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MANUEL V. FEIJOO, M.D., AND MANUEL V. FEIJOO, M.D., P.A., a/a/o Jorge Artyzuk, Plaintiffs, vs. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant.

24 Fla. L. Weekly Supp. 567a

Online Reference: FLWSUPP 2407ARTYInsurance — Personal injury protection — Coverage — Medical expenses — PIP policy providing that insurer will pay 80% of reasonable charges and also providing that in no event will insurer pay more than 80% of No-Fault Act schedule of maximum charges does not provide clear and unambiguous notice of intent to limit reimbursement to permissive statutory fee schedule — Approval of PIP policy by Office of Insurance Regulation does not satisfy requirement that policy provide unambiguous notice of intent to limit reimbursement to permissive statutory fee schedule where there is nothing in insurer’s submission to OIR or in OIR’s response to insurer asserting that reason for approval was insurer’s proper election of permissive statutory fee schedule

MANUEL V. FEIJOO, M.D., AND MANUEL V. FEIJOO, M.D., P.A., a/a/o Jorge Artyzuk, Plaintiffs, vs. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant. County Court, 11th Judicial Circuit in and for Miami-Dade County. Case No. 15-10102 SP 25(4). August 25, 2016. Carlos Guzman, Judge. Kenneth B. Schurr, Law Offices of Kenneth B. Schurr, P.A., Coral Cables, for Plaintiff. Daniel Fox, for Defendant.

ORDER DENYING DEFENDANT’S MOTIONFOR SUMMARY JUDGMENT REGARDINGTHE 9810A POLICY LANGUAGE

THIS CAUSE came before the Court for hearing on the Defendant’s Motion for Summary Judgment regarding the sufficiency of its 9810A policy language, and the Court having reviewed the motion, the subject policy, the entire court file, the relevant legal authorities, and the Court having heard argument of counsel and having been sufficiently advised in the premises, this Court finds as follows:

Background: This case involves a relatively narrow issue: Whether State Farm’s insurance policy form 9810A complies with the requirements of Florida law entitling it to limit its Personal Injury Protection (PIP) medical bill reimbursements to 200% of the Medicare Part B fee schedule.

The Plaintiff, as the assignee of the insured patient’s PIP benefits, filed suit to recover unpaid PIP benefits claimed due and owing from the Defendant. Plaintiff submitted bills to State Farm totaling $1,725 for medical services arising out of an automobile accident in which the insured patient was injured. State Farm paid $782.01, which represents 80% of 200% of the Medicare Part B fee schedule, also known as the schedule of maximum charges set forth in Florida Statute §627.736(5)(a)(l) (2013).

The Plaintiff seeks to recover the difference between 80% of the amount it billed, less the amount that was already paid by State Farm. The Plaintiff contends that State Farm did not properly elect the Medicare fee schedule methodology, and as a result, it was required to process the Plaintiff’s bills under the “reasonableness” methodology set forth in Florida Statute §627.736(5)(a) (2013).

The Policy: On February 6, 2012, State Farm submitted its 48-page insurance policy form 9810A to the Office of Insurance Regulation (“OIR”) for approval as required by law before any insurance policy may be sold in the State of Florida. See, Fla. Stats. 627.410, 627.411, and 627.4145. State Farm contends the OIR’s approval of its 9810A policy form is conclusive proof that State Farm correctly elected the Medicare fee schedule reimbursement methodology in its policy.

State Farm’s 9810A policy contains several provisions relevant to this inquiry. First, on page 14 of the policy, under “Insuring Agreement,” the State Farm policy states, in pertinent part:

We will pay in accordance with the No-Fault Act properly billed and documented reasonable charges for bodily injury to an insured . . . .”

(Emphasis in original).

Then, at pages 15-16 of the 9810A policy, State Farm includes a section under the heading: “Limits” which provides, in pertinent part as follows:

1. We will not pay any charge that the No-Fault Act does not require us to pay, or the amount of any charge that exceeds the amount the No-Fault Act allows to be charged.

2. The most we will pay for each injured insured as a result of any one accident is $10,000 for all combined Medical Expenses, Income Loss, and Replacement Services Loss, described in the Insuring Agreement of this policy’s No-Fault Coverage.

* * *

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:

* * *

d. 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, . . . .

(Emphasis in original).

The State Farm 9810A policy at pages 14-16 repeatedly refers to the the phrase “Reasonable Charges,” which is as follows:

Reasonable Chargewhich includes reasonable expense, means an amount determined by us to be reasonable in accordance with the No-Fault Actconsidering 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 Centers for Medicare and Medicaid Services, including applicable modifiers, if the coding policy or payment methodology does not constitute a utilization limit.

