24 Fla. L. Weekly Supp. 760b

Online Reference: FLWSUPP 2409LABBInsurance — Personal injury protection — Coverage — Medical expenses — Statutory fee schedules — Clear and unambiguous election by insurer — Insurer failed to make, clear, exclusive, and unambiguous election that it would utilize permissive Medicare fee schedule of maximum charges contained in statutes to limit reimbursement of properly submitted bill for medical services — Policy language indicating insured would pay both 80% of properly billed and documented reasonable charge and also stating that insurer would not pay more than 80% of certain No-Fault Act schedule of maximum charges created an impermissible hybrid methodology — Stamped approval of policy by Office of Insurance Regulation did not establish unambiguous election of Medicare Fee Schedule Methodology by insurer

K. MCFARLIN USRY, D.C., P.A. (as assignee of Guivelore Labbe), Plaintiff, vs. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant. County Court, 17th Judicial Circuit in and for Broward County. Case No. COCE-14-016790-50. July 27, 2016. Peter B. Skolnik, Judge. Counsel: Barry Aronin, LaBovick, LaBovick, & Diaz Law Group, Palm Beach Gardens, for Plaintiff. Gregory Willis, Cole, Scott & Kissane, P.A., for Defendant.

ORDER DENYING DEFENDANT’S MOTIONFOR FINAL SUMMARY JUDGMENT¹ AND GRANTINGPLAINTIFF’S CROSS-MOTION FOR SUMMARYJUDGMENT AS TO THE CONSTRUCTION OF STATEFARM’S 9810A POLICY

THIS CAUSE came before the Court on June 30, 2016 on Defendant’s Motion for Final Summary Judgment1 and the Plaintiff’s Cross-Motion for Summary Judgment as to Limiting Reimbursement of Provider’s Charges in Accordance with Fee Schedule, and the Court having considered the motions, the record, and legal authorities cited by counsel and the argument of counsel, and being otherwise sufficiently advised in the premise, the Court finds as follows:

In this case related to a medical provider’s attempts to recover personal injury protection benefits from State Farm Mutual Automobile Insurance Company, the parties presented three issues in their competing motions for summary judgment. However, the parties solely argued one issue on June 30, 2016 in chambers. Thus, the issue presented was whether the insurer can make payment pursuant to the schedule of maximum charges found in Fla. Stat. 627.736(5)(a) of the insurance policy at issue (Form 9810A). For reasons stated herein, the Court DENIES the Defendant’s Motion for Final Summary Judgment1 and GRANTS the Plaintiff’s Cross-Motion for Summary Judgment.

THE DEFENDANT HAS NOT MADE A CLEAR, EXCLUSIVE, AND UNAMBIGUOUS ELECTION THAT IT WILL UTILIZE THE PERMISSIVE MEDICARE FEE SCHEDULE OF MAXIMUM CHARGES CONTAINED IN FLA. STAT. 627.736(5)(a)

The issue before the Court is whether State Farm’s policy form 9810A permits it to limit reimbursement of a properly submitted bill for medical services pursuant to the schedule of maximum charges payment limitation expressed in Florida Statutes Section 627.736(5)(a)(1)². The Florida Supreme Court addressed this issue in Geico Gen. Ins. Co. v. Virtual Imaging Svcs., Inc., 141 So. 3d 147, 156 (2013) [38 Fla. L. Weekly S517a], which indicates that there are two separate payment methodologies in the Florida No Fault Act, and that the statute “anticipates that an insurer will make a choice.” Id. at 159. Moreover, Virtual held that in order to take advantage of the lesser payment methodology, “the insurer must clearly and unambiguously elect the permissive payment methodology in order to rely on it. Id.

Since 1971, the PIP statute has mandated that PIP insurers are required to pay eighty-percent of a reasonable medical charge submitted by an insured/medical provider. This “default methodology” is a “fact-dependent inquiry determined by consideration of various factors.” Geico Gen. Ins. Co. v. Virtual Imaging Svcs., Inc., 141 So. 3d 147, 156 (2013) [38 Fla. L. Weekly S517a]. However significant amendments to the PIP statute occurred in in 2007 (“the 2008 PIP Statute”) and in 2012 (“the 2013 statute”). In 2007 (“the 2008 PIP Statute”) the Legislature amended the PIP statute to include a second payment methodology found in F.S. 627.736(5)(a)22 commonly referred to as the “permissive Medicare fee schedule method.” Virtual at 158. This “permissive Medicare fee schedule method” does not rely on any analysis regarding the reasonableness of a submitted charge or inquiry as to the reasonableness of a submitted charge. Instead, it solely applies the Medicare fee schedules contained in F.S. 627.736(5)(a)22 to a submitted charge for a particular service or supply. However, to properly utilize the “permissive Medicare fee schedule method”, the insurer must “provide notice in the policy of its election to use the fee schedules.” Virtual at 159. Most recently, the Florida Fourth District Court of Appeals 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 insurance company’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 as the exclusive form of reimbursement. Orthopedic Specialists v. Allstate Ins. Co., 177 So. 3d 19, 25-26 (Fla. 4th DCA 2015) [40 Fla. L. Weekly D1918a] (emph. added).

