24 Fla. L. Weekly Supp. 961a
Online Reference: FLWSUPP 2411WILKInsurance — Personal injury protection — Coverage — Medical expenses — PIP policy that states that insurer will limit reimbursement to 80% of properly billed and documented reasonable charge but in no event will pay more than 80% of schedule of maximum charges provided legally sufficient notice of election to limit reimbursement to statutory fee schedule
RICHARD W. MERRITT, D.C., P.A., (assignee of Wilkinson, Marilyn), Plaintiff, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant. County Court, 10th Judicial Circuit in and for Polk County. Case No. 2015-SC-005957. January 20, 2017. Susan L. Barber, Judge.
ORDER ON COMPETING MOTIONS FORPARTIAL SUMMARY JUDGMENT ON STATEFARM’S 9810A POLICY LANGUAGE
This matter was before the Court for hearing on the Parties’ competing Motions for Summary Judgment: (1) the Motion of Plaintiff, Richard W. Merritt, D.C., P.A. (assignee of Wilkinson, Marilyn), (“Plaintiff”) for Partial Summary Judgment; and (2) the Motion of Defendant, State Farm Mutual Automobile Insurance Company, (“Defendant”), for Partial Summary Judgment and Opposition to Plaintiff’s Motion for Summary Judgment. This is a small claims action; however, the Rules of Civil Procedure have been invoked herein. Defendant (hereinafter “State Farm”) asserts that its subject insurance policy permits State Farm to limit reimbursement for medical services based on the application of the fee schedules set forth in Section 627.736, Florida Statutes, and that its policy properly provides notice to the insured of its election to use the fee schedules. Plaintiff asserts that the State Farm policy does not provide sufficient notice to the insured of State Farm’s election to use the fee schedules and as such, the fee schedules cannot properly be used to limit reimbursement for medical services provided. The court considered the competing motions, argument of counsel, case law and exhibits presented, and makes the following findings:
1. This lawsuit arises out of Personal Injury Protection (“PIP”) benefits which are alleged to be due and owing. Plaintiff, RICHARD W. MERRITT, D.C., P.A., (“Plaintiff”), is a medical provider who is an assignee of an individual, Marilyn Wilkinson, insured by STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY (“State Farm”).
2. According to the Complaint, on or about August 5, 2013, Marilyn Wilkinson was involved in a motor vehicle accident. It is alleged Marilyn Wilkinson suffered injuries and received medical treatment from Plaintiff.
3. The motor vehicle accident in question was determined to be a covered loss under the subject policy issued by State Farm and was assigned a claim number.
4. Marilyn Wilkinson executed an assignment of benefits to Plaintiff, which permitted Plaintiff to bill and receive payment directly from State Farm for the services rendered to Marilyn Wilkinson.
5. Thereafter, Plaintiff submitted a claim to State Farm for PIP benefits for dates of service August 14, 2013 through December 13, 2013. State Farm paid PIP benefits for dates of service August 14, 2013 through December 3, 2013, but not in the amounts sought by Plaintiff. For dates of service following December 3, 2013, State Farm did not pay due to cut-off of benefits based on an Independent Medical Examination. The complaint in this action does not seek reimbursement for any service after December 3, 2013.
6. Plaintiff sued State Farm for breach of contract, alleging that State Farm failed to pay the full amount of benefits required by the insurance policy and by Florida Statute 627.736. Plaintiff argues that under section 627.736(1), Florida Statutes, State Farm should have paid eighty percent of the billed amounts, and thus still owes Plaintiff $1,593.86. State Farm argues that it correctly paid Plaintiff under the alternate fee schedule provisions of section 627.736(5)(a)(1) and its policy, and therefore, no breach of contract occurred herein.
7. The Florida Supreme Court explained in Geico General Insurance Co. v. Virtual Imaging Services, Inc., 141 So.3d 147 (Fla. 2013) [38 Fla. L. Weekly S517a], two distinct methodologies in section 627.736, Florida Statutes for an insurer to pay a reasonable charge for medical services. One method is a fact-based inquiry to determine reasonableness under section 627.736(5)(a), and a second method utilizes Medicare Fee Schedules to “predetermine” a reasonable reimbursement for medical services, as detailed in section 627.736(5)(a)(1). As held in Virtual Imaging, in order to use the fee schedules to limit reimbursement for medical services, insurers must first give notice to their insured within the insurance policy. “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.” See id. at 158-159. Furthermore, 627.736(5)(a)(5), Florida Statutes provides as follows:
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 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. If a provider submits a charge for an amount less than the amount allowed under subparagraph 1, the insurer may pay the amount of the charge submitted (emphasis added).
