23 Fla. L. Weekly Supp. 1052a

Online Reference: FLWSUPP 2310SIASInsurance — Personal injury protection — Coverage — Medical expenses — PIP policy that gives insurer unbridled discretion to consider various factors found in reasonable amount method of reimbursement and in permissive fee schedule method of reimbursement does not provide clear and unambiguous notice of intent to limit reimbursement to fee schedule — Approval by Office of Insurance Regulation does not validate policy

FLORIDA EMERGENCY PHYSICIANS KANG & ASSOCIATES, M.D., P.A., as assignee of Jonathan Sias, Plaintiff, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant. County Court, 9th Judicial Circuit in and for Orange County. Case No. 2014-SC-9502-O. February 10, 2016. Steve Jewett, Judge. Counsel: Mark A. Cederberg, Bradford Cederberg P.A., Orlando, for Plaintiff. William Peterfriend, Boca Raton, for Defendant.

Appeal DISMISSED. See FLWSUPP 2801SIAS (State Farm Mutual Automobile Ins. Co. v. Florida Emergency Physicians, 2016-CV-000024-A-O)

ORDER GRANTING PLAINTIFF’SMOTION FOR FINAL SUMMARY JUDGMENTAND DENYING DEFENDANT’S AMENDEDMOTION FOR FINAL SUMMARY JUDGMENT

THIS MATTER having come before this Honorable Court on January 12, 2016 on Plaintiff’s Motion for Final Summary Judgment dated December 22, 2015 and Defendant’s Amended Motion for Final Summary Judgment dated July 21, 2015 and this Honorable Court having considered the motions, the case law presented, the record and the arguments of counsel, and being otherwise fully advised in the premises hereby GRANTS the Plaintiff’s Motion for Final Summary Judgment and DENIES the Defendant’s Amended Motion for Final Summary Judgment and finds that Defendant State Farm Mutual Automobile Insurance Company did not properly elect the permissive payment methodology of Fla. Stat. § 627.736(5)(a)1 in the language of its Policy Form 9810A and therefore Defendant improperly relied upon the fee schedule methodology to limit reimbursement of Plaintiff’s bill resulting in an underpayment to Plaintiff for the services rendered.

FACTS

1. On December 24, 2013, Jonathon Sias (hereinafter “Sias”) was involved in a motor vehicle accident.

2. At the time of the above-referenced accident Sias was covered by a policy of insurance issued by Defendant State Farm Mutual Automobile Insurance Company (hereinafter “State Farm”). The policy provided Personal Injury Protection (PIP) coverage in the amount of $10,000.00.

3. As a result of the December 24, 2013 accident, Sias presented to the Emergency Department at Florida Hospital on December 24, 2013 wherein he received emergency services and care from the Plaintiff, Florida Emergency Physicians Kang & Associates, M.D., P.A. (hereinafter “Florida Emergency Physicians”).

4. Florida Emergency Physicians charged $370.00 for CPT 99283 (Emergency Department visit) for the emergency services and care rendered to Sias on December 24, 2013 and submitted the bill for payment under Sias’ PIP coverage to State Farm.

5. State Farm received Florida Emergency Physicians’ bill on January 14, 2014 and processed the bill by limiting reimbursement to 85% of 200% of the Medicare Part B fee schedule and then paid 80% of that amount resulting in a partial payment of $90.29 (on a $370.00 bill).

6. In the Explanation of Review sent to Florida Emergency Physicians by State Farm for the bill at issue, State Farm explained the reason for the reduction as follows: “[t]he payment for the Nurse Practitioner/Physician Assistant service has been evaluated using Medicare Claims Processing Manual guidelines and the applicable Medicare Part B fee schedule.”

7. There is no dispute that Florida Emergency Physicians rendered “emergency services and care” to Sias on December 24, 2013 and that those “emergency services and care” were reasonable, necessary and related to the subject motor vehicle accident.

