has the same two-method system discussed in Virtual III. Indeed, as rephrased by the Florida Supreme Court, the certified question that was answered in Virtual III applies “to PIP policies issued after January 1, 2008” and that certified question does not identify an ending date. Id. at 150 (caps omitted). The Florida Supreme Court did not hold that all other insurers could ignore Virtual III in insurance policies issued on or after July 1, 2012. Nor has any appellate court held that Virtual III does not apply to such insurance policies.
34. In support of its argument, State Farm cites to the decisions holding that an Allstate PIP insurance policy properly elects the Medicare Fee Schedule Method. See, Allstate Fire & Cas. Inc. Co. v. Stand-Up MRI of Tallahassee, P.A., 188 So. 3d 1 (Fla. 1st DCA 2015) [40 Fla. L. Weekly D693b]; Allstate Indemnity Co. v. Markley Chiro. & Acupuncture, LLC, __ So. 3d __, 2016 WL 1238533 (Fla. 2d DCA Mar. 30, 2016) [41 Fla. L. Weekly D793b]; Florida Wellness & Rehab. v. Allstate Fire & Cas. Ins. Co., __ So.3d __, 2016 WL 3745527 (Fla. 3d DCA July 13, 2016) [41 Fla. L. Weekly D1619c]; South Fla. Wellness, Inc. v. Allstate Ins. Co., 89 F.Supp.3d 1338 (S.D. Fla. 2015). To the extent that State Farm contends that Virtual III only applies to the 2008 version of the PIP statute, it should be noted that these Allstate cases also involve the 2008 version of the PIP statute and not the 2012 version. In any event, the Allstate policy does not include a “reasonable charge” definition like the one in State Farm Policy 9810A, which expressly commingles the various elements of the Reasonable Amount Method and the Medicare Fee Schedule Method. And, in all of the Allstate cases, that insurance company consistently paid the Medicare Fee Schedule Method amount. In contrast, State Farm sometimes pays less and sometimes pays more than the Medicare Fee Schedule Method, depending on what factors State Farm decides to apply.
35. This Court respectfully disagrees with State Farm’s argument that its hybrid method is authorized by the policy form approval process described in the 2012 version of Section 627.736(5)(a)5. Subsection (5)(a)5 states:
5. An insurer may limit payment as authorized by this paragraph only if the insurance policy includes a notice at the time of issuance or renewal that the insurer may limit payment pursuant to the schedule of charges specified in this paragraph. A policy form approved by the [Office of Insurance Regulation] satisfies this requirement. If a provider submits a charge for an amount less than the amount allowed under subparagraph 1., the insurer may pay the amount of the charge submitted.
(Emph. added).
36. In this case, the Plaintiff is not challenging the sufficiency of “a notice” allegedly provided by State Farm, but rather is challenging provisions within Policy Form 9810A itself.
37. State Farm contends that Policy Form 9810A complies with OIR Informational Memorandum OIR-12-02M dated May 4, 2012 and was approved by the Florida Office of Insurance Regulation (“OIR”) pursuant to subsection (5)(a)5 of the PIP statute. But it is undisputed that State Farm submitted Policy Form 9810A to the OIR on February 6, 2012, which was months before the OIR issued its memorandum and before the July 1, 2012 effective date of the new subsection (5)(a)5 of the PIP statute.
38. Further, the OIR’s memorandum specifically states the agency “will commit to review filings submitted for this purpose . . . provided that the insurer has only submitted one endorsement in the file and that one endorsement only contains language to implement the notice requirement,” and explains that “All form filings are subject to the standard form review process of Section 627.410, Florida Statutes.” In addition, the OIR memorandum also contains disclaimers which state, “Depending upon the existing policy language and case by case filing details” the sample language “may be suitable,” but “Ultimately, it is the insurer’s responsibility to develop its own language after researching the issue, reviewing its contract forms, and conferring with its legal staff.” See, Exhibit 2 of Defendant’s request for judicial notice dated August 12, 2016. In this case, State Farm submitted an entire policy form to OIR, not an endorsement with only the single isolated issue which OIR indicated that it would review. Further, there is also no evidence or stipulation that State Farm’s policy was approved by the OIR for purposes of satisfying the general purposes of Section 627.410 or for the limited purposes of Section 627.736(5)(a)5 or for some other purpose.
39. In any event, mere approval by the OIR of “a notice” form or even an entire insurance policy form for use in the State of Florida does not automatically validate the legal sufficiency or enforceability of the contents of the insurance policy itself. See, e.g., Gonzalez v. Associates Life Ins. Co., 641 So.2d 895 (Fla. 3d DCA 1994); Kaufman v. Mutual of Omaha Ins. Co., 681 So.2d 747 (Fla.3d DCA 1996) [21 Fla. L. Weekly D1716b]. It is also well-settled that state agencies, such as the OIR, have no authority to interpret or enforce contracts, or to adjudicate contract disputes, and that such authority and jurisdiction is vested exclusively in the judiciary. See, e.g., Peck Plaza Condominium v. Div. of Florida Land Sales and Condominiums, Dept. of Business Reg., 371 So.2d 152, 153-54 (Fla. 1st DCA 1979); Biltmore Construction Co. v. State, Department of General Services, 363 So.2d 851, 853-854 (Fla. 1st DCA 1978); Vincent J. Fasano, Inc. v. School Bd. of Palm Beach, 436 So.2d 201, 202 (Fla. 4th DCA1983). Subsection (5)(a)5 of the PIP statute does not delegate to the OIR the authority to determine the meaning and legal sufficiency and enforceability of any and all provisions within an PIP insurance policy and to circumvent the exclusive jurisdiction of the court system to determine contract disputes by the mere act of rubber-stamping the word “approved” on a proposed insurance form. Such a delegation would violate the constitutional separation of powers doctrine. See, e.g., Askew v. Cross Key Waterways, 372 So. 2d 913, 924 (Fla. 1978).