The Defendant’s policy states:

Policy, 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.

Policy, page 16

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.

In this section of the policy, Defendant contracts with its insured to pay both Eighty percent of a properly billed and documented reasonable charge, and then states it will not pay more than 80% of the following No-Fault Act schedule of maximum charges. Thus, creating an impermissible hybrid methodology.

Notwithstanding same, the policy goes on to define “Reasonable Charge (which includes Reasonable Expense) as follows:

Policy Page 5

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.

The Defendant’s Policy does not clearly elect the schedule of maximum charges to the exclusion of all other methodologies. State Farm’s definition of “reasonable” charge is a hybrid of various factors found in both the reasonable amount default payment methodology of Fla. Stat. Section 627.736(5)(a) and the “permissive Medicare fee schedule method” of Section 627.736(5)(a)1-5. Specifically, paragraphs 1, 2, 3, 4, and 6 in State Farm’s definition of a reasonable charge correspond directly to the fact-dependent inquiry “elements” of the reasonable amount default payment methodology found in Fla. Stat. Section 627.736(5)(a), while paragraphs 5, and 7 correspond directly to the “permissive Medicare fee schedule payment methodology” found in Fla. Stat. Section 627.736(5)(a)1-5.The suggestion that the Defendant will pay 80% of a reasonable charge and then cite reasonable amount factors, while also alluding to pay no more than 80% of the following No-Fault Act schedule of maximum charges does not make clear which method the Defendant is going to apply — the mandatory or the permissive, and the insurer has not made a clear choice as required by the Florida Supreme Court.

The Defendant wishes to utilize both methodologies. The No Fault act does not work this way. The Defendant is either entitled to pay at the schedule of maximum charges (and may limit reimbursement ONLY to 80% of the schedule) OR 80% of a reasonable charge. The Defendant may not have it both ways. Here, State Farm has failed to elect one statutory payment methodology to the exclusion of the other. Defendant is not permitted to utilize certain elements from the reasonable amount method and certain elements from the Medicare fee schedule method to create a hybrid method that allows State Farm to pay at its whim. Conversely, Virtual and Orthopedic Specialists mandate that an insurer make a choice between the two. This Court finds that because the insurer has not made a clear election and attempts to use both methodologies, it cannot take advantage of the permissive methodology.

OFFICE OF INSURANCE REGULATION

This Court has determined that a mere stamp of “approval” by the Office of Insurance Regulation appearing on Defendant’s policy does not establish an unambiguous election of the Medicare Fee Schedule Methodology by STATE FARM. The Court agrees with Judge Eleni Derke and Judge Robert W. Lee’s reasoning and analysis as it relates to the failings of Fla. Stat. Section 627.736(5)(a)(5) in general and of the stamped approval received by the Office of Insurance Regulation for STATE FARM’s policy: Theramed, LLC v. State Farm Mutual Automobile Ins. Co., Case No. 16-2015-SC-4069-MA (Duval Cty. Ct. Feb. 25, 2016) [23 Fla. L. Weekly Supp. 1038a]; and Pain and Injury Relief of Lake Worth v. State Farm Fire and Casualty Co., Case No. COCE 15-2819 (53) (Broward Cty. Ct. Mar. 30, 2016) [23 Fla. L. Weekly Supp. 1087a].CONCLUSION

As the Defendant has failed to properly elect the schedule of maximum charges, the Defendant’s Motion for Summary Judgment is DENIED. The Plaintiff’s Cross-Motion for Summary Judgment is granted.

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¹Including Defendant’s Supplemental Memorandum of Law in Support of Defendant’s Motion for Final Summary Judgment.

²F.S. 627.736(5)(a)2 (2007) was renumbered to F.S. 627.736(5)(a)1 (2012).

dant has failed to properly elect the schedule of maximum charges, the Defendant’s Motion for Summary Judgment is DENIED. The Plaintiff’s Cross-Motion for Summary Judgment is granted.

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¹Including Defendant’s Supplemental Memorandum of Law in Support of Defendant’s Motion for Final Summary Judgment.

²F.S. 627.736(5)(a)2 (2007) was renumbered to F.S. 627.736(5)(a)1 (2012).