23 Fla. L. Weekly Supp. 1038a
Online Reference: FLWSUPP 2310STANInsurance — 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 or use of OIR sample form does not constitute per se compliance with requirement that policy provide unambiguous notice of intent to limit reimbursement to permissive statutory fee schedule
THERAMED, LLC D/B/A THERAMED MEDICAL CLINICS A/A/O PETRINE STANLEY, 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-4069-MA, Section (CC-J). February 25, 2016. Eleni Derke, Judge. Counsel: Adam Saben, Shuster & Saben, Jacksonville, for Plaintiff. Jennifer White, Law Office of Julie Lewis Hauf, P.L., Orlando, for Defendant.
ORDER DENYING DEFENDANT’S MOTIONFOR SUMMARY JUDGMENT and GRANTINGPLAINTIFF’S MOTION FOR SUMMARY JUDGMENT
THIS MATTER comes before this Court for hearing on February 8, 2016 on Plaintiff’s and Defendant’s Cross-Motions for Summary Judgment as to whether State Farm properly elected the permissive payment methodology of F.S. 627.736(5)(a)1 in the language of Policy Form 9810A. Having reviewed the file and heard argument of counsel, the Court finds as follows:
Defendant’s position is that it complied with the mandate of Geico v. Virtual Imaging Services, 141 So.3d 147 (2013) [38 Fla. L. Weekly S517a] and placed its insured on proper notice by making a “clear and unambiguous” election that it will reimburse PIP benefits pursuant to F.S. 627.736(5)(a)1. Such an election allows Defendant to avail itself of the “permissive” payment methodology, wherein reimbursement calculations are made pursuant to Medicare fee schedules. In Virtual, the Florida Supreme Court held that an automobile insurance carrier can pay properly submitted bills on a PIP claim using one of two payment methodologies. The first “default” payment methodology was a “fact-dependent inquiry determined by consideration of various factors”. Virtual, at 156. The second payment methodology, found in F.S. 627.736(5)(a)11 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 “permissive” payment option, the insurer must provide notice in the policy of its election to use the fee schedules. 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:
“[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].
Therefore, this Court must review the relevant language in the 9810A State Farm policy to see if the Defendant made such a clear and unambiguous election. “In construing an insurance policy, courts should read the policy as a whole, endeavoring to give every provision its full meaning and operative effect”2. On page 16 of the 9810A policy,3 State Farm’s policy reads:
“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).
However, the Court also notes that the Defendant addresses the definition of “Reasonable Charge” as found on page five of State Farm’s 9810A Policy, 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.
These factors, essentially, track those considered by an insurance carrier when opting to pay pursuant to the “default” payment methodology as noted in F.S. 627.736(5)(a)(2012). By opting to include, 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 Virtual. When an insurance company has properly amended its policy to reimburse pursuant to the “permissive” payment methodology, the fact-dependent factors of F.S. 627.736(5)(a) are irrelevant because the “reasonableness” of a submitted charge is no longer a factor; the reimbursement amount is defined pursuant to a Medicare fee schedule; not on the factors listed above.
In Allstate Fire and Casualty Insurance v. Stand-Up MRI of Tallahassee a/a/o Charles Black, 40 Fla. L. Weekly D693b (Fla. 1st DCA March 18, 2015), the First District ruled that a simple statement regarding payable amounts “shall be subject to any and all limitations, authorizes by section 627.736. . . including, but not limited to, all fee schedules” was sufficient to place the insured on proper notice that Allstate was going to pay pursuant to the permissive payment methodology. However, State Farm’s 9810A policy goes further; incorporating a definition of “Reasonable Charge” that tracks the language of the “default” payment methodology factors. This commingling of payment methodologies is incongruous with the holdings of Virtual and Stand-Up with respect to making a proper election. Therefore, when reading the policy as a whole, there is a failure to make a “clear and unambiguous” election.
Next, the Defendant states that its 9810A policy was “approved” by the Office of Insurance Regulation (“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. The Court disagrees. While a Court must give deference to a regulatory agency in interpreting statutes that the agency is charged with implementing, here, the Defendant asks the Court to infer that the OIR’s “approval” constitutes a finding of a proper election. The Defendant presents no authority showing that the OIR found the 9810A policy, when read as a whole, made a “clear and unambiguous” election to reimburse pursuant to the “permissive” payment methodology. There is no showing that State Farm asked the OIR to make such a determination. There is merely a finding that the 9810A policy was “approved” as a policy that State Farm is allowed to put into the marketplace to insure Floridians.
The Defendant states that it relied on plain reading F.S. 627.736(5)(a)5 wherein the statute states that incorporating the (OIR form shall constitute the requisite notice of reliance on the “permissive” payment methodology. However, incorporating the OIR form into an insurance policy does not, in and of itself, constitute notice unless there is a clear and unambiguous election when the policy is read as a whole. Allstate Insurance Company made the same argument that its policy was “approved” by the OIR and, therefore, there was a proper election in MR Services I, Inc. a/a/o Chris Hazlett v. Allstate Fire & Casualty Company, (Order of Broward County Court Judge Robert Lee, Case No.: 13-19191 COCE (53), dated November 24, 2015) [23 Fla. L. Weekly Supp. 776a]. In rejecting that argument, Judge Lee wrote:
“[T]here is nothing in either Allstate’s submission to the OIR, or in the OIR’s response to Allstate that the reason for the approval is so that ‘the insurer may limit payment pursuant to the fee schedule,’ the language provided in the statute” Merely stating that an endorsement or policy which gives a general mention of fee schedules 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 arising out of a mere mention of fee schedules. Otherwise, any letter merely stating that a form is “APPROVED”, without more, would result in a finding that the insurer has automatically invoked the fee schedule limitations, even if the insurer decided that the traditional “reasonableness” analysis might be more advantageous.”
Just like in MR Services I, there is no authority here that the OIR made a determination that State Farm made a clear and unambiguous election by the mere incorporation of its “Sample Fee Schedule Endorsement” into State Farm’s 9810A policy. 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.
Furthermore, a review of the OIR Informational Memorandum, which contains the sample form for “Use of Medical Fee Schedule claims”, contains disclaimers by the OIR before and after the form at issue. The OIR states:
“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 contract 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.
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)2 (2007) which was re-numbered to F.S. 627.736(5)(a)1(2012).
2See, Defendant’s Motion for Summary Judgment page 5, filed June 25, 2015, citing Auto-Owners Ins. Co. v., Anderson, 756 So.2d 29, 34 (Fla. 2000) [25 Fla. L. Weekly S211a].
3Introduced into evidence as Exhibit A in the Defendant’s Motion for Summary Judgment without objection.
