25 Fla. L. Weekly Supp. 774a
Online Reference: FLWSUPP 2509SIASInsurance — Personal injury protection — Coverage — Medical expenses — Statutory fee schedules — Clear and unambiguous election by insurer — Insurer gave adequate notice of its election of fee schedules to limit its payments where policy included under “Limits” heading the provision that it would in no event “pay more than 80% of the following No-Fault Act ‘schedule of maximum charges’ ” and immediately thereafter recited statutory language of the fee schedules — Further, statute provides that policy form approved by Office of Insurance Regulation satisfies notice requirement — Fact that policy definition of “reasonable charge” included consideration of not just fee schedules, but also factors such as usual and customary charges, payments accepted by provider, and reimbursement levels in community does not change result
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellant, v. FLORIDA EMERGENCY PHYSICIANS KANG & ASSOCIATES, M.D., P.A., a/a/o Jonathan Sias, Appellee. Circuit Court, 9th Judicial Circuit (Appellate) in and for Orange County. Case No. 2016-CV-000a024-A-O. December 18, 2017. Appeal from the County Court for Orange County, Steve Jewett, County Judge. Counsel: Tracy T. Segal, Marcy Levine Aldrich, and Nancy A. Copperthwaite, Akerman, LLP, Miami, for Appellant. David M. Caldevilla and Mark A. Cederberg, Bradford Cederberg, P.A., Orlando, for Appellee.NOT FINAL: Appeal DISMISSED (February 24, 2020).28 Fla. L. Weekly Supp. 31a]
[Lower court order published at 23 Fla. L. Weekly Supp. 1052a.]
(Before S. KEST, UNDERWOOD and BLECHMAN, JJ.)
(PER CURIAM.) In this PIP case, Defendant State Farm Mutual Auto Insurance Co. (State Farm) timely appeals the trial court’s Order Granting Plaintiff’s Motion for Final Summary Judgment and Denying Defendant’s Amended Motion for Final Summary Judgment (Order), rendered on February 11, 2016, which was entered in favor of Plaintiff Florida Emergency Physicians Kang & Associates, M.D., P A. (FEP). We reverse.1Factual and Procedural Background
On December 24, 2013, the insured, Jonathon Sias, was involved in a motor vehicle accident. At the time of the accident, Sias was covered under an automobile insurance policy issued by State Farm. The policy provided Personal Injury Protection (PIP) coverage of $10,000.00. Sias received emergency services and care from FEP. It is undisputed that FEP’s emergency services and care was reasonable, necessary and related to the accident.
FEP charged $370.00 for the emergency services and care it had provided to Sias, and submitted the bill to State Farm for payment under Sias’s PIP coverage. State Farm processed the bill by limiting reimbursement to 85% of 200% of the Medicare Part B fee schedule and then paying 80% of that amount, which resulted in a net payment of $90.29. The Explanation of Review (EOR) that State Farm sent to FEP gave the following explanation for the reduction: “The payment for this Nurse Practitioner/Physician Assistant service has been evaluated using Medicare Claims Processing Manual guidelines and the applicable Medicare Part B fee schedule.”
FEP filed suit against State Farm, and the parties ultimately filed competing motions for summary judgment. The trial court in its Order determined that State Farm improperly utilized the “schedule of maximum charges” to limit reimbursement to FEP because its insurance policy did not make a clear and unambiguous election to do so in accordance with Florida law. Rather, State Farm used an unlawful “hybrid method” for calculating PIP benefits, failing to “elect one statutory payment calculation method to the exclusion of the other.” The Order went on to grant FEP’s Motion for Summary Judgment, deny State Farm’s Amended Motion for Summary Judgment, and enter Final Judgment in FEP’s favor for $205.71 plus 4.75% prejudgment interest of $20.19 for a total sum of $225.90.Discussion
State Farm argues that its policy gave adequate notice of its election of the PIP fee schedules to limit reimbursements. Under the heading “Limits,” State Farm’s policy includes the following provision: “[I]n no event will we pay more than 80% of the following No-Fault Act ‘schedule of maximum charges. . . .’” (Emphasis in original.) The Court agrees with State Farm that under Florida law, this provision gave adequate notice of its election.
The PIP statute has always required that automobile insurers reimburse medical providers at 80% of a “reasonable” amount for treatment since its inception. Effective January 1, 2008, the Florida Legislature amended the PIP statute to add a provision allowing insurers to “limit reimbursement” to 80% of the “following schedule of maximum charges.” See ch. 2007-324, § 20, Laws of Fla.; § 627.736(5)(a)2., Fla. Stat. (2008). However, some controversy and litigation then ensued over when and how insurers could use the PIP fee schedules.
In Geico General Insurance Co. v. Virtual Imaging Services, Inc., 141 So. 3d 147, 160 (Fla. 2013) [38 Fla. L. Weekly S517a], the Florida Supreme Court held that “under the 2008 amendments to the PIP statute, 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.” Virtual Imaging explained that notice to the insured through an election in the policy is required because the PIP statute “requires the insurer to pay for ‘reasonable expenses’ for medical services, but “merely permits the insurer to use the Medicare fee schedules as a basis for limiting reimbursements.” Id. at 150 (italics in original).
