25 Fla. L. Weekly Supp. 672a

Online Reference: FLWSUPP 2507BEAUInsurance — Personal injury protection — Coverage — Medical expenses — Deductible — Insurer that clearly and unambiguously elected statutory fee schedules in policy appropriately applied fee schedules to medical provider’s charges before applying deductible to resulting amount

GOOD HEALTH MEDICAL REHAB, INC. a/a/o Jean W. Beauplan, Plaintiff, v. PROGRESSIVE AMERICAN INSURANCE COMPANY, Defendant. County Court, 17th Judicial Circuit in and for Broward County, Civil Division. Case No. COCE17000492 (56), Civil Division. September 1, 2017. Betsy Benson, Judge. Counsel: Matthew W. Emanuel, Todd Landau, P.A., Hallandale Beach, for Plaintiff. Brian S. Goldstein and Patrick J. Gerace, Fort Lauderdale, for Defendant.

ORDER GRANTING DEFENDANT’S MOTION FORFINAL SUMMARY JUDGMENT AND FINALJUDGMENT FOR DEFENDANT

THIS CAUSE came to be heard before the Court on August 18, 2017, on Defendant’s Motion for Final Summary Judgment and Incorporated Memorandum of Law. The Court, having reviewed the record evidence, the entire court file, pleadings, affidavit and motions, and having considered argument of Counsel and legal authority submitted by the parties, and being otherwise fully advised in this matter, does hereby make the following findings of fact and conclusions of law:

FINDINGS OF FACT

At the time of the alleged accident on May 1, 2013, the claimant was insured by an automobile insurance policy contract for 9610A FL (10/05) and endorsement A085 FL (05/12); issued on February 19, 2013, for coverage dates March 29, 2013, through September 29, 2013. The policy included $10,000 in personal injury protection benefits and a $1,000 deductible. Defendant received bills for treatment from Plaintiff, GOOD HEALTH MEDICAL REHAB, INC. ., for dates of service May 2, 2013, through August 15, 2013. Defendant applied 100% of the charges covered under the policy to the deductible. Defendant reduced the charges pursuant to F.S. §627.736(5)(a)(1-5) and the policy of insurance before applying the deductible. The amount Defendant allowed was based on 200% of the Medicare Part B fee schedule for the region in which the services were rendered. The amounts allowed reflected a reduction of the practice expense component for selected therapy services [secondary procedure codes subject to the Medicare Multiple Procedure Payment Reduction (“MPPR”) rule]. Plaintiff filed a Complaint for Breach of Contract against Defendant under an assignment of benefits alleging that Defendant failed to pay all amounts owed for PIP benefits.

ANALYSIS AND CONCLUSIONS OF LAW

Plaintiff stipulated at argument on August 18, 2017, that Defendant’s policy of insurance properly incorporated the fee schedules and payment methodologies found in F.S. §627.736(5)(a)(1-5) and Defendant properly applied MPPR to Plaintiff’s bills pursuant to F.S. §627.736(5)(a)(3). Accordingly, this Court finds that Defendant’s policy complies with the notice requirement of F.S. §627.736(5)(a)(5), See Allstate Insurance Company vs. Orthopedic Specialists, 212 So. 3rd 73, (Fla. 2017) [42 Fla. L. Weekly S38a], and that Defendant may use the fee schedules and payment methodologies to determine the appropriate amount of reimbursement under Defendant’s policy.

As stated above, Plaintiff does not dispute that the Defendant’s policy complies with the notice requirement of F.S. §627.736(5)(a)(5). Rather, Plaintiff disputes whether the Defendant is permitted to apply the schedule of maximum charges to bills that fall within the insured’s deductible.

Plaintiff argues that Defendant has improperly utilized the fee schedules and payment methodologies when analyzing the charges for services which were applied to the $1,000 deductible under the policy. Plaintiff argues that expenses (charges) and benefits (reimbursements) are two different concepts, and that F.S. §627.739 requires the deductible to be applied to the total amount billed by Plaintiff without regard to the limitations of the policy of insurance. Florida Statute §627.739 provides, in relevant part:

(2) Insurers shall offer to each applicant and to each policyholder, upon the renewal of an existing policy, deductibles, in the amounts of $250, $500, and $1,000. The deductible 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).

(See F.S. §627.739(2)) (Emphasis added).

