24 Fla. L. Weekly Supp. 52b
Online Reference: FLWSUPP 2401FULCInsurance — Personal injury protection — Coverage — Medical expenses — PIP policy providing that insurer will pay 80% of reasonable expenses and also stating that to determine whether a charge is reasonable insurer may consider any and all limitations authorized by PIP statute and will not pay more than 80% of 200% of Medicare Part B fee schedule provides clear and unambiguous notice of intent to limit reimbursement to permissive statutory fee schedule
NEUROLOGY PARTNERS, P.A. d/b/a EMAS SPINE & BRAIN a/a/f JUDI FULCO, Plaintiff, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant. County Court, 4th Judicial Circuit in and for Duval County. Case No. 2014-SC-4547, Division P. March 4, 2016. Eric C. Roberson, Judge. Counsel: Adam Saben, Jacksonville, for Plaintiff. David M. Gagnon, Taylor, Day, Grimm and Boyd, Jacksonville, for Defendant.
ORDER GRANTING DEFENDANT’SMOTION FOR SUMMARY JUDGMENT
This cause came before the Court on Defendant’s Motion for Summary Judgment. The Court having reviewed the documents, evidence and arguments of counsel, finds as follows:
In this suit seeking Personal Injury Protection (“PIP”) benefits, the Court is called upon to determine whether State Farm Mutual Automobile Insurance Company (“State Farm”) made a clear and unambiguous election to limit payments for medical services based on various Medicare fee schedules in its insurance policy and several amendments to that policy.
The standard for summary judgment is well known and need not be set forth at length. Moreover, the issue before the Court is not factual but deals with the legal interpretation of a contract. Because State Farm drafted the contract at issue, any ambiguities would be held against it. This is consistent with the well-known standard in summary judgment that issues be viewed in the light most favorable to the non-moving party.
FLORIDA’S PIP FRAMEWORK
Section 627.736, Florida Statutes (the “PIP Statute”) describes two separate and distinct payment calculation methodology options. The first is contained in Section 627.736(5)(a)1 and requires PIP insurers to pay for medical services rendered to the insured based on a fact-intensive analysis of the “reasonable” amount of the charges. This is the default methodology and normally results in higher reimbursements. See Allstate Fire & Casualty Ins. Co. v. Stand-Up MRI of Tallahassee, P.A., __ So. 3d __, 2015 WL 1223701 (Fla. 1st DCA Mar. 18, 2015) [40 Fla. L. Weekly D693b]. The second method is set forth in Section 627.736(5)(a) 2-5 and allows PIP insurers to pay for medical services based on various Medicare fee schedules and other terms. The second method is a permissive payment method.
PIP insurers must “clearly and unambiguously elect the permissive payment methodology in order to rely on it.” Geico Gen. Ins. Co. v. Virtual Imaging Servs., Inc., 141 So. 3d 147, 158 (Fla. 2013) [38 Fla. L. Weekly S517a] (internal citations omitted). The Florida Supreme Court explained that this requirement is to give notice to the insured and the medical provider who renders service as to how much PIP coverage the insurer will provide. Id.
What constitutes a clear and unambiguous election has been molded by case law and statutory amendments. The Legislature amended Section (5)(a)5 of the PIP Statute to state:
Effective July 1, 2012, an insurer may limit payment [to the permissive method] only if the insurance policy includes a notice at the 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 of Insurance Regulation] satisfies this requirement.
Although the Virtual Imaging decision was rendered in 2013, it specifically limited its application to “policies that were in effect from the effective date of the 2008 amendments to the PIP statute . . . through the effective date of the 2012 amendment. . . .” Virtual Imaging, 141 So. 3d at 150.
In Stand-Up MRI, the First District analyzed a policy with certain similarities to the policy at issue in this case. In that case, the only language quoted from the policy at issue stated:
In accordance with the Florida Motor Vehicle No-Fault Law, [Allstate] will pay to or on behalf of the injured person the following benefits. . .
1. Medical Expenses
Eighty percent of reasonable expenses for medically necessary . . . services . . .
Any amounts payable under this coverage shall be subject to any and all limitations, authorized by section 627.736, or any other provisions of the Florida Motor Vehicle No-Fault Law, as enacted, amended or otherwise continued in the law, including but not limited to, all fee schedules.
Stand-Up MRI, 2015 WL 1223701 at *2. The First District held that “the policy gives sufficient notice of its election to limit reimbursements by use of the fee schedule.” Id.
RELEVANT CONTRACTUAL LANGUAGE
The policy at issue in this lawsuit contains the following relevant language. Section II of the insurance policy, discussing Coverage P or No-Fault benefits:
What We Pay
We will pay in accordance with the No-Fault Act for bodily injury to an insured, caused by an accident resulting from the ownership, maintenance or use of a motor vehicle:
1. Medical Expenses. 80% of the reasonable charges incurred for necessary:
a. Medical, surgical, X-ray, dental, ambulance, hospital, professional nursing and rehabilitative services. . . .
This will be referred to as the “Policy Language.”
Next, there is a document entitled 6126LS Amendatory Endorsement that states:
No-Fault — Coverage P
The following is added to No-Fault — Coverage P:
We will limit reimbursement of medical expenses to 80 percent of a properly billed reasonable charge, but in no event will we pay more than 80 percent of the following schedule of maximum charges:
. . .
f. For all other medical services, supplies and care, 200 percent of the allowable amount under the participating physicians fee schedule of Medicare Part B.
