25 Fla. L. Weekly Supp. 817a

Online Reference: FLWSUPP 2509AGUIInsurance — Personal injury protection — Coverage — Medical expenses — Statutory fee schedules — Clear and unambiguous election by insurer — PIP policy that states that in no event will insurer pay more than schedule of maximum charges clearly and unambiguously elects to limit reimbursement to statutory fee schedules — Insurer’s placement of notice of limitation to statutory fee schedules on declarations page when policy was renewed and use of policy form approved by Office of Insurance Regulation satisfies requirements of section 627.736(5)(a)5 and allows insurer to limit reimbursement to statutory fee schedules

JAMES A. VOGLINO, M.D., P.A. a/a/o Francisco Aguila, Plaintiff, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, a foreign corporation, Defendant. County Court, 11th Judicial Circuit in and for Miami-Dade County. Case No. 17-000440-SP-26. November 9, 2017. Lawrence D. King, Judge. Counsel: Spencer G. Morgan, for Plaintiff. Scott W. Dutton, Dutton Law Group, Miami, for Defendant.

ORDER GRANTING PARTIAL SUMMARY JUDGMENTFOR STATE FARM MUTUAL AUTOMOBILEINSURANCE COMPANY

THIS CAUSE came before the Court on October 18, 2017, on the Motion for Partial Summary Judgment filed by the Defendant, State Farm Mutual Automobile Insurance Company (hereinafter “State Farm”) on the issue of whether State Farm may limit reimbursement for medical services covered by PIP insurance to eighty percent (80%) of the schedule of maximum charges and the Court having heard argument of counsel and having reviewed the evidence of record, states as follows:

I. UNDISPUTED FACTS

1. Francisco Aguila (“Claimant”) was involved in a motor vehicle accident on September 24, 2014, in which he allegedly sustained personal injuries.

2. Plaintiff, a medical provider, claims that State Farm has not paid Plaintiff the full amount due and owing in PIP (Personal Injury Protection) benefits for the medical services rendered to the Claimant because State Farm limited reimbursement of Plaintiff’s charges to eighty percent (80%) of the Florida PIP Statute’s (Fla. Stat 627.36) schedule of maximum charges.

3. Plaintiff filed its Complaint against State Farm claiming, inter alia, that State Farm failed to properly pay Plaintiff’s charges under the terms and conditions of the Florida PIP statute and the in accordance with State Farm’s PIP coverage, both of which require payment of 80% of Plaintiff’s charges within thirty (30) days of presentation of the claims, thereby entitling Plaintiff to those damages set forth in the statute, to wit: 80% of the unpaid PIP benefits plus interest.

4. State Farm responded in its Answer and Affirmative Defenses denying the allegations of the Complaint and asserting the defense that the PIP statute and policy of insurance allow State Farm and its insured to limit reimbursement of Plaintiff’s charges to eighty percent (80%) of the PIP statute’s schedule of maximum charges, which is incorporated into the policy. Therefore, State Farm’s primary contention in this Motion for Partial Summary Judgment is that it correctly limited reimbursement of Plaintiff’s charges pursuant to Fla. Stat. 627.736(5)(a), commonly referred to as the “schedule of maximum charges.”

5. The policy form applicable to this litigation is 9810A. When State Farm first issued the 9810A form policy the Declarations Page of the policy provided as follows:

IMPORTANT NOTICE: Under No-Fault Coverage, the only medical expenses we will pay are reasonable medical expenses that are payable under the Florida Motor Vehicle No-Fault Law. The most we will pay for such reasonable medical expenses is 80% of the “schedule of maximum charges” found in the Florida Motor Vehicle No-Fault Law and in the Limits section of the Florida Car Policy’s No-Fault Coverage.

A copy of the Declarations Page was submitted into evidence by State Farm, along with a Certified Copy of the 9810A policy and with the Office of Insurance Regulation’s (OIR) approval of the State Farm 9810A policy form.