(Emphasis in original).

The foregoing “reasonable” factors track those factors considered by an insurance carrier when opting to pay PIP medical bills pursuant to the default payment methodology found in Fla. Stat. 627.736(5)(a) (2013), commonly known as the “reasonableness” methodology. By opting to include these fact-dependent factors in its definition of a “reasonable charge”, while also attempting to reimburse pursuant to the “permissive” payment methodology (i.e. the Medicare Part B fee schedule), the Defendant has seemingly combined Fla. Stats. 627.736(5)(a) (2013) with 627.736(5)(a)(1) (2013). Such runs seemingly contrary to the mandates set forth by the Florida Supreme Court in Geico v. Virtual Imaging, 141 So. 3d 147 (Fla. 2013) [38 Fla. L. Weekly S517a]. When an insurance company properly amends its policy to reimburse pursuant to the “permissive” Medicare payment methodology, the factors set forth in Fla. Stat. 627.736(5)(a) may appear irrelevant because the “reasonableness” of a submitted charge is no longer a factor, and the reimbursement amount is defined exclusively by the Medicare fee schedule, not the factors listed above, and on page 5 of the subject policy.

Upon the Court’s inquiry during the hearing regarding why the 9810A policy included the seven fact-dependent factors to determine a “Reasonable Charge,” defense counsel argued that State Farm included the seven “reasonableness” factors in its definition section of the 9810A policy because it wanted to provide a reimbursement method for medical services and care which were not recognized by, nor payable under, the Medicare fee schedule method.1 This suggests that State Farm is attempting to use both payment methodologies. If the “reasonable charge” is less than 200% of the Medicare fee schedule, then State Farm will pay only the lesser amount. If, however, the charge exceeds 200% of Medicare fee schedule, then State Farm will cap its payment by using the 200% of Medicare fee schedule calculation method. In construing insurance policies, the courts should read the policy as a whole, endeavoring to give every provision its full meaning and operative effect. See Auto-Owners Ins. Co. v. Anderson, 756 So. 2d 29 (Fla. 2000) [25 Fla. L. Weekly S211a]. The question then becomes whether a PIP insurer is entitled to include in its policy both payment methodologies, to wit: Fla. Stat. 627.736(5)(a) and (5)(a)(1).

In Virtual Imaging Service, Inc., the Florida Supreme Court concluded that an insurer was required to give notice to its insured by electing the permissive Medicare fee schedules in its policy before availing of the Medicare fee schedule payment methodology to limit reimbursements. The Florida Supreme Court found that there are two reimbursement methods permitted under 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 insured based on the “reasonableness” factors enumerated in section 627.736(5)(a)(l)” (now known as 627.736(5)(a)(2013))2. Consistent with Kingsway Amigo Ins. Co. v. Ocean Health, Inc.63 So.3d 63, 67 (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 if it wants to avail itself of it. The Court further held that “a PIP insurer cannot take advantage of the Medicare fee schedules to limit reimbursements without notifying its insured by electing the fee schedule in its policy.” This election must be done in a “clear and unambiguous” manner. Virtual Imaging, supra. In this case, the question is whether State Farm has left its choice in proverbial “limbo.” See Orthopedic Specialists (Serridge) v. Allstate Ins. Co.177 So. 3d 19, 25-26 (Fla. 4th DCA 2015) [40 Fla. L. Weekly D1918a]. State Farm is leaving itself the option of choosing a “reasonableness” option, and choosing the 200% of Medicare “permissive” methodology if this option would result in a lower reimbursement. In its 9810A policy form, State Farm gave itself both options to use whenever it chose to do so.

An insurer must elect one of the two options in a clear and unambiguous manner in its policy. See, Ortho Specialists (Serridge). In policy form 9810A, State Farm does not appear to make a specific and unambiguous Medicare Part B fee schedule election in its policy to the exclusion of the alternate payment methodology (i.e. the “reasonableness” methodology). A specific and unambiguous Medicare Part B fee schedule election contained in a policy would provide clarity to the provider regarding balance billing because a provider is prohibited from balance billing the insured patient if the policy contains a Medicare fee schedule election. If there is no Medicare fee schedule election, then the provider is free to balance bill the patient. Additionally, there are countless medical services and modalities that are payable under the fact-dependent “reasonableness” methodology of Fla. Stat. 627.736(5)(a), but which would not be compensable if the policy contained a clear and unambiguous Medicare Part B fee schedule election pursuant to Fla. Stat. 627.736(5)(a)(1). State Farm may avail itself of various other CMS coding policies and payment methodologies if it properly elected the Medicare fee schedule method, but it may not do so if it elected the reasonable amount method3.