40. In this case, the “reasonable charge” definition found in Policy Form 9810A is not found anywhere in the OIR memorandum. Policy Form 9810A also has other material deviations from the sample language contained in the OIR memorandum. These differences are significant because the OIR memorandum explains that the sample language “may” be suitable “depending” on the rest of the policy language and other case-by-case details. See, Exhibit 2 of Defendant’s request for judicial notice dated August 12, 2016.
41. At the summary judgment hearing, State Farm also argued that the declarations page issued to the Insured Patient included a notice that State Farm may rely on the schedule of maximum charges. Again, the Plaintiff is not challenging “a notice” provided by State Farm but is challenging the language within the insurance policy itself. Further, there is no evidence in this record demonstrating that OIR actually approved the declaration page form or the alleged notice provision therein. And, even if approved by OIR, such approval would certainly not authorize State Farm to provide a notice to its insureds which is contrary to the actual language within the insurance policy itself.
F. Declaratory Judgment
42. In summary, this Court agrees with the well-reasoned and persuasive decisions of Judge Perrone in Rondon, of Judge Isom in MRI Associates, and of Judge Farr in University Community Hospital, and the dozens of other county court decisions submitted by the Plaintiff which hold that State Farm has improperly adopted a hybrid method. In contrast, the cases cited by State Farm do not mention, address, or analyze the “reasonable charge” definition of Policy Form 9810A or the implications of that definition.
43. With respect to the claim for declaratory relief set forth in Count I of the Plaintiff’s complaint, this Court hereby GRANTS partial summary judgment in favor of the Plaintiff and against State Farm concerning the parties’ respective rights and obligations pursuant to Policy Form 9810A and Section 627.736, Florida Statutes (2012-2015), which this Court determines and declares as a matter of law are as follows:
(a) State Farm has failed to clearly and unambiguously elect the Medicare Fee Schedule Method in Policy Form 9810A, and has instead adopted an unauthorized hybrid method comprised of elements from both the Medicare Fee Schedule Method described in Section 627.736(a)1-5, Florida Statutes (2012-2015) and the fact-dependent Reasonable Amount Method described in Section 627.736(5)(a), Florida Statutes (2012-2015).
(b) With respect to the Plaintiff’s PIP claims submitted under Policy Form 9810A, State Farm is required to pay such claims in accordance with the default Reasonable Amount Method, instead of the unauthorized hybrid method described in Policy Form 9810A or the Medicare Fee Schedule Method.
44. This is a non-final order. This Court reserves jurisdiction to determine Count II of the complaint, and any claims for reasonable attorneys’ fees and costs.
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1See, Allstate Fire & Cas. Ins. v. Stand-Up MRI of Tallahassee, P.A., 188 So.3d 1, 2-3 (Fla. 1st DCA Aug. 19, 2015) [40 Fla. L. Weekly D693b] (noting that the Reasonable Amount Method “is the default methodology for calculating PIP reimbursements, which also apparently results in higher reimbursements” than the Medicare Fee Schedule Method) (emph. added). See also, § 627.736(5)(a), Fla. Stat. (2012-2015) (health care provider “may charge the insurer and injured party only a reasonable amount pursuant to this section” and “such a charge may not exceed the amount the person or institution customarily charges”); Geico Indemnity Co. v. Physicians Group, LLC, a.a.o., Paul Androski, 47 So.3d 354, 356 (Fla. 2d DCA 2010) [35 Fla. L. Weekly D2448a] (noting that amount payable for surgical procedure was $10,800 under the Reasonable Amount Method, but was merely $1,122 under the Medicare Fee Schedule Method).
2 See, Nationwide Mut. Ins. Co. v. AFO Imaging, Inc., 71 So.3d 134, 137 (Fla. 2d DCA 2011) [36 Fla. L. Weekly D1463b] (the Medicare Fee Schedule Method is “utilized in computing the minimum amount” payable by PIP insurance) (emph. added).
3The “reasonable medical expenses coverage” described by the Florida Supreme Court refers to the required coverage described in subsection (1)(a) of the PIP statute (“Every insurance policy . . . shall provide personal injury protection . . . to a limit of $10,000 . . . as follows . . . Eighty percent of all reasonable expenses. . .”), and does not refer to the fact-dependent default payment calculation method that many courts and litigants commonly refer to as the “Reasonable Amount Method” described in subsection (5)(a)1 of the PIP statute. In rephrasing the certified question, the Florida Supreme Court was confirming that the “reasonable medical expenses coverage” is not replaced by the fee schedule method, but can be calculated using either the fact-dependent method or the fee schedule method. Virtual III clearly holds that “there are two different methodologies for calculating reimbursements to satisfy the PIP statutes reasonable expenses coverage mandate” and that insures must make “a choice” between one method “or” the other. Virtual III, 141 So.3d at 156-157 (italics in original; underline added). Likewise, Justice Canady’s dissenting opinion observes that the majority’s decision rests on the premise that the PIP statute establishes two “mutually exclusive payment methodologies.” Id., 141 So.3d at 160. Because the majority held that PIP insurers must make “a choice” between one method “or” the other, the “mutually exclusive” nature of the two methods is inescapable. Virtual III, 141 So.3d at 157 and 160.
4Copies of those county court decisions were provided to the Court by Plaintiff’s counsel.
