25 Fla. L. Weekly Supp. 114a
Online Reference: FLWSUPP 2501DENTInsurance — Personal injury protection — Deductible applies to actual amount payable by the insurer and does not apply to uncovered charges — Insurer is not required to automatically apply PIP deductible to full, face amount of provider’s bills before making any determination regarding propriety of bill amount or what billed items are allowed or covered under the insurance policy
TRI-COUNTY DIAGNOSTIC & IMAGING CENTERS, LLC (Michelle Dent), Plaintiff, v. WINDHAVEN INSURANCE COMPANY, Defendant. County Court, 15th Judicial Circuit in and for Palm Beach County. Case No. 502014SC010019XXXXSBRS. March 14, 2017. Robert Panse, Judge. Counsel: Chad L. Christensen, for Plaintiff. Ross E. Linzer, Akerman LLP, Miami, and Christopher Jaramillo, Windhaven Insurance Company, for Defendant.
ORDER DENYING PLAINTIFF’S MOTION FORSUMMARY JUDGMENT REGARDING DEFENDANT’SAPPLICATION OF THE DEDUCTIBLE
THIS MATTER came before the Court on November 8, 2016 for hearing on “Plaintiff’s Motion for Summary Judgment Regarding Defendant’s Application of the Deductible” (the “Motion”), filed on August 31, 2016 by Tri-County Diagnostic & Imaging Centers, LLC (“Plaintiff”). After considering the Motion, the Memorandum of Law in Opposition filed by Defendant Windhaven Insurance Company (“Windhaven”), oral argument, the Court file, and being otherwise advised in the premises, this Court ORDERS AND ADJUDGES as follows:
A. Introduction
Plaintiff, as the assignee of Windhaven’s insured, filed a Complaint asserting a single count for breach of contract against Windhaven alleging that Windhaven did not make payment of all amounts due under the policy of insurance at issue. Plaintiff challenges the manner in which Windhaven applied the Florida No-Fault (“PIP”) deductible under that policy to medical bills it submitted to Windhaven. Plaintiff contends that Windhaven should automatically apply the PIP deductible to the full, face amount of medical providers’ bills before making any determination regarding the propriety of the billed amount or what billed items are allowed or covered under the insurance policy. Windhaven argues that, under its policy language and the relevant statutes, the PIP deductible applies to only the covered and reasonable amounts of an insured’s medical expenses.
B. Findings of Fact
Michelle Dent was injured in an automobile accident on February 24, 2014. At the time of the accident, Ms. Dent was an insured under an automobile insurance policy issued by Windhaven with policy number WIN****6181 [redacted] for the Policy Period December 10, 2013 through June 10, 2014 (the “Policy”). The Policy contained a $1,000 deductible. The Policy provides, with regards to the deductible:
C. The amount of any deductible shown in the Schedule or Declarations shall be deducted from the total amount of expenses and losses listed in all applicable parts of Paragraph B. of the Personal Injury Protection Coverage Insuring Agreement, before the application of any percentage limitation for each “insured” to whom the deductible applies.
With regard to medical expenses, the Policy states:
II. Personal Injury Protection Coverage
INSURING AGREEMENT
A. We will pay, in accordance with the Florida Motor Vehicle No-Fault Law, personal injury protection benefits to or for an “insured” who sustains “bodily injury”. The “bodily injury” must be caused by an accident arising out of the ownership, maintenance or use of a “motor vehicle”.
B. Subject to the limits shown in the Schedule or Declarations, personal injury protection benefits consist of the following:
MEDICAL EXPENSES
80 percent of the following schedule of maximum charges which must be “medically necessary[”]:
* * *
6.
For all other medical services, supplies, and care, 200 percent of the allowable amount under the participating physicians schedule of Medicare Part B. However, if such services, supplies, or care is not reimbursable under Medicare Part B, 80 percent of the maximum reimbursable allowance under works’ compensation, as determined under s. 440.13 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 will not be reimbursed.