In this context, the Court agrees with the decisions in the cases of Pain and Injury Relief of Lake Worth (a/a/o Evener Deronvil) v. State Farm Fire and Casualty Company, Case No.: 2015-2819 COCE (53) (Broward County Court, March 30, 2016) [23 Fla. L. Weekly Supp. 1078a], Lee, J. (State Farm’s 9810A policy form fails to make a specific and unambiguous Medicare Part B fee schedule election limiting its PIP reimbursements) as well as the decision in Rembrandt Mobile a/a/o Cepero v. State Farm Mut. Auto. Ins. Co. Case No.: 15-1657 SP 24 (Miami-Dade County Court, April 20, 2016), Cannava, J. (same). This Court has also reviewed other decisions reaching similar conclusions based upon similar analysis.4

State Farm next argues that the deficiencies caused by its hybrid method are cured by the Office of Insurance Regulation’s (“OIR”) “approval” of its 9810A policy pursuant to Fla. Stat. § 627.736(5)(a)5. However, this court respectfully disagrees with State Farm’s argument that the OIR’s approval of its 9810A policy entitles it to claim the safe harbor provided in Florida Statute §627.736(5)(a)(5).

In 2012, the Legislature amended Florida Statute §627.736(5)(a)(5) to provide as follows:

Effective, July 1, 2012, 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.

(Emphasis added).

State Farm argues it received the necessary approval to apply and pay pursuant to the “permissive” Medicare fee schedule methodology when the OIR stamped the word “APPROVED” on top of each of the 48 pages of the policy on October 5, 2012. However, there is nothing in either State Farm’s submission to the OIR, nor in the OIR’s response to State Farm, asserting that the reason for the OIR’s approval was State Farm’s proper election of the “permissive” Medicare payment methodology provided for in Fla. Stat. 627.736(5)(a)(1). In fact, a finding that a policy has clearly, unambiguously, and properly elected the permissive Medicare payment method provided for by Florida statute clearly calls for a legal conclusion, and the OIR does not make legal findings.

The “. . .policy form approved by the OIR. . .” as referenced in Fla. Stat. 627.736(5)(a)(5) is actually the form prepared by the OIR and attached to the OIR’s Informational Memorandum 12-02M (attached as Exhibit B to Defendant’s motion), and that form simply provided insurers with the OIR’s proposed text for an approved Medicare Part B fee schedule endorsement. The OIR’s proposed and approved Medicare Part B policy form endorsement (attached to OIR’s 12-02M Informational Memorandum) notably included a disclaimer, which stated: “Ultimately, it is the insurer’s responsibility to develop its own language after researching the law, reviewing its contract forms and conferring with its legal staff.”

Stating that a policy is “APPROVED,” as is the situation in the instant case, does not result in a finding that the OIR is approving a limitation on payment to the Medicare fee schedules when the policy obviously includes language pertaining to both the “reasonableness” fact-based methodology, and the separate “200% of Medicare fee schedule” methodology. Otherwise, any policy stamped “APPROVED,” without more, would result in a finding that the insurer has properly invoked the Medicare fee schedule limitations, even if an insurer decided to include the traditional “reasonableness” analysis or exclusively use the “reasonableness” method because it finds it more advantageous. This Court notes that no insurer may sell an insurance policy in Florida until it is first ‘approved’ by the OIR. See, Fla. Stat. 627.410, 627.411, and 627.4145, which mandates that all proposed insurance policies be submitted to the OIR, and must pass the statutory readability requirements. According to State Farm’s argument, every policy that is ‘approved’ by the OIR would necessarily and automatically incorporate the Medicare fee schedules once “approved.” This is not the result the Legislature intended. By way of example, the Allstate insurance policy deemed ambiguous by the 4th DCA in Ortho Specialist (Serridge), supra, was stamped “approved” as was the Geico policy at issue in Virtual Imaging, supra.

The OIR’s ‘approval’ of the 9810A policy was simply the OIR indicating that the subject policy satisfied Fla. Stat. 627.4145 readability requirements, and that it does not demonstrate compliance with all statutory and common law requirements regarding a specific and unambiguous Medicare Part B fee schedule election required by Virtual Imaging.

