26 Fla. L. Weekly Supp. 35a
Online Reference: FLWSUPP 2601LGATInsurance — Personal injury protection — Coverage — Medical expenses — Statutory fee schedules — Clear and unambiguous election by insurer — Notice to insured — Incorporation of Office of Insurance Regulation’s sample endorsement into insurer’s 9810A policy was not sufficient to comply with statute requiring that policy include notice at time of issuance or renewal that insurer may limit payment pursuant to statutory schedule of charges — Approval of policy by OIR does not constitute finding of compliance with statutory notice requirements — Language of policy at issue incorporates an unauthorized hybrid methodology for calculating PIP reimbursement — Provider’s motion for summary judgment as to application of Medicare fee schedule granted — Motion for summary judgment as to reasonableness, relatedness, and necessity of medical services denied
LA FAMILIA MEDICAL CENTER, a/a/o Luis Gato, Plaintiff, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant. County Court, 11th Judicial Circuit in and for Miami-Dade County. Case No. 2017-1685 SP 25 (1). March 16, 2018. Linda Diaz, Judge. Counsel: Walter A. Arguelles, Arguelles Legal, P.L., Miami, for Plaintiff. David Bronstein, Bronstein & Carmona, P.A., Ft. Lauderdale, for Defendant.
ORDER GRANTING PLAINTIFF’S MOTION FOR SUMMARYJUDGMENT AS TO THE APPLICATION OF THE MEDICAREFEE SCHEDULE AND DENYING PLAINTIFF’S MOTION FORSUMMARY JUDGMENT AS TO MEDICAL SERVICES BEINGREASONABLE, RELATED AND MEDICALLY NECESSARY
THIS MATTER, having come before the court for hearing on March 6, 2018, on Plaintiff’s Motions for Summary Judgment as to the Application of the Medicare Fee Schedule and the medical services being reasonable, related and medically necessary, and the Court having reviewed respective motions, read relevant legal authority, heard argument from counsel of each party, and having been sufficiently advised in the premises, finds that State Farm Mutual Automobile Insurance Company did not properly elect the permissive payment methodology referenced in Fla. Stat. §627.736(5)(a)(1) (2012) in the language of its policy of insurance form 9810A.
The issue before the Court is whether State Farm’s language in its Policy of Insurance form 9810A clearly and unambiguously adopts the reimbursement methodology expressed in Fla. Stat. §627.736(5)(a)(1) Florida Statutes (2012), and whether the medical services were related, necessary and reasonable.
Pursuant to an assignment of benefits, the Plaintiff submitted bills for medical services rendered to Luis Gato for injuries sustained in an automobile accident. Upon receipt, the Defendant tendered payment for a portion of the bills, limiting payment at 80% of the schedule of maximum charges referenced in Fla. Stat. §627.736(5)(a)(1) (2012).
The Plaintiff filed suit and alleges that Defendant failed to properly elect the Medicare Fee schedule methodology in its policy and as such, was prohibited from using the “fee schedule” to reimburse the Plaintiff’s bills.
The relevant portion of Fla. Stat. §627.736 in this case is subsection (5), which underwent significant changes in the years 2007 and 2012. During the 2007 legislative session, the Legislature amended the “PIP Statute” and created a dichotomous payment paradigm wherein insurers were still mandated to pay the standard eighty percent of a reasonable charge (otherwise known as the default payment methodology) but could now opt for an alternative method for determining reasonableness (otherwise known as the permissive payment methodology1). Under the default payment methodology, the insurer undertakes a fact dependent inquiry in which it takes into consideration numerous factors such as the usual and customary charges and payments accepted by the provider, reimbursement levels in the community and various federal and state medical fee schedules applicable to motor vehicle and insurance coverage.2 Under the permissive payment methodology, the insurer does not rely upon any analysis in determining the reasonableness of charges.3 Instead, the insurer applies the schedule of maximum charges to the charge submitted by the provider. However, In order to avail itself of the permissive payment methodology, the insurer must provide notice in the policy of insurance of its election to use the fee schedules. Geico v. Virtual imaging Services, 141 So.3d 147, 159 (2013) [38 Fla. L. Weekly S517a].