Plaintiff argues the second sentence of F.S. §627.739(2) requires the court to refer to F.S. §627.736(1)(a) which, provides in pertinent part:

Medical benefits. — Eighty percent of all reasonable expenses for medically necessary medical, surgical, X-ray, dental and rehabilitative services. . . (See F.S. §627.736(1)(a))

The inference from Plaintiff’s argument is that with respect to the deductible, any contractual or statutory schedule of maximum charges must fall from consideration due to the phrase “100% of expenses” with the further inference that “expenses” is automatically synonymous with the amount a provider charges or places on their bill for a given service.

Defendant argues several points including the inter-play between the two statutory sections and the requirement that both sections be read in harmony or “in pari materia”; the contractual policy language; and the undisputed fact that the Plaintiff sued under an alleged assignment of benefits and, as assignee, Plaintiff stands in the shoes of the insured.

Defendant first points out the second sentence of F.S. §627.739(2)¹ must be read in its entirety and requires a cross-reference to F.S. §627.736. The cross-reference is not restricted to any specific subsections of the No-Fault Statute and thus refers to the entire No-Fault Statute, F.S. §627.736. Sub-section (1)(a) does indeed reference “reasonable expenses”. This phrase is part of the definition of “Medical benefits” which is italicized in the statute. Moreover, F.S. §627.736(5) is entitled:

“CHARGES FOR TREATMENT OF INJURED PERSONS.” and further provides:

“A physician. . .rendering treatment to an injured person for a bodily injury covered by personal injury protection insurance may charge the insurer and injured party only a reasonable amount. . . .”

1. The insurer may limit reimbursement to 80 percent of the following schedule of maximum charges. . . (Emphasis added).

Given the foregoing, Defendant puts forth the terms “expenses”, “benefits”, “reimbursements”, and “charges” are inxtricably interwoven in the statutory scheme and must be read in pari materia. This Court agrees. See Forsythe v. Longboat Key Beach Erosion Control Dist., 604 So. 2d 452 (Fla. 1992) (“Where possible, court must give full effect to all statutory provisions and construe related statutory provisions in harmony with one another.”) Id., 604 So. 2d 452 (Fla. 1992). The No Fault Statute provides two means for determining what is a reasonable and necessary medical expense. See Geico v. Virtual Imaging Servs., Inc. 90 So. 3d 321 (Fla. 3d DCA 2012) [38 Fla. L. Weekly S517a]; Fla. Dept of Highway Safety v. Hernandez, 74 So. 3d 1070 (Fla. 2011) [36 Fla. L. Weekly S243a]. Thus, it is necessary for the Court to look to the policy of insurance to determine what expenses are determined to be reasonable, and therefore covered, under the policy.

The A085 policy endorsement states:

“. . .We will determine to be unreasonable any charges incurred that exceed the maximum charges set forth in Section 627.736 (5)(a)(1) (a through f) of the Florida Motor Vehicle No-Fault Law, as amended. . .” (Emphasis added).

Additionally, the A085 policy endorsement provides:

“. . .When a deductible applies, the deductible will be applied to 100 percent of the expenses and losses covered under the Personal Injury Protection Coverage.” (Emphasis added).

This Court is guided by case precedent on deductibles. In Digital Medical Diagnostics, a PIP case, the Third District Court of Appeals held that a deductible is considered a basic part of an insurance policy. See Digital Medical Diagnostics et al., v. United Automobile Insurance Company, 958 So. 2d 505 (Fla. 3rd DCA 2007) [32 Fla. L. Weekly D1392a]. In Mercury Insurance Company of Florida, another PIP case, the Fifth District Court of Appeals held that emergency service medical providers are not exempt from application of the deductible despite language in the No-Fault Statute which requires a 30 day, $5,000 reserve for such providers. See Mercury Insurance Company of Florida v. Emergency Physicians etc. et al. 182 So. 3d 661 (Fla. 5th DCA 2015) [40 Fla. L. Weekly D2364a]. In General Star Indemnity Company, the Second District Court of Appeals held that applying a deductible to both covered and non-covered losses in the context of a commercial policy of insurance for a Hurricane Georges windstorm claim was rejected as producing troubling, if not absurd results. See General Star Indemnity Company v. West Florida Village Inn, Inc. etc., et. al. 874 so. 2d 26 (Fla 2nd DCA 2004) [29 Fla. L. Weekly D1070b]. Thus, when analyzing expenses covered under the Defendant’s policy of insurance it is necessary to apply the schedule of maximum charges, i.e. the covered charges.

