24 Fla. L. Weekly Supp. 731b

Online Reference: FLWSUPP 2409SALIInsurance — Personal injury protection — Coverage — Medical expenses — Statutory fee schedules — PIP policy providing that insurer will calculate reimbursement pursuant to permissive statutory fee schedule while reserving insurer’s right to adjust any payment to medical provider by amounts insurer deems to be unreasonable commingles statutory payment methodologies and does not provide clear and unambiguous notice of intent to limit reimbursement to permissive statutory fee schedule

HOLLYWOOD DIAGNOSTICS CENTER, INC. (a/a/o Manuel Salinas), Plaintiff, vs. 21st CENTURY CENTENNIAL INSURANCE COMPANY, Defendant. County Court, 17th Judicial Circuit in and for Broward County. Case No. 15-22975 COCE (53). August 17, 2016. Robert W. Lee, Judge. Counsel: Steven Lander, Lander, Dalal & Associates, PL, Fort Lauderdale, for Plaintiff. Katherine Ellis, Sanabria, Llorente Marsh & Associates, Miami, for Defendant.

REVERSED. FLWSUPP 2703SALI

ORDER GRANTING PLAINTIFF’S MOTION FORFINAL SUMMARY [DISPOSITION] and DENYINGDEFENDANT’S MOTION FOR FINAL SUMMARYDISPOSITION

THIS CAUSE came before the Court on June 28, 2016 for hearing of the Plaintiff’s Motion for Final Summary Judgment and the Defendant’s Motion for Final Summary Disposition,¹ and the Court’s having reviewed the Motions, the entire Court file, and the relevant legal authorities; having heard argument; having made a thorough review of the matters filed of record; and having been sufficiently advised in the premises, the Court finds as follows:

Background: This case involves a relatively narrow issue: whether 21st Century Centennial’s PIP policy endorsement (AU FLG4 0113) complies with the requirements of Florida law to entitle 21st Century to limit its payment of PIP claims to the rate of 200% of Medicare. The parties agree that this is a question of law and is the sole remaining issue in the case.

The Plaintiff has filed suit to recover PIP benefits claimed due from the Defendant. Pursuant to an assignment of benefits, the Plaintiff submitted bills to 21st Century Centennial for medical services arising out of an automobile accident in which Manuel Salinas was injured. The insurance company paid the claim, but at an amount representing 80% of the total allowable medical expenses calculated pursuant to the schedule of maximum charges set forth in Florida Statute §627.736(5)(a)(1) (2013), 200% of the Medicare fee schedules, after the application of the policy deductible.

The Plaintiff seeks to recover the difference between 80% of the amount billed by the Plaintiff less the amount paid by 21st Century Centennial. The Plaintiff contends that the Defendant did not properly elect the Medicare fee schedule methodology, and as a result, was required to process the bills under the “reasonableness” methodology set forth in Florida Statute §627.736(5)(a).

The relevant endorsement provides as follows:

Page 1 of 6, Definition D: Medical expenses means 80% of all reasonable expenses incurred for medically necessary medical [. . .] services [. . .]. Subject to the Limit of Liability section below we will pay no more than the amount provided by any fee schedule or payment limitation, whether mandatory or permissive, as contained in the Florida Motor Vehicle No-Fault Law [. . .].

Page 2 of 6, Definition G: Reasonable expenses means no more than the amount provided by any fee schedule or payment limitation, whether mandatory or permissive, as contained in the Florida Motor Vehicle No-Fault Law [. . .].

Page 4 of 6, Limit of Liability B(6): We will limit reimbursement of medical expenses to 80 percent of the following schedule of maximum charges: For all other medical services, supplies and care, 200 percent of the allowable amount under [t]he participating physician’s fee schedule of Medicare Part B [. . .].

This is not the end of the inquiry, however. On page 6 of the endorsement, the insurer adds a section under Condition D “Unreasonable or Unnecessary Medical Expenses”:

If an insured incurs medical expenses which we deem to be unreasonable or unnecessary, we may refuse to pay for those medical expenses and contest them.

To determine whether a medical expense is reasonable [. . .] we may use independent sources of our choice.

We may adjust any payment to a medical provider under Part B-1 by any amounts we deem to be unreasonable medical expenses. Any adjustment taken will not affect the rights of an Insured for coverage under Part B-1. Whenever a medical provider agrees to an adjustment of medical expenses charged, any co-payment owed by an insured will also be proportionately adjusted.

When we deem an amount billed by a medical provider to be unreasonable, the insured shall not be responsible for payment of any portion of the bill. [. . .]