ISSUE PRESENTED

The issue before the Court is whether State Farm’s Policy Form 9810A clearly and unambiguously adopts the reimbursement methodology expressed in Florida Statute §627.736(5)(a)1 as required under the law to apply the schedule of maximum charges payment limitation to Plaintiff’s bill in this case.LEGAL ANALYSISDefendant, State Farm, improperly utilized the “scheduleof maximum charges” to limit reimbursement to Plaintiff,Florida Emergency Physicians, because the subject policyof insurance (Policy Form 9810A) does not make a clearand unambiguous election to do so as mandatedby the Florida Supreme Court in Virtual Imaging

Since 1971, the PIP statute has always included provisions which explained that PIP insurers are required to pay the “reasonable” amount of the insured’s medical expenses. Those provisions are commonly known as the “reasonable amount” or “fact dependent” method of calculating PIP benefits. In 2008, the Florida Legislature added a second payment calculation method, which is optional and permissive, and it is commonly referred to as the “Medicare fee schedule” or “schedule of maximum charges” method.

This lawsuit involves the version of the PIP statute that was amended in 2012 and took effect on January 1, 2013. It is important to note that that this version of the PIP statute renumbered the subsections of the “fact dependent method” and the “schedule of maximum charges method.” So, before January 1, 2013, the “fact dependent method” was found in subsections (1)(a) and (5)(a)1, but it is now found in subsections (1)(a) and (5)(a). Before January 1, 2013, the “schedule of maximum charges” method was found in subsections (5)(a)2-5, but it is now found in subsection (5)(a)1-5.

As of January 1, 2013, the version of the PIP statute at issue in this case includes the following provisions which pertain to the “fact dependent method” and the “schedule of maximum charges method”:

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

[The “fact dependent” method is found in (1)(a) and (5)(a), and states:]

(1) REQUIRED BENEFITS. — An insurance policy complying with the security requirements of s. 627.733 must provide personal injury protection . . . to a limit of $10,000 in medical and disability benefits and $5,000 in death benefits resulting from bodily injury, sickness, disease, or death arising out of the ownership, maintenance, or use of a motor vehicle as follows:

(a) Medical benefits. — Eighty percent of all reasonable expenses for medically necessary medical, surgical, X-ray, dental and rehabilitative services, including prosthetic devices and medically necessary ambulance, hospital, and nursing services if the individual receives initial services and care . . .

. . . . .

(5) CHARGES FOR TREATMENT OF INJURED PERSONS. —

(a) A physician, hospital, clinic of 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, and the insurer providing such coverage may pay for such charges directly to such person or institution lawfully rendering such treatment if the insured receiving such treatment or his or her guardian has countersigned the properly completed invoice, bill, or claim form approved by the office upon which such charges are to be paid for as having actually been rendered, to the best knowledge of the insured or his or her guardian. However, such a charge may not exceed the amount the person or institution customarily charges for like services 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 reasonableness of the reimbursement for the services, treatment, or supply.

[The “schedule of maximum charges” method is found in (5)(a)1-5 and states:]

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

a. For emergency transport and treatment by providers licensed under chapter 401, 200 percent of Medicare.

b. For emergency services and care provided by a hospital licensed under chapter 395, 75 percent of the hospital’s usual and customary charges.

c. For emergency services and care as defined by s. 395.002 provided in a facility licensed under chapter 395 rendered by a physician or dentist, and related hospital inpatient services rendered by a physician or dentist, the usual and customary charges in the community.

d. For hospital inpatient services, other than emergency services and care, 200 percent of the Medicare Part A prospective payment applicable to the specific hospital providing the inpatient services.

e. For hospital outpatient services, other than emergency services and care, 200 percent of the Medicare Part A Ambulatory Payment Classification for the specific hospital providing the outpatient services.

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, the insurer may 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.

2. For purposes of subparagraph 1., the applicable fee schedule or payment limitation under Medicare is the fee schedule or payment limitation in effect on March 1 of the service 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 to services, supplies, or care rendered during that service year, notwithstanding any subsequent change made to the fee schedule or payment limitation, except that it may 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. For purposes of this subparagraph, the term “service year” means the period from March 1 through the end of February of the following year.

