25 Fla. L. Weekly Supp. 287a
Online Reference: FLWSUPP 2503STRIInsurance — Personal injury protection — Coverage — Medical expenses — Statutory fee schedules — Clear and unambiguous election by insurer — Where definition of “reasonable charge” in PIP policy is hybrid of factors found in reasonable amount method of reimbursement and provisions of fee schedule method of reimbursement, policy is ambiguous as to reimbursement method and did not specifically elect fee schedule method of reimbursement — Approval of PIP policy by Office of Insurance Regulation is not dispositive as to whether policy makes proper election for payment under permissive statutory fee schedule
MICHAEL L. DOUGLAS, D.C., P.A., d/b/a DOUGLAS RAPID REHAB, P.A., As assignee of Carol Strickland, Plaintiff, vs. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant. County Court, 11th Judicial Circuit in and for Miami-Dade County, Civil Division. Case No. I6-015349-SP-23. May 15, 2017. Alexander S. Bokor, Judge. Counsel: Leandro Carvalho, Madalon Law, Ft. Lauderdale, for Plaintiff. Michael B. Chackman, Bernstein, Chackman, Liss, Hollywood, for Defendant.
ORDER GRANTING IN PART PLAINTIFF’S MOTIONFOR FINAL SUMMARY JUDGMENT OR SUMMARYDISPOSITION REGARDING LIMITINGREIMBURSEMENT OF PROVIDER CHARGES INACCORDANCE WITH FEE SCHEDULE and ORDERDENYING DEFENDANT’S AMENDED MOTION FORFINAL SUMMARY JUDGMENT
THIS CAUSE came before the Court on May 3, 2017, for hearing on the Plaintiff’s Motion for Final Summary Judgment or Summary Disposition Regarding Limiting Reimbursement of Provider Charges in Accordance with Fee Schedule, and the Defendant’s Amended Motion for Final Summary Judgment, and the Court having reviewed the Motions, the Court file, and the relevant legal authorities; having heard arguments; having made a thorough review of the matters filed of record; and having been sufficiently advised on the premises, the Court finds as follows:LEGAL ISSUE
The relatively narrow issue before the Court is whether State Farm’s language in its policy of insurance form 9810A complies with the relevant requirements of Florida law and permits it to limit reimbursement payment of claims for medical services pursuant to the schedule of maximum charges referenced in Fla. Stat. §627.736(5)(a)1, (2014)
PROCEDURAL HISTORY AND FACTUAL BACKGROUND
Pursuant to an assignment of benefits, the Plaintiff, Michael Douglas, D.C., P.A., d/b/a Douglas Rapid Rehab, P.A., submitted medical bills for services rendered to Defendant’s named insured, Carol Strickland, in connection with injuries claimed sustained in an automobile accident which occurred on or about October 19, 2014. The Defendant, State Farm Mutual Automobile Insurance Company, issued partial payment for eight out of nine CPT codes that the Plaintiff billed for their four dates of service pursuant to 80% of the schedule of maximum charges set forth in Fla. Stat. §627.736(5)(a)1. Specifically, the Defendant tendered payment pursuant to Explanation Codes 305 and 433, which it indicates payment is “based upon 200% of the Participating Level of Medicare Part B fee schedule for the local in which the services were rendered” and “based upon the payment methodology established pursuant to the Workers’ Compensation Fee Schedule (s. 440.13),” respectively. Additionally, the Defendant chose to reimburse one of the nine CPT codes in which Plaintiff billed throughout the fours dates of services, CPT 97110, at 80% of the billed amount (i.e., outside of the fee schedule methodology) while offering no Explanation Code for their reimbursement of same.
The Plaintiff filed suit and contends that the Defendant failed to properly elect the permissive fee schedule methodology of Fla. Stat. §627.736(5)(a)1. in its 9810A policy and, resultantly, was prohibited from using the “fee schedule” limitations to reimburse the Plaintiff’s bills.
ANALYSIS
The “Florida Motor Vehicle No-Fault Law,” colloquially referred to many as the “PIP statute,” requires insurers to pay a “reasonable” amount of an insured’s medical treatment for lawfully rendered services. In 2008, after a brief sunset of the PIP statute, it was reinstated by Legislature to include a second payment methodology which is a permissive method of calculating PIP benefits (commonly referred to as the “fee schedule methodology”). This version of the PIP statute still required insurers to pay 80% of reasonable charges as before, but if elected in their policies, now permitted insurers to utilize the fee schedule methodology.
