23 Fla. L. Weekly Supp. 708a
Online Reference: FLWSUPP 2307MCCLInsurance — Personal injury protection — Coverage — Deductible — Where PIP policy clearly defines “reasonable fees” in accordance with statutory fee schedule, insurer properly determined reasonable fee for medical provider’s services under fee schedule, applied deductible to that amount and reduced resulting difference by 80% — Policy language providing that deductible will be deducted from total amount of medical benefits before application of any percentage limitation did not require insurer to apply deductible before application of statutory fee schedule where policy specifically defines medical benefits as “reasonable fees,” which are in turn defined by policy by use of statutory fee schedule
GARRISON PROPERTY AND CASUALTY INSURANCE COMPANY, Appellant, vs. NEW SMYRNA IMAGING, LLC a/a/o Megan McClanahan, Appellee. Circuit Court, 18th Judicial Circuit (Appellate) in and for Seminole County. Case No. 13-03-AP. L.T. Case No. 2011-SC-001593. January 12, 2015. Appeal from the County Court for Seminole County, Honorable Jerri L. Collins County Court Judge. Counsel: Douglas H. Stein, for Appellant. Kevin B. Weiss, for Appellee.
[Lower court order granting motion for summary judgment published at 20 Fla. L. Weekly Supp. 77a.]
(GALLUZZO, Judge.) THIS CAUSE comes before the Court on appeal from a Final Judgment rendered in the lower tribunal. This Court dispenses with oral argument pursuant to Fla. R. App. P. 9.320.BACKGROUND
This case arises out of a claim filed by New Smyrna Imaging, LLC (Appellee or NSI), alleging that Garrison Property & Casualty Insurance Company (Appellant or Garrison) failed to pay Personal Injury Protection (PIP) benefits under a policy issued to Megan McClanahan. NSI had provided medical services to the policyholder, and filed the claim as assignee of the policy.
The policy at issue has a $500 deductible, and NSI charged $1695 for the services provided. NSI alleged in its Complaint that $502.98 was the balance due from Garrison. Garrison argued that it had properly reduced the $1695 bill to $1066.28, pursuant to the fee schedule in section 627.736(5)(a)2.f, Florida Statutes, applied the $500 deductible to get $566.28, and then paid 80% of that amount, i.e. $453.02. Garrison filed a Motion for Final Summary Judgment. NSI filed its own Motion for Final Summary Judgment, arguing that a different method of calculation should have been applied. According to NSI, the $500 deductible should have been applied to reduce the $1695 bill to $1195, which would then be paid at 80%, i.e. $956. Because $956 exceeded 80% of the applicable fee schedule amount, however, NSI claimed that it should be reduced to $853.28 ($1066.28 fee schedule amount x 80%); and because Garrison had already paid $453.28, NSI now claimed it was owed $400.
The trial court granted NSI’s Motion for Summary Judgment and denied Garrison’s motion, holding that section 627.736, Florida Statutes required that the deductible first be applied to the total bill, and the insurer may then adjust the payment accordingly. Final Judgment was entered on December 21, 2012, and Garrison appealed.
STANDARD OF REVIEW
A trial court’s ruling on a motion for summary judgment is reviewed de novo. Volusia Cty v. Aberdeen at Ormond Beach, L.P., 760 So. 2d 126, 130 (Fla. 2000) [25 Fla. L. Weekly S390a]. Similarly, statutory interpretation is a pure legal matter subject to a de novo standard of review. Kephart v. Hadi, 932 So. 2d 1086, 1089 (Fla. 2006) [31 Fla. L. Weekly S375a].ANALYSIS
This case addresses the interplay of sections 627.739(2) and 627.736, Florida Statutes and the proper order for application of the deductible and fee schedule when calculating payments to providers.
Section 627.739(2) mandates that “[i]nsurers shall offer to each applicant and to each policyholder, upon the renewal of an existing policy, deductibles, in amounts of $250, $500, and $1,000. The deductible amount must be applied to 100 percent of the expenses and losses described in s. 627.736.” § 627.739, Fla. Stat. (2003). Prior to 2003, the deductible was “to be deducted from the benefits otherwise due each person subject to the deduction.” § 627.739, Fla. Stat. (1999).
In interpreting this statute, the trial court found that “benefits otherwise due” were qualifying words, which had been replaced with the phrase “described in s. 627.736.” The court went on to note that the new language does not have the same qualifying effect as the previous language had. The court stated that it does not make sense that the Legislature would include “100 percent” language and then turn around and redirect parties to reduce it to 80%.1 The court did not however attempt to define what is meant by “expenses and losses described in s. 62.736.”