The Defendant’s position is that the policy at issue permits it to tender reimbursement pursuant to the permissive payment methodology. The Defendant argues that the holding in Virtual is not applicable to policies issued after the enactment of the 2012 version of the PIP statute. Although the Supreme Court declared that the holding applies to policies that were in effect from the 2008 amendment through July 1, 2012 (the effective date of the current PIP statute), Virtual continues to be good law and is applicable in this matter. Nothing in the 2012 amendments to the PIP statute reverses the Florida Supreme Court’s ruling that the PIP statute establishes two distinct methodologies that PIP insurers may choose to incorporate in their insurance policies. The fee schedule was, and still is, permissive, and is only available who unambiguously elected it to the exclusion of the reasonable method. See, Geico Gen. Ins. Co. v. Virtual Imaging Serv., Inc.,141 So. 3d 147 (Fla. 2013) [38 Fla. L. Weekly S517a]; Kingsway Amigo Ins. Co. v. Ocean Health, Inc.,63 So. 3d 63 (Fla. 4th DCA 2011) [36 Fla. L. Weekly D1062a]; A-Plus Med. & Rehab Ctr. a/a/o Cesar Acevedo v. State Farm Mut. Auto. Ins. Co., 2014-15200-SP-25-2; June 9, 2016 [24 Fla. L. Weekly Supp. 159b]. Furthermore, the notice requirement established in Virtual is codified in the enactment of Fla. Stat. §627.736(5)(a)5 (2012), which states: “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 the issuance or renewal that the insurer may limit payment pursuant to the schedule of charges specified in this paragraph.”
The Defendant argues to the Court that it has incorporated the Office of Insurance Regulation’s sample endorsement into its 9810A policy and as such, it is sufficient as compliance with the notice requirement of Fla. Stat. 627.736(5)(a)(5)4. The Court is of the position that mere incorporation of the OIR sample form is not sufficient notice. “In construing an insurance policy, Courts should read the policy as a whole, endeavoring to give every provision its full meaning and operative effect.” Auto-Owners Inc. Co. v Anderson, 756 So.2d 29, 34 (Fla. 2000) [25 Fla. L. Weekly S211a]. As stated in Virtual, “even if the Medicare fee schedules are incorporated into the insured’s policy, neither the insured nor the provider knows, without the policy providing notice by electing the Medicare fee schedules, that the insurer will limit reimbursements.” Virtual at 159.
Further, the OIR’s Informational Memorandum, disclaims its sample form by stating that:
“Depending upon the existing language, the same language may be suitable to address the notice requirement of House Bill 119 or the insurer may already have approved language that satisfies the notice requirement. Ultimately, it is the insurer’s responsibility to develop its own language after researching the law, reviewing its contacts forms, and conferring with its legal staff.”
Immediately after the sample endorsement language in the memorandum, the OIR once again disqualifies its form by including the same disclaimer. “The OIR directs insurers to review its forms, research the law and confer with its counsel in addition to using its “sample form” as a notice mechanism.” New Life Med. & Rehab Ctr. a/a/o Francisco Martinez v. State Farm Mut. Auto. Ins. Co., Order of Judge Lourdes Simon, Miami Dade County Court, Case Number 2014-05263-SP-05-04, dated April 6, 2016. As such, Defendant’s argument must fail as inclusion of the sample endorsement is not dispositive as to whether a policy contains a proper election for payment under the permissive payment methodology.
The Defendant further argues that the policy at issue was approved by the Office of Insurance Regulation and thus such approval constitutes a finding of compliance with the notice requirements set forth in Fla. Stat. §627.736(5)(a)5(2012). This Court is not in agreement with Defendant’s assertion. As stated by Judge Lee, “any letter merely stating that a form is “APPROVED”, without more, would result in a finding that the insurer has automatically invoked the fee schedule limitations, even if the insurer decided that the traditional “reasonableness” analysis might be more advantageous. And because no insurer may issue a policy until it is approved by the OIR, any new policy would automatically incorporate the fee schedules once approved. This is clearly not the result the legislature intended.” MR Services I, Inc. a/a/o William White v. Allstate Insurance Company, Order of Judge Robert Lee, Broward County Court, Case Number 13-12538 COCE (53), dated November 4, 2015) [23 Fla. L. Weekly Supp. 637b]. Furthermore, as held in Gonzalez v Assoc. Life Ins. Co., 641 So. 2d 895, n.1 (Fla. 3rd DCA 1994) “mere approval by the Department of Insurance (OIR’s predecessor agency) does not automatically validate the contents of an insurance policy.” See also, Kaufman v Mut. of Omaha Ins. Co., 681 So 2d. 747, n.4 (Fla. 3rd DCA 1996) [21 Fla. L. Weekly D1716b]. (Department of Insurance approval of a policy form does not override the explicit terms of a statutory requirement).
