24 Fla. L. Weekly Supp. 536b

Online Reference: FLWSUPP 2407DAVIInsurance — Personal injury protection — Coverage — Medical expenses — PIP policy that provides that insurer will pay 80% of reasonable charges and also provides that in no event will insurer pay more than 80% of 200% of Medicare Part B fee schedule does not unambiguously elect to limit reimbursement to statutory fee schedule — Neither approval of PIP policy by Office of Insurance Regulation nor use of OIR sample language in policy constitutes per se compliance with requirement that policy provide unambiguous notice of intent to limit reimbursement to permissive statutory fee schedule

FIRST COAST MEDICAL CENTER, INC., As Assignee for Scott Davis, Plaintiff, vs. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant. County Court, 4th Judicial Circuit in and for Duval County. Case No. 2015-SC-5458 CC-B. June 28, 2016. Roberto A. Arias, Judge. Counsel: Adam Saben, Shuster & Saben, Jacksonville, for Plaintiff. Carlos Carmona, Bronstein & Carmona, Fort Lauderdale, for Defendant.

ORDER GRANTING PLAINTIFF’S MOTIONFOR SUMMARY JUDGMENT AND DENYINGDEFENDANT’S MOTION FORSUMMARY JUDGMENT

This cause came on to be heard upon the competing Motions for Summary Judgment filed by the parties. The Plaintiff was represented by Adam Saben, Esquire, and the Defendant was represented by Carlos Carmona, Esquire. The Court has reviewed the entire court file, the motions and memoranda of law filed by the attorneys for the respective parties and has considered the able arguments for counsel of both the Plaintiff and Defendant. Having considered the foregoing, the Court finds that it is required by the Florida Supreme Court decision in Geico v. Virtual Imaging Services, 141 So.3d 147 (Fla. 2013) [38 Fla. L. Weekly S517a] to grant the Plaintiff’s Motion for Summary Judgment and deny the Defendants Motion for Summary Judgment.

The facts of this case are rather simple. The Plaintiff provided services to the insured to treat an injury received as a result of an automobile accident. The Assignee/Patient was insured with the Defendant’s insurance carrier which policy provided PIP benefits under the No-Fault coverage. After having treated the insured, the Plaintiff submitted its invoice to the Defendant for payment pursuant to the terms and conditions of the Defendant’s policy of insurance, and specifically, under the policy’s coverage for PIP. Upon receiving the Plaintiff’s billings, the Defendant issued a partial payment and reduced any and all payments made to the Plaintiff to reflect the amount permitted under the Medicare Part B fee schedule. The Defendant maintains that it is only required to pay to the amount listed under the Medicare Part B’s fee schedule, pursuant to the language in the Defendant’s insurance policy. The Plaintiff, on the other hand, maintains that the Defendant cannot limit its payment, pursuant to the Medicare Part B fee schedule, because it did not properly use language in the policy of insurance to place its insured (the patient) and providers on notice that it would use the Medicare Part B schedules to determine payments of the claim. That is, that it did not use in clear and unambiguous terms, that it was electing, what has been described as, the (permissive) payment methodology as held by the Supreme Court in Geico v. Virtual Imaging Services, 141 So.3d147 (2013) [38 Fla. L. Weekly S517a]. Therefore, the Plaintiff contends, the Defendant did not properly elect the Medicare fee schedule methodology and, as a result, was required to process the bill under the “reasonableness” methodology set forth in Florida Statute §627.736(5)(a).

ANALYSIS

An extensive overview of the history of Florida’s PIP Statute was made by the Florida Supreme Court in Virtual, id at pages 152-158. This Court will not duplicate the Supreme Court’s effort in this order. The Supreme Court based its decision after reviewing the provisions of the Statute and its history.

The issue in this case requires this Court to review the contract of insurance and the policy provisions and the Florida Statutes. The particular issues presented to this Court has been the subject of a lot of litigation throughout the State. This Court has reviewed Court decisions and opinions rendered by County Court Judges from around the State, including in our 4th Judicial Circuit. These opinions are not unanimous in their holdings. Additionally, the Supreme Court has granted review of the 4th DCA opinion in Orthopedic Specialist as Assignee of Kelly Serridge v. Allstate Insurance Company, 177 So.3d 19 (Fla. 4th DCA 2015) [40 Fla. L. Weekly D1918a]. There, a very similar issue, as with that presented in this case, has been raised by the appellant. Therefore, the Supreme Court’s decision in the pending appeal will probably decide the issue presented in this case once and for all.