The Preface to the Florida Statutes provides that “a cross-reference to a specific statute incorporates the language of the referenced statute as it existed at the time the reference was enacted.” Preface at viii, Fla. Stat. (2008). As an initial step under § 627.739(2), the insurer must first determine what are the “expenses and losses described in s. 627.736,” in order to apply the deductible to 100 percent of those expenses and losses. Section 627.736 contains several references to expenses, almost all of which are described as or used in the context of reasonable expenses or expenses “covered by the policy.” § 627.736(1)(a), (1)(b), (4), & (6)(b), Fla. Stat.2 Thus, when read together, § 627.739 and § 627.736 require that a PIP deductible be applied to 100 percent of the reasonable and necessary medical expenses, or those expenses covered by the policy.
Section 627.736 provides two means for determining what is a reasonable and necessary medical expense. § 627.736, Fla. Stat.; GEICO Gen. Ins. Co. v. Virtual Imaging Svcs., Inc., 141 So. 3d 147 (Fla. 2013) [38 Fla. L. Weekly S517a]. Section 627.736(5)(a) sets forth several factors to consider in determining the reasonableness of medical expenses. Alternately, under § 627.736(5)(a)1 (previously (5)(a)2), the Legislature provided that “[t]he insurer may limit reimbursement to 80 percent of [a defined] schedule of maximum charges.” § 627.736, Fla. Stat. In order to pay in accordance with this fee schedule limitation, the insurer must clearly and unambiguously select that payment methodology such that the insured and medical providers are aware of it. GEICO, 141 So. 3d at 160. Therefore, if the insurer has clearly stated its intention to use the fee schedule, the deductible can be applied to 100 percent of the reasonable expenses found in the fee schedule, as referenced in § 627.736.3
Nothing in the plain language of § 627.739 would appear to require that the deductible be applied differently depending on which method is chosen for determining the reasonableness of the expenses to which it is applied. Indeed, the method adopted by the trial court — applying the deductible before applying the fee schedule — would not apply the deductible uniformly. The trial court relied solely on the amendment to § 627.739 with a focus on “100 percent” and without explaining what precisely are the “expenses and losses described in s. 627.736.” The court did not account for the Legislature’s allowance of a fee schedule nor for the possibility that a bill submitted may be unreasonable. This interpretation and application of the statute would essentially eliminate any reasonableness determination as to the expenses submitted by health care providers, which has long been a part of the PIP statutes.
In the current case, the policy issued by Garrison clearly defines “reasonable fees” in accordance with the fee schedule language of § 627.736(5)(a)1. In calculating the payment owed to NSI, Garrison determined the reasonable expense, as per the fee schedule. Garrison then applied the deductible to that amount, reduced it to the allowed 80%, and paid that sum to NSI. This Court finds that this was in agreement with the statutory interpretation outlined above.
The trial court additionally found that the language of the insurance policy itself precluded Garrison from applying the deductible in the manner it did. The policy states, under Part B-1 Application of Deductible, “[t]he amount of any deductible stated in the Declarations shall be deducted from the total amount of medical benefits, work loss, and replacement services expenses, before the application of any percentage limitation incurred by or on behalf of each person to whom the deductible applies.” The trial court found this language to require Garrison to apply the deductible before the application of any percentage limitation, including the authorized fee schedules.
However, the policy specifically defines medical benefits as “reasonable fees for medically necessary surgical, medical, X-ray, dental . . . and nursing services.” The policy further defines reasonable fees by using the fee schedule language from § 627.736. Read as a whole, the policy itself mirrors the statutory requirement that the deductible be applied to 100 percent of the expenses and losses described in § 627.736, i.e. reasonable expenses, which, based upon Garrison’s election, are determined through the use of a fee schedule. Because Garrison properly applied the deductible based on statutory interpretation, and the policy reflects that statutory language, this Court finds that Garrison also properly applied the deductible under its own policy language.
Therefore, the Order Granting Plaintiff’s Motion for Summary Judgment and Denying Defendant’s Motion for Summary Judgment is reversed and the matter is remanded to the trial court for further proceedings consistent with this opinion.
Appellant is entitled to Attorney’s Fees pursuant to Fla. R. App. P. 9.040, to be assessed by the trial court.
REVERSED and REMANDED.
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1Although the trial court references 80%, there is no question as to the timing of the 80% reduction. Rather, the issue is the application of the fee schedule, which applies various percentage adjustments.
2The references to expenses found in 627.736(4)(f) and (6)(c) are the only two references not used in the context of reasonable fees. These two references are, however, discussing attorney’s fees and expenses of processing, which are unrelated to the analysis regarding application of the deductible.
3Argument can be made that, because the fee schedule method for calculation of fees was not in place at the time the cross-reference to § 627.736 was added to § 627.739, it does not apply. However, under that version of § 627.736, no guidance was given at all as to what is considered a reasonable expense, aside from the note that “[i]n no event, however, may such a charge be in excess of the amount the person or institution customarily charges for like services or supplies in cases involving no insurance.” § 627.736, Fla. Stat. (2001). As such, it is reasonable to allow both methods for calculation of reasonable fees based on subsequent case law and statutory amendments.
