24 Fla. L. Weekly Supp. 620a

Online Reference: FLWSUPP 2408PALMInsurance — Personal injury protection — Coverage — Medical expenses — PIP policy providing that insurer will pay 80% of reasonable charges, but 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 — Neither approval of PIP policy by Office of Insurance Regulation nor use of OIR sample language in policy constitutes per se compliance with requirement that policy provide unambiguous notice of intent to limit reimbursement to permissive statutory fee schedule

MOORE CHIROPRACTIC CENTER, INC. a/a/o Salvatore Palmeri, Plaintiff, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant. County Court, 4th Judicial Circuit in and for Clay County. Case No. 2015-SC-470 (D). May 10, 2016. Kristina Mobley, Judge. Counsel: Adam Saben, Shuster & Saben, Jacksonville, for Plaintiff. David Gagnon, Taylor, Day, Grimm & Boyd, Jacksonville, for Defendant

.ORDER DENYING DEFENDANT’S MOTION FORSUMMARY JUDGMENT and GRANTINGPLAINTIFF’S MOTION FOR SUMMARY JUDGMENT

THIS MATTER comes before this Court for hearing on April 6, 2016 on Plaintiff’s and Defendant’s Cross-Motions for Summary Judgment as to whether State Farm properly elected the permissive payment methodology of section 627.736(5)(a)1, Florida Statutes (2012), in the language of Policy Form 9810A. Having been fully advised after reviewing the file, hearing the argument of counsel, and considering relevant case law, the Court finds as follows:

Defendant’s position is that it complied with the mandate of Geico v. Virtual Imaging Services, 141 So. 3d 147 (Fla. 2013) [38 Fla. L. Weekly S517a], and placed its insured on proper notice by making a clear and unambiguous election that it will reimburse personal injury protection (“PIP”) benefits pursuant to section 627.736(5)(a)1, Florida Statutes. Such an election allows Defendant to avail itself of the permissive payment methodology wherein reimbursement calculations are made pursuant to Medicare fee schedules.

In Virtual, the Florida Supreme Court held that an automobile insurance carrier can pay properly submitted bills on a PIP claim using one of two payment methodologies. The default payment methodology is a “fact-dependent inquiry determined by consideration of various factors.” Id. at 156. The second payment methodology, found in section 627.736(5)(a)1, Florida Statutes,¹ is not fact-dependent. This permissive payment methodology does not rely on any analysis regarding the reasonableness of a submitted charge or upon a study into reimbursements accepted by the medical provider. Instead, it relies on a mere application of the “schedule of maximum charges” to the charge submitted for a particular service or supply. However, in order to avail itself of the permissive payment option, the insurer must provide notice in the policy of its election to use the Medicare fee schedules. Merely incorporating the 2008 amendments into an insurer’s policy does not, without inclusion of proper election language, constitute notice. In Virtual, the Florida Supreme Court stated, “when the plain language of the PIP statute affords insurers two different mechanisms for calculating reimbursements, the insurer must clearly and unambiguously elect the permissive payment methodology in order to rely on it.” Id. at 158 (citing Kingsway Amigo Ins. Co. v. Ocean Health, Inc., 63 So. 3d 63, 67 (Fla. 4th DCA 2011) [36 Fla. L. Weekly D1062a]). Therefore, this Court must review the relevant language in the 9810A State Farm policy to see if Defendant made such an election.

“In construing an insurance policy, courts should read the policy as a whole, endeavoring to give every provision its full meaning and operative effect”.² On page sixteen of the 9810A policy,³ State Farm’s policy reads:

“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. . .” (emphasis in original).

However, the Court also notes that Defendant defines “Reasonable Charge” on page five of State Farm’s 9810A Policy, which states:

Reasonable Charge, which includes reasonable expense, means 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 Centers for Medicare and Medicaid Services, including applicable modifiers, if the coding or payment methodology does not constitute a utilization limit.

These factors essentially track those considered by an insurance carrier when opting to pay pursuant to the default payment methodology as noted in section 627.736(5)(a), Florida Statutes. By opting to include the fact-dependent factors in its definition of “Reasonable Charge” while also attempting to reimburse pursuant to the permissive payment methodology, Defendant impermissibly commingles subsections 627.736(5)(a) and 627.736(5)(a)1. Such commingling runs afoul of Virtual. When an insurance company has properly amended its policy to reimburse pursuant to the permissive payment methodology, the fact-dependent factors of section 627.736(5)(a), Florida Statutes, are irrelevant because the reasonableness of a submitted charge is no longer a factor; the reimbursement amount is defined pursuant to a Medicare fee schedule rather than the factors listed above. Neurology Partners, P.A. d/b/a Emas Spine & Brain a/a/o Willie Brown v. State Farm Mut. Auto. Ins. Co., 23 Fla. L. Weekly Supp. 550a (Fla. Duval Cty. Ct. 2015); Neurology Partners, P.A. d/b/a Emas Spine & Brain a/a/o Dawn Beals v. State Farm Mut. Auto. Ins. Co., 23 Fla. L. Weekly Supp. 833a (Fla. Duval Cty. Ct. 2015); First Coast Medical Center a/a/o Kevin Adams v. State Farm Mut. Auto. Ins. Co., 23 Fla. L. Weekly Supp. 943a (Fla. Duval Cty. Ct. 2016).

