23 Fla. L. Weekly Supp. 833a
Online Reference: FLWSUPP 2308BEALInsurance — Personal injury protection — Coverage — Medical expenses — 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 — PIP policy that includes fact-dependent factors in its definition of “reasonable charge” while also attempting to reimburse in accordance with statutory fee schedule commingles payment methodologies and does not provide clear and unambiguous notice of intent to limit reimbursement to fee schedule — Requirement of clear and unambiguous notice of election to use statutory fee schedule enunciated by Florida Supreme Court in Virtual Imaging relative to 2008 version of PIP statute is equally applicable to 2012 amendments to PIP statute
NEUROLOGY PARTNERS, P.A. D/B/A EMAS SPINE & BRAIN A/A/O DAWN BEALS (“NEUROLOGY PARTNERS”), Plaintiff, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY (“STATE FARM”), Defendant. County Court, 4th Judicial Circuit in and for Duval County. Case No. 16-2014-SC-4876MA. December 3, 2015. Brent D. Shore, Judge. Counsel: Adam Saben, Shuster & Saben, Jacksonville, for Plaintiff. Greg Willis, Cole, Scott & Kissane, for Defendant.
ORDER DENYING DEFENDANT’S MOTIONFOR SUMMARY JUDGMENT
THIS MATTER comes before this Court for hearing on October 27, 2015 on Defendant’s Motion for Summary Judgment. This Court, having reviewed the Court file and having heard argument of counsel and being otherwise advised in the premises DENIES the Defendant’s Motion for Summary Judgment and finds that State Farm did not properly elect the permissive payment methodology of F.S. 627.736(5)(a)1 in the language of endorsement 9810A.LEGAL ISSUE
The issue before the Court is whether State Farm’s policy language in its 9810A PIP endorsement permits it to limit reimbursement of a properly submitted bill for medical services pursuant to the schedule of maximum charges described in F.S. 627.736(5)(a)1 (2012).
ANALYSIS
The Florida Supreme Court in Geico v. Virtual Imaging Services, 141 So.3d 147 (2013) [38 Fla. L. Weekly S517a] held that an automobile insurance carrier can pay properly submitted bills on a PIP claim using one of two payment methodologies. The first “default” payment methodology was a “fact-dependent inquiry determined by consideration of various factors”. Virtual, at 156. The Court stated:
“The permissive language of the 2008 amendments [therefore], plainly demonstrates that there are two different methodologies for calculating reimbursements to satisfy the PIP statute’s reasonable medical expenses coverage mandate” Virtual, at 156 (emphasis in original), citing, Kingsway Amigo Ins. Co. v. Ocean Health, Inc. 63 So.3d 63 (Fla. 4th DCA 2011) [36 Fla. L. Weekly D1062a].
The second payment methodology, found in F.S. 627.736(5)(a)21 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 option in (5)(a)2, the insurer must provide notice in the policy of its election to use the fee schedules”. Virtual, at 159. Merely “incorporating” the 2008 amendments into an insurer’s policy does not, without inclusion of proper election language, constitute notice. The Florida Supreme Court stated:
“Accordingly, even if the Medicare fee schedules are incorporated into the insured’s policy, neither the insured nor the provider knows, without the policy providing notice by electing the Medicare fee schedules, that the insurer will limit reimbursements.” Virtual, at 159.
Two appellate courts have applied Virtual when reviewing the PIP language from an Allstate Insurance Company policy.2 Although both courts reached opposite conclusions with respect to the Allstate policy properly placing its insureds on notice of its intent to utilize the “permissive” payment methodology, both courts followed Virtual in that they held that an insurer cannot take advantage of the Medicare fee schedules to limit reimbursement without notifying its insured by electing those fee schedules in its policy.3 That is, the language in a PIP policy must clearly show an election of the permissive payment methodology over the default payment methodology before it can pay pursuant to the Medicare fee schedule rates.
Just like GEICO in the Virtual case, State Farm argues that its Policy Form 9810A satisfies the notice requirement in F.S. 627.736(5)(a)1 (2012). Because this argument requires an interplay between the statutory scheme and the policy, the Court next turns to an analysis of the policy provisions.
“In construing an insurance policy, courts should read the policy as a whole, endeavoring to give every provision its full meaning and operative effect”4 On page 16 of the 9810A policy,5 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).
This language cited above closely tracks the language in the form created by the Office of Insurance Regulation (“OIR”) and the tracking of F.S. 627.736(5)(a)1. This shows an attempt to make the aforementioned requisite election and notice to an insured. Further, the Defendant advises the Court that the 8210A policy was “approved” by the OIR on October 5, 2012. According to the Defendant, this approval is an imprimatur by the OIR that the State Farm policy properly elected and noticed the insured of its intent to reimburse solely via the permissive payment methodology. However, this Court concurs with its sister court in Neurology Partners, P.A. d/b/a Emas Spine & Brain a/a/o Willie Brown v. State Farm, Case No.: 2014-SC 5472 [23 Fla. L. Weekly Supp. 550a] (Order of Duval County Court Judge Scott Mitchell dated July 28, 2015) that, in reading the policy as a whole, there is a failure to make a clear election and notice.
First, a review of the OIR Informational Memorandum, which contains the sample form for “Use of Medical Fee Schedule claims”,6 contains disclaimers by the OIR before and after the form at issue. The OIR states:
“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 contacts forms, and conferring with its legal staff.”
