24 Fla. L. Weekly Supp. 616a
Online Reference: FLWSUPP 2408WESTInsurance — Personal injury protection — Coverage — Medical expenses — PIP policy that includes reasonableness factors of section 627.736(5)(a) as well as schedule of maximum charges of No-Fault Act and Medicare coding policies and payment methodologies in its definition of “reasonable charge” commingles payment methodologies and does not provide clear and unambiguous notice of intent to limit reimbursement to permissive statutory fee schedule — Approval of PIP policy by Office of Insurance Regulation does not automatically validate contents of policy as providing unambiguous notice of intent to limit reimbursement to permissive statutory fee schedule
PATHWAY WELLNESS CHIROPRACTIC CLINIC (assignee of Westberry, Sharon), Plaintiff, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant. County Court, 2nd Judicial Circuit in and for Leon County. Case No. 2105 SC 002303. September 21, 2016. J. Layne Smith, Judge. Counsel: Chris Kasper and Abraham Ovadia, Florida PIP Law Firm, PA, Boca Raton, for Plaintiff. Kimberly V. Stosik, Conroy Simberg, Tallahassee, for Defendant.
ORDER GRANTING PLAINTIFF’S MOTION FOR PARTIALSUMMARY JUDGMENT, AND DENYING DEFENDANT’SMOTION FOR PARTIAL SUMMARY JUDGMENT,ON THE ISSUE OF THE 9810A POLICY OF INSURANCE
THIS CAUSE came before the Court on the parties’ dueling motions for partial summary judgment on the issue of the 9810A policy of insurance. The Court, having considered the motions, the record, the legal authorities presented by counsel, and the argument of counsel, and otherwise being sufficiently advised in the premises:
ORDERS AND ADJUDGES that the Plaintiff’s motion for partial summary judgment on the issue of the 9810A policy of insurance is hereby GRANTED, and the Defendant’s motion for partial summary judgment on the issue of the 9810A policy of insurance is hereby DENIED. The grounds supporting this order are as follows:PIP Insurers Must Make a Clear Election of OnePayment Methodology to the Exclusion ofOther Payment Methodologies
1. Since its enactment in 1971, the PIP statute has required insurers to pay the “reasonable” amount of the insured’s medical expenses. Prior to January 1, 2008, reasonableness was determined by the consideration of a variety of statutory, fact-dependent factors commonly referred to as the “reasonable amount method” or the “fact dependent method” of calculating PIP benefits. Effective January 1, 2008, the Florida Legislature changed the statute and added that insurer’s “may limit reimbursement of PIP claims to 80 percent of [an enumerated] schedule of maximum charges,” commonly referred to as the “fee schedule method.” The fee schedule method is only available to insurers who unambiguously elected it in their policies to the exclusion of the reasonable amount method. See, e.g., Geico Gen. Ins. Co. v. Virtual Imaging Services, Inc.,141 So. 3d 147 (Fla. 2013) [38 Fla. L. Weekly S517a] (“Virtual”); Orthopedic Specialists v. Allstate Ins. Co., 177 So. 3d 19 (Fla. 4th DCA 2015) [40 Fla. L. Weekly D1918a], review granted, No. SC15-2298, 2016 WL 282060 (Fla. Jan. 20, 2016) (“Orthopedic Specialists”); Kingsway Amigo Insurance Company v. Ocean Health, Inc., 63 So. 3d 63 (Fla. 4th DCA 2011) [36 Fla. L. Weekly D1062a] (“Kingsway”).
2. This case involves the version of the PIP statute which was amended on July 1, 2012 and took effect on January 1, 20131. The section authorizing the reasonable amount or fact dependent method is at Fla. Stat. § 627.736(5)(a)(2013). The section authorizing the fee schedule amount method is at Fla. Stat. § 627.736(5)(a)1-5.
3. In Virtual, the Florida Supreme Court held that in order to properly limit reimbursement to a fee schedule method, insurers must clearly and unambiguously elect to do so in their policies. In that case, the Florida Supreme Court approved Kingsway, which held that Section 627.736 “allows an insurer to choose between two different payment calculation methodology options” and “anticipates that an insurer will make a choice.” 63 So. 3d at 67 (Emph. added). Most recently, the Florida Fourth District Court of Appeal held:
To elect a payment limitation option, the PIP policy must do so “clearly and unambiguously.” A policy is not sufficient unless it plainly and obviously limits reimbursement to the Medicare fee schedules exclusively. The policy cannot leave [the PIP insurance company’s] choice of reimbursement method in limbo [and] must make it inescapably discernible that it will not pay the “basic” statutorily required coverage [the reasonable amount method] and will instead substitute the Medicare fee schedules as the exclusive form of reimbursement.
Orthopedic Specialists, 117 So. 3d at 25-26.The 9810A Policy
4. The Insuring Agreement on page 14 of the policy states:
We2 will pay in accordance with the No-Fault Act properly billed and documented reasonable charges for bodily injury to an insured caused by an accident resulting from the ownership, maintenance, or use of a motor vehicle as follows:
1. Medical Expenses
We will pay 80% of properly billed and documented medical expenses . . .
