24 Fla. L. Weekly Supp. 936a

Online Reference: FLWSUPP 2411DOCTInsurance — Personal injury protection — Deductible — 2008 version of statute requires that PIP deductible be applied to 100% of expenses before medical bills can be reduced by an insurance company

DOCTOR REHAB CENTER, INC., as assignee, individually & on behalf of all those similarly situated, Plaintiff, v. UNITED AUTOMOBILE INSURANCE COMPANY, a Florida corporation, Defendant. Circuit Court, 11th Judicial Circuit in and for Miami-Dade County, Civil Division. Case No. 11-09772 CA 24. August 7, 2012. Sarah I. Zabel, Judge. Counsel: Vossoughi and Koenigsberg, for Plaintiff. Thomas L. Hunker, for Defendant.

[Motions for reconsideration denied 1/29/13 and 11/25/13.]FINAL SUMMARY JUDGMENT

THIS CAUSE came before the Court on June 5, 2012 on Defendant’s Motion for Final Summary Judgment Application of Deductible and Plaintiff Doctor Rehab Center, Inc.’s Cross-Motion for Summary Judgment on Defendant United Automobile Insurance Co.’s Improper Application of Policy Deductible. The Court having heard argument of counsel, reviewed the memoranda of law, and otherwise being advised in the premises, GRANTS final summary judgment in favor of the Plaintiff and finds as follows:

FINDINGS OF FACT

1) This is a matter of statutory interpretation of section 627.739(2), Florida Statutes (2008) and the application of a PIP deductible. On June 16, 2010, Jessica Rodriguez was involved in an automobile accident and sustained personal injuries. She was insured under an automobile policy with Defendant United Automobile Insurance Company (UAIC). She assigned her rights under the policy to recover no-fault personal injury protection (PIP) benefits to Plaintiff Doctor Rehab Center, Inc. (Doctor Rehab).

2) Jessica Rodriguez was offered an option under the policy to select a deductible of $250.00, $500.00 or $1,000.00. She selected $1,000.00. Doctor Rehab submitted a covered proof of claim in the amount of $1,690.00 to UAIC for a medical bill. All of the medical treatment was determined to be necessary. UAIC reduced the amount of Doctor Rehab’s medical bill to $819.48 under section 627.736(5)(a)(2)(f), Florida Statutes (2008), the Medicare Fee Schedule, and paid nothing after applying the $1,000 deductible to the reduced amount. Doctor Rehab filed a class action complaint for declaratory and injunctive relief and for insurance benefits.

CONCLUSIONS OF LAW

3) Summary judgment is appropriate only “if the pleadings, depositions, answers, interrogatories, admissions, affidavits, and other materials . . . show that there is no genuine issue as to any material fact from the record and that the moving party is entitled to judgment as a matter of law.” Fla. R. Civ. P. 1.510(c). Reeves v. North Broward Hosp. Dist., 821 So. 2d 319, 321 (Fla. 4th DCA 2002) [27 Fla. L. Weekly D1265b]. No genuine issue of material fact exists on this record and the only issue remaining to be resolved involves a matter of law. The issue: When the medical treatment is determined to be necessary, should the PIP deductible be applied to 100 percent of Doctor Rehab’s medical bills under section 627.739(2), Florida Statutes (2008) before the formula for payment under section 627.738(5)(a)(2)(f) Florida Statutes (2008) is applied by UAIC to reduce the medical bills? This Court answers this question in the affirmative based on the following.

4) The legislative intent is the polestar that guides a court’s inquiry under the PIP statute. United Auto. Ins. Co. v. Rodriguez, 808 So. 2d 82, 85 (Fla. 2001) [26 Fla. L. Weekly S747a]. It is well established that where the language of a statute is clear and unambiguous, there is no need for statutory interpretation and the plain and ordinary meaning of the statutory language applies. Warren v. State Farm Mut. Auto. Ins. Co., 899 So. 2d 1090, 1094-1095 (Fla. 2005) [30 Fla. L. Weekly S197b]; Donato v. American Tel. & Tel. Co., 767 So. 2d 1146, 1150 (Fla. 2000) [25 Fla. L. Weekly S44a]. Only when the statutory language is unclear or ambiguous should a court apply the rules of statutory construction and explore the legislative history to determine the legislative intent. Nicarry v. Eslinger, 990 So. 2d 661, 664 (Fla. 5th DCA 2008) [33 Fla. L. Weekly D2166a].

