23 Fla. L. Weekly Supp. 771a
Online Reference: FLWSUPP 2307FRAZInsurance — Personal injury protection — Coverage — Medical expenses — PIP policy providing that insurer will pay 80% of reasonable expenses but also providing that reasonable expenses shall mean lesser of amount provided by any fee schedule, whether mandatory or permissive, contained in PIP statute improperly seeks to utilize both reasonable amount method and fee schedule method of reimbursement and does not provide clear and unambiguous notice of intent to limit reimbursement to fee schedule method — Deductible — Even assuming insurer properly elected to use statutory fee schedule, it improperly applied fee schedule reductions prior to subtracting deductible
USA HEALTH & THERAPY, INC., (Garett Frazier), Plaintiff, v. SECURITY NATIONAL INSURANCE COMPANY, Defendant. County Court, 17th Judicial Circuit in and for Broward County. Case No. 13-8280 COCE (50). December 1, 2015. Honorable Peter B. Skolnik, Judge. Counsel: Steven Lander and Abdul-Sumi Dalal, Lander, Dalal and Associates, P.L., Fort Lauderdale, for Plaintiff. Olga Acosta, Plantation, for Defendant.
ORDER GRANTING PLAINTIFF’S MOTION FOR FINALSUMMARY JUDGMENT AND DENYING DEFENDANT’SMOTION FOR FINAL SUMMARY JUDGMENT
THIS CAUSE came before the Court on October 9, 2015 for hearing of the Plaintiff’s Motion for Final Summary Judgment and Defendant’s Motion for Final Summary Judgment, and the Court’s having reviewed the Motions, 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:
In this case related to a medical provider’s attempts to recover personal injury protection benefits from an automobile insurance company, the parties present two issues in their competing motions for summary judgment. The first is whether the insurer can make payment pursuant to the schedule of maximum charges found in Fla. Stat. 627.736(5)(a) of the insurance policy at issue (Form 1005 02/11), and the second issue is whether the insurer properly calculated the amounts related to the application of the deductible. For reasons stated herein, the Court DENIES the Defendant’s Motion for Final Summary Judgment and GRANTS the Plaintiff’s Motion for Final Summary Judgment.
THE DEFENDANT HAS NOT MADE A CLEAR, EXCLUSIVEELECTION THAT IT WILL UTILIZE THE SCHEDULE OFMAXIMUM CHARGES IN FLA. STAT. 627.736(5)(a)
At issue here is whether the insurer may limit reimbursement to the schedule of maximum charges found in Fla. Stat. 627.736(5)(a). The Florida Supreme Court addressed this issue in GEICO Gen. Ins. Co. v. Virtual Imaging Svcs., Inc., 141 So. 3d 147 (Fla. 2013) [38 Fla. L. Weekly S517a], which indicates that there are two separate payment methodologies in the No Fault Act, and that the statute “anticipates that an insurer will make a choice.” Id. at 159. Virtual held that in order to take advantage of the lesser payment methodology, “the insurer must clearly and unambiguously elect the permissive payment methodology in order to rely on it.”
The Defendant’s policy states:
Policy, page 18-19
1. Medical Benefits — Eighty percent of all reasonable expenses (as defined in this policy) for medically necessary medical, surgical, x-ray, dental, and rehabilitative services, including prosthetic devices, and medically necessary ambulance, hospital, and nursing services. . . .
In this section of the policy, Defendant contracts with its insured to pay “Eighty percent of all reasonable expenses.” Notwithstanding same, the policy goes on to define “reasonable expenses” as follows:
Policy, page 25
6. Reasonable expenses shall mean the lesser of the amount provided by any fee schedule or schedule of payment, whether mandatory or permissive, as contained in the Florida Motor Vehicle No-Fault Law (§§ 627.730-627.7405, Florida Statutes) as may be amended from time to time, which was in effect on the date that this policy was issued. We shall not pay any amount in excess of the amount the person or institution customarily charges for like services or supplies.
The Defendant’s policy does not clearly elect the schedule of maximum charges to the exclusion of all other methodologies. First, the language is ambiguous, insofar as it indicates the insurance company might rely upon “any fee schedule or schedule of payment, whether permissive or mandatory[.]” There are several of schedules of payment in the No Fault Act. The mandatory provision of Fla. Stat. 627.736(5) references “state and medical fee schedules related to automobile or other insurance.” The schedule of maximum charges also references Medicare based fee schedules, as well as worker’s compensation based fee schedules. It is unclear which schedule to which the policy may be referring. Furthermore, the suggestion that the Defendant may pay at either mandatory or permissive payment methodologies does not make clear which method the Defendant is going to apply — the mandatory or the permissive, and it does not appear that the insurer has made a choice as required by the Florida Supreme Court.