The policy of insurance in this case (Policy Form 9810A) on pages 14-16, in pertinent part, provides as follows:

Insuring Agreement

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, but only if that Insured receives initial services and care from a provider described in A. below within 14 days after the motor vehicle accident that caused bodily injury to that insured.

* * *

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 Medicate and Medicaid Services, including applicable modifiers:

* * *

f. For all other medical services, supplies and care, 200 percent of the allowable amount under:

(I) The participating physicians fee schedule of Medicare Part B, except as provided in sub-sub-subparagraphs (II) and (III).

(II) Medicare Part B, in the case of services, supplies, and care provided by ambulatory surgical centers and clinical laboratories,

(III) The Durable Medical Equipment Prosthetics/Orthotics and Supplies fee schedule of Medicare Part B, in the case of durable medical equipment.

However, if such services, supplies, or care is not reimbursable under Medicare Part B, as provided in this sub-subparagraph, then we will limit reimbursement to 80 percent of the maximum reimbursable allowance under workers’ compensation, as determined under s. 440.13, Florida Statutes, and rules adopted thereunder which are in effect at the time such services, supplies, or care is provided. Services, supplies, or care that is not reimbursable under Medicare or workers’ compensation `(Florida Rules of Procedure for Worker’s Compensation Adjudication) will not be reimbursed by us.

For purposes of the above, the applicable fee schedule or payment limitation under Medicare is the fee schedule or payment limitation in effect on March 1 of the year in which the services, supplies, or care is rendered and for the area in which such services, supplies, or care is rendered, and the applicable fee schedule or payment limitation applies throughout the remainder of that year, notwithstanding any subsequent change made to the fee schedule or payment limitation, except that it will not be less than the allowable amount under the applicable schedule of Medicare Part B for 2007 for medical services, supplies, and care subject to Medicare Part B.

This policy also defines “reasonable charges” as:

Reasonable Charge, which includes reasonable expense, means and amounts 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 fee schedules applicable to motor vehicle and other insurance coverage;

5. The schedule of maximum charges under 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 top coding policy or payment methodology does not constitute a utilization limit.

Florida Statute §627.736 provides as follows:

627.736 Required personal injury protection benefits; exclusions; priority; claims. —

(1) Required Benefits: — An Insurance policy complying with the security requirements of s. 627.733 must provide personal injury protection to the named insured,. . .as follows:

(a) Medical benefits: — Eighty percent of all reasonable expenses for medically necessary medical, surgical, X-ray, dental, and rehabilitative services if the individual receives initial services and care pursuant to subparagraph 1, within 14 days after the motor vehicle accident. . . . .

* * *

(5) CHARGES FOR TREATMENT OF INJURED PERSONS. —

(a) A physician, hospital, clinic, or other person or institution lawfully rendering treatment to an injured person for a bodily injury covered by personal injury protection insurance may charge the insurer and injured party only a reasonable amount pursuant to this section for the services and supplies rendered. . . . However, such a charge may not exceed the amount the person or supplies. In determining whether a charge for a particular service, treatment, or otherwise is reasonable, consideration may be given to evidence of usual and customary charges and payments accepted by the provider involved in the dispute, reimbursement levels in the community and various federal and state medical fee schedules applicable to motor vehicle and other insurance coverages, and other information relevant to the reimbursement for the service, treatment, or supply.

1. The insurer may limit reimbursement to 80 percent of the following schedule of maximum charges:

* * *

f. For all other medical services, supplies, and care, 200 percent of the allowable amount under:

(I) The participating physicians fee schedule of Medicare Part B, except as provided in sub-sub-subparagraphs (II) and (III).

(II) Medicare Part B, in the case of services, supplies, and care provided by ambulatory surgical center and clinical laboratories.

(III) The Durable Medical Equipment Prosthetics/Orthotics and Supplies fee schedule of Medicare Part B, in the case of durable medical equipment.

However, if such services, supplies, or care is not reimbursable under Medicare Part B, as provided in this sub-subparagraph, then we will limit reimbursement to 80 percent of the maximum reimbursable allowance under workers’ compensation, as determined under s. 440.13 and rules adopted thereunder which are in effect at the time such services, supplies, or care is provided. Services, supplies, or care that is not reimbursable under Medicare or workers’ compensation is not required to be reimbursed by the insurer.

In addition, sub-subparagraph (5)(a)5 provides as follows:

Effective July 1, 2012, an insurer may limit payment as authorized by this paragraph only if the insurance policy includes notice at the time of issuance or renewal that the insurer may limit payment pursuant to the schedule of charges specified in the paragraph. A policy form approved by the office satisfies this requirement.