6. The “Important Notice” found on the State Farm policy Declarations Page advising the insured of the schedule of maximum charges payment limitations refers the insured to the Limitations portion of the State Farm policy. Therein, the follow limitation is found:

Limits

* * *

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:

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f. For all other medical services, supplies, and care, 200 percent of the allowable amount under:

(I) The participating physicians fee schedule of Medicare Part B, except as provided in sub-sub-subparagraphs (II) and (III). (II) Medicare Part B, in the case of services, supplies, and care provided by ambulatory surgical centers and clinical laboratories. (III) The Durable Medical Equipment Prosthetics/Orthotics and Supplies fee schedule of Medicare Part B, in the case of durable medical equipment.

However, if such services, supplies, or care is not reimbursable under Medicare Part B, as provided in this sub-subparagraph, then we will limit reimbursement to 80 percent of the maximum reimbursable allowance under workers’ compensation, as determined under s. 440.13, Florida Statutes, and rules adopted thereunder which are in effect at the time such services, supplies, or care is provided. Services, supplies, or care that is not reimbursable under Medicare or workers’ compensation (Florida Rules of Procedure for Worker’s Compensation Adjudication) will not be reimbursed by us.

7. State Farm paid all of the Plaintiff’s charges for medical services by limiting reimbursement to 80% of the schedule of maximum charges. Plaintiff contends State Farm’s 9810A policy does not allow State Farm to limit reimbursement to the allowable amount under the applicable fee schedules.

II. ISSUES OF LAW

From its inception, the Florida No-Fault (“PIP”) Statute has required that automobile insurers reimburse medical providers who treat their insureds after a car accident a “reasonable” amount for the treatment incurred. In 2008, concerned about the high cost of medical bills and the impact on premiums, the Florida Legislature added a “schedule of maximum charges” in Subsection (5) of the PIP Statute. Fla. Stat. § 627.736(5)(a)2. (2008). The question of when and how Florida auto insurers could use that schedule created much controversy and substantial litigation. See, e.g., Geico Ins. Co. v. Virtual Imaging Servs. Inc., 141 So. 3d 147 (Fla. 2013) [38 Fla. L. Weekly S517a]; Kingsway Amigo Ins. Co. v. Ocean Health, Inc., 63 So. 3d 63, 68 (Fla. 4th DCA 2011) [36 Fla. L. Weekly D1062a]: DCI MRI, Inc. v. GEICO Indem. Co., 79 So. 3d 840, 842 (Fla. 4th DCA 2012) [37 Fla. L. Weekly D170e]. Ultimately, in Virtual Imaging, 141 So. 3d 147, the Florida Supreme Court clarified that an insurer could make a formal election of the schedule of maximum charges only by providing notice of its intent to do so in the applicable insurance policy.

In 2012, the Florida Legislature again amended the PIP Statute. Fla. Stat. § 627.736 (2012) (the “2012 PIP Statute”). The PIP Statute continues to state — as did the prior versions of the statute — that automobile insurance policies issued in Florida must provide PIP coverage for “reasonable” medical expenses:

627.736 Required personal injury protection benefits; exclusions; priority; claims. —

(1) Required Benefits: — An insurance policy complying with the security requirements of s. 627.733 must provide personal injury protection to the named insured, . . . as follows:

(a) Medical benefits. — Eighty percent of all reasonable expenses for medically necessary medical, surgical, X-ray, dental, and rehabilitative 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) (emphasis added).

Fla. Stat. §627.736(5)(a) (2012), further specifies that medical providers like Plaintiff may only charge the insured and insurer a “reasonable amount”:

(5) CHARGES FOR TREATMENT OF INJURED PERSONS. —

(a) A physician, hospital, clinic, or other person or institution lawfully rendering treatment to an injured person for a bodily injury covered personal injury protection insurance may charge the insurer and injured party only a reasonable amount pursuant to this section for the services and supplies rendered. . . . However, such a charge may not exceed the amount the person or institution customarily charges for like services or supplies. In determining whether a charge for a particular service, treatment, or otherwise is reasonable, consideration may be given to evidence of usual and customary charges and payments accepted by the provider involved in the dispute, reimbursement levels in the community and various federal and state medical fee schedules applicable to motor vehicle and other insurance coverages, and other information relevant to the reasonableness of the reimbursement for the service, treatment, or supply.