7. The applicable fee schedule or payment limitation under Medicare is the fee schedule or payment limitation in effect at the time the services, supplies, or care was rendered and for the area in which such services were rendered, except that it may not be less than the allowable amount under the participating physicians schedule of Medicare Part B for 2007 for medical services, supplies, and care subject to Medicare Part B.
Medical expenses shall only be reimbursed for such services and care that are lawfully provided, supervised, ordered, or prescribed by a health care provider or facility authorized under Florida’s Motor Vehicle No-Fault Law. We reserve the right to submit a claim to Peer Review for evaluation and we reserve the right to deny the claim based on the Peer Review.
Plaintiff, a medical provider, rendered treatment and provided certain medical services to Ms. Dent. Ms. Dent executed an assignment of benefits in favor of Plaintiff. Plaintiff submitted bills to Windhaven in the amount of $1,600.00 for certain medical services it provided to Ms. Dent for date of service April 22, 2014. In response, Windhaven issued an “explanation of benefits” to Plaintiff that detailed Windhaven’s calculations of what amount would be reimbursable. Windhaven determined that only $1,140.92 of the $1,600.00 billed by Plaintiff was covered by the Policy. Windhaven then applied Ms. Dent’s $1,000.00 deductible to that amount, leaving $140.92. Windhaven paid Plaintiff $112.74, representing 80% of $140.92.
C. Conclusions of Law
Windhaven’s Policy clearly and unambiguously elects to use the schedules of maximum charges set forth in Florida Statute Section 627.736(5)(a)1 to determine what medical expenses are covered under the Policy. Therefore, the Court must look to the statute.
Legislative intent guides a court’s construction of a statute. Larimore v. State, 2 So. 3d 101, 106 (Fla. 2008) [34 Fla. L. Weekly S131a] (citing Bautista v. State, 863 So. 2d 1180, 1185 (Fla. 2003) [28 Fla. L. Weekly S849a]). “To discern legislative intent, a court must look first and foremost at the actual language used in the statute.” Id. (citing Joshua v. City of Gainesville, 768 So. 2d 432, 435 (Fla. 2000) [25 Fla. L. Weekly S641a]). “[W]hen the language of the statute is clear and unambiguous and conveys a clear and definite meaning, there is no occasion for resorting to the rules of statutory interpretation and construction; the statute must be given its plain and obvious meaning.” Holly v. Auld, 450 So. 2d 217, 219 (Fla. 1984) (quoting A.R. Douglass, Inc. v. McRainey, 137 So. 157, 159 (Fla. 1931)).
When two statutes relate to the same object or subject, the Florida Supreme Court has repeatedly urged Florida courts to “read statutes relating to the same subject or object in pari materia, in order to harmonize the provisions and give effect to the Legislature’s intent.” Geico v. Virtual Imaging Servs., Inc., 90 So. 3d 321, 323 (Fla. 3d DCA 2012) [37 Fla. L. Weekly D985b]; see also Fla. Dept of Highway Safety v. Hernandez, 74 So. 3d 1070, 1075 (Fla. 2011) [36 Fla. L. Weekly S648c]; Hill v. Davis, 70 So. 3d 572, 577 (Fla. 2011) [36 Fla. L. Weekly S487a]. Accordingly, the two statutes implicated here — Section 627.739, Fla. Stat. (the “Deductible Statute”) and Section 627.736, Fla. Stat. (the “PIP Statute”) — must be read together, in pari materia.
The Deductible Statute, Fla. Stat. § 627.739(2) (2015), states (emphasis added):
(2) Insurers shall offer to each applicant and to each policyholder, upon the renewal of an existing policy, deductibles, in amounts of $250, $500, and $1,000. The deductible amount must be applied to 100 percent of the expenses and losses described in s. 627.736. After the deductible is met, each insured is eligible to receive up to $10,000 in total benefits described in s. 627.736(1). However, this subsection shall not be applied to reduce the amount of any benefits received in accordance with s. 627.736(1)(c).
In turn, the PIP Statute, Fla. Stat. § 627.736, defines covered expenses and losses as those that are reasonable; not as the face amounts billed by a provider. Indeed, Fla. Stat. § 627.736(1)(a) (2015) (emphasis added) requires payment of:
(a) Medical benefits. — Eighty percent of all reasonable expenses for medically necessary medical, surgical, X-ray, dental, and rehabilitative services. . . .