This Court’s reasoning is underscored by the undisputed fact that the Plaintiff filed this lawsuit under an assignment of insurance benefits from the insured. As the Fourth District Court of Appeals stated in Northwoods, “In order to activate the right to claim PIP payments under the assignment, the provider’s bills must be compensable under the statute in that they have been determined to be reasonable and necessary. . . Until the necessity of the services and reasonableness of the charges is settled, their compensability under PIP is not established, and assignment of PIP benefits has not matured.” See Northwoods Sports Med. & Physical Rehab., Inc. v. State Farm Mut. Auto. Ins. Co., 137 So. 3d 1049, 1057 (Fla. 4th DCA 2014) [39 Fla. L. Weekly D491a]. It is axiomatic that as assignee, the Plaintiff stands in the shoes of the insured. See Cadle Co. II, Inc. v. Stamm, 633 So. 2d 45, 46 (Fla. 1st DCA 1994); See also, Union Indemnity Co. v. City of New Smyrna, 100 Fla. 980, 130 So. 453 (Fla. 1930); See also, Chrysler Credit Corporation v. United Services Automobile Association, 625 So. 2d 69 (Fla. 1st DCA 1993). Moreover, with respect to the Plaintiff’s position that reimbursements or benefits are different than expenses, the “ASSIGNMENT OF INSURANCE BENEFITS, RELEASE & DEMAND,” which is an Exhibit to Plaintiff’s complaint assigns the “. . .rights and benefits of my automobile insurance a/k/a Personal Injury Protection (hereinafter PIP). . .”. Therefore, even if this Court were to accept the conceptual distinction proffered by Plaintiff, the Plaintiff is nonetheless constricted to the insured’s contractual rights as assignee. The Plaintiff, as assignee, simply cannot recover more from the Defendant than the insured would be entitled to recover directly.

Plaintiff argues that this Court should be persuaded by the reasoning in the matter of Care Wellness Center, LLC a/a/o Virginia Bardon-Diaz v. State Farm Auto. Ins. Co., Case No. 14-07576 CONO (70) (Brwd Cty. Judge Fry 2016) [24 Fla. L. Weekly Supp. 383a]; however, the facts of this case are substantially different from the facts in Care Wellness. First, the State Farm policy of insurance in Care Wellness, stated, “. . .After the deductible has been applied, we will pay the balance of properly documented Medical Expenses. . .” (Emphasis added). Conversely, the Progressive policy at issue in this case states that expenses and losses covered under the PIP coverage of the policy will be applied to the deductible. Furthermore, unlike in Care Wellness, the Plaintiff’s charges in this case were the first bills received in this claim. This distinction is significant as it highlights that Plaintiff’s proposed method of applying the deductible to the amounts billed, without regard to the policy of insurance, and then applying the fee schedule(s) elected in the policy to the remaining portion of the charges would result in the “splitting” of CPT codes. As applied in this case, the fee schedules allocate full reimbursement amounts for medical services to the individual CPT codes for each service. Attempting to apply the deductible through the method proposed by Plaintiff would result in a CPT code being partially allowed at the amount billed with no statutory direction as to what to do with the remainder of the charge for that service. As such, it is simply not possible within the framework of the statutes to apply the deductible to the billed amounts and then apply the fee schedule(s) to the remaining portion of the charges. Moreover, under Plaintiff’s proposed method, evidence of reasonableness of the charges pursuant to the statutory factors listed in F.S. §627.736(5)(a), would be necessary in every single PIP suit involving a policy of insurance with a deductible². While this Court agrees with Defendant that a reasonableness analysis is necessary when applying the deductible; this Court does not agree with Plaintiff’s position that the “reasonableness factors” found in F.S. §627.736(5)(a) are relevant once an insurer provides clear and unambiguous notice of its intent to apply the schedule(s) of maximum charges in its policy. The Legislature introduced the “fee schedules” currently found in F.S. §627.736(5)(a)(1)(2013) to control costs and reduce litigation regarding the reasonableness of charges.³ If this Court were to accept Plaintiff’s position it would be going against the clear intention of the Legislature to limit litigation and defeat the purpose of allowing insurers to determine reasonableness of charges pursuant to the (5)(a)(1) fee schedules.

