23 Fla. L. Weekly Supp. 1058a

Online Reference: FLWSUPP 2310IGNAInsurance — Personal injury protection — Coverage — Medical expenses — Insurer that breached PIP policy by utilizing statutory fee schedule that was not clearly and unambiguously elected in policy when processing medical provider’s bill is not entitled to challenge reasonableness of charges — No merit to argument that relatedness and medical necessity of services remain at issue where relatedness and necessity were admitted by insurer’s action of making partial payment on claim

FLORIDA HOSPITAL MEDICAL CENTER, as assignee of Farrah Ignace-Jean, Plaintiff, v. PROGRESSIVE AMERICAN INSURANCE COMPANY, Defendant. County Court, 9th Judicial Circuit in and for Orange County. Case No. 2013-SC-6527-O. February 16, 2016. Steve Jewett, Judge. Counsel: David B. Alexander, Orlando, for Plaintiff. Henry R. Ramos, Orlando, for Defendant.

ORDER GRANTING PLAINTIFF’S MOTIONFOR FINAL SUMMARY JUDGMENT

THIS MATTER having come before this Honorable Court on Plaintiff’s Motion for Final Summary Judgment and this Honorable Court having heard arguments of counsel on January 19, 2016 and being otherwise fully advised in the premises, states as follows:

I. FACTS

This is a claim for Personal Injury Protection benefits (hereinafter “PIP”) arising out of a motor vehicle collision that occurred on or about November 25, 2008. The Plaintiff in this matter is FLORIDA HOSPITAL MEDICAL CENTER, as assignee of Farrah Ignace-Jean (hereinafter “Plaintiff”). At all times material to the subject cause of action, the assignor, Farrah Ignace-Jean, was covered under a policy of automobile insurance by the Defendant, PROGRESSIVE AMERICAN INSURANCE COMPANY (hereinafter “Defendant”) which provided PIP for injuries Farrah Ignace-Jean sustained in the above-referenced accident. The Plaintiff rendered emergency service and care to the assignor, Farrah Ignace-Jean, on November 25, 2008 through November 26, 2008, in the Emergency Department of Florida Hospital following the above referenced collision. The Plaintiff submitted a bill to the Defendant in the amount of $3,049.06 for dates of service November 25, 2008 through November 26, 2008. Defendant paid less than 80% of Plaintiff’s submitted charges. The Defendant allowed 75% of Plaintiff’s usual and customary charges for emergency services and paid Plaintiff’s bill at the reduced amount of 80% of 75% of Plaintiff’s usual and customary charges for emergency services. In turn, Plaintiff was reimbursed $1,829.44, not $2,439.25. Subsequently, Plaintiff demanded and brought the present suit for the difference.

II. SUMMARY OF ARGUMENT

This issue has been litigated and addressed by County Courts and Circuit Courts across Florida. Plaintiff argues, as a result of the 2008 amendment to Fla. Stat. 627.736, the Florida Supreme Court decision in Geico Gen. Ins. Co. v. Virtual Imaging Svcs., Inc., 141 So. 3d 147 (Fla. 2013) [38 Fla. L. Weekly S517a](hereinafter referred to as “Virtual III”), and appellate court decisions that have addressed this issue¹, Defendant breached the contract of insurance at issue at the point in time when Defendant, without notice to its insured, limited reimbursement under “the schedule of maximum charges” set forth within Fla. Stat. §627.736(5)(a)2.(2008-2011)². It is undisputed that Defendant’s Explanation of Benefits provided “Explanation Codes” of “381” and “X989” both of which are defined within the “Explanation Code Guide” on the Explanation of Benefits and both read as follows: “The allowable amount has been calculated pursuant to Florida Statute 627.736(5) which limits reimbursement to 75% of the hospital’s usual and customary charges for emergency services.”