The Florida Supreme Court explained in Geico General Ins. Co., v. Virtual Imaging Services, Inc., etc., 38 Fla. L. Weekly S517a (2013) how there are two different payment methodologies for calculating reimbursements to satisfy the PIP statute’s reasonable medical expenses coverage mandate. The first “default” payment methodology is a “fact-dependent inquiry determined by consideration of various factors[,]” and the second “permissive” payment methodology relies merely on the application of the “schedule of maximum charges” to the charges submitted for a particular service or supply. However, in order to avail itself of the option in §627.736(5)(a)1., the insurer must provide “clear and unambiguous” notice its policy of insurance of its election to use the fee schedules. Id.
The holding in Virtual Imaging that the PIP Statute offers two different methodologies for calculating reimbursement for medical benefits and that an insurer must properly notice their election of the “permissive” payment methodology in their policies was reaffirmed by the Florida Supreme Court again in Allstate Ins. Co. v. Orthopedic Specialists, etc., 42 Fla. L. Weekly S38a (Fla. 2017). In this ruling, the Florida Supreme Court reviewed Allstate’s policy that read Allstate will pay medical expenses at 80% of reasonable expenses, and in an endorsement to the policy, under the “Limits of Liability” section further clarifies that any payments will be subject to “any and all” limitations in 627.736, “including, but not limited to, all fee schedules.” Id. This policy language, when read and construed as a whole, satisfied the Florida Supreme Court that Allstate’s policy language limiting reimbursement to the fee schedule methodology provided the proper notice requirement. Id.
Enter Defendant’s form 9810A policy, which is applicable to this immediate action before the court. First, on page 14 of the policy, under “Insuring Agreement,” State Farm notes that “we will pay in accordance with the No-Fault Act properly billed and documented reasonable charges for bodily injury to an insured” (emphasis in original). The phrase “reasonable charges” is defined on page 5 of the policy as follows:
Reasonable charge, which includes reasonable expense, means an amount determined by us to be reasonable in accordance with the No-Fault Act, considering one or more of the following:
1. Usual and customary charges;
2. Payments accepted by the provider;
3. Reimbursement levels in the community;
4. Various federal and state medical fee schedules applicable to motor vehicle and other insurance coverages;
5. The schedule of maximum charges in the No-Fault Act,
6. Other information relevant to the reasonableness of the charge for the service, treatment, or supply; or
7. Medicare coding policies and payment methodologies of the federal centers for Medicare and Medicaid Services, including applicable modifiers, if the coding policy or payment methodology does not constitute a utilization limit.
(Emphasis in original)
State Farm’s definition of “reasonable charges” intermingles the characteristics of both a “reasonableness” methodology and a “200% of Medicare” methodology, or, at a minimum, does not clearly elect between the two. This is not the end of the inquiry, however. On pages 15-16 of State Farm’s form 9810A policy, State Farm adds a section under “Limits” that provides as pertains to the medical bills in the instant case:
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.
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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-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 Statues, 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 Workers’ Compensation Adjudication) will not be reimbursed by us.
(Emphasis added throughout by use of bolded language).
This section suggests to the Court that State Farm is attempting to use both methodologies; by opting to include the fact-dependent factors in its definition of “Reasonable Charge” while also attempting to reimburse pursuant to the fee schedule methodology, the Defendant impermissibly commingles §627.736(1)(a) and §627.736(5)(a)1. The Court finds that the Defendant’s reliance on Orthopedic Specialists which found Allstate’s policy language that PIP reimbursement “shall be subject to the limitations in F.S. 627.736, including all fee schedules” as providing sufficient notice, is inapplicable to the Defendant’s form 9810A policy due to its inclusion of the default methodology factors in its definition of “Reasonable Charge” resulting in the intermixing of payment methodologies. The linchpin of the Orthopedic Specialists decision was that Allstate’s policy did not give it an option to pay under either of the two methodologies. Conversely, Defendant’s form 9810A policy alternates between two payment methodologies or at a minimum fails to provide a clear election between the two. As such, because State Farm has not clearly and unambiguously elected a single payment methodology, it is not lawfully authorized to rely on the permissive fee schedule methodology.
Defendant next argues that the 2012 amendments to the PIP statute as found in Fla. Stat. §627.736(5)(a)5. (2012), contain a new “notice provision.” Defendant contents that the fee schedule reimbursement methodology notice requirement is automatically fulfilled when the Office of Insurance Regulation (“OIR”) approves an insurer’s policy form. Defendant continues that on February 6, 2012, State Farm submitted its form 9810A policy to the OIR, and that it resultantly received the “approval” to use the fee schedule reimbursement methodology from the OIR on October 5, 2012, when the OIR simply stamped “APPROVED” on top of the form 9810A policy.