The Defendant also argues that Office of Insurance Regulation is vested exclusive jurisdiction over compliance with the notice provision. While “the OIR is entrusted with the responsibility to regulate insurers and enforce statutes, interpretation of statutes is within the purview of the Court.” Neurology Partners, P.A. d/b/a Emas Spine & Brain a/a/o Willie Brown v. State Farm Mut. Auto. Ins. Co., Order of Judge Scott Mitchell, Duval County Court, Case Number 14-SC-5472, dated July 28, 2015, [23 Fla. L. Weekly Supp. 550a]. While the legislature may assign to an agency the responsibility of establishing certain procedures, legislative authority to an administrative agency is always subject to judicial review. The Courts have full jurisdiction to determine if the administrative agency has performed in accordance with the Legislature’s mandate. See Askew v. Cross Key Waterways, 372 So. 2d 913, 924 (Fla. 1978).5
Finally, the Court addresses the Defendant’s policy language and finds that it has incorporated an unauthorized “hybrid methodology” for calculating PIP reimbursement. Defendant’s policy provides for “No-Fault Coverage” and states:
“We will limit payment of the 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:
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f. For all other medical services, supplies and care, 200 percent of the allowable amount under:
(l) The participating physicians fee schedule of Medicare Part B. . .
The term “Reasonable Charge” is defined as follows:
Reasonable Charge, which includes reasonable expense, means 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 Centers for Medicare and Medicaid Services, including applicable modifiers, if the coding or payment methodology does not constitute a utilization limit.
The Defendant suggests that the reasonableness definition is subordinate to the limitation of payment provision in the PIP portion of the applicable policy and thus has no effect on State Farm’s ability to tender payment pursuant to the permissive payment methodology of 627.736(5)(a)(1). The Court is not in agreement with said notion as the policy cannot be read “in a vacuum” and instead must be read in conjunction with the policy as a whole to ensure it is given proper meaning. By opting to include, in clear and unambiguous language, the fact-dependent factors in its definition of “Reasonable Charge” while also attempting to reimburse pursuant to the permissive payment methodology, the Defendant impermissibly commingles F.S. 627.736(5)(a) and F.S. 627.736(5)(a)(1). “Such commingling runs afoul of F.S. 627.736(5)(a)5 (2012) and Virtual” and is incongruous with the Virtual mandate of placing an insured on notice with language conveying a “clear and unequivocal election. Dr. Rubin Thompson, D.C. a/a/o Derigiene Soilnistes v. State Farm Mut. Auto. Ins. Co., Order of Judge Shelley Kravitz, Miami Dade County Court, Case Number 2014-12640-SP-05-01, dated December 07, 2015. As such, because State Farm has not clearly and unambiguously elected a single payment methodology, State Farm is not lawfully authorized to rely on the permissive methodology.
This Court is mindful of the recent decision issued by the Florida Supreme Court in Allstate Ins. Co. v. Orthopedic Specialists, No. SC 15-2298 (2017) [212 So.3d 973; 42 Fla. L. Weekly S38a], which found that the policy language in Allstate’s policy placed its insured on notice that it would tender reimbursement pursuant to the permissive payment methodology. The Court found that the statement that reimbursement “shall be subject to the limitations in F.S. 627.736, including all fee schedules” was sufficient notice. The same rationale cannot apply to State Farm’s 9810A policy as its inclusion of the default methodology factors in its definition of “Reasonable Charge” results in a commingling of payment methodologies. An insurer may not alternate between the two payment methodologies at its whim.
Lastly Plaintiff alleges that the services at issue were reasonable, related and medically necessary.
Accordingly, it is ORDERED and ADJUDGED that as a matter of law, Plaintiff’s Motion for Summary Judgment as to the Application of the Medicare Fee Schedule is hereby GRANTED. Plaintiff’s Motion for Summary Judgment as to medical services being related, necessary and reasonable is hereby DENIED.
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1The permissive language of the 2008 amendments [therefore], plainly demonstrates that there are two different methodologies for calculating reimbursements to satisfy the PIP statute’s reasonable medical expenses coverage mandate. Geico v. Virtual Imaging Services, 141 So.3d 147, 156 (2013) [38 Fla. L. Weekly S517a](emphasis in original), citing, Kingsway Amigo Ins. Co. v. Ocean Health, Inc., 63 So.3d 63 (Fla. 4th DCA 2011) [36 Fla. L. Weekly D1062a].
2The default payment methodology is referenced as subsection (5)(a)1 under the 2008 version of the PIP Statute and subsection 5(a) of the 2012 version of the PIP statute.
3The permissive payment methodology is referenced as subsection (5)(a)2 under the 2008 version of the PIP Statute and subsection 5(a)1 of the 2012 version of the PIP statute.
4“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 the 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 (2012).
5“Even if section 627.736(5)(a)(5) they purport to delegate authority to the OIR to determine the validity of insurance policies, such determinations shall be subject to judicial review. . .Thus OIR’s approval State Farm’s policy form 9810A and its incorporation of the OIR “humble form” is not per se compliance with the requisite notice requirement of F.S. 627.736(5)(a)(5).” New Life Med. & Rehab Ctr. a/a/o Francisco Martinez v. State Farm Mut. Auto. Ins. Co., Order of Judge Lourdes Simon, Miami Dade County Court, Case Number 2014-05263-SP-05-04, dated April 6, 2016.