And § 627.736(5)(a) provides (emphasis added):
(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. . . .
* * *
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 automobile 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 [the “Schedule of Maximum Charges”]:
a. For emergency transport and treatment by providers licensed under chapter 401, 200 percent of Medicare.
b. For emergency services and care provided by a hospital licensed under chapter 395, 75 percent of the hospital’s usual and customary charges.
c. For emergency services and care as defined by s. 395.002 provided in a facility licensed under chapter 395 rendered by a physician or dentist, and related hospital inpatient services rendered by a physician or dentist, the usual and customary charges in the community.
d. For hospital inpatient services, other than emergency services and care, 200 percent of the Medicare Part A prospective payment applicable to the specific hospital providing the inpatient services.
e. For hospital outpatient services, other than emergency services and care, 200 percent of the Medicare Part A Ambulatory Payment Classification for the specific hospital providing the outpatient services.
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.
However, if such services supplies, or care is not reimbursable under Medicare Part B, as provided in this sub-subparagraph, the insurer may limit reimbursement to 80 percent of the maximum reimbursable allowance under workers’ compensation, as determined under s. 440.13 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 is not required to be reimbursed by the insurer.
The expenses and losses described as covered by the PIP Statute must be reasonable expenses and losses. In Geico General Insurance Co. v. Virtual Imaging Services, Inc., 141 So. 3d 147, 155 (Fla. 2013 [38 Fla. L. Weekly S517a]), the Florida Supreme Court explained that PIP coverage only applies to reasonable and medical necessary expenses. Plaintiff’s interpretation of the PIP Statute, which asks this Court to overlook the PIP Statute’s coverage mandate, is improper.
Plaintiff’s approach to the application of the PIP deductible — i.e., to apply the deductible to the face amount of the bills, whatever that amount might be — would impermissibly modify both statutes’ express terms and their “reasonable and obvious implications.” Holly, 450 So. 2d at 219. And it is well-settled that “[c]ourts ought to avoid an interpretation of a statute that would lead to an unreasonable, absurd or ridiculous result . . .” Dept. of Highway Safety & Motor Vehicles v. Patrick, 895 So. 2d 1131, 1135 (Fla. 5th DCA 2005) [30 Fla. L. Weekly D349a].
Under the PIP Statute, “[a]n expense is the same as a debt . . . .” Kaklamanos v. Allstate Ins. Co., 796 So. 2d 555, 561 (Fla. 1st DCA 2001) [26 Fla. L. Weekly D1793a], aff’d 843 So. 2d 885 (Fla. 2003) [28 Fla. L. Weekly S287a]. It has long been held that a “debt” is “[t]hat which is due from one person to another, whether money, goods, or services; that which one person is bound to pay to another; a thing owed.” Turner v. State, 168 So. 2d 192, 193 (Fla. 3d DCA 1964) (quoting Holman v. Hollis, 114 So. 254, 255 (Fla. 1927)). Thus, a “reasonable expense” is the amount that a provider is entitled to be paid.
The language of the relevant statutes, when read in pari materia and harmonized together, permits Windhaven to apply PIP deductibles to 100 percent of only the covered, medically necessary, and reasonable reimbursement amounts. By applying the schedule of maximum charges prior to the application of the Policy deductible, Windhaven has complied with its obligations under the Policy and the statutory requirements: it applied the deductible to 100% of the expenses and losses as described in Section 627.736, Fla. Stat.
Windhaven’s approach is consistent with law regarding insurance policy deductibles. As stated in General Star Indemnity Co. v. West Florida Village Inn, Inc., 874 So. 2d 26, 33-34 (Fla. 2d DCA 2004) [29 Fla. L. Weekly D1070b] (citations omitted) (emphasis added):
The notion that a deductible could be applied to loss that is not covered by the policy is fundamentally unreasonable. . . . A ‘deductible’ is ‘a clause in an insurance policy that relieves the insurer of responsibility for an initial specified loss of the kind insured against.’ A deductible loses its meaning entirely if it is to apply to loss that is not covered by the policy.
