25 Fla. L. Weekly Supp. 579b
Online Reference: FLWSUPP 2507ALLFInsurance — Personal injury protection — Coverage — Medical expenses — Reasonableness of charges — Insurer did not waive opportunity to litigate reasonableness of provider’s charge for MRI when its adjuster used computerized auto-pay process
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellant, v. ALL FAMILY CLINIC OF DAYTONA BEACH, INC., etc., Appellee. Circuit Court, 7th Judicial Circuit in and for Volusia County. Case No. 2016-10002-APCC. September 14, 2017. Appeal from the County Court Volusia County. Shirley Green, Judge. Counsel: Nancy W. Gregoire, Fort Lauderdale; Brooke L. Boltz, Orlando; and Mark D. Tinker, St. Petersburg, for Appellant. Kimberly P. Simoes, DeLand, for Appellee.
[Lower court order published at 23 Fla. L. Weekly Supp. 1050a.]
OPINION OF THE COURT
(ROWE, Judge.) This matter came before this Court in its appellate capacity for review of a Final Judgment entered on December 28, 2015, by the County Court. The Court has considered the briefs filed, reviewed the record on appeal, and heard oral argument of counsel.
The record on appeal reflects that on November 12, 2012, Appellee All Family Clinic provided medical treatment to Appellant State Farm’s insured by performing a cervical spine MRI. All Family Clinic timely billed State Farm $1,835.24 for this service. On December 4, 2012, State Farm paid $1,006.02 for the MRI, leaving a balance of $892.22. The record indicates that State Farm’s stated explanation was that its subject payment was based on a reasonable amount under the terms and conditions of the insurance policy as well as Section 627.736(5)(a)1, Florida Statutes, “which permits, when determining a reasonable charge for a service, an insurer to consider usual and customary charges and payments accepted by the provider, reimbursement levels in the community and various federal and state fee schedules applicable to automobile and other insurance coverages, and other information relevant to the reasonableness of the reimbursement for the service.” State Farm further explained that its reduced payment for the MRI service was based upon 200% of the 2007 Participating Level of Medicare physician fee schedule for the region in which the services were rendered. On June 3, 2015, two and a half years later, All Family Clinic filed the underlying lawsuit against State Farm seeking recovery of the balance of its bill.
It was undisputed that State Farm processed and paid the subject bill by utilizing its “auto process tool,” or “auto-pay system,” which automatically pays medical bills at the predetermined 200% of Medicare Part B rate set forth in Section 627.736(5)(a)2. All Family Clinic filed a motion for summary disposition in the trial court claiming that State Farm’s conduct in placing the MRI bill on the auto-pay system was conclusive and indisputable evidence of State Farm’s clear intention to relinquish its 30-day statutory right to investigate whether the medical service was reasonable, related or necessary, and that this relinquishment of rights resulted in a waiver of State Farm’s statutory right to challenge reasonableness, medical necessity and relatedness of the MRI services. In ruling in favor of All Family Clinic, the trial court expressly agreed with the argument that “State Farm had waived its right to investigate the bill and to challenge whether the charge was a reasonable charge and was related and medically necessary.” The trial court ruled that State Farm’s conduct in placing All Family Clinic’s bill on the auto-pay system evidenced “a knowing and voluntary waiver of its right to investigate the MRI bill and, therefore, State Farm cannot challenge the bill as being unreasonable, unnecessary or unrelated at this juncture.” The trial court entered Final Judgment against State Farm for the $829.22 balance of the MRI bill plus prejudgment interest, and State Farm filed the instant appeal.
On appeal State Farm argues that it was both factually and legally incorrect for the trial court to have held that State Farm did not “adjust” the subject MRI bill within the initial 30-day statutory investigation period simply because the adjuster used the computerized auto-pay process, and that State Farm, therefore, waived its ability to defend itself against All Family Clinic’s lawsuit. Citing to the Black’s Law Dictionary definition of the term “adjust” as being “[t]o determine the amount that an insurer will pay an insured to cover a loss,” State Farm argues that its adjuster elected to use the auto-pay process to make that determination of what amount State Farm would pay, which was 200% of what Medicare would pay for the same service, and that the bill was then adjusted and paid in accordance with that reasonable rate determination. The mere fact that State Farm paid only $1,006.02 of the $1,835.24 bill would suggest that the bill was “adjusted” by any definition of the word.