It appears here that the Defendant wants to use both methodologies, and simply pay the lesser of each based upon the service. The No Fault Act does not work this way. The Defendant is either entitled to pay at the schedule of maximum charges (and may limit reimbursement ONLY to 80% of the schedule, and not less) OR 80% of a reasonable charge. The Defendant may not have it both ways. Fla. Stat. 627.736(5)(a)5 indicates that as part of the permissive methodology, “[i]f 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,” — not 80% of the amount of the charge submitted. However, this policy leaves open the option of paying 80% of a reasonable charge, or 80% of the schedule of maximum charges. The insurer here improperly attempts to take advantage of both payment methodologies, which runs afoul of the Virtual mandate that the insurer make a choice between the two. This Court finds that because the insurer has not made a clear election and attempts to use both methodologies, it cannot take advantage of the permissive methodology.
THE INSURER IMPROPERLYCALCULATED THE DEDUCTIBLE
Even assuming arguendo that the defendant had make a clear election to use the schedule of maximum charges, the Defendant has improperly applied fee schedule reductions prior to subtracting the deductible.
The Florida No Fault Act indicates that an insurance company may issue a deductible in the amount up to $1000. See Fla. Stat. 627.739. That deductible is to be subtracted from 100% of the expenses and losses described in the No Fault Act, prior to any percentage limitations.
Here, the insurer calculated its reimbursement by making fee schedule reductions, then subtracting the $1000 deductible, then subtracting the insured’s co-pay. This violates both the statute as well as the insurer’s own policy language.
First, as stated above, the Statute only allows for a deductible of $1,000.00. Here, the insurer’s calculation essentially forces the insured to pay more than $1,000.00 prior to the insurer’s obligation accruing. Assume a patient pays $1,000 for medical services, for which the insurer only values at $500 under the schedule of maximum charges. The insurer’s calculation requires the insured to pay $500 additional, for a total of $1500, prior to the insured’s obligation being met, or a $1500.00 deductible. By applying the schedule of maximum charges to services for which the patient has already paid full value (amounts above the schedule of maximum charges), the insurer’s position requires that the insured must pay more than $1000.00 for the deductible, which is contrary to Fla. Stat. 627.739.
The Court adopts the very well-reasoned opinion of Honorable Judge Donald. J. Cannava, in Excellent Health Care Svcs. (a/a/o Edwin Martinez) v. Kingsway Amigo Ins. Co., 23 Fla. L. Weekly Supp. 168a (Fla. 11th Judicial Circuit, 2015). As Judge Cannava Points out:
[T]he plain language of [Fla. Stat. 627.739] does not require the insured to pay for expenses and losses “covered by” the insurance policy to count towards the deductible, but rather, “described in” the Act. It is noteworthy that prior to 2003, the deductible provision above reads that expenses and losses are to be subtracted from “benefits otherwise due.” That language was removed in CS/SB 32A (2003). To adopt the Defendant’s view of the Statute is to abrogate the 2003 legislative changes, which is impermissible. The Florida Supreme Court has ruled that it “is a basic rule of statutory construction that ‘the Legislature does not intend to enact useless provisions’ ” Martinez v. State, 981 So.2d 449, 452 (Fla. 2008) [33 Fla. L. Weekly S125a]. See also Borden v. East-European Ins. Co., 921 So.2d 587, 595 (Fla. 2006) [31 Fla. L. Weekly S34a] (“the Legislature does not intend to enact useless provisions, and courts should avoid readings that would render part of a statute meaningless.”) Re-Employment Services, Ltd. v. NLAC, 969 So.2d 467 (Fla. 5th DCA 2007) [32 Fla. L. Weekly D2725a] (holding that interpretations that “vitiate” the “pertinent provisions of the statute” should be rejected).
Dozens of Judges across the state have ruled that insurers may not apply the schedule of maximum charges prior to subtracting the deductible based upon the language of the statute. See also William J. Gogan (As Assignee of Tara Ricks) v. USAA General Indemnity Company, 21 Fla. L. Weekly Supp. 97c (17th Judicial Circuit, 2013); New Symrna Imaging, LLC (a/a/o Megan McClanahan) v. Garrison Property and Casualty Ins. Co., 20 Fla. L. Weekly Supp. 77a (18th Judicial Circuit, 2012); Flagler Hospital, Inc. (a/a/o Devin Sapp) v. Peak Property & Casualty Ins. Corp., 18 Fla. L. Weekly Supp. 597a (7th Judicial Circuit, 2011), and Flagler Hospital, Inc. (a/a/o Jody C. Rigdon) v. Progressive Select Ins. Co., 18 Fla. L. Weekly Supp. 620c (7th Judicial Circuit, 2011).
In addition, the Deductible provision in the insurance policy indicates that “[t]he deductible amount will be applied to 100 percent of the reasonable expenses and losses compensable under this policy[.]” This clearly suggests that the deductible provision will be applied to 100% of the reasonable expenses. As stated above, the definition of reasonable expenses does not allow the insurer to utilize the schedule of maximum charges, and as such, the insurer may not devalue the insured’s prior payments by the fee schedules.CONCLUSION
As the Defendant has failed to properly elect the schedule of maximum charges, and as the Defendant has not properly applied the deducible, the Defendant’s Motion for Summary Judgment is DENIED. The Plaintiff’s Motion for Summary Judgment is GRANTED. The Plaintiff shall submit a Final Judgment.