The policy in this case clearly provides that the Defendant will pay 80% of the properly billed and documented reasonable charges for bodily injury to an insured, in accordance to the No-Fault Act, (emphasis added). This policy also clearly provides a limit to those payments. Under the “Limits” portion of the policy, it provides that “in no event will we pay more than 80% of the following ‘schedule of maximum charges and . . . (f). . . 200% of . . . Medicare Part B. . .’

This Court finds that the policy clearly notifies the insured and medical provider that it is limiting the payments of all reasonable charges to 80% of the Medicare Part B participating physician fee schedule. Of this, there is no ambiguity at all. If the required analysis was only to determine whether the policy’s language clearly conveyed a limitation of payment, no further inquiry would be necessary.

The Court, however, must also determine under Geico General Insurance Company v. Virtual Imaging Services (Virtual), 141 So.3d 147 (Fla. 2013) [38 Fla. L. Weekly S517a], whether the insurer, through the policy, “clearly and unambiguously elect[ed] the permissive payment methodology in order to rely on it.” Virtual, id. at page 158 (citing with approval to Kingsway Amigo Ins. Co. v. Ocean Health Inc., 63 So.3d 63 (Fla. 4th DCA 2011) [36 Fla. L. Weekly D1062a]. In Virtual, the Court held that the PIP Statute provided the insurer two different mechanisms for determining “reasonableness” of the charges. The first was a fact-dependent inquiry that determined the reasonableness of the charges by considering various factors under §627.736(5). The factors listed were usual and customary charges and payments accepted by the provider, reimbursement levels in the community and various Federal and State medical fee schedules and other information relevant to the reasonableness of the reimbursement. Virtual, at pages 155-156. The second and alternative methodology or mechanism, for determining “reasonableness” and pay properly submitted claims, is “by reference to the Medicare fee schedules”. Id at 156. This Court notes that some of the language used by the Florida Supreme Court within the Virtual opinion seems to indicate that the provider only needs to give “notice in its policy of its election [to limit reimbursement]. Id at 156. However, the majority goes on to “adopt the reasoning of the Fourth District in Kingsway.” Virtual at page 160. Thus, “[b]ecause the policy. . .did not reference the permissive method of calculation based on the Medicare fee schedules, Geico could not limit its reimbursement based on those fee schedules.” Id. There, the Court answered negatively the following rephrased certified question:

WITH RESPECT TO PIP POLICIES ISSUED AFTER JANUARY 1st, 2008, MAY AN INSURER LIMIT REIMBURSEMENTS BASED ON THE MEDICARE FEE SCHEDULES IDENTIFIED IN §627.736(5)(a), FLORIDA STATUTES, WITHOUT PROVIDING NOTICE IN ITS POLICY ELECTION TO USE THE MEDICARE FEE SCHEDULES AS THE BASIS FOR CALCULATING REIMBURSEMENTS? (emphasis added)

Therefore, Virtual can only be read as requiring the insurer to clearly elect the payment methodology it will use to calculate all of the reimbursements, rather than merely establishing the Medicare Part B schedules as a limit to them.

This reading of Virtual is also supported by the dissenting opinions of Justices Cannady and Polston. There, they noted that “[t]he view adopted by the majority and the District Courts rest on the interpretive policy that §627.736(5)(a)1 and §627.736(5)(a)2, Florida Statutes (2008), respectively established mutually exclusive payment methodologies.” Virtual, id at page 160. They also noted that “(n)othing in the Statute suggest that an insurer must make a one-time election between §627.736(5)(a)1 and §627.736(5)(a)2.” Virtual, at page 161. While this Court may agree with Justices Polston and Cannady, it is rather obvious that the majority of the Supreme Court, as reflected in the Virtual opinion, disagree with the three of us.

The question still remains whether the policy in question clearly, pursuant to Virtual, give “notice in its policy of an election to use the Medicare fee schedules as the basis for calculating reimbursements.” Virtual, at page 160.

It is a well-settled rule of law in Florida that where an insurance contract is ambiguous, it will be construed liberally in favor of the insured and strictly against the insurer. Elsworth v. Ins. Co. of North America, 508 So.2d 395 (Fla. 1st DCA 1987). Where a policy of insurance has provisions that conflict with each other, the policy is ambiguous and must be construed in favor of coverage. Tire Kingdom v. First Southern Ins. Co., 573 So.2d 885 (Fla. 3rd DCA 1990).

