25 Fla. L. Weekly Supp. 285b
Online Reference: FLWSUPP 2503MELGInsurance — Personal injury protection — Coverage — Medical expenses — Statutory fee schedules — Clear and unambiguous election by insurer — Where PIP policy provides that insurer will pay 80% of reasonable medical expenses but also states that in no event will insurer pay more than schedule of maximum charges, and policy was approved by Office of Insurance Regulation, insurer may limit reimbursement to permissive statutory fee schedules — No merit to argument that, by including language regarding payment of reasonable amount and language placing limitation on that amount, insurer failed to make clear and unambiguous election
THE HOPE REHABILITATION, INC., (a/a/o Lillian Melgar), Plaintiff, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant. County Court, 11th Judicial Circuit in and for Miami Dade County. Case No. 14-009893 CC 25. May 1, 2017. Jason Emilios Dimitris, Judge.
ORDER GRANTING PARTIAL SUMMARYJUDGMENT FOR STATE FARM MUTUALAUTOMOBILE INSURANCE COMPANYREGARDING ITS ADOPTION OF THESCHEDULE OF MAXIMUM CHARGES
THIS CAUSE came before the Court on March 30, 2017, on the Second Amended Motion for Summary Judgment1 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 of the schedule of maximum charges and the Court having heard argument of counsel and having reviewed the evidence of record, orders as follows:
I. UNDISPUTED FACTS
1. Lillian Melgar was involved in a motor vehicle accident on August 1, 2013, in which she allegedly sustained personal injuries.
2. Plaintiff, a medical provider, claims in the present suit that STATE FARM has not paid the full amount due and owing in PIP (Personal Injury Protection) benefits for the medical services rendered to the patient, Lillian Melgar, between August 14, 2013, through October 31, 2013.
3. Plaintiff asserts that STATE FARM has not complied with the terms and conditions of the Florida PIP statute (Fla. Stat. 627.736) and the STATE FARM PIP coverage requiring payment of 80% of reasonable charges within thirty (30) days of presentation of said claim and therefore Plaintiff is entitled to those damages.
4. STATE FARM responded in its Answer and Affirmative Defenses denying the allegations of the Complaint. STATE FARM’s primary contention in its Motion for Partial Summary Judgment is that it is allowed to limit 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 following 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:
* * * * * *
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.
7. STATE FARM paid all of the Plaintiff’s charges for medical services for dates of services August 14, 2013 to August 30, 2013 by limiting reimbursement to 80% of the schedule of maximum charges, as reflected in the Explanations of Review filed with the Court2. Plaintiff contends STATE FARM’s 9810A policy does not allow STATE FARM to limit reimbursement in this way.
II. ISSUES OF LAW
A. The Standard for Granting Summary Judgment
Summary judgment is properly granted where the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. Rule 1.510, Florida Rules of Civil Procedure. When the facts of a cause of action are clear, and only questions of law exist, summary judgment is properly granted. Duprey v. United Servs. Auto. Assoc., 254 So. 2d 57, 58 (Fla. 1st DCA 1971). Cf. Ball v. Fla. Podiatrist Trust, 620 So. 2d 1018, 1022 (Fla. 1st DCA 1993).
B. STATE FARM is Entitled to a Summary Judgment Determining that it has Paid In Compliance with the Florida Statutes and the 9810A Policy Does Permit STATE FARM to Limit Reimburse to the Schedule of Maximum Charges.
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 eighty percent of a “reasonable” amount for the treatment incurred. In 2008, 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 resulted in some controversy and litigation. See, e.g., Geico Ins. Co. v. Virtual Imaging Servs., Inc., 141 So. 3d 147 (Fla. 2013) [38 Fla. L. Weekly S517a]. 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) (emphasis added), further specifies:
(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 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 . . . . 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-subsubparagraphs (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.
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) [Editor’s Note: No emphasis on court document.]. 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, 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.
STATE FARM placed an “IMPORTANT NOTICE” on the front page of the Declaration Page when the policy was renewed3 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
Plaintiff contends that STATE FARM cannot in one portion of the policy agree to pay a reasonable amount and then later place a limitation on this provision by limiting reimbursement to the schedule of maximum charges.
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 form 9810A is entirely consistent and tracks the language of Florida Statute §627.736. First, the policy preserves and adheres to the PIP statutes basis 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 clear and unambiguous.
Thus, the Plaintiff’s contention that this Court must apply Virtual Imaging in that there are only two mutually exclusive payment methodologies and that a carrier must apply one to the exclusion of the other is actually rejected by the Virtual Imaging opinion which specifically held that it did not apply to any cases governed by the new election procedures found in Fla. Stat. 627.736(5)(a)5. Moreover, the Florida Supreme Court further clarified the law more recently in Allstate Ins. Co. v. Orthopedic Specialists, __ So. 3d __, 2017 WL 372092 (Fla. Jan. 26, 2017) [42 Fla. L. Weekly S38a]. Therein, like the instant case, the medical provider plaintiffs argued that the carrier did not make a sufficient election to limit reimbursement based on the Schedule of Maximum Charges because: (1) the policy did not state that Allstate “will not actually pay eighty percent of benefits reasonable charges” and (2) the policy did not state that Allstate will instead “calculate only under the permissive Medicare fee schedules.” Id. at 9 (emphasis added). The Court rejected this “all or nothing” argument:
. . . Respondents’ argument misconstrues 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. See Virtual Imaging, 141 So. 3d at 155.
This is entirely consistent with State Farm’s 9810A policy, which provides that State Farm will pay “reasonable” — but only up to the Schedule amount. State Farm is not at liberty to remove the “reasonableness” coverage mandate from its policy. All STATE FARM was required to do under section (5)(a)5 of the revised PIP statute was to provide notice to its insured that it would limit reimbursement to the Schedule of maximum charges: that STATE FARM did in clear terms.
IV. CONCLUSION
STATE FARM’s Motion for Partial Summary Judgment is granted.
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1STATE FARM only filed a Motion for Partial Summary Judgment for dates of services August 14, 2013 to August 30, 2013 with respect to its use of the schedule of maximum charges because the subsequent dates of service were not paid due to an IME/peer review. While this Order does decide whether STATE FARM can utilize the schedule of maximum charges to limit reimbursement, this Order does not adjudicate whether treatment after August 30, 2013 was medically necessary or related to the accident of August 1, 2013.
2STATE FARM also filed requests for judicial notice of the Medicare Fee schedules applicable to the CPT codes at issue in this case as well as a request for judicial notice of the Office of Insurance Regulation’s approval of the 9810A policy. The Court orally granted those requests at the March 30, 2013 hearing on this motion.
3See Paragraph 6 of the Undisputed Facts, above.