In any event, State Farm correctly points out that its use of a computer database system as its internal method of gauging reasonableness of a provider’s bill is not something the court should have considered. In State Farm Mutual Automobile Insurance Co. v. Sestile, 821 So. 2d 1244, 1246 (Fla. 2d DCA 2002) [27 Fla. L. Weekly D1757a], the appellate court ruled that “it is not a court’s function to determine, across the board, that [State Farm’s] internal method of gauging reasonableness does or does not comply with the statute. The fact-finder must construe the word ‘reasonable’ and determine whether the insurance company’s evaluation of medical bills fits the definition on a case-by-case basis. . . . In some cases, a computer database may accurately assess the reasonableness of a medical provider’s bill; in other cases, it may be far from the mark. But this is the insured’s burden to prove.”
More importantly though, this Court agrees with State Farm’s ultimate argument that “while State Farm disagrees that it has never ‘adjusted’ this claim, no matter what it is not precluded from contesting reasonableness or, more to the point, defending this lawsuit where All Family is claiming that some other amount is reasonable.” Section 627.736(4)(b)(6) allows an insurer to dispute the reasonableness of charges at any time, including after payment of the claim or after the 30-day period for payment. Coral Gables Chiropractic PLLC v. United Automobile Insurance Company, 199 So. 3d 292, 295 (Fla. 3d DCA 2016) [41 Fla. L. Weekly D687a]. Under that statute, even after a provider’s claim is reduced, an insurance company may still defend against a lawsuit by the provider claiming additional amounts on the grounds that the service was not medically necessary or that the amount was not reasonable. Northwoods Sports Medicine and Physical Rehabilitation, Inc. v. State Farm Mutual Automobile Insurance Company, 137 So. 3d 1049, 1057 (Fla. 4th DCA 2014) [39 Fla. L. Weekly D491a], citing United Automobile Insurance Company v. Rodriguez, 808 So. 2d 82, 87 (Fla. 2001) [26 Fla. L. Weekly S747a] (holding that insurer’s failure to pay PIP benefits within the 30-day statutory period does not forever bar it from contesting the claim). See also January v. State Farm Mutual Insurance Co., 838 So. 2d 604, 607 (Fla. 5th DCA 2003) [28 Fla. L. Weekly D484a] (holding that an insurer does not become automatically obligated to pay a claim when the 30-day period has passed, and the insurer may contest the claim after the 30 days), also citing Rodriguez.
The Fifth District Court of Appeal recently ruled on the issue of “waiver” in Progressive Select Insurance Company v. Emergency Physicians of Central Florida, LLP, 202 So. 3d 437 (Fla. 5th DCA 2016) [41 Fla. L. Weekly D2145a]. In that case Progressive argued that it did not waive its opportunity to litigate the reasonableness of the provider’s bills when it paid the bills based on the fee schedule. The appellate court agreed, ruling that Progressive’s payment of personal injury protection benefits according to the Medicare fee schedule without specifically electing in its policies to use the fee schedule did not result in a waiver of an opportunity to litigate the reasonableness of the medical provider’s bills. Id. at 438. The appellate court further held that, “in ruling otherwise, the lower court’s decision constitutes a violation of clearly established principles of law resulting in a miscarriage of justice.” Id. See also State Farm Mutual Automobile Insurance Company v. World Health Wellness, Inc., 2017 WL 1322938 (Fla. 9th Cir. Ct. April 3, 2017) (holding that based on Progressive Select State Farm was not later precluded from litigating, and should have been allowed to litigate, the reasonableness of the provider’s PIP charges, even though it had relied on a fee schedule).
Based on the statutory and case law authority discussed herein, this Court rejects All Family Clinic’s argument that State Farm waived its right to litigate the reasonableness of the MRI bill. The lower court erred in ruling that State Farm had waived its right to challenge whether All Family Clinic’s MRI bill was a reasonable charge and was related and medically necessary. The lower court should not have granted the motion for summary disposition, as there clearly was a triable issue for a jury to consider — that of reasonableness. All Family Clinic maintains that its bill is reasonable, and State Farm disputes that the amount claimed is reasonable. This is an issue that must be tried, and State Farm was unlawfully deprived of its right to defend itself against All Family Clinic’s lawsuit.
For the foregoing reasons, the lower court’s Final Judgment is hereby
REVERSED, and this matter is REMANDED to the trial court for further proceedings consistent with this opinion.