Plaintiff argues that damages are measured at the time of the breach and that it is entitled to be paid 80% of Plaintiff’s charged amount minus Defendant’s previous payment. Defendant disagrees and argues that it may challenge reasonableness of Plaintiff’s charge at any point in time, including for the first time after litigation has commenced. Defendant further argues that Fla. Stat. §627.736(4)(b) allows Defendant to challenge reasonableness of Plaintiff’s charge regardless of Defendant’s actions during the claim handling process. In turn, Plaintiff argues that Defendant’s position, if entertained by this Court, would completely ignore Defendant’s breach of contract, allow Defendant to pull the wool over the eyes of its insureds and profit handsomely from its own breach of contract. Plaintiff contends that Defendant’s position is directly counter to the purpose of PIP³ and the intent of the Legislature in adding “the schedule of maximum charges” to Fla. Stat. §627.736⁴.

III. ANALYSIS AND RULING

It is undisputed that Defendant’s policy of insurance at issue⁵ fails to “clearly and unambiguously” elect to pay medical bills at the permissive payment methodology of Fla. Stat. 627.736(5)(a)2. (2008-2011). See Virtual I. In turn, Defendant’s Policy Form 9610A FL (10/05) does not allow Defendant to reimburse Plaintiff at “the schedule of maximum charges.”

The pertinent language of Farrah Ignace-Jean’s policy with the Defendant is contained on pages 7 through 8 of the policy. Specifically, the policy provides, in pertinent part:

“PART II(A) – PERSONAL INJURY PROTECTION COVERAGE

INSURING AGREEMENT

If you pay the premium for this coverage, we will pay benefits that an insured person is entitled to receive pursuant to the Florida Motor Vehicle No-Fault Law as amended, because of bodily injury:

1. caused by an accident;

2. sustained by an insured person; and

3. arising out of the ownership, maintenance or use of a motor vehicle . . .

Personal Injury Protection Coverage benefits consist of:

1. medical benefits;

. . .

ADDITIONAL DEFINITIONS

When used in this Part II(A):

. . .

‘Medical benefits’ means 80% of all reasonable expenses incurred for medically necessary medical, surgical, x-ray, dental and rehabilitative services, including prosthetic devices and medically necessary ambulance, hospital, and nursing services.” (emphasis added).

Conversely, Fla. Stat. 627.736(5)(a)2. (2008-2011) reads in pertinent part as follows:

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

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

The language within Defendant’s Explanation of Benefits generated at the point in time when Defendant processed Plaintiff’s bill mirrors the language of Fla. Stat. §627.736(5)(a)2.b. (2008-2011), not Fla. Stat. §627.736(5)(a)1. (2008-2011)⁶. Defendant, without notice to its insured, chose to improperly limit reimbursement of Plaintiff’s bill to 80% of 75% of Plaintiff’s usual and customary charges for emergency services. Consequently, Defendant processed and reimbursed Plaintiff’s bill pursuant to Fla. Stat. §627.736(5)(a)2.b. (2008-2011). As a result, Defendant breached the contract at issue. This Court disagrees with Defendant’s argument that it can still, even after such a breach, challenge the reasonableness of Plaintiff’s charge at anytime. To so rule, would directly contradict and violate the clear purpose of Fla. Stat. §627.736, including Fla. Stat. §627.736(4)(b), which is swift and virtually automatic reimbursement of benefits.

In determining whether a charge for a particular service or treatment is reasonable, there are two (2) methods: i) the fact dependent method under Fla. Stat. §627.736(5)(a)1. (2008-2011) or ii) the permissive “schedule of maximum charges” under §627.736(5)(a)2. (2008-2011). These methods have been described as separate and distinct methods for evaluating the statute’s reasonable expense coverage mandate under Fla. Stat. §627.736(1)(a). The insurer must choose one payment methodology it will utilize for reimbursement and cannot alternate between the two methods. See Virtual I. Defendant in the present matter chose to limit reimbursement pursuant to Fla. Stat. §627.736(5)(a)2.b. (2008-2011) and Defendant must live with that choice. Pursuant to the Florida Supreme Court, only if an insurer “clearly and unambiguously” notifies its insureds that it will be reimbursing medical providers at “the schedule of maximum charges” can it lawfully utilize the permissive payment methodology of Fla. Stat. 627.736(5)(a)2. (2008-2011). The Florida Supreme Court stated that if an insurer “clearly and unambiguously” notified its insureds of its permissive election then, and only then, “[f]or emergency services and care provided by a licensed hospital [Plaintiff in the case at hand], for instance, the 2008 amendments provided that an insurer could limit reimbursement to ‘75 percent of the hospital’s usual and customary charges.’ § 627.736(5)(a)2.b., Fla. Stat. (2008).” See Virtual III. Based upon the Virtual III opinion, there is no question that “75% of the hospital’s usual and customary charges” is exclusively a Fla. Stat. 627.736(5)(a)2. (2008-2011) factor and is not a factor in and can not be commingled with Fla. Stat. 627.736(5)(a)1. (2008-2011). The Florida Supreme Court in Virtual III agreed with the Third DCA decision in Virtual I which specifically sets forth the damages due and owing by an insurer when that insurer pays benefits pursuant to “the schedule of maximum charges” without unambiguously electing said permissive payment methodology within its policy. Pursuant to the Third DCA, affirmed by the Florida Supreme Court, the breach of contract damages are “the greatest amount possible within the language of the policies.” See Virtual I. In turn, the damages in the present matter for Defendant’s breach of contract are 80% of Plaintiff’s charges minus the Defendant’s previous payment.