8. As clarified by the Florida Supreme Court in rephrasing the certified question of great public importance in Virtual Imaging, supra, the issue for resolution by this court is not whether State Farm can compute reimbursements based upon the Medicare Fee Schedules rather than provide reasonable medical expenses coverage, but whether State Farm can use the Medicare Fee Schedules as a method for calculating the reasonable medical expenses coverage required by 627.736, Florida Statutes. Pursuant to Virtual Imaging and 627.736(5)(a)(5), Florida Statutes, State Farm may do so if its insurance policy includes a notice that State Farm may limit payment pursuant to those fee schedules.
9. State Farm’s 9810A Policy Form provides:
Insuring Agreement
We 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, but only if that insured receives initial services and care from a provider described in A. below within 14 days after the motor vehicle accident that caused bodily injury to that insured.
* * *
Limits
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 [thereafter setting forth (a.) through (f.) of the schedule of maximum charges]. . .
10. Plaintiff presented case law from several jurisdictions around this state which finds State Farm’s policy language deficient in providing the insured the required notice of State Farm’s election to use the fee schedules. The concern raised by several courts about the State Farm policy language is that in its definition of “Reasonable Charge”. State Farm includes the fee schedule as one of its factors in determining reasonableness. In other words, State Farm’s definition of “reasonable charge” intermingles the characteristics of both a “fact-based reasonableness” methodology and “fee schedule” methodology. Some of these courts have opined that State Farm can’t leave the choice “in limbo”. State Farm must select one of the two methods — either fact-based inquiry to determine reasonableness or utilization of the fee schedules as a “predetermination” of reasonableness — not both, in providing reimbursement for medical services. See Pain and Injury Relief of Lake Worth v. State Farm Fire and Casualty Company, 23 Fla. L. Weekly Supp. 1087a (Broward Cty Ct. March 30, 2016) as but one example. Plaintiff argues that by including the fee schedule as one factor to consider in its definition of reasonable charge, State Farm’s policy contains an impermissible “hybrid” approach. Plaintiff argues State Farm must exclusively employ either the “Reasonable Amount Method” or a “Medicare Fee Schedule Method.” As authority, Plaintiff relies on Geico General Insurance Co. v. Virtual Imaging Services, Inc., supra. However, the GEICO policy at issue in the Virtual Imaging case contained no language even mentioning the schedule of maximum charges and/or the possibility of a payment limitation based upon that schedule. The Florida Supreme Court’s focus therefore was on notice to the insured; not whether the insurer made an “all or nothing” election to pay pursuant to the schedule of maximum charges (See the Florida Supreme Court’s rephrasing of the certified question of great public importance in that case detailed in paragraph eight hereinabove). This Court further notes the current version of the statute in question contemplates that even when an insurer elects to use the fee schedules, there may be occasions when the fee schedules are not applicable or the insurer will pay a different amount. Section 627.736(5)(a)(5), Florida Statutes states, “If a provider submits a charge for an amount less than the amount allowed under subparagraph I [the fee schedules], the insurer may pay the amount of the charge submitted.”
11. State Farm’s agreement to pay a properly billed and documented “reasonable charge” is subject to the “Limits” section of the No-Fault Coverage provisions of the 9810A Policy, which provides that (underlined emphasis added):
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 [thereafter setting forth (a.) through (f.) of the schedule of maximum charges]. . . .
12. This Court relies on the decision of the Second District Court of Appeal in Allstate Indemnity Company v. Markley Chiropractic & Acupuncture, LLC, __So.3d__, 41 Fla. L. Weekly D793b (Fla. 2d DCA Mar. 30, 2016), which rejected an argument that Allstate’s policy made an inadequate election to use the schedule of maximum charges. The Second District Court held: “We do not quarrel with Virtual Imaging’s holding that notice to the provider is required. However, Virtual Imaging did not dictate a form of notice. It seems clear to us that Virtual Imaging requires no other magic words from Allstate’s policy and its simple notice requirement is satisfied by Allstate’s language limiting ‘[a]ny amounts payable’ to the fee schedule-based limitations found in the statute.” This Court finds State Farm’s policy language is significantly more detailed than the Allstate policy language which was satisfactory to the Second District.
13. The language of State Farm’s 9810A Policy Form effectively notified Plaintiffs that — in the event that Plaintiff submitted bills for amounts in excess of the schedule of maximum charges for the subject services — State Farm may limit reimbursement based on the application of the schedule of maximum charges. State Farm has thus provided legally sufficient notice of its election to use the schedule of maximum charges contained in Fla. Stat. 627.736(5)(a)1. State Farm therefore was permitted to limit reimbursement for the subject services based on the schedule of maximum charges.
ACCORDINGLY,
This Court GRANTS State Farm’s Partial Motion for Summary Judgment and denies Plaintiff’s Partial Motion for Summary Judgment. With the exception of charges which were denied pursuant to an Independent Medical Examination, State Farm properly limited its reimbursements for the subject services based on the application of the schedule of maximum charges in section 627.736(5)(a)1, Florida Statutes.
