24 Fla. L. Weekly Supp. 622a

Online Reference: FLWSUPP 2408HIGGInsurance — Personal injury protection — Coverage — Medical expenses — PIP policy providing that insurer will pay 80% of reasonable expenses but also providing that in no event will insurer pay more than 80% of No-Fault Act schedule of maximum charges commingles permissive and default payment options and 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

NEUROLOGY PARTNERS, P.A. D/B/A EMAS SPINE & BRAIN SPECIALISTS a/a/o Casey Higginbotham, Plaintiff, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY (“STATE FARM”), Defendant. County Court, 4th Judicial Circuit in and for Duval County. Case No. 16-2015-SC-001727-XXXXMA (CC-F). July 28, 2016. James A. Ruth, Judge. Counsel: Melissa Winer, Shuster & Saben, Jacksonville, for Plaintiff. David Gagnon, Taylor, Day, Grimm & Boyd, Jacksonville, for Defendant.

ORDER GRANTING PLAINTIFF’S MOTION FORSUMMARY JUDGMENT AND DENYINGDEFENDANT’S MOTION FOR SUMMARY JUDGMENT

THIS CAUSE comes before the Court for hearing on April 19, 2016, on Plaintiff’s and Defendant’s Cross-Motions for Summary Judgment. Having reviewed the case law provided, heard argument of counsel, and being otherwise fully advised of the premises herein, the Court finds as follows:

Florida Statute (“F.S.”) 627.736(5)(2012) authorizes two methodologies for calculating reimbursement in a PIP claim. The first option available to the carrier is the “default” payment methodology.¹ Under the “default” option, reimbursement of a submitted bill is based upon 80% of a properly billed reasonable charge. Here, the insurance carrier may look into a variety of factors to determine if a submitted charge is reasonable, such as usual and customary charges and reimbursements levels in the community. The second option available to the carrier is the “permissive” payment methodology. This option involves no factual inquiry; merely the application of the submitted bills to a schedule of maximum charges as enumerated in F.S. 627.736(5)(a)1.

The Florida Supreme Court in GEICO General Insurance Company vs. Virtual Imaging Services, Inc., 141 So.3d 147 (Fla. 2013) [38 Fla. L. Weekly S517a] (“Virtual”) held that an insurance carrier must notify its insured in “clear and unambiguous” language if it opts to calculate PIP reimbursements solely using the “permissive” payment methodology. The Court held:

“[W]hen 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”. Virtual, 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].

In reviewing State Farm’s 9810A policy², the Defendant draws the Court’s attention to page 16, which reads, in pertinent part:

“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).

While this language may constitute a clear and unambiguous election, when the policy is read as a whole, the Court also notes that State Farm defines “Reasonable Charge” on page 5 as follows:³

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 listed as criteria to be considered by a carrier that opts to pay pursuant to the “default” payment methodology. State Farm’s inclusion of language from both the “permissive” and “default” payment options commingles the two methodologies in its 9810A policy, in contravention of the Supreme Court’s Virtual mandate requiring a “clear and unambiguous” election. If a carrier properly amends its policy, the fact-dependent criteria of the “default” payment methodology are irrelevant because the reasonableness of a submitted charge is no longer a factor. See, 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 (Order of Duval County Court Judge Scott Mitchell dated July 29, 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 (Order of Duval County Court Judge Brent Shore dated December 3, 2015); First Coast Medical Center a/a/o Kevin Adams v. State Farm Mut. Auto. Ins. Co., 23 Fla. L. Weekly Supp. 943a (Order of Duval County Court Judge Dawn Hudson dated January 15, 2016); Theramed, LLC d/b/a Theramed Medical Clinics a/a/o Petrine Stanley v. State Farm Mut. Auto. Ins. Co., 23 Fla. L. Weekly Supp. 1038a (Order of Duval County Court Judge Eleni Derke dated February 25, 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 F.S. 627.736(5)(a)1.

The Defendant also argues that its 9810A policy was “approved” by the Office of Insurance Regulation (“OIR”) on October 5, 2012. According to the Defendant, this approval permits State Farm “to limit payment by application of the schedule of maximum charges as a matter of law”.⁴ The Defendant indicates that “the language of its Policy tracks the language of the ‘Sample Fee Schedule Endorsement’ contained in the OIR’s Informational Memorandum [OIR-12-02M⁵]”.⁶ 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 an “approval” constitutes a finding of compliance with the notice requirement of Virtual. In fact, the Informational Memorandum states that inclusion of the sample form in an insurers’ policy is not dispositive of the issue of election and notice. Both the Memorandum and Sample Fee Schedule Endorsement contain a disclaimer, which states in part that:

“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 insurer’s responsibility to develop its own language after researching the law, reviewing its contract forms, and conferring with its legal staff.”

Therefore, OIR “approval” of State Farm’s 9810A policy form does not rise to a de facto proper election of the “permissive” payment methodology.

The Court finds that the language contained in Defendant’s 9810A policy does not make a “clear and unambiguous” election to pay pursuant the “permissive” payment methodology contained in F.S. 627.736(5)(a)1. Therefore the Defendant’s Motion for Summary Judgment is DENIED and the Plaintiff’s Motion for Summary Judgment is GRANTED.

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¹F.S. 627.736(5)(a) (2012).

²Introduced into evidence, without objection, through the affidavit of Tanishan Scarborough, filed March 10, 2016.

³“In construing an insurance policy, courts should read the policy as a whole, endeavoring to give every provision its full meaning and operative effect” See Defendant’s Motion for Summary Judgment page 4, filed March 10, 2016, citing Auto-Owners Ins. Co. v. Anderson, 756 So.2d 29, 34 (Fla. 2000) [25 Fla. L. Weekly S211a].

⁴See, Defendant’s Motion for Summary Judgment, page 10-11.

⁵Introduced into evidence without objection through Exhibit “B” of Defendant’s Notice of Intent to Seek Judicial Notice filed March 10, 2016.

⁶See, Defendant’s Motion for Summary Judgement, page 9.