‘Generally, the functional purpose of a deductible, which is frequently referred to as self-insurance, is to alter the point at which an insurance company’s obligation to pay will ripen.’ As self-insurance, a deductible requires the insured to share in the risk of loss, and worthy social goals are promoted. . . . . applying the deductible to noncovered loss does not serve the goals of having the insured share in the risk. Indeed, it threatens to render the deductible a nullity.
Thus, the expenses described in the PIP Statute to which the deductible applies, by definition, can only be those expenses that are covered by the PIP coverage — and not simply the face amount of a provider’s medical bills. See Sheldon v. United Servs. Auto. Ass’n, 55 So. 3d 593, 596 (Fla. 1st DCA 2010) [36 Fla. L. Weekly D23a] (an insurer “cannot be required to pay more [benefits] than it agreed to pay under the policy”).
Plaintiff’s proposed method is not only contrary to the language of the PIP Statute, but its application in practice would also defeat the very purpose of the statutory scheme, which aims to increase benefits flowing to the insureds. The practical effect of Plaintiff’s proposed method is to ignore the PIP Statute’s, and the Policy’s, payment methodology in favor of a method which would permit medical providers to bill excessive amounts, forcing insureds to pay deductibles based on inflated charges, and resulting in quicker depletion of insureds’ PIP benefits. Plaintiff is suing Windhaven based on an assignment of benefits from a Windhaven insured, thereby standing in her shoes. But the position taken by Plaintiff is directly in conflict with the interests of the insured. Windhaven’s method of applying the deductible enables Ms. Dent to avoid unwarranted depletion of PIP benefits, helps control health care costs, and lowers payoffs that may lure fraudsters.
It should be noted as well that the legislative history of both the Deductible Statute and the PIP Statute also supports Windhaven’s method of applying the deductible. See Hobbs v. State, 999 So. 2d 1025, 1028 n.1 (Fla. 2008) [33 Fla. L. Weekly S1005a] (noting that although the Court’s decision was based on the plain language of the statute, the legislative history further supported its holding). The legislative history shows that the purpose of the Deductible Statute provision was to increase the amount of PIP benefits to the insured. And the legislative history of the PIP Statute shows that the purpose of the reimbursement methodology set forth in the statute was to maximize an insured’s benefits and to reduce rising PIP premiums by decreasing medical charges, fraud, and excess litigation. Windhaven’s method is the only method that furthers both of these clear legislative intentions.
Windhaven’s position is further supported by a proposed Florida Senate Bill and related analysis. Section 5 of Florida Senate Bill 1036 (2016), which did not become law, sought to amend Section 627.739(2), Fla. Stat. in a manner that is consistent with Windhaven’s methodology. The Bill Analysis and Fiscal Impact Statement dated January 25, 2016 explained that this proposed amendment sought:
to clarify that the PIP deductible applies to expenses and losses covered under PIP benefits and coverage. The bill also clarifies that when an insurer applies the PIP fee schedule, the amount of expenses and losses applicable to the deductible will be limited to 100 percent of the reimbursement under the fee schedule.
The use of the word “clarify” in this analysis indicates that the proposed amendment was consistent with the effect of the current language, and the proposed amendment simply sought to remove any potential ambiguity.
The Court further adopts the rationales contained in the well-reasoned appellate decisions of Garrison Property & Cas. Ins. Co. v. New Smyrna Imaging, LLC, 2015 WL 11022888 (Fla. 18th Jud’l Cir. (App)) (Feb. 9, 2015) and Progressive American Insurance Co. v. Munroe Regional Health System, Inc., 2015 WL 11022891 (Fla. 18th Jud’l Cir. (App)) (Apr. 17, 2015) [23 Fla. L. Weekly Supp. 707a] which, while not binding, are persuasive authority.
The Court finds that the PIP deductible should be applied to the actual amount payable by the insurer and that the deductible should not apply to uncovered charges. The Court therefore denies Plaintiff’s Motion.