If this Court were to presume that the OIR’s “approval” of the policy authorized State Farm to utilize both the reasonableness method and the Medicare fee schedule payment methodologies, then this Court would have jurisdiction to review the policy to ensure that it “. . .does not conflict with the plain and ordinary intent of the law.” Florida Farm Bureau Casualty Ins. Co. v. State of Fla., Office of Insurance Regulation109 So.3d. 860, 861 (Fla. 1st DCA 2013) [38 Fla. L. Weekly D597b]. (An agency’s construction of the statute receives judicial deference if it falls within the permissible range of interpretations, and does not conflict with the plain and ordinary intent of the law).

The doctrine of “primary jurisdiction” does not divest this court of jurisdiction to review the policy at issue for legal sufficiency and such an assertion may raise issues regarding the separation of powers. See, e.g., Askew v. Cross Key Waterways, 372 So. 2d. 913, 924 (Fla. 1978); State v. Bender, 382 So. 2d 697, 700 (Fla. 1980).

In the context of a different chronology of events than the matter before this Court, the doctrine of “primary jurisdiction” may allow a Court to postpone or suspend judicial determination regarding the legal sufficiency of the policy until after an initial decision on the policy is issued by the OIR. See Flo-Sun v. Kirk783 So.2d 1029 (Fla. 2001) [26 Fla. L. Weekly S189a]; Hill Top Developers v. Holiday Pines Service Corp., 478 So.2d 368 (Fla. 2d DCA 1985). In this case, the OIR has issued a decision “approving” the policy at issue as evidenced by its stamp, and this Court has authority and jurisdiction to review the policy to ensure that it is in compliance with the law.

The argument that the OIR’s “approval” permitted an insurer to utilize a policy that contains provisions which are in conflict with the statutory requirements has been rejected by the Third District Court of Appeal. In Gonzalez v. Associates Life Insurance Company, 641 So.2d 895 (Fla. 3d DCA 1994), the court made it clear that mere “approval” by the Department of Insurance (OIR’s predecessor agency) does not automatically validate the contents of an insurance policy:

Associates Life argues that because the Department of Insurance pre-approved the form of the policy issued here, we should affirm. Regardless of what deference we should accord the department’s determination, we find as a matter of law, its approval of the policy form in this case was clearly erroneous, and that reversal is required.

See also, Kaufman v. Mutual of Omaha Ins. Co.681 So.2d 747, (Fla. 3d DCA 1996) [21 Fla. L. Weekly D171a] (Department of Insurance approval of a policy form does not override the explicit terms of a statutory requirement).

The court respectfully with the Defendant’s argument that the OIR’s “approval” of the policy form at issue permits the insurer to utilize a policy that appears to be in conflict with the law.

The Court finds that State Farm’s 9810A policy language does not make a specific and unambiguous Medicare Part B fee schedule election, and instead, the policy creates an ambiguity between the two alternative payment methodologies. Accordingly, it is hereby:

ORDERED and ADJUDGED that the Defendant’s Motion for Partial Summary Judgment is DENIED and Plaintiff’s Motion is GRANTED.

__________________

1Pursuant to Fla. Stat. 627.736(5)(a)(1)(2013), the insurer is not required to pay for services or care that is not payable by Medicare, or workers comp.

2The PIP statute that went into effect on Jan. 1, 2013 renumbered various sections that appeared in the Jan. 1, 2008 version of the statute so that 627.736(5)(a)(1)(2008) and 627.736(5)(a)(2)(2008) were renumbered and now appear as 627.736(5)(a)(2013) and 627.736(5)(a)(1)(2013).

3Fla. Stat. 627.736(5)(a)3. states that “subparagraph 1. [the Medicare fee schedule method] does not prohibit an insurer from using the 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.” This is permissive language; a PIP insurer may therefore only take advantage of these further limitations if and only if (a) it clearly and unambiguously elected the Medicare fee schedule method to the exclusion of the reasonable amount method; (b) it clearly and unambiguously elected the specific CMS payment methods and coding policies it intends to use; (c) the allowed amount is not less than the statutory floor; and (d) the CMS payment methodologies and coding policies are not utilization limits.

