23 Fla. L. Weekly Supp. 1087a
Online Reference: FLWSUPP 2310DEROInsurance — 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 does not provide clear and unambiguous notice of intent to limit reimbursement to permissive statutory fee schedule — Approval of policy by Office of Insurance Regulation does not satisfy requirement that policy provide unambiguous notice of intent to limit reimbursement to permissive statutory fee schedule where it is not clear from insurer’s letter requesting approval or OIR’s letter of approval that OIR was approving language as election to limit payment pursuant to fee schedule
PAIN AND INJURY RELIEF OF LAKE WORTH (a/a/o Evener Deronvil), Plaintiff, vs. STATE FARM FIRE AND CASUALTY COMPANY, Defendant. County Court, 17th Judicial Circuit in and for Broward County. Case No. 15-2819 COCE (53). March 30, 2016. Robert W. Lee, Judge. Counsel: Nathan J. Avrunin, Davie; Mac S. Phillips, Phillips Law Group, Fort Lauderdale; and Emilio R. Stillo, Davie, for Plaintiff. Michael S. Walsh, Fort Lauderdale, for Defendant.
ORDER DENYING DEFENDANT’S SECOND AMENDEDMOTION FOR SUMMARY JUDGMENT
THIS CAUSE came before the Court on March 28, 2016 for hearing of the Defendant’s Second Amended Motion for Summary Judgment, and the Court’s having reviewed the Motion, the entire Court file, and the relevant legal authorities; having heard argument; having made a thorough review of the matters filed of record; and having been sufficiently advised in the premises, the Court finds as follows:
Background: This case involves a relatively narrow issue: whether State Farm’s new PIP policy, form 9810A, complies with the requirements of Florida law to entitle it to limit its payment of PIP claims to the rate of 200% of Medicare.
The Plaintiff has filed suit to recover PIP benefits claimed due from the Defendant. Pursuant to an assignment of benefits, the Plaintiff submitted bills to State Farm totaling $11,533.67 for medical services arising out of an automobile accident in which Evener Deronvil was injured. State Farm paid $7,305.93, representing 80% of the total allowable medical expenses calculated pursuant to the schedule of maximum charges set forth in Florida Statute §627.736(5)(a)(1) (2013), 200% of the Medicare fee schedules, after the application of the policy deductible.
The Plaintiff seeks to recover the difference between 80% of the amount billed by the Plaintiff less the amount paid by State Farm. The Plaintiff contends that the Defendant did not properly elect the Medicare fee schedule methodology, and as a result, was required to process the bills under the “reasonableness” methodology set forth in Florida Statute §627.736(5)(a).
State Farm submitted its 48-page policy to the Office of Insurance Regulation (OIR) in an attempt to get approval for the Medicare methodology. State Farm contends that the OIR’s “approval” of its new policy is conclusive that State Farm correctly elected the Medicare methodology. State Farm’s policy contains several provisions relevant to this inquiry. First, on page 14 of the policy, under “Insuring Agreement,” State Farm notes that “we will pay in accordance with the No-Fault Act properly billed and documented reasonable charges for bodily injury to an insured” (emphasis in original). The phrase “reasonable charges” is defined on page 5 of the policy as follows:
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 policy or payment methodology does not constitute a utilization limit.
(Emphasis in original).
Clearly, albeit perplexingly, State Farm’s definition of “reasonable charges” intermingles the characteristics of both a “reasonableness” methodology and a “200% of Medicare” methodology.
This is not the end of the inquiry, however. On pages 15-16 of the policy, State Farm adds a section under “Limits” that provides as pertains to the medical bills in the instant case:
1. 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.
2. The most we will pay for each injured insured as a result of any one accident is $10,000 for all combined Medical Expenses, Income Loss, and Replacement Services Loss, described in the Insuring Agreement of this policy’s No-Fault Coverage.
* * *
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, including applicable modifiers:
* * *
d. For hospital inpatient services, other than emergency services and care, 200 percent of the Medicare Part A prospective payment applicable to the specific hospital providing the inpatient services.
Upon Court inquiry at the hearing, defense counsel was unable to explain why State Farm had included the “reasonableness” factors in its definition section when it wanted to use the 200% of Medicare methodology, other than to say that State Farm had “the right” to do this. This section suggests to the Court, however, that State Farm is attempting use both methodologies: if the “reasonable” charge is less than 200% of Medicare, State Farm will pay only the lesser amount. If, however, that charge exceeds 200% of Medicare, State Farm will cap its payment using the 200% calculation. Otherwise the language would be mere surplusage, which is discouraged when construing policies of insurance. See Price v. Home Ins. Co. of the Carolinas, 100 Fla. 338, 344-45, 129 So. 748, 751 (1930). The question is whether a PIP insurer is entitled to do this.
Conclusions of Law. The Florida Supreme Court’s ruling in Geico General Insurance Company vs. Virtual Imaging Service, Inc., 141 So.3d 147 (Fla. 2013) [38 Fla. L. Weekly S517a] is controlling. In Virtual Imaging, the Supreme Court concluded “that the [PIP] insurer was required to give notice to its insured by electing the permissive Medicare fee schedules in its policy before taking advantage of the Medicare fee schedule methodology to limit reimbursements” (emphasis added).