The Ninth Judicial Circuit, sitting in its appellate capacity, has now ruled on this issue and found that “if an insurer applies a fee schedule per the statute, then there is no need to have a fact-dependent inquiry on reasonableness of the charge.” Progressive Select Insurance Company v. Florida Emergency Physicians Kang & Associates, M.D., P.A. (Kerry Tastinger), Case No.: 2014-CV-000072-A-O (9th Judicial Circuit of Florida, Appellate, September 24, 2015), Progressive American Insurance Company v. Emergency Physicians of Central Florida, LLP (Ebony Williams), Case No.: 2014-CV-000079-A-O (9th Judicial Circuit of Florida, Appellate, September 24, 2015), Progressive Express Insurance Company v. Emergency Physicians of Central Florida, LLP (Ivan Romano), Case No.: 2014-CV-000112-A-O (9th Judicial Circuit of Florida, Appellate, September 24, 2015). The Ninth Jud. Cir. ruled that “the trial court also cited Virtual III and properly found that there was no dispute as to the reasonableness of FEP’s charges because Progressive utilized the fee schedule per section 627.736(5)(a)2.c., Florida Statutes, that provided an alternative mechanism for determining reasonableness of the charges and thus, the trial court properly concluded that an additional fact-dependent inquiry was not necessary.” Id. In the present matter Defendant utilized Fla. Stat. §627.736(5)(a)2.b. (2008-2011), instead of Fla. Stat. §627.736(5)(a)2.c. (2008-2011), but the Ninth Jud. Cir. ruling and analysis is directly on point and binding on this Court.

Importantly, in this matter Plaintiff’s bill is in the record and Defendant, via the Explanation of Benefits, also in the record, has admitted that Plaintiff billed its “usual and customary charges for emergency services.” Defendant argues that although Defendant found Plaintiff’s billed amount to be Plaintiff’s “usual and customary charges” and utilized Plaintiff’s bill, and Plaintiff’s bill alone, to calculate its reimbursement amount under Fla. Stat. §627.736(5)(a)2. (2008-2011), it can still challenge the reasonableness of that same billed amount. Defendant’s position is contrary to Defendant’s actions in the claim, the record before this Court, and the law. The Court finds Defendant’s position without merit. Defendant cannot now “mend the hold”⁷ and argue that reasonableness is still at issue when Defendant failed to actually utilize any of the factors set forth within the fact dependent methodology of Fla. Stat. §627.736(5)(a)1. (2008-2011). Plaintiff billed Defendant its usual and customary charges. Pursuant to the actions of Defendant and the record before the Court, Plaintiff’s billed amount is a reasonable expense pursuant to Fla. Stat. 627.736(1)(a). Defendant via its own actions has admitted same. Defendant cannot challenge the reasonableness of Plaintiff charge when Defendant utilized Plaintiff’s bill, and only Plaintiff’s bill, in arriving at its improper limitation. The reasonableness of Plaintiff’s charges is not at issue in this matter.