5) UAIC argues on summary judgment that it can reduce Doctor Rehab’s medical bills before applying the PIP deductible when implementing section 627.736(5)(a)(2)(f), Florida Statutes (2008),¹ the Medicare Fee Schedule. Doctor Rehab counters on summary judgment that UAIC violated section 627.739(2), Florida Statutes (2008), when it reduced its medical bills before applying the deductible.

6) The purpose of the deductible for personal injury protection (PIP) benefits is to alter the point at which an insurer’s obligation to pay will ripen. Int’l Bankers Ins. Co. v. Arnone, 552 So. 2d 908, 911 (Fla. 1989). Electing a deductible for personal injury insurance benefits is optional, and, therefore, it is presumed that insureds elect a PIP deductible with knowledge of the consequences, including possibly incomplete coverage. Hannah v. Newkirk, 675 So. 2d 112, 114 (Fla. 1996) [21 Fla. L. Weekly S243a]. A PIP deductible should only be applied to expenses which are deemed cornpensable. General Star Indem. Co v. West Florida Village Inn, Inc., 874 So. 2d 26, 33-34 (Fla. 2d DCA 2004) [29 Fla. L. Weekly D1070b] (“The notion that a PIP deductible could be applied to loss that is not covered by the policy is fundamentally unreasonable . . . A deductible loses its meaning entirely if it is to apply to a loss that is not covered by the policy.”).

7) The 2002 version of Section 627.739(2), Florida Statutes stated in pertinent part that:

[i]nsurers shall offer to each applicant and to each policyholder, upon the renewal of an existing policy, deductible, in amounts of $250, $500, $1,000, and $2,000, such amount to be deducted from the benefits otherwise due each person subject to the deduction. However, this subsection shall not be applied to reduce the amount of any benefits received in accordance with s. 627.736(1)(c).

8) This earlier version of the statute was interpreted in Arnone when addressing the application of the PIP deductible. 552 So. 2d at 911. The Arnone Court explained that the phrase “benefits otherwise due” referred to the required benefits language located in section 627.736(1). Id. The court determined based on the plain language of the statute and in pari materia with 627.736(1) that the deductible in a PIP policy can be subtracted from 80% of the medical expenses as listed in section 627.736(1) or the statutory mandated coverage limit of $10,000.00. Id. In other words, the earlier version of the statute required that the PIP deductible be subtracted from eighty percent of the medical expenses. Govan v. International Bankers Ins. Co., 521 So. 2d 1086, 1088 (Fla. 1988). Thus, application of the 80 percent of the medical expenses formula was applied before the PIP deductible was subtracted when determining the amount of benefits due. Id

9) However, Section 627.739(2), Florida Statutes was amended in 2003.² The 2003 version of the statute is identical to the 2008 version of the statute. Section 627.739(2), Florida Statutes (2008) states in pertinent part:

[i]nsurers shall offer to each applicant and to each policyholder, upon the renewal of an existing policy, deductibles, in amounts of $250, $500, and $1,000. The deductible amount must be applied to 100 percent of the expenses and losses described in s. 627.736. After the deductible is met, each insured is eligible to receive up to $10,000 in total benefits described in s. 627.736(1). However, this subsection shall not be applied to reduce the amount of any benefits received in accordance with s. 627.736(1)(c).

10) In this case, both parties agreed that the language of Section 627.739(2), Florida Statutes (2008) is clear and unambiguous. The plain language of section 627.739(2) Florida Statutes (2008) clearly and unambiguously requires that the PIP deductible be applied to “100 percent of the expenses and losses” of Doctor Rehab.

11) Doctor Rehab is correct in stating that the methodology in computing a PIP deductible was changed when the language of the prior version of section 627.739(2) allowing for the PIP deductible to be subtracted from the “benefits otherwise due” was deleted in favor of language requiring that “the deductible amount must be applied to 100 percent of expenses and losses.”

12) No cases exist from the district court level interpreting section 627.739(2), Florida Statutes (2008). However, other lower courts have provided interpretations of the statute. The statute has been interpreted to mean that the PIP deductible should be subtracted from 100% of the amount billed. Flagler Hospital Inc. a/a/o Devin Sapp v. Peak Property & Cas. Ins. Corp., 18 Fla. L. Weekly Supp. 597a (Fla 7th Cir. Ct. April 7, 2011). The statute changed the calculation of the PIP deductible to require its application to 100 percent of the medical expenses rather than 80 percent of expenses. Id. Initially, the deductible should be applied to 100 percent of the amount billed for medical services provided. Id. Then the 80 percent formula should be applied after the deductible is subtracted to determine the amount of benefits due. Id.

