24 Fla. L. Weekly Supp. 838a
Online Reference: FLWSUPP 2410MLOPInsurance — Personal injury protection — Coverage — Medical expenses — Deductible — PIP statute requires that deductible be applied to 100% of expenses and losses incurred before application of fee schedule reductions — Insurer was free to challenge that loss was not compensable or that charges were not reasonable, related and medically necessary at time charges were submitted, but it cannot raise those challenges after it has applied bill to deductible
FLORIDA HOSPITAL MEDICAL CENTER as assignee of Michelle Lopez, Plaintiff, v. PROGRESSIVE SELECT INSURANCE COMPANY, Defendant. County Court, 9th Judicial Circuit in and for Orange County. Case No. 2015-SC-7092-O. December 12, 2016. Steve Jewett, Judge. Counsel: William S. England, Bradford Cederberg, P.A., Orlando, for Plaintiff. Dina O. Piedra, Orlando, for Defendant.
ORDER GRANTING PLAINTIFF’S MOTIONFOR FINAL SUMMARY JUDGMENT
THIS MATTER having come before this Honorable Court on the Plaintiff’s Motion for Final Summary Judgment and this Honorable Court having heard arguments of counsel and being otherwise fully advised in the premises, finds as follows:
The dispositive issue in this matter is whether Progressive must apply 100% of expenses and losses toward an elected deductible as set forth in Fla. Stat. 627.739 or whether Progressive is permitted to reduce 100% of the expense to fee schedule before applying the deductible. There is no dispute that Progressive’s insured in this matter, Michelle Lopez, was involved in a motor vehicle collision and sustained injuries on December 20, 2014. There is no dispute that the insured elected a $1,000.00 deductible on her policy that provided $10,000.00 in PIP benefits once the deductible was satisfied. There was no medical payments coverage purchased.
As a result of the injuries sustained in the motor vehicle collision, the insured presented to the emergency department of Florida Hospital for emergency medical treatment. Florida Hospital submitted a bill for $2,641.00 to Progressive on February 2, 2015. This was the second bill received by Progressive and therefore was subject to the elected deductible before the $10,000.00 in benefits became due and owing. Progressive did not deny or reject any of the billing for the services provided by Florida Hospital, but instead allowed all of the codes billed and utilized the Schedule of Maximum Charges to reduce Florida Hospital’s usual and customary charges to 75% prior to applying the insured’s deductible. Progressive never requested any additional information in order to process Florida Hospital’s bill and apply same to the insured’s deductible.
Instead of applying “100% of the expenses and losses” toward the elected deductible, Progressive first reduced Florida Hospital’s bill by 25% pursuant to the fee schedule contained in Fla. Stat. 627.736(5)(a)(1). Florida Hospital contends this was error, resulting in (1) an underpayment to Florida Hospital of $192.78; and (2) a payment responsibility much greater than the $1,000.00 deductible for which Progressive’s insured contracted. Progressive contends it is permitted to apply the fee schedule reduction to the deductible, as opposed to “100% of expenses and losses” submitted by Florida Hospital, simply because it has elected to reimburse PIP benefits pursuant to the fee schedule.
POSITIONS OF THE PARTIES
Progressive interprets the language of Section 627.739(2), Florida Statutes (2013), to require Defendant to make an assessment of the compensability of the medical bills prior to applying the deductible. That is, Defendant alleges that the language of 627.739(2) specifically mandates that only reasonable, medically necessary and related medical bills should be applied to the deductible and supports said argument by referencing the language “described in Florida Statute 627.736”. Progressive argues the plain language of Section 627.739(2), Florida Statutes (2013), states that a PIP deductible applies to “100% of the expenses and losses described in s. 627.736.” Forsythe v. Longboat Key Beach Erosion Control District, 604 So. 2d 452, 455 (Fla. 1992) which held, “it is axiomatic that all parts of a statute must be read together in order to achieve a consistent whole,” and “where possible, courts must give full effect to all statutory provisions and construe related provisions in harmony with one another.”