Immediately after the form in the memorandum, the OIR again qualifies and disclaims its form by repeating the above disclaimer in bold, black letters. Therefore, based on the memorandum by the OIR, inclusion of the approved form in an insurer’s policy is not dispositive of the issue of election and notice. To the contrary, the OIR directs insurers to review its forms, research the law, and confer with counsel in addition to using its “sample form” as a notice mechanism. The inclusion of the sample form cannot be read “in a vacuum” when determining whether a policy contains a proper election for payment under the permissive payment methodology as per F.S. 627.736(5)(a)5.
Next, with respect to the OIR’s “approval” of the State Farm policy, this Court is not convinced as to the significance of such an “approval” with respect to an insurers intent to select one payment methodology over another. While the policy may be approved by the OIR for use by State Farm for its business of insuring Floridians, the Defendant presents no authority showing that such “approval” constitutes a finding of compliance with the notice requirements contained in F.S. 627.736(5)(a)5 (2012). There is no language in the OIR “approval” showing that there was a proper notice or election to comply with F.S. 627.736(5)(a)5. Further, while the OIR is entrusted with the responsibility to regulate insurers and enforce statutes, interpretation of statutes is within the purview of the court. Therefore, OIR “approval” of Policy Form 9810A and State Farm’s incorporation of the OIR “sample form” are not dispositive of the Defendant’s motion or rise to the level of per se compliance with the requisite notice requirement of F.S. 627.736(5)(a)5.
Next, the Court next addresses the definition of “Reasonable Charge” as found on page five of State Farm’s Policy Form 9810A, 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.
By opting to include, in clear and unambiguous language, the fact-dependent factors in its definition of “Reasonable Charge”, while also attempting to reimburse pursuant to the permissive payment methodology, the Defendant impermissibly commingles F.S. 627.736(5) and F.S. 627.736(5)(a). Such commingling runs afoul of F.S. 627.736(5)(a)5 and Virtual.
State Farm asks this Court to disregard Virtual, stating that it is not binding on this Court since the Supreme Court in Virtual states, “The Supreme Court itself clarified that its opinion only addressed the ‘effect of the 2008 amendments on an insurers ability to limit reimbursement prior to the Legislature’s 2012 amendment of F.S. 627.736 with House Bill 119′ ” However, the Defendant overstates its position for three reasons: 1) the 2012 PIP statute, as amended, kept the exact same language regarding the two payment methodologies (albeit the Legislature re-numbered the sections); 2) even assuming that the Supreme Court restricted its opinion in Virtual to policies before July 1, 2012, the rationale of Virtual of providing notice of an election is equally sound to the amended version of the statute; and, 3) the amended section of F.S. 627.736(5)(a)57 states that notice and a proper election are still required for an insurer to avail itself of the permissive payment methodology. In fact, the Supreme Court in Virtual states “the Legislature has now specifically incorporated a notice requirement into the PIP statute, effective July 1, 2012, see, F.S. 627.736(5)(a)5.” Virtual, at 150. Therefore, it is clear that the rationale and holding of Virtual apply to the 2012 amendments of F.S. 627.736, to wit: (5)(a)5, and are relevant in this analysis.
In Allstate Fire and Casualty Insurance v. Stand-Up MRI of Tallahassee a/a/o Charles Black, 40 Fla. L. Weekly D693b (Fla. 1st DCA March 18, 2015) (“Stand-Up”), the First District agreed with Allstate that a simple statement regarding payable amounts “shall be subject to any and all limitations, authorizes by section 627.736. . .including, but not limited to, all fee schedules” was sufficient to place the insured on notice that Allstate was going to pay pursuant to the permissive payment methodology. However, State Farm’s 9810A policy goes further; incorporating a definition of “reasonable charge” that tracks the language of the “default” payment methodology factors. This commingling of payment methodologies is incongruous with the holdings of Virtual, Stand-Up and Serridge with respect to making a proper election.
Therefore, the Defendant’s Motion for Summary Judgment is DENIED.
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1F.S. 627.736(5)(a)2 (2007) which was re-numbered to F.S. 627.736(5)(a)1(2012).
2Allstate Fire & Casualty Insurance v. Stand-Up MRI of Tallahassee, P.A. a/a/o Charles Black, 40 Fla. L. Weekly D693b (Fla. 1st DCA March 18, 2015) and Orthopedic Specialists a/a/o Kelli Serridge v. Allstate Insurance Company, 40 Fla. L. Weekly D1918a (Fla. 4th DCA Aug. 19, 2015).
3See, Stand-Up, “The insurer cannot take advantage of the Medicare fee schedules to limit reimbursement without notifying its insured by electing those fee schedules in its policy” citing Virtual, at 159 and Serridge, “Virtual Imaging’s central holding is clear: To elect a payment limitation option, the PIP policy must do so “clearly and unambiguously”.
4See, Defendant’s Motion for Summary Judgment page 5, filed June 25, 2015, citing Auto-Owners Ins. Co. v. Anderson, 756 So.2d 29, 34 (Fla. 2000) [25 Fla. L. Weekly S211a].
5Introduced into evidence as Exhibit A in the Defendant’s Motion for Summary Judgment without objection.
6Introduced as Exhibit D in the Defendant’s Motion for Summary Judgment and introduced into evidence without objection.
7“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 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 satisfies this requirement.” F.S. 627.736(5)(a)5(2012) (emphasis added).