Therefore, when reading Defendant’s policy as a whole, the Court finds that Defendant’s 9810A policy fails to make a clear and unambiguous election to reimburse solely pursuant to section 627.736(5)(a)1, Florida Statutes.

Next, Defendant states that its 9810A policy was approved by the Office of Insurance Regulation (“OIR”) on October 5, 2012. According to Defendant, this approval permits State Farm “to limit payment by application of the schedule of maximum charges as a matter of law.”⁴ While the Court agrees that the OIR approved Defendant’s 9810A policy, there is no evidence that such an approval constitutes a finding that Defendant’s policy complies with the election mandate of Virtual. Defendant argues that a court must give deference to a regulatory agency in interpreting statutes that the agency is charged with implementing. Florida Farm Bureau Cas. Ins. Co. v. State, 109 So. 3d 860 (Fla. 1st DCA 2013) [38 Fla. L. Weekly D597b].⁵ However, the issue here is not an agency’s interpretation of a statute, but a court’s interpretation of a contract. Such an issue is clearly within the purview of this Court.

Defendant presents no authority showing that the OIR found the 9810A policy, when read as a whole, made a clear and unambiguous election to reimburse pursuant to the permissive payment methodology. Further, there is no showing that State Farm asked the OIR to make such a determination. There is merely a finding that the 9810A policy was approved as a policy that State Farm is authorized to put into the marketplace to insure Floridians.⁶

In 2012, the Legislature amended section 627.736(5)(a)5, Florida Statutes, to include a notice requirement with respect to limiting payment on reimbursements pursuant to section 627.736(5)(a)1. The Legislature also enabled the OIR to create a policy form to satisfy this notice requirement.

The Court finds that Defendant incorporated this form into its 9810A Policy. However, mere incorporation of the sample form does not create a clear and unambiguous election. Indeed, the OIR Informational Memorandum disclaims this form, stating:

Depending upon the existing language, the same language may be suitable to address the notice requirement of House Bill 119 or the insurer may already have approved language that satisfies the notice requirement. 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.

The inclusion of the sample form cannot be read in a vacuum. Mere inclusion of the OIR sample form does not, in and of itself, satisfy the notice requirement of section 627.736(5)(a)5, Florida Statutes, and Virtual.

Therefore, Defendant’s Motion for Summary Judgment is DENIED and Plaintiff’s Motion for Summary Judgment is GRANTED.

__________________

¹§ 627.736(5)(a)2, Fla. Stat. (2007) was renumbered to § 627.736(5)(a)1 Fla. Stat. (2012).

²See Defendant’s Motion for Summary Judgment at 3, filed January 25, 2016, citing Auto-Owners Ins. Co. v. Anderson, 756 So. 2d 29, 34 (Fla. 2000) [25 Fla. L. Weekly S211a].

³Introduced into evidence without objection through the affidavit of Valerie Halsey, filed January 27, 2016.

⁴See Defendant’s Motion for Summary Judgment at 9-11.

⁵Cited in Defendant’s Motion for Summary Judgment at 10.

⁶Plaintiff presents numerous rulings from sister courts rejecting Defendant’s argument that OIR approval constitutes compliance with Virtual as a matter of law. Pain and Injury Relief of Lake Worth a/a/o Evener Deronvil v. State Farm Fire and Cas. Co., (Broward Cty. Ct. No.: 15-2819 COCE (53), March 30, 2016) [23 Fla. L. Weekly Supp. 1087a]; Theramed, LLC d/b/a Thermed Medical Clinics a/a/o Petrine Stanley v. State Farm Mutual Auto. Ins. Co., (Duval Cty. Ct. No. 16-2015-SC-4069-MA, February 25, 2016) [23 Fla. L. Weekly Supp. 1038a]; MRI Services, Inc. a/a/o Chris Hazlett v. Allstate Fire & Casualty Company, (Broward Cty. Ct. No.: 13-19191 COCE (53), November 24, 2015) [23 Fla. L. Weekly Supp. 776a]; Florida Emergency Physicians Kang & Associates, M.D., P.A. a/a/o Jonathan Sias v. State Farm Mut. Auto. Ins. Co., (Orange Cty. Ct. No.: 2014-SC-9502-O, February 10, 2016) [23 Fla. L. Weekly Supp. 1052a]