Therefore, Progressive argues since it determined that only 75% of Florida Hospital’s charge was compensable under PIP, it was permitted to reduce Florida Hospital’s bill to 75% of its usual and customary charge, before applying the elected deductible. It cites General Star Indemnity v. West Florida Village Inn, Inc., 874 So.2d 26 (Fla. 2d DCA 2004) [29 Fla. L. Weekly D1070b] for this premise. Progressive also contends that the permissive fee schedule limitations, specifically 75% of a hospital’s usual and customary charge for emergency services and care in this case, apply both before and after Personal Injury Protection Benefits are reimbursed by the insurer.
Florida Hospital asserts Fla. Stat. 627.739 is clear and unambiguous and that the deductible must be applied to “100% of expenses and losses” and only after the deductible is met, does the limiting provision on payment of PIP benefits (the fee schedule) come into play. Florida Hospital cites the evolution of the deductible statute, from its wording in 2002, in which the deductible was applied to “the expenses otherwise due” (80% owed by PIP) to the challenges to the statute resolved by the Supreme Court of Florida in the cases of International Bankers Ins. Co. v. Govan, 521 So.2d 1086 (Fla. 1988) and International Bankers Ins. Co. v. Arnone, 552 So.2d 908 (Fla. 1989); the subsequent amendment of Fla. Stat. 627.739 in 2003 to include its current language, “must be applied to 100% of expenses and losses” and its re-enactment in conjunction with the PIP statute in 2007.
Florida Hospital also argues that compensabilitypertains to the broadest sense of PIP coverage, as set forth in Fla. Stat. 627.736(1) — that being whether this loss is covered by a PIP policy. Thus, once a motor vehicle accident is reported that (a) involves injury, (b) to an insured, (c) arising out of the operation, maintenance or use of the vehicle, then you have a compensable or covered loss. The Plaintiff agrees that once you establish a compensable loss, the treatment rendered for that loss must be reasonable in amount, related and medically necessary and the carrier has a multitude of tools available to assess the reasonableness, relatedness and medical necessity. These include denying the charge, requesting more information from the provider, conducting an IME or Peer review or sending a request pursuant to Fla. Stat. 627.736(6)(b).
The Plaintiff asserts that Progressive is not permitted to apply the fee schedule to bills that fall under the patient’s elected deductible (and thus outside the PIP benefits for which Progressive contracted to provide). Such a reduction is permitted only when the carrier is paying benefits or “limiting reimbursement [of PIP Benefits]” under its policy. Plaintiff contends that if this court were to accept the Defendant’s arguments, it would be violating the long standing rules of statutory construction, and would lead to inconsistent application of the deductible and an application of the Schedule of Maximum Charges to sums for which it was not intended to apply.
CONCLUSIONS OF LAW
The Court first looks to Fla. Stat. 627.739 which states “[T]he 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 $10,000.00 in total benefits described in s. 627.736(1).” The question becomes, “does the plain wording of 627.739 have a different meaning than “100% of expenses and losses” when a carrier has elected to utilize the fee schedule for reimbursements? The answer is no. “Where the wording of the (No-Fault) law is clear and amenable to a logical and reasonable interpretation, a court is without power to diverge from the intent of the Legislature as expressed in the plain language of the statute”. Warren vs. State Farm Mutual Auto Ins. Co., 899 So.2d 1090, 1095 (Fla. 2005) [30 Fla. L. Weekly S197b].
The court has read the Govan and Arnone decisions and examined the amendments to the 2003 deductible statute. As a result of Govan and Arnone, the deductible statute was amended to: a) eliminate $2,000.00 deductibles; b) create $10,000.00 in available benefits over and above an elected deductible; and c) change the calculation to be used when applying bills toward the deductible (from the 80% figure represented by “benefits otherwise due” to the 100% figure represented by “100% of expenses and losses”). All of these changes show a desire to create greater benefits, have lower deductibles and most importantly, allow for the deductible to be satisfied in the most expedient manner for the benefit of the insured.