Specifically, the Supreme Court found that there are two reimbursement methods permitted under the 2008 amendments to the PIP statute, and that the PIP statute “offered insurers a choice in dealing with their insureds as to whether to limit reimbursements based on the Medicare fee schedules or whether to continue to determine the reasonableness of provider charges for necessary medical services rendered to a PIP insurer based on the factors enumerated in section 627.736(5)(a)(1)” (emphasis added). Consistent with Kingsway Amigo Ins. Co. v. Ocean Health, Inc., 63 So.3d 63, 27 (Fla. 4th DCA 2011) [36 Fla. L. Weekly D1062a], the PIP insurer must give notice and elect the Medicare fee schedule methodology in its policy. The Supreme Court further held that “a PIP insurer cannot take advantage of the Medicare fee schedules to limit reimbursements without notifying its insured by electing those fee schedules in its policy.” This election must be done in a “clear and unambiguous” manner.
In the Court’s view then, the question is whether State Farm has left the choice in “limbo.” See Orthopedic Specialists v. Allstate Ins. Co., 177 So.3d 19, 25-26 (Fla. 4th DCA 2015) [40 Fla. L. Weekly D1918a]. Clearly, State Farm is attempting to have its cake and eat it too. It is attempting to leave itself the option of choosing a reasonableness option when it is to its advantage, or choosing the 200% Medicare methodology if this option would result in a lower reimbursement. Under the case law interpreting the “two methodology” provision of the PIP statute, an insurer cannot do this. It must “elect” the “option” in a “clear and unambiguous” manner in its policy. State Farm did not do so. In this regard, the Court agrees with the well-reasoned decisions entered in the cases of Theramed, LLC v. State Farm Mutual Automobile Ins. Co., Order Denying Defendant’s Motion for Summary Judgment and Granting Plaintiff’s Motion for Summary Judgment, Case No. 16-2015-SC-4069-MA (Duval Cty. Ct. Feb. 25, 2016) (Derke, J.) [23 Fla. L. Weekly Supp. 1038a]; and Florida Emergency Physicians Kang & Associates, M.D., P.A. v. State Farm Mutual Automobile Ins. Co., Order Granting Plaintiff’s Motion for Final Summary Judgment and Denying Defendant’s Amended Motion to Final Summary Judgment, Case No. 2014-SC-9502-O (Orange Cty. Ct. Feb. 10, 2016) [23 Fla. L. Weekly Supp. 1052a] (Jewett, J.).
Finally, for reasons set forth in this Court’s decision in the case of MR Services I, Inc. v. Allstate Ins. Co., 23 Fla. L. Weekly Supp. 776a (Broward Cty. Ct. 2015), this Court rejects State Farm’s argument that the OIR “approval” of its policy entitles it to claim the safe harbor provided in Florida Statute §627.736(5)(a)(5). In 2012, the Legislature amended Florida Statute §627.736(5)(a)(5) to provide that “a policy form approved by the office [Office of Insurance Regulation] satisfies this requirement,” i.e., that the “insurance policy includes a notice at the time of issuance or renewal that the insurer may limit payment pursuant to the fee schedule” (emphasis added).
On February 6, 2012, State Farm submitted its proposed new policy 9810A to the OIR. The submitted policy is 48 pages long. State Farm argues that it received the “approval” to use the fee schedule methodology from the OIR on October 5, 2012 when the OIR stamped “APPROVED” on top of each of the 48 pages. However, there is nothing in either State Farm’s submission to the OIR, or in the OIR’s response to State Farm, that the reason for the approval if so that “the insurer may limit payment pursuant to the fee schedule,” the language provided in the statute. Merely stating that a policy is “APPROVED,” as is the situation in the instant case, does not result in a finding that the OIR is approving a limitation on payment to the fee schedules when the policy includes language pertaining to both the “reasonableness” fact-based methodology and the separate “200% of Medicare” methodology. Otherwise, any policy stamped “APPROVED,” without more, would result in a finding that the insurer has automatically invoked the fee schedule limitations, even if an insurer decided that the traditional “reasonableness” analysis might be more advantageous. And because no insurer may issue a policy in Florida until it is approved by the OIR, any new policy would automatically incorporate the fee schedules once “approved.” This is clearly not the result the Legislature intended.
To properly harmonize all provisions of Florida Statute §627.736(5)(a) so that an insurer retains an option to actually use the “reasonableness” provisions of the statute if desired in lieu of the fee schedule provisions, this Court holds that it must be clear that the OIR is approving the language as an election to limit payment pursuant to the fee schedule. Because State Farm did not so demonstrate in its letter requesting approval to the OIR, and the OIR did not alternatively say so in its “approval” of the policy, the Court finds that Orthopedic Specialists still controls the outcome in this case.
As pertains specifically to the State Farm policy, this Court further agrees with the cogent analysis of Judge Derke in her decision in Theramed, supra on pages 4-6, in which she analyzes the OIR issue in more detail. Accordingly, it is hereby
ORDERED and ADJUDGED that the Defendant’s Second Amended Motion for Summary Judgment is DENIED.