Clearly, albeit perplexingly, the insurer’s definition of “reasonable charges” intermingles the characteristics of both a “reasonableness” methodology and a “200% of Medicare” methodology. If an insurer is electing the 200% of Medicare methodology, there is no need to inquire into any other “independent sources.” Moreover, a true 200% election results in a safe harbor determination that the amount paid by the insurer is reasonable — the insurer cannot leap back and forth between paying one bill at the 200% Medicare rate, and then determining the next bill is an unreasonable medical expense. Under Condition D, the insurer is seemingly reserving the right to pay less than 200% of the Medicare amount, which it cannot do if it is electing the Medicare methodology. This section suggests to the Court that 21st Century is attempting use both methodologies to its advantage, rather than making a clear and unambiguous election. Otherwise the language would be mere surplusage, which is discouraged when construing policies of insurance. See Price v. Home Ins. Co. of the Carolinas, 100 Fla. 338, 344-45, 129 So. 748, 751 (1930).

Upon Court inquiry at the hearing, defense counsel was unable to clearly explain why 21st Century had included the “reasonableness” factors in its “Conditions” section when it purportedly wanted to use the 200% of Medicare methodology. Therefore, the Court gave both parties the opportunity to provide written argument to address the Court’s concerns. The Defendant filed its Supplemental Response on July 1, 2016, and the Plaintiff filed its Reply on August 8, 2016.

Conclusions of Law. The Florida Supreme Court’s ruling in Geico General Insurance Company vs. Virtual Imaging Service, Inc., 141 So.3d 147 (Fla. 2013) [38 Fla. L. Weekly S517a] is controlling. In Virtual Imaging, the Supreme Court concluded “that the [PIP] 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” (emphasis added).

Specifically, the Supreme Court found that there are two reimbursement methods permitted under the 2008 amendments to the PIP statute, and that the PIP statute “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 insurer based on the factors enumerated in section 627.736(5)(a)(1)” (emphasis added). Consistent with Kingsway Amigo Ins. Co. v. Ocean Health, Inc., 63 So.3d 63, 27 (Fla. 4th DCA 2011) [36 Fla. L. Weekly D1062a], the PIP insurer must give notice and elect the Medicare fee schedule methodology in its policy. The Supreme Court further held that “a PIP insurer cannot take advantage of the Medicare fee schedules to limit reimbursements without notifying its insured by electing those fee schedules in its policy.” This election must be done in a “clear and unambiguous” manner.

In its Supplemental Response, the insurer argues that the language in Condition D — asserting a right not to pay unreasonable expenses — is actually a reference to “treatment” that the insurer believes is unreasonable or unnecessary. But that is not what Condition D says; rather, it specifically refers to “medical expenses,” not medical “services” or “treatment.” Indeed, Condition D specifically authorizes the insurer to “adjust any payment to a medical provider [. . .] by any amounts we deem to be unreasonable expenses” (emphasis added). The fact that this refers to an amount paid is further buttressed by another provision in this Condition that provides that “the insured shall not be responsible for payment of any unpaid portion of the bill” (emphasis added). If this provision referred to medical treatment that was not reasonable or necessary, then there would be no payment at all, rather than payment of only a “portion” of the bill.” Finally, the Condition is titled “Unreasonable or Unnecessary Medical Expenses” (emphasis added). If the insurer had intended to refer to “medical services” or “treatment” it could have clearly said so.

Clearly, 21st Century Centennial is attempting to leave itself the option of choosing a reasonableness option when it is to its advantage, or choosing the 200% Medicare methodology if this option would result in a lower reimbursement. Under the case law interpreting the “two methodology” provision of the PIP statute, an insurer cannot do this. It must “elect” the “option” in a “clear and unambiguous” manner in its policy. The insurer in this case, 21st Century Centennial, did not do so. Accordingly, it is hereby

ORDERED and ADJUDGED that the Plaintiff’s Motion for Summary Final [Disposition] is hereby GRANTED, and the Defendant’s Motion for Final Summary Judgment is DENIED. The Plaintiff shall submit a proposed final judgment for the court’s consideration.

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¹This case is traveling under the Florida Small Claims Rules, which provide for summary disposition rather than summary judgment. Rule 7.135. The Court therefore treats the Plaintiff’s Motion as one for summary disposition. See Barton v. Cooper, 19 Fla. L. Weekly Supp. 860 (11th Cir. App. 2013) (court may treat motion for summary judgment as a motion for summary disposition); Jackson v. Wells Fargo Home Mortgage, Inc., 12 Fla. L. Weekly Supp. 188a (6th Cir. App. 2004) (no specific motion required to consider summary disposition).