5. The policy defines “medical expenses” on page 4:
Medical Expenses means reasonable charges incurred for medically necessary, surgical, X-ray, dental, and rehabilitative services . . .
6. The policy defines “reasonable charge” on page 5:
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.
7. The policy’s “Limits” section is found on pages 15-16, and states the following on page 16:
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:
a. For emergency transport and treatment by providers licensed under chapter 401, Florida Statutes, 200 percent of Medicare.
b. For emergency services and care provided by a hospital licensed under chapter 395, Florida Statutes, 75 percent of the hospital’s usual and customary charges.
c. For emergency services and care as defined by s. 395.002, Florida Statutes, provided in a facility licensed under chapter 395, Florida Statutes, rendered by a physician or dentist, and related hospital inpatient services rendered by a physician or dentist, the usual and customary charges in the community.
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.
e. For hospital outpatient services, other than emergency services and care, 200 percent of the Medicare Part A Ambulatory Payment Classification for the specific hospital providing the outpatient services.
f. For all other medical services, supplies, and care, 200 percent of the allowable amount under:
(I) The participating physicians fee schedule of Medicare Part B, except as provided in sub-sub-subparagraphs (II) and (III).
(II) Medicare Part B, in the case of services, supplies, and care provided by ambulatory surgical centers and clinical laboratories.
(III) The Durable Medical Equipment Prosthetics/Orthotics and Supplies fee schedule of Medicare Part B, in the case of durable medical equipment.
However, if such services, supplies, or care is not reimbursable under Medicare Part B, as provided in this sub-subparagraph, then we will limit reimbursement to 80 percent of the maximum reimbursable allowance under workers’ compensation, as determined under s. 440.13, Florida Statutes, and rules adopted thereunder which are in effect at the time such services, supplies, or care is provided. Services, supplies, or care that is not reimbursable under Medicare or workers’ compensation (Florida Rules of Procedure for Worker’s Compensation Adjudication) will not be reimbursed by us.
For purposes of the above, the applicable fee schedule or payment limitation under Medicare is the fee schedule or payment limitation in effect on March 1 of the year in which the services, supplies, or care is rendered and for the area in which such services, supplies, or care is rendered, and the applicable fee schedule or payment limitation applies throughout the remainder of that year, notwithstanding any subsequent change made to the fee schedule or payment limitation, except that it will not be less than the allowable amount under the applicable schedule of Medicare Part B for 2007 for medical services, supplies, and care subject to Medicare Part B.
8. The 9810A policy’s definition of “reasonable charge” includes all of the “reasonableness factors” set forth in Fla. Stat. § 627.736 (5)(a) with the addition of “the schedule of maximum charges in the No-Fault Act” and “Medicare coding policies and payment methodologies. . .” The Court agrees with the Plaintiff that State Farm has not elected one payment method to the exclusion of the other. This commingling of both payment methods in a single policy is precisely the reason that the 9810A policy is insufficient under Virtual and Orthopedic Specialists.State Farm’s OIR Arguments
9. Mere approval by OIR (Office of Insurance Regulation) of “a notice” does not automatically validate the contents of an insurance policy itself. See, e.g., Gonzalez v. Associates Life Ins. Co., 641 So. 2d 895, 897, n. 1 (Fla. 3d DCA 1994)(rejecting insurer’s argument that approval from the Department of Insurance (OIR’s predecessor) of a policy should automatically result in judicial approval of the policy); Kaufman v. Mutual of Omaha Ins. Co., 681 So. 2d 747, 749, n. 4 (Fla. 3d DCA 1996) [21 Fla. L. Weekly D1716b] (insurance policy that impermissibly combines two statutory alternatives is in violation of Florida law even if the Department of Insurance approved it; an agency’s “approval does not override the explicit terms of a statutory requirement”). Additionally, the OIR memorandum appended to State Farm’s motion cautions insurers that “[u]ltimately, it is the insurer’s responsibility to develop its own language after researching the issue, reviewing its contract forms, and conferring with its legal staff.”
10. State Farm has not presented any facts or law to support its proposition that OIR determined that the 9810A policy contains a clear and unambiguous election of one payment methodology to the exclusion of the other payment methodology. Notwithstanding, even if OIR had done so, its decision would at most be persuasive, and not be binding, on the trial court. Only the judicial branch has the authority to adjudicate contract disputes. OIR’s approval of State Farm’s entire 9810A policy does not settle the question whether State Farm can pick one of two alternate methodologies of payment or combine elements from different methodologies of payment, on an expense by expense basis. It cannot.Conclusion
For these reasons, the Plaintiff’s motion for partial summary judgment on the issue of the 9810A policy of insurance is GRANTED, and the Defendant’s motion for partial summary judgment on that issue is DENIED.
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1It is important to note that the “new” version of the PIP statute retained both the reasonable amount method and the Medicare fee schedule method, although the Legislature renumbered the subsections. Before January 1, 2013, the reasonable amount method was found in subsection (5)(a)1, but it is now found in subsection (5)(a). Before January 1, 2013, the Medicare fee schedule method was found in subsections (5)(a)2-5, but it is now found in subsections (5)(a)1-5.
2Unless otherwise indicated, all emphasized terms are in the original.