3. Subparagraph 1. does not allow the insurer to apply any limitation on the number of treatments or other utilization limits that apply under Medicare or workers’ compensation. An insurer that applies the allowable payment limitations of subparagraph 1. must reimburse a provider who lawfully provided care or treatment under the scope of his or her license, regardless of whether such provider is entitled to reimbursement under Medicare due to restrictions or limitations on the types or discipline of health care providers who may be reimbursed for particular procedures or procedure codes. However, subparagraph 1. does not prohibit an insurer from using Medicare coding policies and payment methodologies of the federal Centers for Medicare and Medicaid Services, including applicable modifiers, to determine the appropriate amount of reimbursement for medical services, supplies, or care if the coding policy or payment methodology does not constitute a utilization limit.

4. If an insurer limits payment as authorized by subparagraph 1., the person providing such services, supplies, or care may not bill or attempt to collect from the insured any amount in excess of such limits, except for amounts that are not covered by the insured’s personal injury protection coverage due to the coinsurance amount or maximum policy limits.

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 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.

§627.736(1)(a), (5)(a)1-5, Fla. Stat. (2012-2015)(emph. added).

As previously noted, the “schedule of maximum charges” payment methodology is optional and permissive. However, in order to rely on the “schedule of maximum charges” method, a PIP insurance carrier must clearly and unambiguously choose that payment methodology in its insurance policy. In Geico Gen. Ins. Co. v. Virtual Imaging Services, Inc. (“Virtual III”), 141 So.3d 147, 157 (Fla. 2013) [38 Fla. L. Weekly S517a], the Florida Supreme Court spoke to this issue and held that PIP insurers have “a choice in dealing with their insureds as to whether to limit reimbursements based on the Medicare fee schedules [schedule of maximum charges method] 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 [former] section 627.736(5)(a)1 [now (5)(a)][fact dependent method].” (Emph. added). In Virtual III, the Florida Supreme Court approved Kingsway Amigo Ins. Co. v. Ocean Health, Inc., 63 So.3d 63, 67 (Fla. 4th DCA 2011) [36 Fla. L. Weekly D1062a], which held that Section 627.736 “allows an insurer to choose between two different payment calculation methodology options [schedule of maximum charges method or fact dependent method]” and “anticipates that an insurer will make a choice.” (Emph. added). In other words, the Florida Supreme Court held that there are two (2) separate and distinct payment methodologies under the PIP statute and the PIP insurer must choose one or the other in its policy. Most recently, the Florida Fourth District Court of Appeal held:

To elect a payment limitation option, the PIP policy must do so “clearly and unambiguously.” A policy is not sufficient unless it plainly and obviously limits reimbursement to the Medicare fee schedules exclusively. The policy cannot leave [the PIP insurer’s] choice of reimbursement method in limbo . . . The policy must make it inescapably discernable that it will not pay the “basic” statutorily required coverage and will instead substitute the Medicare fee schedules [schedule of maximum charges] as the exclusive form of reimbursement. Orthopedic Specialists v. Allstate Ins. Co., 177 So.3d 19 (Fla. 4th DCA 2015) [40 Fla. L. Weekly D1918a]. (Emph. added).

