23 Fla. L. Weekly Supp. 550a
Online Reference: FLWSUPP 2306BROWInsurance — 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
NEUROLOGY PARTNERS, P.A. D/B/A EMAS SPINE & BRAIN A/ A/O WILLIE BROWN (“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. 2014-SC-5472. July 29, 2015. Scott Mitchell, Judge. Counsel: Adam Saben, Shuster & Saben, Jacksonville, for Plaintiff. Faustino Estoy, Vernis & Bowling, Jacksonville, for Defendant.
ORDER DENYING DEFENDANT’S MOTIONFOR SUMMARY JUDGMENT
THIS MATTER comes before this Court for hearing on July 15, 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 ANALYSIS
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). The relevant portion of F.S. 627.736 in this case is subsection (5), which underwent significant changes in 2007 (“the 2008 statute) and 2012 (“the 2013 statute”). During the 2007 Legislative session, the Legislature amended the “PIP Statute” and created a dichotomous payment paradigm wherein insurers were still mandated to pay the standard eighty percent of a reasonable charge but could now opt for an alternative mechanism for determining reasonableness: by reference to the Medicare fee schedules. The Florida Supreme Court in Geico v. Virtual Imaging Services, 141 So.3d 147 (2013) [38 Fla. L. Weekly S517a] explained that the first “default” payment methodology was a “fact-dependent inquiry determined by consideration of various factors”, stating:
“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 159.2
In 2012, the Legislature amended the PIP statute again. The relevant changes were: a) F.S. 627.736(5)(a)1 and (5)(a)2 were re-numbered to F.S. 627.736(5)(a) and (5)(a)1, respectively; b) the content of said subsections remained virtually identical;3and c) the Legislature amended F.S. (5)(a)5. see, infra. 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.
As State Farm properly states in its Motion for Summary Judgment, “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, essentially, tracks the language of F.S. 627.736(5)(a)1, which is consistent with an attempt to rely on the permissive payment methodology as explained in Virtual. The pertinent part of the policy states:
“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).
It is also consistent with State Farm’s attempt to comply with the notice requirement in F.S. 627.736(5)(a)5 wherein the statute states:
“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).
The language cited above from page 16 of State Farm’s policy 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 9810A 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, 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:
“It should be noted that the fee schedule in the sample language is the fee schedule that is effective at the time that the notice requirement is established in Florida Statutes (July 1, 2012). It does not include the revisions in House Bill 119 to the fee schedule that became effective on January 1, 2013.”
In the next paragraph, the memorandum continues:
“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 unmoved as to the significance of such an “approval” with respect to an insurers intent to pick 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.
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′ ”7 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)5 infers 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.
Finally, State Farm relies on Allstate Fire and Casualty Insurance v. Stand-Up MRI of Tallahassee, 2015 WL 1223701 Fla. 1st DCA (Opinion of March 18, 2015) [40 Fla. L. Weekly D693b]. In Stand-Up MRI, the First DCA found the policy language on an Allstate policy places the insured on notice that Allstate was going to pay pursuant to the permissive payment methodology. However, the First DCA found that Allstate properly placed its insured on notice with a “plain statement that reimbursements shall be subject to the limitations in F.S. 627.736, including all fee schedules”. Unlike the Allstate policy in Stand-Up MRI, the State Farm 9810A policy includes a definition of “reasonable expense”, that commingles the payment methodologies.
Therefore, this Court rules that State Farm Policy 9810A does not place its insured on notice of the election to pay pursuant to F.S. 627.736(5)(a)1(2012) and it may not avail itself of the permissive payment methodology. 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).
2The case at issue is brought by the medical provider and not the insured. However, the Supreme Court addressed the importance of providers being placed on notice of the election by the insurer. “[T]his is of particular concern to health care providers, who render services to PIP insureds in reliance on the terms of the insured’s policy. Further, as the FMA (Florida Medical Association) also noted, GEICO’s justification for its decision to reimburse at reduced rates without providing notice of this election in its policy — that such reduced rates reimbursement rates are in the best interests of the insured — ignores the fact that the provider also needs notice of the reimbursement rate because it is the provider who is forced to accept the lower payment rate after rendering services in reliance on the terms of the policy.” Virtual, at 159-160.
3Compare F.S. 627.736(5)(a)(1)(2007):
“With respect to a determination of whether a charge for a particular service, treatment, or otherwise is reasonable, consideration may be given to evidence of usual and customary charges and payments accepted by the provider involved in the dispute, and 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”; and,
F.S. 627.736(5)(a)(2012):
“In determining whether a charge for a particular service, treatment, or otherwise is reasonable, consideration may be given to evidence of usual and customary charges and payments accepted by the provider involved in the dispute, and 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.”
4See, Defendant’s Motion for Summary Judgment page 4, filed June 22, 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 E in the Defendant’s Motion for Summary Judgment and introduced into evidence without objection.
7See Page 12 of the Defendant’s Motion for Summary Judgment, citing Virtual at 154.