4Quality Med. Group, Inc., a/a/o Christle Murphy v. State Farm Mut. Auto. Ins. Co., Case No.: 14-3904 SP 05 (04) (Miami-Dade County Court, October 12, 2015), Simon, J. (State Farm’s 9810A policy form fails to make a specific and unambiguous Medicare Part B fee schedule election limiting its PIP reimbursements); Neurology Partners, P.A. d/b/a Emas Spine & Brain a/a/o Dawn Beals v. State Farm Mutual Automobile Insurance Company, 23 Fla. L. Weekly. Supp. 833a (Duval County Court, December 3, 2015), Shore, J. (same); Dr. Rubin Thompson, D.C. a/a/o Soilnestes v. State Farm Mut. Auto. Ins. Co., Case No.: 14-12640 SP 05 (01) (Miami-Dade County Court, December 7, 2015), Kravitz, J. (same); Crespo and Assoc. a/a/o Rondon, v. State Farm Mut. Auto. Ins. Co. Case No.: 15-CC-0001357 (Hillsborough County Court, December 18, 2015) [23 Fla. L. Weekly Supp. 982b], Perrone, J. (same); First Coast Medical Center a/a/o Kevin Adams v. State Farm Mutual Automobile Insurance Company, Case No.: 2014-SC-03619 (Duval County Court, January 15, 2016) [23 Fla. L. Weekly Supp. 943a], Hudson, J. Florida Emergency Physicians Kang & Associates, M.D., P.A., a/a/o Jonathan Sias v. State Farm Mutual Automobile Insurance Company, Case No.: 2014-SC-9502-O (Orange Cty. Court, Feb. 10, 2016) [23 Fla. L. Weekly Supp. 1052a], Jewett, J. (same). DNA Center, LLC a/a/o Helen Roy v. State Farm Mutual Automobile Insurance Company, Case No.: 2015-021342-CONS (Volusia County Court, February 24, 2016) [23 Fla. L. Weekly Supp. 1043a], Green, J. (same); Theramed, LLC d/b/a Theramed Medical Clinics a/a/o Petrine Stanley v. State Farm Mutual Automobile Insurance Company, Case No.: 2015-SC-004069 (Duval County Court, February 25, 2016) [23 Fla. L. Weekly Supp. 1038a], Derke, J. (same); Pain and Injury Relief of Lake Worth (a/a/o Evener Deronvil) v. State Farm Fire and Casualty Company, Case No.: 2015-2819 COCE (53) (Broward County Court, March 30, 2016) [23 Fla. L. Weekly Supp. 1087a], Lee, J. (same); New Life Medical and Rehab Center, Inc., a/a/o Martinez Francisco J v. State Farm Mutual Automobile Insurance Company, Case No.: 2014-05263 SP 05 (Miami-Dade County Court, April 6, 2016), Simon, J. (same); Neurology Partners d/b/a Emas Spine & Brain Specialists a/a/o Lauren Rizzi v. State Farm Mut. Auto. Ins. Co., Case No.: 2015-SC-001816 CC-J (Duval County Court, April 12, 2016), Derke, J. (same); Ceda Health of South Miami LLC a/a/o Lagos v. State Farm Mut. Gen. Ins. Co., Case No.: 14-1787 CC 25 (Miami-Dade County Court, April 19, 2016), Marino-Pedraza, J. (same); Argyle Chiropractic a/a/o Renella v. State Farm Mut. Auto. Ins. Co., Case No.: 16-2015-SC-157 MA (CC-M) (Duval County Court, April 20, 2016), Floyd, J. (same); Rembrandt Mobile a/a/o Cepero v. State Farm Mut. Auto. Ins. Co. Case No.: 15-1657 SP 24 (Miami-Dade County Court, April 20, 2016), Cannava, J. (same); Pompano Spine Center a/a/o Ifautane Similien v. State Farm Mut. Auto. Ins. Co.Case No.: COCE 15-005621 (54) (Broward County Court, April 25, 2016) [24 Fla. L. Weekly Supp. 253a], DiPietro, J. (same); Ceda Health a/a/o Elio Serra v. State Farm Mut. Auto. Ins. Co., Case No.: COCE 14-005314 (Broward County Court, April 29, 2016) [24 Fla. L. Weekly Supp. 81a], Zaccor, J. (same); Ceda Ortho. & Interventions Med. of FIU/Kendall, LLC a/a/o Rosa Moya v. State Farm Mut. Auto. Ins. Co.23 Fla. L. Weekly Supp. 565a (Miami-Dade County Court, October 8, 2014), Cannava, J. (Policy failed to make a specific and unambiguous Medicare fee schedule election); Neurology Partners, P.A. D/B/A Emas Spine & Brain a/a/o Willie Brown v. State Farm Mutual Automobile Insurance Company, 23 Fla. L. Weekly Supp. 550a (Duval County Court, July 28, 2015), Mitchell, J. (Policy failed to make a specific and unambiguous Medicare fee schedule election).

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