Simply stated, a PIP insurer cannot “alternate between the two methodologies at its whim.” University Comm. Hosp. a/a/o Marjorie Young v. Mercury Ins. Co. of Fla., 21 Fla. L. Weekly Supp. 89a (Fla. 13th Jud. Cir., Hillsborough County Ct., September 16, 2013)(PIP policy that cited to fee schedule payment methodology bud did not choose that method alone but allowed insurer to choose between the two different methods at insurer’s discretion was “not permissible” because the insurance company “may not alternate between the two methodologies at its whim as [the] policy allows.” See also Accident & Injury Clinic, Inc. a/a/o Natasha Bland v. State Farm Mut. Auto. Ins. Co., Case No. 2014-20020 CONS (Fla. 7th Jud. Cir., Volusia County Ct., August 1, 2014)(State Farm must elect the fee schedule limitations “as its sole methodology”); Florida Hospital Medical Center a/a/o Celia Hoelke v. State Farm Mut. Auto. Ins. Co., Case No. 2013-SC-8220-O (Fla. 9th Jud. Cir., Orange County Ct., September 17, 2014)(insurer cannot process and pay the bill under Medicare fee schedule method and then attempt to challenge reasonableness of Plaintiff’s charge in litigation); Neurology Partners, P.A. d/b/a Emas Spine & Brain a/a/o Willie Brown v. State Farm Mut. Auto. Ins. Co., Case No. 2014-SC-5472 (Fla. 4th Jud. Cir., Duval County Ct., July 29, 2015) [23 Fla. L. Weekly Supp. 550a] (PIP policy that includes fact-dependent factors in its definition of “reasonable charge” while also attempting to reimburse in accordance with statutory fee schedule commingles payment methodologies and does not provide clear and unambiguous notice of intent to limit reimbursement).

In the case at bar, the limit of liability portion of State Farm’s insurance Policy Form 9810A, page 16 explicitly states:

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.

Further, State Farm’s Policy Form 9810A, page 4 defines Medical Expenses as follows:

reasonable charges incurred for medically necessary medical, surgical, X-ray, dental, and rehabilitative services, including medically necessary prosthetic devices and medically necessary ambulance, hospital and nursing services.

Lastly, State Farm’s Policy Form 9810A, page 5 defines Reasonable Charge (which includes reasonable expense) as follows:

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 Center for Medicare and Medicaid Services, including applicable modifiers, if the coding policy or payment methodology does not constitute a utilization limit.

Notably, State Farm’s definition of “reasonable charge” is a hybrid of various factors found in both the fact-dependent “reasonable amount” payment methodology of Section 627.736(5)(a) and the fee schedule or “schedule of maximum charges” payment methodology of Section 627.736(5)(a)1-5. Specifically, paragraphs 1, 2, 3, 4 and 6 referenced above correspond to elements of the “reasonable amount” payment methodology listed in Section 627.736(5)(a) while paragraphs 5 and 7 referenced above correspond to elements of the “fee schedule” payment methodology found in Section 627.736(5)(a)1-5.

The Court finds that State Farm’s insurance policy (Policy Form 9810A) adopts an unauthorized and unlawful “hybrid method” for calculating PIP benefits. In so doing, State Farm has failed to elect one statutory payment calculation method to the exclusion of the other. As explained in Virtual III, Orthopedic Specialists, University Community Hospital, Neurology Partners as well as other cases, State Farm is not allowed to utilize certain provisions from the “fact dependent” method and certain provisions from the “schedule of maximum charges” method, mix them together and create a hybrid method that leaves the insured and/or medical provider guessing as to how PIP benefits will be reimbursed; a decision that would rest solely at State Farm’s discretion and whim. Clearly this is the antithesis of the clear and unambiguous election of payment methodology mandated by the Florida Supreme Court in Virtual III.

The mandate of the Florida Supreme Court’s decision in Virtual III is that a PIP insurer must elect one of the two separate and distinct payment methodologies set for in the No-Fault statute — either subsection (5)(a)1 [fact dependent] or (5)(a)s [schedule of maximum charges](now (5)(a) and (5)(a)1, respectively). If both payment methodologies are possible, then the policy is ambiguous and must be construed against the insurer and in favor of the insured/medical provider.