Further, Defendant attempts to argue in passing that causal relatedness and medical necessity of the services must still be proven by Plaintiff in this matter. The Court finds this argument without merit. Pursuant to the deposition testimony of Defendant’s Corporate Representative, Defendant extended coverage for this claim and paid in part (albeit improperly) Plaintiff’s claim. “Any of the services which were previously paid . . . are deemed medically necessary, and related to the accident.” Glenn V. Quintana, D.C., P.A. (a/a/o Melissa N. Evans) v. State Farm Mutual Automobile Insurance Company, 19 Fla. L. Weekly Supp. 882a (Fla. 11th Jud. Cir., Miami-Dade Co., July 11, 2012). It is undisputed that Defendant found Plaintiff’s bill for emergency services and care to be compensable. “In order for a claim to be compensable, it must be reasonable, related, and medically necessary.” United Auto. Ins. Co. v. Riverside Medical Assoc., 20 Fla. L. Weekly Supp. 389a (Fla. 17th Jud. Cir., Appellate, December 13, 2012). Via Defendant’s actions and the record evidence before the Court, the Defendant has admitted that the emergency services and care provided by Plaintiff to Farrah Ignace-Jean was related to the loss at issue and medically necessary. “[A] ‘covered loss’ — i.e., a charge that is within the coverage of a personal injury protection insurance policy . . . will not be later challengeable.” United Auto. Ins. Co. v. A 1st Choice Healthcare Systems, 21 So. 3d 124 (Fla. 3rd DCA 2009) [34 Fla. L. Weekly D2268a]. As a result, the medical necessity and relatedness of the emergency services and care provided by Plaintiff to Farrah Ignace-Jean has been admitted to by Defendant and no longer at issue in this matter.

Damages for breach of contract are measured as of the date of the breach. See Shearson Loeb Rhoades, Inc. v. Medlin, 468 So. 2d 272 (Fla. 4th DCA 1985), Grossman Holdings Ltd. v. Hourihan, 414 So. 2d 1037 (Fla. 1982), Pembroke v. Caudill, 160 Fla. 948 (Fla. 1948). Defendant breached the contract at issue on the date it utilized the permissive payment methodology to process Plaintiff’s bill. As stated by the Fourth DCA, a non-breaching party must be placed in “as advantageous a position as he would have occupied had his contract not been broken.” Id. citing Popwell v. Abel, 226 So. 2d 418, 422 (Fla. 4th DCA 1969).

IV. CONCLUSION

Defendant’s Policy Form 9610AFL (10/05) fails to clearly and unambiguously elect to pay medical bills at “the schedule of maximum charges.” As a result, said policy failed to place insureds on notice of Defendant’s intention to limit reimbursement to “the schedule of maximum charges” within the statute. Therefore, Defendant breached the contract at issue. Pursuant to Defendant’s actions and the record before the Court, Plaintiff’s bill represents a reasonable expense under the law. As the non-breaching party Plaintiff must be placed in the most advantageous position as possible but for the breach. The Court finds that all issues have been disposed of by the Court, including but not limited to, any and all issues raised by the parties in the pleadings. No genuine issue of material fact remain and Plaintiff is entitled to Final Summary Judgment as a matter of law.

IT IS HEREBY ORDERED AND ADJUDGED that:

Plaintiff’s Motion for Final Summary Judgment is hereby GRANTED.

Final Judgment is hereby GRANTED in favor of the Plaintiff, FLORIDA HOSPITAL MEDICAL CENTER, as assignee of Farrah Ignace-Jean, wherein Plaintiff shall recover from Defendant, PROGRESSIVE AMERICAN INSURANCE COMPANY, the sum of $609.81 plus 11% pre-judgment interest in the amount of $478.74 for a total sum of $1,088.55 for which sum let execution issue.* The Court finds Plaintiff is entitled to its reasonable attorneys’ fees and costs. The Court 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. § 55.03.