The creation of a deductible separate and apart from the $10,000.00 in PIP benefits plays a key role in the court’s analysis. The deductible is not part of the benefits being reimbursed under PIP. Although Progressive has the right to contract with its insured to reimburse the $10,000.00 benefits portion of its policy pursuant to a reimbursement limitation, that right does not extend to the deductible or after the total amount of benefits have been paid, both of which the insurer is not responsible and for which the insured is self-insured. Section 627.736(5)(a)4. of the PIP statute outlines that when the carrier is paying pursuant to the fee schedule, the provider may seek no more than 20% of the fee schedule amount “except for amounts that are not covered by the insured’s personal injury protection coverage due to coinsurance amount or maximum policy limits”. Progressive’s own explanation of benefits in this matter states: “The person providing any service, supplies or care cannot bill or attempt to collect from you any amount in excess of the fee schedules, except for coinsurance, which would be 20% of the fee schedule amount or a deductible up to the maximum policy limits.” (Emphasis added).
Until the deductible is satisfied, Progressive is not obligated to reimburse PIP benefits for any bills. It is the insured who is responsible for the bills that fall under the deductible. When Progressive reduces Florida Hospital’s bill to 75% of its usual and customary charge, prior to applying the deductible, two things happen: 1) the insured becomes responsible for the difference between submitted charge and 75% of the hospital’s usual and customary charge (here, 25% of the billed amount, totaling $660.25). This is in addition to the $1,000.00 deductible for which the insured contracted to be responsible; and 2) Progressive pays $192.78 less of PIP benefits to Florida Hospital than is actually owed. Florida Hospital has cited a litany of cases across the State of Florida directly on point in support of its position, including opinions from St. John’s county, Orange county; Hillsborough county, Broward county, Volusia county; Sarasota county and Collier county.
The terms “expenses” and “benefits” used in Section 627.739(2), Florida Statutes have vastly different meanings within the PIP statutory scheme. “Expenses” are bills for “medically necessary, medical, surgical, X-ray, dental, and rehabilitative service, including prosthetic devices and medically necessary ambulance, hospital, and nursing services.” §627.736(1)(a), Fla. Stat. “Benefits” however are amounts for which an insurer is liable for payment under PIP coverage. See United States Sec. Ins. Co. v. Silva, 693 So.2d 593 (Fla. 3d DCA 1997) [22 Fla. L. Weekly D507a] (“. . .the word ‘benefits’ as used in the statute, and in the insurance contract herein, means payments, and not medical treatment. . .”).
Notably, the pre-2003 version of Section 627.739(2), Florida Statutes allowed the deductible to be deducted from the PIP insured’s “benefits.” Thus pre-2003, there was no distinction between “expenses” and “benefits”. However, under the 2003 amendment, the deductible must be applied to 100% of the “expenses and losses”, and after the deductible is satisfied, the insured patient is entitled to receive up to $10,000 in “benefits”. Accordingly, the 2003 amendment drew a clear and definite distinction between the terms “expenses” and “benefits”. See e.g., State v. Mark Marks, P.A., 698 So.2d 533, 541 (Fla. 1997) [22 Fla. L. Weekly S439a] (“legislative use of different terms in different portions of the same statute is strong evidence that different meanings were intended”); Department of Professional Regulation v. Durrani, 455 So.2d 515, 518 (Fla. 1st DCA 1984) (“legislative use of different terms in different portions of the same statute is strong evidence that different meanings were intended”).
The re-enactment of §627.739 in conjunction with §627.736 in 2007 supports Plaintiff’s interpretation of the law. The Legislature was well aware of the fee schedule limitations contained in §627.736(2007) and chose not to modify the language of §627.739(2007) in any way. §627.739 does not say the deductible is to be applied to 100% of sums contained in Fla. Stat. §627.736(5)(a)1, (formerly Fla. Stat. §627.736(5)(a)2.) when the carrier has elected to reimburse in that fashion and 100% of the expenses and losses when the carrier has not elected the fee schedule. Further §627.736(5)(a)4., as well as Progressive’s EOB, clearly establish that the fee schedule is not applicable to sums that fall under the deductible. The fee schedule only applies to the $10,000.00 in benefits paid by the PIP policy. The deductible must be met before the insurer’s obligation to reimburse up to $10,000.00 in PIP benefits is triggered.