Nothing in the subsequent 2012 amendments supersede Virtual Imaging and Orthopedic Specialists or render their holdings a nullity as applied to this case. An insurer must make an unambiguous election to use the fee schedule. Not only does Virtual Imaging continue to be good law and applicable in this matter, but Fla. Stat. §627.736(5)(a)5. (2012) codified the notice requirement, which also states in relevant part: “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.”
Merely stating that a policy is “APPROVED” as is the situation in the instant case with State Farm’s 9810A policy, does not result in a finding that the OIR is approving a limitation on payment to the fee schedules. The policy language includes language pertaining to both the “reasonableness” fact-based methodology and the separate “200% of Medicare” and/or “100% or the Fla. Worker’s Comp fee schedule” methodology. While the law may require deferral to a competent agency interpretation of a statute or regulation within that agency’s expertise, such an agency finding does not control over the plain language of the statutes at issue or the controlling case law. An agency’s interpretation of such statutes and rules does not have to be the only reasonable interpretation but it must be a permissible one. See, e.g., Suddath Van Lines, Inc. v. Dep’t of Envtl. Prot., 668 So.2d 209, 212 (Fla. 1st DCA 1996) [21 Fla. L. Weekly D225a]. Here, if the court accepted Defendant’s arguments, it would mean this court would have to defer to the OIG’s incorrect and impermissible interpretation of the statutory language merely because OIG stamped a document “approved” after an expedited review. If that were the case, this court would reject such an interpretation as clearly erroneous under the plain language of the statute. As explained below, however, OIG’s review was not intended to be an agency determination.
Additionally, and importantly, this court need not make a determination of deferral or deference to an agency interpretation, because the agency at issue has made no such finding. OIR’s Informational Memorandum OIR-12-02M disclaimed responsibility for conducting any determination of whether a PIP insurer has legal authority to adopt a particular payment methodology in its PIP insurance policy. The OIR memorandum specifically states that the OIR “will commit to review filings submitted for this purpose on an expedited basis provided that the insurer has only submitted one endorsement in the file and that one endorsement only contains language to implement the notice requirement” and explains that “[a]ll form filings are subject to standard form review process of Section 627.410, Florida Statutes.” (dealing with filing and approval of forms). In addition, the OIR memorandum contains disclaimers which state: “Depending upon the existing policy language, the sample language may be suitable to address the notice requirement of House Bill 119 or the insurer may already have approved language that satisfies the notice requirement. Ultimately, it is the insurer’s responsibility to develop its own language after researching the law, reviewing its contract forms, and conferring with its legal staff” (emphasis added). This disclaimer regarding the “insurer’s responsibility” is repeated twice in the memorandum. The use of “may be suitable” and disclaimers regarding the insurer’s responsibility make clear that any approval is merely to expedite the insurer’s ability to issue a policy or an addendum but is not intended to be a safe harbor.CONCLUSION
The Florida Supreme Court’s ruling in Geico General Ins. Co., v. Virtual Imaging Services, Inc., etc., 38 Fla. L. Weekly S517a (2013), and as affirmed in Allstate Ins. Co. v. Orthopedic Specialists, etc., 42 Fla. L. Weekly S38a (Fla. 2017), is controlling. In Virtual Imaging, the Supreme Court concluded “that the [PIP] insurer was required to give notice to its insured by electing the permissive Medicare fee schedules in its policy before taking advantage of the Medicare fee schedule methodology to limit reimbursements” (emphasis added). This Court, bound by Virtual Imaging and Orthopedic Specialists, finds that the Defendant failed to give clear and unambiguous notice to its insureds via the form 9810A policy of its election to reimburse PIP benefits via the “permissive” fee schedule methodology pursuant to Fla. Stat. §627.736(5)(a)1 (2012-present). Additionally, this Court rejects the Defendant’s argument that the Office of Insurance Regulation’s “approval” of its policy entitles it to claim the safe harbor provided in Fla. Stat. §627.736(5)(a)5.
ORDERED and ADJUDGED that the Plaintiff’s Motion for Final Summary Judgment or Summary Disposition Regarding Limiting Reimbursement of Provider Charges in Accordance with Fee Schedule is GRANTED in part, and Defendant’s Amended Motion for Final Summary Judgment is DENIED. The Court notes that this is not a “final summary judgment” because, pursuant to Defendant’s Affirmative Defenses, there continue to be alleged issues in this case concerning the relatedness and medical necessity of the Plaintiff’s treatment, and whether Plaintiff has complied with Fla. Stat. §627.736(10) in submitting a legally sufficient pre-suit demand letter.
