25 Fla. L. Weekly Supp. 276a
Online Reference: FLWSUPP 2503BERNInsurance — Personal injury protection — Coverage — Medical expenses — Statutory fee schedules — Clear and unambiguous election by insurer — PIP policy that states that insurer will pay 80% of reasonable charge but in no event will insurer pay more than 80% of No-Fault Act schedule of maximum charges clearly and unambiguously elects to limit reimbursement to permissive statutory fee schedules
DIGITAL RADIOLOGY, PA, a/a/o Bernard, Nellie, Plaintiff, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant. County Court, 11th Judicial Circuit in and for Miami-Dade County. Case No. 2015-1655 SP 24. June 29, 2017. Diana Gonzalez-Whyte, Judge.
THIS CAUSE having come upon Defendant’s Motion for Summary Judgment and the Court having considered the record, and otherwise being duly advised in the premises, it is ORDERED AND ADJUDGED: Defendant’s Motion for Summary Judgment is GRANTED.
I. FACTS
Nellie Bernard (“Insured”) was injured in an automobile accident on July 29, 2013. Digital Radiology, PA (“Digital”) provided Insured with treatment for the injuries sustained in the accident. State Farm Mutual Automobile Insurance Company (“State Farm”) issued its form 9810A insurance policy (“Policy”) to Insured. The Policy included Personal Injury Protection (“PIP”) for Insured and was in full force on the date of the accident. Insured assigned benefits to Digital, who in turn, billed State Farm a total of $850.00, for treatment provided to Insured. State Farm reduced the $850.00 to the approved amount of $104.20 and paid to Digital $85.96, which accounted for 80% of the approved amount. State Farm contends that the amount was proper under total allowable medical expense calculations pursuant to the schedule of maximum charges set forth in Florida Statute §627.736(5)(a)2 and in accordance with the required notice contained within its 9810A policy.
II. ISSUE(S) BEFORE THE COURT
The issue before for this Court on Summary Judgment is whether Insured received a plain, unambiguous, and clearly construed notice from State Farm regarding its reimbursement method, and if that method was properly applied to Insured’s approved charges.
III. SUMMARY JUDGMENT STANDARD
Summary Judgment is properly granted where the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. Fla. R. Civ. P. 1.510. Summary Judgment is proper if no genuine issue of material fact exists and if the moving party is entitled to a judgment as a matter of law. Volusia County v. Aberdeen at Ormond Beach, L.P., 760 So. 2d 126, 130 (Fla. 2000) [25 Fla. L. Weekly S390a].
IV. PIP STATUTORY PROVISIONS
The law is well established that the Florida PIP Statute § 627.736 describes two distinct payment calculation methodologies. The first calculation is mandatory pursuant to § 627.736 (1)(a), which requires an insurer to pay “[e]ighty percent of all reasonable expenses for medically necessary medical, surgical, X-ray, dental, and rehabilitative services, including prosthetic devices and medically necessary ambulance, hospital, and nursing services if the individual receives initial services and care pursuant to subparagraph 1. within 14 days after the motor vehicle accident.” Fla. Stat. § 627.736(1)(a). This mandatory language serves to provide a minimum or “floor” for reimbursements.
The second calculation is a permissive limitation, which permits the insurer to limit reimbursement for medical services based on Medicare and Worker’s Compensation Schedules. Specifically, these provisions provide that insurers “may limit reimbursement” to eighty percent of a schedule of maximum charges set forth in the PIP statute. Fla. Stat. § 627.736(5)(a)1. The insurer has discretion over this permissive language, which serves to provide a maximum or “ceiling” for reimbursements.
Between the “floor” and “ceiling” lies a range that is one factor in determining reasonable charges. In order for State Farm to use this “ceiling” to limit charges, State Farm must follow certain notification guidelines. A PIP insurer cannot take advantage of the Medicare Fee Schedules to limit reimbursements without notifying its insured by electing those Fee Schedules in its policy or amendatory endorsement. see Allstate Ins. Co. v. Orthopedic Specialists, 212 So. 3d 973, 976 (Fla. 2017) [42 Fla. L. Weekly S38a]. Notice to the insured is necessary because the PIP statute, § 627.736 requires the insurer to pay for reasonable expenses for medically necessary services, but also permits the insurer to use the Medicare Fee Schedules as a basis for limiting reimbursements. Id. The plain language of § 627.736 affords insurers two mechanisms for calculating reimbursements, however, the insurer must clearly and unambiguously elect the permissive payment methodology in order to rely on it. See Kingsway Amigo Ins. Co. v. Ocean Health, Inc., 63 So. 3d 63, 67 (Fla. 4th DCA 2011) [36 Fla. L. Weekly D1062a]; see also Geico Gen. Ins. Co. v. Virtual Imaging Servs, Inc., 141 So. 3d 147, 158 (Fla. 2013) [38 Fla. L. Weekly S517a].
