24 Fla. L. Weekly Supp. 467b
Online Reference: FLWSUPP 2406CHARInsurance — Personal injury protection — Coverage — Deductible — Insurer improperly applied fee schedule reductions to medical provider’s charges prior to applying deductible to charges — Insurer should have applied deductible to 100% of expenses
PAGANO CHIROPRACTIC, P.A. (Patient: Davis Charles), Plaintiff, vs. PROGRESSIVE AMERICAN INSURANCE COMPANY, Defendant. County Court, 20th Judicial Circuit in and for Collier County. Case No. 11-2014-SC-000837-0001-XX. June 16, 2016. Janeice T. Martin, Judge. Counsel: Chad L. Christensen, Ellis, Ged & Bodden, P. A., Boca Raton, for Plaintiff. Neil Andrews, Andrews, Biernacki, Davis, Milev & Polsky, P.A., for Defendant.
ORDER ON PLAINTIFF’S MOTION FORPARTIAL SUMMARY JUDGMENT AS TO THEAPPLICATION OF THE DEDUCTIBLE AND DEFENDANT’SMOTION FOR PARTIAL SUMMARY JUDGMENT AS TOTHE APPLICATION OF THE DEDUCTIBLE
THIS CAUSE came on to be heard upon Plaintiff’s Motion for Partial Summary Judgment as to the Application of the Deductible and Defendant’s Motion for Partial Summary Judgment as to the Application of the Deductible, and the Court having reviewed the pleadings, heard argument of counsel, and otherwise being fully advised in the premises, the Court finds as follows:
This case involves a medical provider’s breach of contract claim to recover PIP benefits from an insurer and the issue presented is whether the insurer properly applied the deductible to charges submitted by Plaintiff. Plaintiff has withdrawn all dates of service outside those that were directly applicable to Defendant’s deductible application. As such, this Court believes the answer to this legal question leads to a dispositive result.
In this case, the Defendant first reduced Plaintiff’s charges and applied the deductible to the allowable amount rather than applying the deductible to the total charges billed by Plaintiff. This Court finds that this practice violates F.S. 627.739, F.S. 627.736, and the language of Defendant’s policy of insurance.
The Court agrees with Plaintiff that the deductible should be applied to 100% of Plaintiff’s billed charges prior to any reductions. The permissive payment methodology under F.S. 627.736(5)(a)1 only applies when an insurer is reimbursing claims. When Progressive is applying the deductible, it is not reimbursing claims.
F.S. 627.736(5), which reads as follows:
(5) CHARGES FOR TREATMENT OF INJURED PERSONS. —
(a)1. The insurer may limit reimbursement to 80 percent of the following schedule of maximum charges. . . .
In addition, Progressive’s Insurance policy Endorsement A085 FL (05/12) provides as follows:
UNREASONABLE OR UNNECESSARY MEDICAL BENEFITS
Pursuant to Florida law, we will limit reimbursement to, and pay no more than, 80 percent of the following schedule of maximum charges. . .
We will reduce any payment to a medical provider under this Part II(A) by any amounts we deem unreasonable. . .
In determining the appropriate reimbursement under the applicable Medicare fee schedule. . .any other provider will be subject to the CMS coding policies and payment methodologies. . .The CMS policies include, but are not limited to. . .Multiple Procedure Payment Reeduction (MPPR).
3. Medical benefits means 80% of all reasonable expenses incurred. . . .
When a deductible applies, the deductible will be applied to 100% of the expenses and losses covered under the Personal Injury Protection Coverage. After the deductible is met, each insured person is eligible to receive up to $10,000 in total benefits. . .under Personal Injury Protection Coverage.
According to Merriam-Webster dictionary, reimbursement is defined as to pay someone an amount of money. When the deductible is being applied, the insurer is not reimbursing or paying for medical expenses. As such, reducing the medical expenses and then applying the deductible is contrary to the language of F.S. 627.736 and the policy of insurance.
More importantly, and longstanding in the Florida Motor Vehicle No-Fault law, is Florida Statute §627.739(1) and (2) (2003), which states, inter alia:
1. The named insured may elect a deductible or modified coverage or combination thereof to apply to the named insured alone or to the named insured and dependent relatives residing in the same household, but may not elect a deductible or modified coverage to apply to any other person covered under the policy;
2. Insurers shall offer each applicant and to each policyholder, upon the renewal of an existing policy, deductibles, in the amounts of $250, $500, and $1000. The deductible amount must be applied to 100% 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 amounts of any benefits received in accordance with s. 627.736(1)(c). (emphasis added).
Recently, in Mercury Insurance Company of Florida v. Emergency Physicians of Central, 2015 WL 6022040 (Fla. 5th DCA 2015) [40 Fla. L. Weekly D2364a], the Fifth District Court of Appeals held that any contracted for deductible must be applied to 100% of the expenses and losses. The meeting of the contracted for deductible unlocks the insured’s right to access his/her $10,000 in PIP benefits. Id. at 6. The functional purpose of a deductible, which is frequently referred to as self-insurance, is to alter the point at which an insurance company’s obligation to pay will ripen. Id. (citations omitted). When the insured enters into a contract to be subject to the deductible, the insured agrees to “self-insure” for the deductible amount.”Id.
In this case, since the insured is responsible for the deductible and the language of §627.739 requires the deductible to be applied to 100 percent of the expenses, it is improper for Progressive to reduce the allowable amount of plaintiff’s charges prior to the application of the deductible.
Prior to the 2003 amendment to F.S. 627.739, the deductible was applied to “benefits otherwise due.” The Court in International Bankers Insurance Company v. Arone, et. al., 552 So.2d 908 (Fla. 1989) found that the statutory language “benefits otherwise due” required 80% reduction under the policy before the deductible was applied. However, the statute did change in 2003, and specifically deleted the words “benefits otherwise due,” and instead now reads that the deductible should be applied to 100% of the expenses and losses as defined in section 627.739. Section 627.736 no longer has the qualifying phrase “otherwise due.” See William J. Gogan M.D. a/a/o Tara Ricks v. USAA Gen. Indemnity Co., 21 Fla. L. Weekly Supp. 97c (Fla. Brow. Cty. Ct. 2013).
Florida Statute §627.739 has remained unchanged since the 2003 amendments through present day, and is contained in the re-enacted Florida Motor Vehicle No-Fault Law, which took effect on January 1, 2008. Thus, the legislature was aware of this statutory provision when it enacted the fee schedule language at F.S. 627.736(5), in the No-Fault law, and chose not to change the language of the application of the deductible to 100% of the expenses and losses.
Finally, neither the language of Florida Statute §627.739, nor Defendant’s policy, state that the deductible shall be applied “after application of the payment methodology as found in §627.736(5)(a)2.,” or any other payment methodology.
Accordingly, it is hereby, ORDERED AND ADJUDGED that Plaintiff’s Motion for Partial Summary Judgment is GRANTED and Defendant’s Motion for Partial Summary Judgment is DENIED.