1. The insurer may limit reimbursement to 80 percent of the following schedule of maximum charges:

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f. For all other medical services, supplies, and care, 200 percent of the allowable amount under:

(I) The participating physicians fee schedule of Medicare Part B, except as provided in sub-sub-subparagraphs (II) and (III).

(II) Medicare Part B, in the case of services, supplies, and care provided by ambulatory surgical centers and clinical laboratories.

(III) The Durable Medical Equipment Prosthetics/Orthotics and Supplies fee schedule of Medicare Part B, in the case of durable medical equipment.

However, if such services supplies, or care is not reimbursable under Medicare Part B, as provided in this sub-subparagraph, the insurer may limit reimbursement to 80 percent of the maximum reimbursable allowance under workers’ compensation, as determined under s. 440.13 and rules adopted thereunder which are in effect at the time such services, supplies, or care is provided. Services, supplies, or care that is not reimbursable under Medicare or workers’ compensation is not required to be reimbursed by the insurer.

Unlike the prior statute, however, sub-section (5) was amended to include a new notice provision that explicitly addresses when and how an insurer may limit payment pursuant to the schedule of maximum charges:

Effective July 1, 2012, an insurer may limit payment as authorized by this paragraph only if the insurance policy includes a notice at the time of issuance or renewal that the insurer may limit payment pursuant to the schedule of charges specified in this paragraph. A policy form approved by the office satisfies this requirement. . . . Fla. Stat. § 627.736(5)(a)5. (emphasis added).

This provision was designed in part to address the notification issues raised by the Florida Supreme Court in Virtual Imaging. The Notice Provision, Section (5)(a)5., of the PIP Statute, went beyond Virtual Imaging in one significant respect: The Legislature explicitly directed that the payment limitation could be used by the insurer only if the policy included a notice at the time of renewal advising the insured that the carrier would limit reimbursement. In this regard, the Florida Legislature also stated that “a policy approved by the [Office of Insurance Regulation (“OIR”)] satisfies this requirement” — i.e., the notice requirement specified in the immediately prior sentences — as quoted above. Thus, the Legislature intended to foreclose the pervasive litigation that had plagued Florida courts under the 2008 PIP Statute as to whether an insurer’s policy language had properly limited reimbursement based on the schedule of maximum charges in their policies.

Consistent with this provision, it is undisputed State Farm placed an “IMPORTANT NOTICE” on the front page of the Declaration Page when the policy was renewed and that State Farm’s Policy Form 9810A was filed with and approved by the OIR. Under the explicit language of Fla. Stat. § 627.736(5)(a)5., this “IMPORTANT NOTICE” advising the insured of the limitations of payment to the schedule of maximum charges and the use of this approved policy form “satisfies” the requirement of the statute and permits State Farm to limit reimbursement based on the schedule of maximum charges as a matter of law.

III. The State Farm Policy

First, this Court notes that the PIP statute and the schedule of maximum charges found therein is solely a creature of statute and that the legislature can thus dictate how a carrier is to give notice if it chooses to adopt the schedule of maximum charges as a limitation on its obligation to pay a reasonable fee for medical services.