Effective July 1, 2012, the Florida Legislature again amended the PIP statute to require that insurers notify their insureds at the time of policy issuance or renewal of the insurer’s election to limit reimbursement pursuant to the fee schedules in the PIP statute. See ch. 2012-197, § 10, Laws of Fla.; § 627.736(5)(a)5., Fla. Stat. Section 627.736(5)(a)5. provides:
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.
This statute applies to the instant case.2
In Allstate Insurance Co. v. Orthopedic Specialists, 212 So. 3d 973, 977 (Fla. 2017) [42 Fla. L. Weekly S38a], the Florida Supreme Court determined that under Virtual Imaging, the following language in an Allstate PIP policy provided “legally sufficient notice of Allstate’s election to use the permissive Medicare fee schedules: ‘[a]ny amounts payable’ for medical expense reimbursements ‘shall be subject to any and all limitations, authorized by section 627.736, . . . including . . . all fee schedules.’ ” Id. Orthopedic Specialists rejected the argument that the notice was ambiguous under Virtual Imaging “because it fails to state that Allstate: (1) will not actually pay eighty percent of reasonable charges and (2) will instead calculate benefits only under the permissive Medicare fee schedules.” Id. Orthopedic Specialists explained that under Virtual Imaging, “A PIP policy cannot contain a statement that the insurer will not pay eighty percent of reasonable charges because no insurer can disclaim the PIP statute’s reasonable medical expenses coverage mandate.” Id. Orthopedic Specialists also explained that under Virtual Imaging, “[A] PIP policy cannot state that the insurer will calculate benefits solely under the Medicare fee schedules . . . because the Medicare fee schedules are not the only applicable mechanism for calculating reimbursements under the permissive payment methodology.” Id.3
The Court concludes that State Farm’s policy gives adequate notice of its election of the PIP fee schedules to limit reimbursements for purposes of section 627.736(5)(a)5., Florida Statutes (2013) and Orthopedic Specialists. As indicated, under the heading “Limits,”State Farm’s policy provides: “[I]n no event will we pay more than 80% of the following No-Fault Act ‘schedule of maximum charges. . . .’ ” (Emphasis in original.) The policy then lists the “schedule of maximum charges” immediately thereafter, tracking verbatim the statutory language of the fee schedules set forth in section 627.736(5)(a)1.a.-f., Florida Statutes (2013). Between explicitly stating that State Farm will not pay more than 80% of the PIP “schedule of maximum charges” and then reciting the statutory language of the fee schedules immediately thereafter, it is difficult to imagine how State Farm’s notice could have been clearer in expressing its intent to “limit payment pursuant to the schedule of charges” for purposes of section 627.736(5)(a)5., Florida Statutes (2013).
State Farm’s notice in its policy is sufficient under section 627.736(5)(a)5., Florida Statutes (2013) for an additional reason. That section also provides, “A policy form approved by the office satisfies this requirement.” In the instant case, it is undisputed that its policy, which includes the notice, was approved by the Office of Insurance Regulation. Thus, as a matter of law, State Farm’s notice satisfies section 627.736(5)(a)5., Florida Statutes (2013). Contrary to the trial court’s ruling, the Florida Legislature has granted the Office of Insurance Regulation with the authority to review and approve insurance policies. See § 627.410(1), Fla. Stat. (2013). See also Land O’Sun Mgmt. Corp. v. Commerce & Indus. Ins. Co., 961 So. 2d 1078, 1080 (Fla. 1st DCA 2007) [32 Fla. L. Weekly D1787a] (“The legislature . . . has determined that the Office of Insurance Regulation must review and approve insurance policies drafted by insurance companies doing business in Florida.”).
State Farm’s notice is also sufficient under Orthopedic Specialists, which the Florida Supreme Court decided after the trial court entered its Order in the instant case. As indicated, the Allstate notice in Orthopedic Specialists provided: ‘[a]ny amounts payable’ for medical expense reimbursements ‘shall be subject to any and all limitations, authorized by section 627.736, . . . including . . . all fee schedules.’ ” 212 So. 3d at 977. As also indicated, Orthopedic Specialists determined that this language provided “legally sufficient notice of Allstate’s election to use the permissive Medicare fee schedules,” and rejected arguments that the language was ambiguous in several respects. Id. The Court finds the State Farm notice in the instant case to be at least as clear as the Allstate notice in Orthopedic Specialists. The instant State Farm notice states that “in no event” will State Farm pay more than 80% of the No-Fault Act “ ‘schedule of maximum charges,’” while the Allstate notice provided that PIP reimbursements “shall be subject to any and all limitations” that included “all fee schedules.”