The deductible is to be applied to 100% of the expenses and losses incurred. Although the statute doesn’t specifically include the word “reasonable” expenses, the Supreme Court of Florida made it clear in Geico General Ins. Co. v. Virtual Imaging Services, Inc., 141 So.3d 147 (Fla. 2012) [38 Fla. L. Weekly S517a] that an insurer’s payment of 80% of reasonable expenses is and always has been at the heart of the PIP statute. Providers are obligated to submit only reasonable expenses and likewise, carriers are obligated to reimburse only those reasonable expenses. This is separate and apart to the limitations on reimbursement Progressive can contract to reimburse when paying out the contracted for $10,000.00 in benefits, after the deductible has been satisfied.
Progressive was free to challenge that the loss is not compensable, that is, that the loss is not one for which the policy is designed to cover. A loss sustained from a fall from a ladder or a cut sustained in the kitchen are examples of injuries not compensable under a PIP policy. Progressive was likewise free to challenge that the medical services provided are not reasonable, related or medically necessary. Here however, Progressive accepted the charge as submitted. They did not assert that the charge was not compensable or that the treatment or charge was for unrelated, unreasonable or unnecessary treatment. Florida Hospital’s submission of their bill is prima facie evidence of a reasonable charge. A.J. v. State, 677 So.2d 935 (Fla. 4th DCA 1996) [21 Fla. L. Weekly D1677e].
This Court finds that relatedness and medical necessity are no longer at issue by virtue of application of Plaintiff’s bill to the insured’s deductible. At the time of processing Plaintiff’s bill Defendant took no issue with Plaintiff’s usual and customary charge before applying the fee schedule limitation. Given that the Defendant has already made the determination that Plaintiff’s services were medically necessary and related to the accident. Certainly Defendant could have withheld or denied payment of Plaintiff’s bill(s) if Defendant had reasonable proof that it was not responsible for payment. See Section 627.736(4)(b), Fla. Stat. Once an insurer affirms coverage for a service, it cannot thereafter claim that the service was not medically necessary or related to the accident. See Quintana, D.C., P.A. a/a/o Melissa Evans v. State Farm Mut. Auto. Ins. Co., 19 Fla, L. Weekly Supp. 882a (Fla. 11th Jud. Cir., Miami-Dade County, July 11, 2012). An insurer cannot retroactively suggest that a bill that it affirmed coverage for is now not covered because it is unrelated or unnecessary. Id. Such a suggestion would be tantamount to a violation of the bad faith statutes and an Unfair Trade Practice, and would completely frustrate the purpose of the PIP statute which is “swift and virtually automatic payment.” Id. Pursuant to Florida Medical & Injury Center, Inc. v. Progressive Exp. Ins. Co., 29 So. 3d 329 (Fla. 5th DCA 2010) [35 Fla. L. Weekly D215b], this Court does not accept the proposition that Defendant can “mend the hold” and belatedly assert any additional defenses to which it may have been entitled to raise in the claims handling process, and chose not to raise in the Explanation of Reimbursement which was created by Defendant and sent to the Plaintiff and the insured for the purposes of explaining the manner and processing of Plaintiff’s bill.
The Court finds that no genuine issues of material fact remain. The Court finds that all issues have been disposed of by the Court, including but not limited to, any and all issues raised by the parties in the pleadings. Upon competing motions for final summary judgment, the Court finds that Plaintiff is entitled to Final Summary Judgment as a matter of law.
Accordingly, it is hereby, ORDERED AND ADJUDGED:
1. Plaintiff’s Motion for Final Summary Judgment is GRANTED.
2. Plaintiff shall recover from Progressive the sum of $192.78 in benefits and accrued interest at 4.75% in the sum of $16.88 For a total sum of $209.66 for which sum let execution issue. *
3. The Court finds Plaintiff is entitled to its reasonable attorneys’ fees and costs. The Court reserves jurisdiction to determine the amount of attorneys’ fees and costs to Plaintiff pursuant to Fla. Stat. §§627.736, 627.428 and 57.041.
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* Post judgment interest of 4.75% per annum shall accrue on this judgment pursuant to Fla. Stat. § 55.03.