STATE FARM’S POLICY LANGUAGE
Under State Farm’s No-Fault Coverage, which reads in part,
(Policy Form 9810A at 14-16)
We will pay in accordance with the No-Fault Act properly billed and documented reasonable charges for bodily injury to an insured caused by an accident resulting from the ownership, maintenance, or use of a motor vehicle as follows:
1. Medical Expenses: We will pay 80% of properly billed and documented medical expenses, but only if that insured receives initial services and case from a provider described in A. below with 14 days after the motor vehicle accident that caused bodily injury to the insured.
The policy further explains:
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, including applicable modifiers:
The plain language of the policy clearly elects to pay under the Reasonable Amount Method, and to use Medicare Fee Schedules as a limiting factor.
The language of § 627.736(5)(a)2, is permissive and offers State Farm a choice in dealing with the insured as to 1) whether to limit reimbursements based on the Medicare Fee Schedule Method or 2) whether to continue to reimburse pursuant to the Reasonable Amount Methodology mandated under § 627.736(5)(a)1. See Virtual Imaging, 141 So. 3d at 157.V. CLEAR AND UNAMBIGUOUS
“If the language used in an insurance policy is plain and unambiguous, a court must interpret the policy in accordance with the plain meaning of the language used so as to give effect to the policy as it was written.” Virtual Imaging, 141 So. 3d at 157. “Further, in order for an exclusion or limitation in a policy to be enforceable, the insurer must clearly and unambiguously draft a policy provision to achieve that result.” Id; see also Auto-Owners Ins. Co. v. Anderson, 756 So. 2d 29, 36 (Fla. 2000) [25 Fla. L. Weekly S211a]. The Medicare Fee Schedule Method set forth in § 627.736(5)(a)2 provides an option for insurers and in order for the insurer to exercise the option, the insurer must provide notice in the policy. Virtual Imaging, 141 So. 3d at 157-58. The provider also needs notice of the reimbursement rate because it is the provider who is forced to accept the lower payment rate after rendering services in reliance on the terms of the policy. Id. at 159-160. In Virtual Imaging, the Supreme Court of Florida held that an insurer may limit payment as authorized by the statute only if the insurance policy provides notice, at the time of issuance or renewal, that the insurer may limit payment pursuant to the schedule of charges as specified in § 627.736(5)(a)5. Id. at 154.
Digital argues that State Farm’s policy is ambiguous under Virtual Imaging because it fails to state that State Farm will not pay 80 percent of reasonable charges and that instead will calculate benefits only under the permissive Medicare Fee Schedules. However, the holding in Virtual Imaging clearly states that “a PIP policy cannot contain a statement that the insurer will not pay eighty (80) percent of reasonable charges because no insurer can disclaim the PIP statute’s reasonable medical expenses coverage mandate.” Orthopedic Specialists, 212 So. 3d at 977. Furthermore, a PIP policy cannot state that the insurer will calculate benefits solely under the Medicare Fee Schedules contained within § 627.736(5)(a)2 because the Medicare Fee Schedules are not the only applicable mechanism for calculating reimbursements under the permissive payment methodology. Id. This means the insurer must follow the mandatory reasonableness method and may choose to limit pursuant to the Medicare Fee Schedule, so long as notice has been provided. See id. at 976-977; see also Virtual Imaging, 141 So. 3d at 157-58.
Because insurers may not elect the permissive Medicare Fee Schedule without also providing the mandatory reasonableness payment methodology, this Court finds that the 9810A Policy provides sufficient notice to the insured that State Farm will pay pursuant to the Reasonableness Payment Methodology as required by § 627.736, and that State Farm may limit under the Medicare Fee Schedule of 627.736(5)(a)2.
The Majority decision written by Justice Canady in Allstate Ins. Co., v. Orthopedic Specialist, the most recent Florida Supreme Court decision on the issue, continued Virtual Imaging’s dissenting opinion’s school of thought by concluding that “PIP policy cannot contain a statement that the insurer will not pay eighty (80) percent of reasonable charges because no insurer can disclaim the PIP statute’s reasonable medical expenses coverage mandate.” Orthopedic Specialists, 212 So. 3d at 977. The reasonableness payment methodology is mandatory and cannot be disclaimed by the insurer. This means the insurer must follow the mandatory reasonableness method and may choose to limit pursuant to the Medicare Fee Schedule, so long as notice has been provided (emphasis added). see Allstate Ins. Co., v. Orthopedic Specialist, 212 So. 3d at 976 (Fla 2017) [42 Fla. L. Weekly S38a].; see also Virtual Imaging, 141 So. 3d at 157-58.
VI. CONCLUSION
This Court therefore finds that there is no genuine issue of material fact. State Farm’s policy is clear and unambiguous and has properly elected the option to limit reimbursement, satisfying the PIP statute’s mandate, permissive election, and the case law. State Farm’s Motion for Summary Judgment is GRANTED.