Additionally, the trial court’s conclusion that State Farm used an unlawful “hybrid method” for calculating PIP benefits, failing to “elect one statutory payment calculation method to the exclusion of the other,” does not pass muster under Florida law. In reaching that conclusion, the trial court in its Order reasoned that while State Farm purports to limit its reimbursements to the fee schedules, elsewhere in its policy it defines a “reasonable charge” as
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 Center for Medicare and Medicaid Services, including applicable modifiers, if the coding policy or payment methodology does not constitute a utilization limit.
(Emphasis in original.)
In the trial court’s view, State Farm’s policy definition of “reasonable charge,” as quoted above, is a hybrid of the various factors found in both the fact-dependent “reasonable amount” payment methodology of section 627.736(5)(a), Florida Statutes (2013) and the fee schedule or “schedule of maximum charges” payment methodology of section 627.736(5)(a)1.-5., Florida Statutes (2013). The court explained:
Specifically, paragraphs 1, 2, 3, 4 and 6 referenced above correspond to elements of the “reasonable amount” payment methodology listed in Section 627.736(5)(a) while paragraphs 5 and 7 referenced above correspond to elements of the “fee schedule” payment methodology found in Section 627.736(5)(a)1-5.
The court further reasoned:
State Farm is not allowed to utilize certain provisions from the “fact dependent” method and certain provisions from the “schedule of maximum charges” method, mix them together and create a hybrid method that leaves the insured and/or medical provider guessing as to how PIP benefits will be reimbursed; a decision that would rest solely at State Farm’s discretion and whim. Clearly this is the antithesis of the clear and unambiguous election of payment methodology mandated by the Florida Supreme Court. . . .
The trial court concluded that since State Farm’s policy “does not clearly and unambiguously elect to limit reimbursement of PIP benefits” pursuant to section 627.736(5)(a)1., Florida Statutes (2013), State Farm “may not avail itself of the permissive payment methodology.”
However, contrary to the reasoning in the trial court’s Order, it is clear that State Farm’s policy definition of “reasonable charge” is wholly proper and is indeed required under Florida law. As indicated, Orthopedic Specialists explained that under Virtual Imaging, “[A] PIP policy cannot state that the insurer will calculate benefits solely under the Medicare fee schedules . . . because the Medicare fee schedules are not the only applicable mechanism for calculating reimbursements under the permissive payment methodology.” 212 So. 3d at 977 (citing Virtual Imaging, 141 So. 3d at 159 (“[T]he Medicare fee schedules are not the only mechanism for calculating reimbursements.”)).
Thus, under Orthopedic Specialists and Virtual Imaging, it is clear that even if a PIP insurer elects to limit its reimbursements to the fee schedules, in calculating its reimbursements it may not rely solely on the fee schedules since the “Medicare fee schedules are not the only applicable mechanism for calculating reimbursements under the permissive payment methodology.” Moreover, the PIP statute itself makes it clear that an insurer in determining whether a charge is reasonable is to consider other factors in addition to the fee schedules. Section 627.736(5), Florida Statutes (2013) provides:
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.
In the instant case, while State Farm seeks to limit its reimbursements to the fee schedules, in calculating its reimbursements its policy does not provide that it “will calculate benefits solely under the Medicare fee schedules,” which would be in violation of Orthopedic Specialists and Virtual Imaging. Rather, as indicated, State Farm’s policy definition of a “reasonable charge” includes a consideration of not just the fee schedules, but also such factors as usual and customary charges, payments accepted by the provider, and reimbursement levels in the community.
Accordingly, State Farm’s policy definition complies with Orthopedic Specialists and Virtual Imaging, and it is also consistent with section 627.736(5), Florida Statutes (2013), which as indicated contemplates a consideration of such factors as usual and customary charges, payments accepted by the provider, and reimbursement levels in the community in addition to the fee schedules. Therefore, State Farm in its policy states how it will calculate a “reasonable charge” in full accordance with Florida law, with the result that its election to limit reimbursements to the fee schedules was not ambiguous.
In short, we conclude that State Farm gave adequate notice of its election of the fee schedules to limit its payments, and that the trial court reversibly erred in ruling otherwise. In light of our disposition, we do not address State Farm’s additional argument.
Accordingly, it is hereby ORDERED AND ADJUDGED as follows:
1. The trial court’s Order Granting Plaintiff’s Motion for Final Summary Judgment and Denying Defendant’s Amended Motion for Final Summary Judgment, rendered on February 11, 2016, is REVERSED and this matter is REMANDED to the trial court for further proceedings consistent with this opinion.
2. FEP’s motion for appellate attorney’s fees, filed on April 6, 2017, is DENIED. (UNDERWOOD and BLECHMAN, JJ., concur.)
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1This Court has jurisdiction under section 26.012(1), Florida Statutes, and Florida Rule of Appellate Procedure 9.030(c)(1)(A). We dispense with oral argument. Fla. R. App. P. 9.320.
2In light of section 627.736(5)(a)5., Florida Statutes, Virtual Imaging stated that its holding applied “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 I, 2012.” 141 So. 3d at 150.
3Orthopedic Specialists additionally rejected arguments that the phrases “shall be subject to” and “all fee schedules” in the Allstate notice were ambiguous. Id. at 978-79.
