25 Fla. L. Weekly Supp. 425a

Online Reference: FLWSUPP 2505STATInsurance — Personal injury protection — Coverage — Medical expenses — Summary disposition — Trial court erred in sua sponte entering summary disposition on issue of medical necessity of MRIs — Insurer had right to challenge necessity despite having made partial payment on claim, affidavit of insurer’s expert created genuine issue of material fact as to necessity, trial court failed to address affirmative defense of insufficient demand letter, and trial court acted under small claims rules despite prior ruling invoking rules of civil procedure — Trial court erred in granting medical provider’s motion for summary judgment as to reasonableness of charges where reasonableness is fact-dependent inquiry — Attorney’s fees — Appellate fees — Insurer is conditionally awarded appellate attorney’s fees under offer of judgment statute if it prevails on remand

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellant, v. PRECISION DIAGNOSTIC, INC., Appellee. Circuit Court, 19th Judicial Circuit (Appellate) in and for Indian River County. Case No. 15-AP-14. L.T. Case No. 14-SC-242. March 30, 2017. Appeal from the County Court for Indian River County. Joe Wild and David Morgan, Judges. Counsel: Nancy Gregoire, Birnbaum, Lippman & Gregoire, PLLC, Fort Lauderdale, and Joseph Murasko, Vernis & Bowling, North Palm Beach, for appellant. Todd Landau, Landau & Associates, P.A., Hallandale Beach, for appellee.

(PER CURIAM.) On February 28, 2012, the claimant was in an automobile accident. He sought treatment for his injuries from the Appellee (“Precision”), and in exchange for treatment, the claimant validly assigned his insurance benefits to Precision. Precision submitted bills to the Appellant (“State Farm”) for payment, and when State Farm failed to pay 100% of the bills, Precision filed a complaint for breach of contract¹. Precision filed a motion for summary judgment² as to reasonableness of the amount of the two MRIs, and the trial court granted it in March 2015. The parties appeared before the trial court on June 8, 2015 to begin jury selection. Prior to selecting the jury, the attorneys told the trial court that the issue for trial had been narrowed to whether the MRIs were medically necessary. After a recess, the trial court came back and sua sponte announced that pursuant to Fla. Sm. Cl. R. 7.135, it found that there was no triable issue; it summarily disposed of the case. The written final judgment was entered on September 12, 2015, and it awarded $1094.50 to Precision. State Farm filed an appeal, and we find that the trial court erred in granting the summary judgment as to reasonableness and further erred in summarily disposing of the case under Fla. R. Sm. Cl. 7.135 immediately before trial.

An appeal from an order granting summary judgment is reviewed de novo. Progressive Auto Pro Ins. Co. v. One Stop Medical, Inc., 985 So. 2d 10, 12 (Fla. 4th DCA 2008) [33 Fla. L. Weekly D1174a].

State Farm argues that the trial court erred in granting summary disposition on the outstanding medical necessity issue for the three reasons. First, it argues that the PIP statute authorizes a retroactive challenge of medical necessity, even after payment, and it cites §627.736(4)(b)(6), which states:

Personal injury protection insurance benefits paid pursuant to this section are overdue if not paid within 30 days after the insurer is furnished written notice of the fact of a covered loss and of the amount of same. However:

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6. This paragraph does not preclude or limit the ability of the insurer to assert that the claim was unrelated, was not medically necessary, or was unreasonable or that the amount of the charge was in excess of that permitted under, or in violation of, subsection (5). Such assertion may be made at any time, including after payment of the claim or after the 30-day period for payment set forth in this paragraph.

In Northwoods Sports Medicine and Physical Rehabilitation, Inc. v. State Farm Mut. Auto. Ins. Co., the provider billed State Farm, and State Farm reduced payment to 80% of 200% of the Medicare fee schedule, as it also did in the instant case. 137 So. 3d 1049, 1051 (Fla. 4th DCA 2014) [39 Fla. L. Weekly D491a]. The Fourth District stated:

When the insurance company denies or reduces payment, a dispute arises as to whether the additional amounts are covered by the statute as being either medically necessary or reasonable in amount. Section 627.736(4) sets forth very specific requirements on how the insurance company must treat claims of providers. Even after a claim is denied or reduced, an insurance company may still defend a suit by the provider claiming additional amounts on the grounds that the service was not medically necessary or that the amount was not reasonable. See §627.736(4)(b), Fla. Stat. (2008); Rodriguez, 808 So.2d at 87-88.

Id. at 1057. Precision responds to this argument by stating that State Farm determined that the MRIs were medically necessary when it made a partial payment; it cites county court orders for this premise. Precision also argues that State Farm conceded that the MRIs were medically necessary in the pretrial stipulation. However, the pretrial stipulation clearly states that “Defendant STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY denies that the cervical and lumbar MRIs were medically necessary.” In the issues section of the pretrial stipulation, it also states that the second issue is “whether the cervical and lumbar MRIs were medically necessary.” Both parties made it clear to the trial court at the hearing immediately preceding trial that the issue was whether the MRIs were medically necessary, so Precision’s arguments are disingenuous. §627.736(4)(b)(6) and the interpretation of it by the Fourth District in Northwoods grant State Farm the right to retroactively challenge the PIP benefit payment to Precision based on medical necessity.