Ultimately, any ambiguity in the insurance contract must be resolved in favor of the insured (or the medical provider who steps into the shoes of the insured by virtue of an assignment). See Geico Indem. Co. v. Virtual Imaging Services, Inc. (“Virtual I”), 79 So.3d at 58. Thus, if there is an ambiguity, the provider is entitled to be reimbursed “for the greatest amount possible within the language of the policies.” Id. Therefore, in both Virtual I and Kingsway, since the policies did not (i) reference the permissive methodology, or (ii) specifically describe the calculations that the insurer utilized, the provider was entitled to the greatest amount possible — i.e. 80% of the amount that the provider billed. See Geico Indemnity Co. v. Virtual Imaging Svcs., Inc. (“Virtual I”), 79 So. 3d 55, 57-58 (Fla. 3d DCA 2011) [36 Fla. L. Weekly D2597a] (when insurer improperly pays under (5)(a)(2) when the policy requires payment under (5)(a)(1), the insurer breaches the contract of insurance and is liable for the “greatest amount possible.”); see also Geico Gen. Ins. Co. v. Virtual Imaging Svcs., Inc., 90 So. 3d 321, 322 (Fla. 3d DCA 2012) [37 Fla. L. Weekly D985b] (“Virtual II”) (consequence for improperly breaching the contract by limiting reimbursement under (5)(a)(2) is reimbursement at the amount claimed by the provider to be reasonable); see also Petitioner’s Initial Brief at pp. 3-4, 25-26, in Geico Gen. Ins. Co. v. Virtual Imaging Svcs., Inc., 141 So. 3d 147, 156 (Fla. 2013) [38 Fla. L. Weekly S517a] (“Virtual III”) (acknowledging that the Fourth DCA in Virtual I held that the consequence of an insurer’s use of (5)(a)(2), when the permissive methodology was not clearly and unambiguously set forth in the policy, is that the insurer must reimburse the provider for the “greatest amount possible within the language of the policies, i.e. 80% of the amount billed”).

State Farm erroneously suggests that the hybrid method contained in Policy Form 9810A must be deemed to be legal because that form was approved by the Florida Office of Insurance Regulation pursuant to Section 627.736(5)(a)5. This Court disagrees. Mere approval by the Florida Office of Insurance Regulation of State farm’s “notice” does not validate the entire policy. 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]. Florida law is well-established that state agencies (i.e. Florida Office of Insurance Regulation) have no authority to interpret or enforce contracts or adjudicate contract disputes. That authority is vested exclusively in the judiciary. Additionally, as State Farm’s Policy Form 9810A purports to adopt elements from both the “fact dependent” payment methodology and the “schedule of maximum charges” payment methodology, it does not present with the isolated issue that the Florida Office of Insurance Regulation indicated it would review. As revealed in the “Informational Memorandum OIR 12-OM” put out by the Florida Office of Insurance Regulation, the agency has affirmatively disclaimed responsibility for conducting any determination of whether State Farm has legal authority to adopt a hybrid method in its PIP policy.

Because this Court finds that State Farm’s Policy Form 9810A does not clearly and unambiguously elect to limit reimbursement of PIP benefits pursuant to Fla. Stat. §627.736(5)(a)1, State Farm may not avail itself of the permissive payment methodology. In light of this ruling, the Court need not address Plaintiff’s other two (2) arguments raised in its Motion for Final Summary Judgment. Accordingly, it is hereby:

ORDERED AND ADJUDGED that:

1. Plaintiff’s Motion for Summary Judgment is GRANTED.

2. Defendant’s Amended Motion for Summary Judgment is DENIED.

Final Judgment is hereby GRANTED in favor of the Plaintiff, FLORIDA EMERGENCY PHYSICIANS KANG & ASSOCIATES, M.D., P.A., as assignee of Jonathon Sias, wherein Plaintiff shall recover from Defendant, STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, the sum of $205.71 plus 4.75% pre-judgment interest in the amount of $20.19 for a total sum of $225.90 for which sum let execution issue.* The Court finds that Plaintiff is entitled to its reasonable attorneys’ fees and costs and reserves jurisdiction to determine the amount of attorneys’ fees and costs to Plaintiff pursuant to Fla. Stat. §§627.736, 627.428 and 57.041.

__________________

*Post-judgment interest of 4.75% per annum shall accrue on this judgment pursuant to Fla. Stat. §55.036.