Additionally, a careful examination of the legislative history and case law interpreting the PIP deductible statute(s) reveals the reasoning behind the use of the phrase “100% of expenses and losses described in s. 627.736.” Florida law requires statutes to be strictly construed. Prior to the foregoing amendments the statute was interpreted to require the deductible to be applied to the benefits due after computation of the 80% of the expenses for which coverage was provided under [the] policy. See Govan v. International Bankers Ins. Co., 521 So.2d 1088 (Fla. 1988). Because the insured is responsible for the charges that fall within the deductible elected in the policy and per Govan, the insured was only required to pay the providers 80% of the covered charges, the providers were not receiving reimbursement for the remaining 20% of the covered expenses. The legislature changed this with the amendments requiring that the deductible be applied to “100% of expenses and losses described in s. 627.736.”; requiring that the deductible paid by the insured equal the amount of expenses and losses covered under the statute and policy. This is how the Defendant applied the deductible in this case.

This Court finds that the Defendant properly applied the policy deductible pursuant to F.S. §627.739, and F.S. §627.736⁴. Florida Statute §627.739, requires a cross-reference to F.S. §627.736, for charges that fall within the deductible elected in the policy of insurance. The deductible is a basic part of the insurance policy⁵, which requires a reasonableness analysis pursuant to the policy.⁶ Thus, Defendant appropriately applied the covered charges to the policy deductible. This Court disagrees with the Plaintiff’s analysis that the deductible should be applied to the provider’s billed amount without regard to the policy of insurance. The undisputed facts and evidence demonstrate the Defendant properly applied the deductible and correctly paid Plaintiff entitling Defendant to Final Summary Judgment. See Glasspoole v. Konover Const. Corp. South, 787 So.2d 937 (Fla. 4th DCA 2001) [26 Fla. L. Weekly D1398c].

ORDERED AND ADJUDGED that Defendant’s Motion for Final Summary Judgment is hereby GRANTED.

IT IS FURTHER ORDERED AND ADJUDGED that Plaintiff shall take nothing by this action. FINAL JUDGMENT IS HEREBY ENTERED IN FAVOR OF THE DEFENDANT AND IT SHALL GO HENCE FORTH WITHOUT DAY. The Defendant is the prevailing party in this action. The Court reserves jurisdiction to determine Defendant’s entitlement to reasonable attorneys’ fees and costs.

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¹F.S. §627.739 states, “The deductible must be applied to 100 percent of the expenses and losses described in s. 627.736.” The phrase “. . .described in s. 627.736.” is significant as it modifies the foregoing terms expenses and losses in conformity with the No Fault Statute. See Garrison Prop. & Cas. Ins. Co. v. New Smyrna Imaging, LLC, Case No. 13-03-AP (18th Cir. App. 2015) [23 Fla. L. Weekly Supp. 708a], and Progressive American Ins. Co. v. Munroe Regional Health System Inc. d/b/a Munroe Regional Medical Center, Case No. 14-11-AP (18th Cir. App. 2015) [23 Fla. L. Weekly Supp. 707a].

²As noted by the Court at the summary judgment hearing on August 18, 2017, no evidence was filed by the Plaintiff to support the contention that the amounts charged by Plaintiff in this case were reasonable.

³See Geico Gen. Ins. Co. v. Virtual Imaging Servs., Inc., 141 So. 3d 147, 153 (Fla. 2013) [38 Fla. L. Weekly S517a](“The provision in the PIP statute authorizing insurers to limit reimbursements for medical services rendered pursuant to the Medicare fee schedules, which is at issue in this case, has its genesis in a series of changes the Legislature made to the PIP statute, beginning in 2001, that were designed to regulate the amount providers could charge PIP insurers and policyholders for the medically necessary services PIP insurers are required to reimburse.”)

⁴This Court notes F.S. §627.739 Personal injury protection; optional limitations; deductibles. — amended in 2003, sunset along with the PIP Statute, F.S. §627.736, in 2007, and was subsequently revived along with the revived PIP Statute in 2008. The PIP Statute underwent notable revisions in 2013, and as such, the relevant versions of the respective statutes are the 2013 versions as the alleged accident in this case occurred on May 1, 2013.

⁵See Digital Medical Diagnostics a/a/o Jesus Caber, Miriam Caber, and Lidice Soto v. United Auto. Ins. Co., 958 So.2d 505 (Fla. 3rd DCA 2007) [32 Fla. L. Weekly D1392a].

⁶See Garrison Prop. & Cas. Ins. Co. v. New Smyrna Imaging, LLC, Case No. 13-03-AP (18th Cir. App. 2015) [23 Fla. L. Weekly Supp. 708a], and Progressive American Ins. Co. v. Munroe Regional Health System Inc. d/b/a Munroe Regional Medical Center, Case No. 14-11-AP (18th Cir. App. 2015) [23 Fla. L. Weekly Supp. 707a]