Second, State Farm argues that the Dr. Costello affidavit created a genuine issue of material fact on the medical necessity issue. Since the trial court sua sponte issued the summary disposition, the parties did not present argument on the affidavit and its extensive attachments, which state that the MRIs were not medically necessary. The attachments include Dr. Costello’s CV, the medical records he reviewed to come to his conclusion, and his report, which states in detail why the MRIs were not medically necessary. A trial court cannot weigh the evidence or judge the credibility of witnesses when determining whether to grant summary judgment. Plantation Key Office Park, LLLP v. Pass Intern., Inc., 110 So. 3d 505, 508 (Fla. 4th DCA 2013) [38 Fla. L. Weekly D736a] (citing Craven v. TRG-Boynton Beach, Ltd., 925 So.2d 476, 480-81 (Fla. 4th DCA 2006) [31 Fla. L. Weekly D1100a]). “A summary judgment motion will be defeated if the evidence by affidavit or otherwise demonstrates the existence of a material factual issue.” Harvey Bldg., Inc. v. Haley, 175 So. 2d 780, 782 (Fla. 1965). Both parties agreed in the pretrial stipulation and immediately before jury selection that the medical necessity of the MRIs was a jury issue. Nothing in the record refutes the Dr. Costello affidavit as a genuine issue of material fact.

Third, State Farm argues that the trial court erred in entering summary disposition without addressing State Farm’s affirmative defense of the failure of Precision’s presuit demand letter to comply with §627.736(10). Before a party is entitled to summary judgment, that party must either factually refute the affirmative defenses or show that they are legally insufficient. Suarez v. Wells Fargo Bank, N.A., 201 So. 3d 694, 696 (Fla. 4th DCA 2016) [41 Fla. L. Weekly D1981a]. State Farm raised the affirmative defense in the answer in response to the amended complaint. Additionally, State Farm raised a related affirmative defense of deceptive and misleading presuit demand letter based on newly discovered evidence, and the trial court entered an order deeming it filed. Three days before trial, the parties listed “whether there was a proper PIP pre-suit demand letter when Plaintiff allegedly waived the patient’s balance” as an issue in the pretrial stipulation. State Farm’s attorney orally made the trial court aware of the defense immediately before trial. Nothing in the record shows that Precision either factually refuted it or showed that it was a legally insufficient defense.

This case was originally filed in Broward County, and the parties agreed to invoke the rules of civil procedure, eschewing the small claims rules; the trial court entered an order invoking the rules of civil procedure. Then on a motion for change of venue based on forum non conveniens, the case was transferred to Indian River County. The Indian River County trial court did not disturb the order invoking the rules of civil procedure or enter an order superseding it. The case continued for almost twenty more months after transfer with extensive motion practice and discovery; it was clearly outside of the small claims rules of procedure. It is strange that after all that time, the trial court used Fla. R. Sm. Cl. 7.135 as the basis for summary disposition. However, on remand, nothing prevents or precludes the trial court from reinstating the Florida Rules of Small Claims.

Based on the foregoing four reasons, the trial court erred in sua sponte summarily disposing of this case under the small claims rules immediately before trial.

Next, State Farm argues that the trial court erred in granting Precision’s motion for summary judgment as to reasonableness. §627.736(5)(a) speaks to the reasonableness of the charges in a PIP case:

A physician, hospital, clinic, or other person or institution lawfully 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 pursuant to this section for the services and supplies rendered, and the insurer providing such coverage may pay for such charges directly to such person or institution lawfully rendering such treatment if the insured receiving such treatment or his or her guardian has countersigned the properly completed invoice, bill, or claim form approved by the office upon which such charges are to be paid for as having actually been rendered, to the best knowledge of the insured or his or her guardian. 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.

(Emphasis added). In Geico Gen. Ins. Co. v. Virtual Imaging Services, Inc., the Florida Supreme Court stated that the reasonableness of the charges for a provider’s particular services is a fact dependent inquiry and is determined by consideration of various factors. 141 So. 3d 147, 155-156 (Fla. 2013) [38 Fla. L. Weekly S517a]. Therefore, the trial court incorrectly granted Precision’s motion for summary judgment as to reasonableness.

Finally, both parties filed motions for appellate attorney’s fees. Appellate attorney’s fees can be awarded if authorized by contract or statute. Brass & Singer, P.A. v. United Auto. Ins. Co., 944 So. 2d 252, 254 (Fla. 2006) [31 Fla. L. Weekly S762a]. Pursuant to Fla. R. App. P. 9.400, a party must specify the statutory, contractual, or substantive basis for an award. Id. State Farm’s motion points to §768.79, which states:

(1) In any civil action for damages filed in the courts of this state, if a defendant files an offer of judgment which is not accepted by the plaintiff within 30 days, the defendant shall be entitled to recover reasonable costs and attorney’s fees incurred by her or him or on the defendant’s behalf pursuant to a policy of liability insurance or other contract from the date of filing of the offer if the judgment is one of no liability or the judgment obtained by the plaintiff is at least 25 percent less than such offer, and the court shall set off such costs and attorney’s fees against the award. . .

The record reflects that State Farm served Precision with three proposals for settlement on September 24, 2014, October 10, 2014, and December 29, 2014. Therefore, as the prevailing party on appeal, State Farm is conditionally awarded its appellate attorney’s fees, if it prevails on remand.

Reversed and remanded. (BELANGER, SCHWAB, JJ., and YACUCCI, Acting Circuit Judge, concur.)

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¹The case was originally filed in Broward County. Later, a party moved for a change of venue to Indian River County.

²Prior to transfer, the Broward County court entered an order invoking the rules of civil procedure in response to a stipulated motion, which is why a motion for summary judgment was permitted in a small claims case.