13) Doctor Rehab is correct in stating that the proper formulation for payment of a PIP claim requires that the deductible be subtracted from 100 percent of the total amount billed before the formula for payment pursuant to section 627.736(5)(a)(2)(b) or statutory reductions are applied. Flagler Hospital Inc. a/a/o Jody C. Rigdon v. Progressive Select Ins. Co., 18 Fla. L. Weekly Supp. 620c (Fla. 7th Cir. Ct. April 14, 2011). This is based on the language of the statute which states “the deductible amount must be applied to 100 percent of the expenses and losses described in section 627.736.” Id. The issue in Rigdon was whether the deductible should be applied and subtracted from the total billing before the formula for payment pursuant to section 627.736(5)(a)(2)(b) is applied or after the statutory reductions are applied. Id.

14) Both parties agreed to start their interpretation of the statute at the 100 percent of the expenses and losses. UAIC incorrectly reads into the language of the statute a requirement that “the expenses and losses” phrase means that the deductible is applied 100% only after the compensable or reasonable and necessary medical expenses have been calculated. However, Doctor Rehab correctly points out that the language of the statute does not state deductible be applied to 100% of the expenses and losses that are determined to be reasonable and medically necessary.

15) Both parties interpret differently the meaning of the term “as described in s. 627.736.” The particular sentence containing the language “as described in s. 627.736” does not refer to a specific subsection. As a result, UAIC argues that this phrase means that it can ascertain which medical bills are reasonable and necessary before it applies the deductible required under section 627.736(1)(a). Thus, UAIC interprets the phrase “as described” to mean as being described under required benefits under section 627.736(1)(a).

16) However, Doctor Rehab correctly argues that that the language “as described” is not an invitation to incorporate section 627.736(1)(a) into the statute. However, section 627.736(1), Florida Statutes is not mentioned in the statute until the next sentence after the language stating “after the deductible is met”. Rather, the phrase “as described” as interpreted by the Office of Insurance Regulation means as described under the required PIP benefits found in the statute like medical and wage loss benefits. Therefore, the compensable or reasonable and necessary medical expenses are calculated after the deductible has been applied.

17) Doctor Rehab stipulated in the record that it was not challenging UAIC’s determination of reasonableness of a medical bill. Therefore, the issue is not the reasonableness of the amount billed, but the proper formula to be applied to the total amount billed. UAIC argues that Doctor Rehab’s interpretation is contrary to section 627.736(5)(a)(5)(2) Florida Statutes (2008) because if an insurer limits payment pursuant to a fee schedule, the medical provider may not collect the remainder of its medical bill from an insured.

18) However, Doctor Rehab correctly points out that the policy of Jessica Rodriguez did not contain any language allowing UAIC to reduce the medical bills under the Medicare Fee Schedule of section 627.736(5)(a)(2)(f) Florida Statutes (2008). The policy merely indicated that the “Company will pay, in accordance with the Florida Motor Vehicle No-Fault Law, . . . eighty percent of all medically necessary expenses. . . ” in permitting reasonable medical expenses coverage.

19) An insurer cannot limit reimbursement of medical bills using the alternative Medicare Fee Schedule of section 627.736(5)(a)(2)(f) Florida Statutes (2008) unless a provision electing the Medicare Fee Schedule, rather than, the reasonable medical expenses coverage, exists within the PIP policy. Geico Indem. Co. v. Virtual Imaging Service Inc.,79 So. 3d 55, 58 (Fla. 3d DCA 2011) [36 Fla. L. Weekly D2597a]. Based on the above, this Court finds that Doctor Rehab’s summary judgment is based on the plain language of the law, and as a matter of law the interpretation of section 627.739(2), Florida Statutes (2008) requires that the PIP deductible be applied before medical bills can be reduced by an insurance company.

It is thereupon, ORDERED AND ADJUDGED that:

1) Defendant’s Motion for Final Summary Judgment Application of Deductible is hereby DENIED and Plaintiff’s Cross-Motion for Summary Judgment on Defendant’s Improper Application of Policy Deductible is hereby GRANTED.

2) This Court reserves jurisdiction to further approve, authorize and grant any and all remaining relief in this proceeding.

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¹Section 627.736(5)(a)(2)(f), Florida Statutes (2008) provides for the reimbursement of medical bills in accordance with Medicare Part B and Worker’s Compensation Fee Schedules.

²Ch. 2003-411, §9 Laws of Fla. (eff. Oct. 1, 2003).