Secondly, the Florida Supreme Court in Virtual Imaging explicitly stated that its holding was not to apply to policies issued post 2012 because the new Notice Provision would govern those circumstances. In Virtual Imaging, 141 So. 3d 147, the Florida Supreme Court reviewed the propriety of an insurer’s fee schedule election language under the prior version of the PIP Statute, Fla. Stat. § 627.736 (2007-2012). But the Court clarified that its decision does not apply to policies after the enactment of the 2012 PIP Statute — which are governed by the Notice Provision set forth in § 627.736(5)(a)5:

Because the GEICO policy has since been amended to include an election of the Medicare fee schedules as the method of calculating reimbursements, and the Legislature has now specifically incorporated a notice requirement into the PIP statute, effective July 1, 2012, see § 627.736(5)(a)5., Fla. Stat. (2012), our holding applies only to policies that were in effect from the effective date of the 2008 amendments to the PIP statute that first provided for the Medicare fee schedule methodology, which was January 1, 2008, through the effective date of the 2012 amendment, which was July 1, 2012. Id. at 150 (emphasis added; citations omitted).

As the Florida Supreme Court recognized, the only reason it had to create rules as to how and when a carrier could adopt the schedule of maximum charges was because the 2008 version of the PIP statute was silent in that respect. Now that the Florida Legislature has adopted the Notice Provision, the Court is bound to follow that new statute.

The State Farm policy provides as follows:

Insuring Agreement

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 care from a provider described in A. below within 14 days after the motor vehicle accident that caused bodily injury to that insured

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Limits

1. We will not pay any charge that the No-Fault Act does not require us to pay, or the amount of any charge that exceeds the amount the No Fault Act allows to be charged.

2. The most we will pay for each injured insured as a result of any one accident is $10,000 for all combined Medical Expenses, Income Loss, and Replacement Services Loss, described in the Insuring Agreement of this policy’s No-Fault Coverage.

***

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:

a. For emergency transport and treatment by providers licensed under chapter 401, Florida Statutes, 200 percent of Medicare.

b. For emergency services and care provided by a hospital licensed under chapter 395, Florida Statutes, 75 percent of the hospital’s usual and customary charges.

c. For emergency services and care as defined by s. 395.002, Florida Statutes, provided in a facility licensed under chapter 395, Florida Statutes, rendered by a physician or dentist, and related hospital inpatient services rendered by a physician or dentist, the usual and customary charges in the community.

d. For hospital inpatient services, other than emergency services and care, 200 percent of the Medicare Part A prospective payment applicable to the specific hospital providing the inpatient services.

e. For hospital outpatient services, other than emergency services and care, 200 percent of the Medicare Part A Ambulatory Payment Classification for the specific hospital providing the outpatient services.

f. For all other medical services, supplies, and care, 200 percent of the allowable amount under:

(I) The participating physicians fee schedule of Medicare Part B, except as provided in sub-sub-subparagraphs (II) and (III).

(II) Medicare Part B, in the case of services, supplies, and care provided by ambulatory surgical centers and clinical laboratories.

(III) The Durable Medical Equipment Prosthetics/Orthotics and Supplies fee schedule of Medicare Part B, in the case of durable medical equipment.

However, if such services, supplies, or care is not reimbursable under Medicare Part B, as provided in this sub-subparagraph, then we will limit reimbursement to 80 percent of the maximum reimbursable allowance under workers’ compensation, as determined under s. 440.13, Florida Statutes, and rules adopted thereunder which are in effect at the time such services, supplies, or care is provided. Services, supplies, or care that is not reimbursable under Medicare or workers’ compensation (Florida Rules of Procedure for Worker’s Compensation Adjudication) will not be reimbursed by us.

The State Farm policy form 9810A is therefore entirely consistent with and tracks the language of Florida Statute §627.736. First, the policy preserves and adheres to the PIP statutes basic mandate that a carrier pay 80% of a reasonable charge. Similarly, the State Farm policy contains a definition of a “reasonable charge” that is consistent with the nearly identical definition found in Fla. Stat. 627.736(5). Finally, the policy utilizes clear language in adopting the PIP statute’s permissive fee schedule limitation. The statement in the Declarations Page and in the policy that “in no event” will State Farm “pay more than the schedule of maximum charges” is a clear and unambiguous notice of an election to limit reimbursement of allowed charges under the applicable fee schedules.

IV. CONCLUSION

State Farm’s Motion for Partial Summary Judgment is GRANTED.