The conflict herein exists by virtue of the requirement that the insurance company has to clearly and unambiguously notify the insurer and, for that matter, the medical providers that the insurance company has elected to use the Medicare Part B fee schedules as the basis for calculating the reimbursements. A review of the policy provisions reflects that, while clearly attempting to limit the payment to 80%, it also allows State Farm to be able to choose between the two different methods to calculate and pay the claims.

State Farm’s policy provides that “we will pay in accordance with the No-Fault Act properly billed and documented reasonable charges for bodily injury to an insured.” (emphasis added in original.) Thereafter, the phrase “reasonable charges” is defined as set out herein above. The definition of “reasonable charges” delineates the factors that are considered in the methodology used through the fact-dependent methodology discussed by the Florida Supreme Court in Virtual. Therefore, this policy’s language would allow State Farm to pick and choose whichever method it would want to use in determining how any claim would be paid. State Farm would be free to choose to pay any claims made through either the reasonableness methodology, which is fact-dependent and which would use the factors listed under the policy’s definition of “reasonable charges”, or it could, as in this case, opt to use the methodology using the Medicare Part B fee schedule. While the Defendant argues that it has never attempted to pay a claim using the “reasonableness” fact-dependent methodology, this Court cannot consider that in analyzing the policy in question. Therefore, in this Court’s view, the result is inescapable: this policy does not clearly and unambiguously give notice of the insurer’s election to use the Medicare Part B fee schedules as the methodology it will use to pay its claims.

Lastly, this Court rejects the Defendant’s argument that the OIR “approval” of its policy entitles it to claim the safe harbor provided in Florida Statute §627.736(5)(a)(5). There, the Legislature amended this Florida Statute in 2012 to provide that “a policy form approved by the Office [Office of Insurance Regulation] satisfies this requirement”. That is, that the “insurance policy includes a notice at the time of issuance or renewal that the insurer may limit payment pursuant to the fee schedule”.

In February 2012, the Defendant, State Farm Mutual Automobile Insurance Company, submitted its proposed new policy 9810A to the OIR. This policy is 48 pages long. The Defendant argues that it received the “approval” to use the fee schedule methodology from the OIR in October 2012 with the OIR stamped “APPROVED” on top of each of the 48 pages. This Court agrees with Broward County Judge Robert W. Lee when he found that “[h]owever, there is nothing in either State Farm’s submission to the OIR, or in the OIR’s response to State Farm, that the reason for the approval is (sic) so that ‘the insurer may limit payment pursuant to the fee schedule,’ the language provided in the Statute.” Pain and injury relief of Lake Worth v. State Farm Fire and Casualty Company, Case Number 15-2819 COCE (53) (Broward County Court, March 30, 2016) [23 Fla. L. Weekly Supp. 1087a].

Additionally, a review of the OIR informational memorandum, which contains the simple form for “Use of Medical Fees Schedule claims”, contains disclaimers by the OIR before and after the form at issue. That memorandum states:

“Depending upon the existing language, the same language may be suitable to address the notice requirement 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.”

The above language makes it clear that the OIR has qualified its form. Therefore, based upon that memorandum, inclusion of the approved form in an insurer’s policy is not dispositive of the issue of election and notice. Incorporating the OIR form into an insurance policy does not, in and of itself, constitute notice unless, when the policy is read as a whole, there is a clear and unambiguous election of what methodology for calculating payment will be used. As stated herein above, when read as a whole, this policy does not elect one methodology over the other. It, instead, allows State Farm the option to choose among the two available methodologies.¹

Finally, this Court finds that Allstate Fire & Cas. Ins. v. Stand-up MRI of Tallahassee, P.A., 188 So.3d 1 (Fla. 1st DCA 2015) [40 Fla. L. Weekly D693b] does not control the decision in this case. There, the First District Court of Appeal held that an insurance policy which contained a medical expense limitation which stated “[a]ny amounts payable under this coverage shall be subject to any and all limitations, authorized by §627.736, or any other provisions of the Florida Motor Vehicle No-Fault Law, as enacted, amended or otherwise continued (sic) in the law, including, but not limited to all fee schedules.” . . .gave sufficient notice of Allstate’s election to limit reimbursements by use of the fee schedules. There, however, there was no indication that Allstate’s policy’s language provided for more than one way to calculate payments of the claim; the way the Defendant’s policy has been found to allow.

For the herein above stated reasons the Defendant’s Motion for Summary Judgment is denied and the Plaintiff’s Motion for Summary Judgment is granted.

__________________

¹Again, this Court is of the opinion that but for the Virtual opinion, it would hold that the policy in this case could limit payments under the current language to 80% of the allowable Medicare Part B fee schedule, as explained in the dissenting opinion in Virtual and as the Statute provides.