. . .
For purposes of the above, the applicable fee schedule or payment limitation under Medicare is the fee schedule or payment limitation under Medicare is the fee schedule or payment limitation in effect at the time the services, supplies or care is rendered . . . except that it will not be less than the allowable amount under the participating physicians schedule of Medicare Part B for 2007 for medical services, supplies, and care subject to Medicare Part B.
This will be referred to as the “6126LS Amendment.”
Finally, the 6910.3 Amendatory Endorsement states:
Item 1 of What We Pay is changed to read:
1. Medical Expenses. 80% of all reasonable expenses incurred for:
a. Medically necessary medical, surgical, X-ray, dental, ambulance, hospital, professional nursing and rehabilitative services, eyeglasses, hearing aids and prosthetic devices;
. . .
To determine whether a charge is reasonable we may consider usual and customary charges and payments accepted by the provider, reimbursement levels in the community and various federal and state medical fee schedules applicable to automobile and other insurance coverages, and other information relevant to the reasonableness of the reimbursement for the service, treatment or supply.
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.
This will be referred to as the “6910.3 Amendment.”
DISCUSSION
The Court starts by noting its appreciation for the excellent argument and preparation demonstrated by all counsel.
Defendant argues that the Office of Insurance Regulation’s (“OIR”) Informational Memorandum OIR-12-02M Issued May 4, 2012 constitutes a “policy form approved by the office” and thus satisfies the notice requirement established by Section 627.736(5)(a)5 as a matter of law. Plaintiff, on the other hand, argues that the form contained in the OIR memorandum contains many caveats that the language may be suitable to address the notice payee requirement of the statute.
The language contained in the OIR memorandum is substantially similar to the language in the 6126LS Amendment.
Plaintiff properly concedes that the 6126LS Amendment, standing alone, constitutes valid notice that State Farm was electing the permissive payment method. However, Plaintiff goes on to argue that the 6126LS Amendment must be read in pari materia with the 6910.3 Amendment. In doing so, the State Farm policy also incorporates the factors used in the default payment method established in Section 627.736(5)(a)1. The result, according to Plaintiff, is a failure to clearly and unambiguously elect the permissive payment method.
The Court cannot say, as a matter of law, at this time that the suggested language in the OIR Memorandum is “a policy form approved by the office. . . .” The OIR Memorandum contains multiple warnings that “[d]epending on the existing policy language, the sample language may be suitable to address the notice requirement” of Section 627.736(5)(a)5 and “[u]ltimately, it is the insurer’s responsibility to develop its own language after researching the law, reviewing its contract forms, and conferring with its own legal staff.” [See D.E. 32, Ex B (emphasis added)]. The OIR Memorandum is better viewed as a suggestion as opposed to the explicit approval satisfying the statutory requirement.
That conclusion, however, does not end the Court’s analysis. The next step is to determine whether State Farm’s policy — read as a whole — makes a clear and unambiguous election in light of the policy language approved in Stand-Up MRI of Tallahassee.
Section 627.736 contains several limitations on what constitutes a reasonable charge. Under the default payment method, consideration is given to (i) usual and customary charges and payments accepted by the provider involved in the dispute; (ii) reimbursement levels in the community and various federal and state medical fee schedules applicable to motor vehicle and other insurance coverages, and (iii) other information relevant to the reasonableness of the reimbursement for the service treatment or supply.
The permissive payment methodology limits payments based on the applicable Medicare fee schedule.
At the hearing, all counsel agreed that these are the only limitations relevant for the Court’s consideration.
Reading the two sections of the State Farm policy in harmony, they state:
What We Pay:
1. Medical Expenses. 80% of all reasonable expenses . . .
. . .
To determine whether a charge is reasonable we may consider [any and all limitations authorized by section 627.736].
[B]ut in no event will we pay more than 80 percent of the following schedule of maximum charges — (f) For all other medical services, supplies and care, 200 percent of the allowable amount under the participating physicians fee schedule of Medicare Part B.
For purposes of the above, the applicable fee schedule or payment limitation under [the permissive payment methodology].
The Court fails to find how this is distinguishable from the approved language in Stand-Up MRI of Tallahassee which stated that the policy would pay 80% of reasonable expenses but “[a]ny amounts payable under the coverage shall be subject to any and all limitations authorized by section 627.736 . . . including but not limited to all fee schedules.” Stand-Up MRI, 2015 WL at 1223701 *2.
In both policies, the insurers specifically reserved all limitations in the PIP Statute — including the limitations in both the default and permissive payment methodologies. In Stand-Up MRI the insurer merely included the fee schedules as one of the limitations and the First District found this to be sufficient notice of electing the permissive payment methodology.
Here, State Farm stated that in no event would it pay more than the amounts allowed in the permissive payment methodology. Thus, State Farm’s policy appears to be a clearer election of the permissive payment option than the language approved in Stand-Up MRI of Tallahassee.
Accordingly, it is ORDERED and ADJUDGED:
Defendant’s Motion for Summary Judgment Regarding 6126LS Endorsement Language is hereby GRANTED.
The Court finds that, based on controlling First District case law, State Farm made a clear and unambiguous election to utilize the payment limitations set forth in Section 627.736(5)(a)2, Florida Statute.