¹In Virtual III, the Florida Supreme Court, specifically stated “we agree with all of the appellate court decisions that have addressed this issue . . .” (which included, but was not limited to, Geico Gen. Ins. Co. v. Virtual Imaging Svcs., Inc., 90 So. 3d 321 (Fla. 3d DCA 2012) [37 Fla. L. Weekly D985b] [(hereinafter referred to as “Virtual II”), Geico Indemnity Company v. Virtual Imaging Svcs., Inc., 79 So. 3d 55 (Fla. 3d DCA 2011) [36 Fla. L. Weekly D2597a](hereinafter referred to as “Virtual I”), Kingsway Amigo Insurance Company v. Ocean Health, Inc., 63 So. 3d 63 (Fla. 4th DCA 2011) [36 Fla. L. Weekly D1062a], DCI MRI, Inc. v. Geico Indem. Co., 79 So. 3d 840 (Fla. 4th DCA 2012) [37 Fla. L. Weekly D170e], and Nationwide Mutual Fire Insurance Company v. AFO Imaging, Inc., 71 So. 3d 134 (Fla. 2nd DCA 2011) [36 Fla. L. Weekly D1463b]). Subsequent to the Virtual III decision other appellate courts have addressed this issue, finding the insurance policy ambiguous and ruling in favor of the medical provider. See State Farm Mutual Automobile Ins. Co. v. Pembrooke Pines MRI, Inc., a/a/a Elias Cruz, __ So. 3d __ (2015) [40 Fla. L. Weekly D1879a], 2015 WL4747535(August 12, 2015). In Pembrooke Pines, the Fourth District Court of Appeal found in footnote one (1.) of the opinion that “State Farm did not adopt the limitations for reimbursement allowed by section 627.736(5)a.2.f., Florida Statutes (2011) . . .” Pembrooke Pines, __ So. 3d __(2015), 2015 WL4747535(Fla. 4th DCA, August 12, 2015). Also See Progressive Select Insurance Company v. Florida Emergency Physicians Kang & Associates, M.D., P.A. (Kerry Tastinger), Case No.: 2014-CV-000072-A-O (9th Judicial Circuit of Florida, Appellate, September 24, 2015), Progressive American Insurance Company v. Emergency Physicians of Central Florida, LLP (Ebony Williams), Case No.: 2014-CV-000079-A-O (9th Judicial Circuit of Florida, Appellate, September 24, 2015), Progressive Express Insurance Company v. Emergency Physicians of Central Florida, LLP (Ivan Romano), Case No.: 2014-CV-000112-A-O (9th Judicial Circuit of Florida, Appellate, September 24, 2015).

²As of the 2012 Legislative Session, Fla. Stat. §627.736(5)(a)2. was renumbered as Fla. Stat. §627.736(5)(a)1. The Plaintiff’s position and the Court’s analysis herein applies equally to the initial 2008 version and the renumbered version of said subsection.

³“Without a doubt, the purpose of the no-fault statutory scheme is to ‘provide swift and virtually automatic payment so that the injured insured may get on with his life without undue financial interruption.’ ” Ivey v. Allstate Ins. Co., 774 So. 2d 679 (Fla. 2000) [25 Fla. L. Weekly S1103a] citing Government Employees Ins. Co. v. Gonzalez, 512 So. 2d 269, 271 (Fla. 3d DCA 1987).

⁴The legislative intent behind enacting the schedule of maximum charges was “designed to reduce costs and eliminate litigation regarding what is a ‘reasonable’ charge.” Florida Senate, Bill Analysis and Fiscal Impact Statement, CS/SB 40-C, Oct. 4, 2007, page 18.

⁵Progressive Policy Form 9610A FL (10/05).

⁶As of the 2012 Legislative Session, Fla. Stat. §627.736(5)(a)1. was renumbered as Fla. Stat. §627.736(5)(a). The Plaintiff’s position and the Court’s analysis herein applies equally to both the initial 2008 version and renumbered version of said subsection.

⁷The “mend the hold” doctrine limits available defenses to the exact defense asserted at the time of the breach and prevents a party from mending its hold to get a “better grip” after its initial argument fails. Defendant’s position that it was permitted to utilize the permissive payment methodology under section 5(a)2. has failed and as a result Defendant is attempting to “mend the hold” by arguing that it can challenge reasonableness at any time regardless of Defendant’s actions in the claim. The United States Supreme Court disagrees with such a practice. See Railway Co. v. McCarthy, 96 U.S. 258 (1877).