27 Fla. L. Weekly Supp. 593a
Online Reference: FLWSUPP 2707PHERInsurance — Personal injury protection — Coverage — Medical expenses — Statutory fee schedules — Clear and unambiguous election by insurer — PIP policy that expressly gives insurer discretion to alternate between reasonableness method and permissive statutory fee schedule method of reimbursement is ambiguous and fails to provide clear notice of election of fee schedule method of reimbursement — Remand with instructions to enter summary judgment in favor of medical provider
FERNANDEZ REHABILITATION CORP., a/a/o Paola Hernandez, Appellant, v. PROGRESSIVE AMERICAN INS. CO., Appellee. Circuit Court, 11th Judicial Circuit (Appellate) in and for Miami-Dade County. Case No.17-381 AP. L.T. Case No. 2017-000317-SP-05. September 19, 2019. On Appeal from the County Court of Miami-Dade County, Ivonne Cuesta, Judge. Counsel: Adam B. Saben and Melissa Rakin, for Appellant. Michael Christopher Clarke, for Appellee.
(Before ELLEN SUE VENZER, LOURDES SIMON, and ANDREA WOLFSON, JJ.)
OPINION
(VENZER, J.) Pending before this Court is an appeal regarding a claim for PIP benefits set forth in an insurance agreement. The Appellant is appealing the method applied by the court below in determining whether the insurer clearly and unambiguously placed the insured on notice that the Appellee elected to calculate reimbursements for medical expenses using the “permissive” payment method instead of the alternative, conventional “reasonable expenses” method. The Appellant contends the language in the policy created an ambiguity as to which method has been elected to calculate reimbursements. Conversely, the Appellee contends their policy clearly and unambiguously elected the permissive fee schedule under controlling Florida law. This Court concludes that the contradicting language in the policy created an ambiguity, and, as a result, should be interpreted liberally in favor of the insured and strictly against the insurance company who drafted the policy.
FACTUAL AND PROCEEDURAL BACKROUND:
In this PIP appeal, the medical provider, Fernandez Rehabilitation Corporation (herein Fernandez Rehab) is appealing the County Court’s final summary judgment ruling which determined that the insurer, Progressive American Insurance Company (herein Progressive), clearly and unambiguously placed the insured on notice that they elected to calculate reimbursements for medical expenses solely using the permissive payment method, which allows medical reimbursements to be limited to Medicare’s Part B fee rates.
Fernandez Rehab was the provider and assignee of Progressive’s named insured, Paola Hernandez. In June 2012, Ms. Hernandez was involved in an automobile accident, and was insured under Progressive’s auto insurance policy with an effective date spanning from April 2012 through November 2012. The policy included coverage for PIP benefits. Following the execution of an agreement to assign her PIP benefits to the Appellant, in exchange for the medical services rendered, the Appellant submitted the medical bills accrued by Ms. Hernandez directly to Progressive. In turn, Progressive limited reimbursement to 80% of the physician fee schedule allowed under Medicare Part B.
As a result of the payment, which Progressive paid less than the 80% of what was billed, Fernandez Rehab sued Progressive to recover the unpaid medical bills and for breaching the insurance policy. Progressive asserted it did not breach the terms of the policy and filed a motion for summary judgment maintaining that both §627.736(5)(a)(2) (as then numbered) of the PIP statute (which permits insurers to base medical reimbursements on Medicare Part B rates), in addition to the policy’s Endorsement provisions (which provide clear notice that reimbursement will reflect the amount permitted under Medicare Part B), entitle Progressive to pay the Medicare rate in lieu of the rate billed by the provider. Fernandez Rehab filed a cross summary judgment motion refuting the application of the Medicare fee schedule and cited the policy’s contradictory provisions which suggest two different methods for calculating reimbursements. Fernandez Rehab argued that merely tracking the text of the PIP statute to incorporate the permissive standard into the policy while still retaining the option to apply the “reasonable expenses” method, without specifying which method of payment is elected, does not constitute notice to the insured of the reimbursement limitation. Finding the policy’s provisions reconcilable, the County Court ruled in favor of Progressive and against Fernandez Rehab. This appeal ensued.
DISCUSSION:
Based on a de novo review of the facts and law underlying this summary judgment ruling, this Court finds the County Court incorrectly granted summary judgment in favor of Progressive. Progressive’s contradictory language found within its policy creates an ambiguity, and thus, does not make the clear and unambiguous election needed to calculate reimbursements based on the permissive payment method.
In 2003, the Florida Legislature permitted insurance companies to consider evidence, including certain fee schedules, to arrive at what the insurance company considered the “reasonable” amount that should be paid for any service. The legislature amended the “reasonable” amount standard, codified as §627.736(5)(a) to include consideration of usual and customary charges, payments accepted by the provider involved in the dispute, the reimbursement levels in the community, 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 services. Geico Gen. Ins. Co. v. Virtual Imaging Serv., Inc., 141 So. 3d 147, 153 (Fla. 2013) [38 Fla. L. Weekly S517a]. This is known as the “reasonable expense” method. In 2008, the legislature again revised §627.736 Fla. Stat. and added a second payment calculation, codified as subsection (5)(a)(2), which allowed insurers the option to reimburse services at Medicare Part B rates, which may be less than that billed by medical providers. This method became known as the “permissive” method.
In 2013, the Florida Supreme Court interpreted the second payment calculation in Geico Gen. Ins. Co. v. Virtual Imaging Serv., Inc., 141 So. 3d 147 (Fla. 2013) [38 Fla. L. Weekly S517a]. The Court held that in order for the insurer to avail itself of the permissive method, the insurer must “clearly and unambiguously” make the election in the insurance policy. Id., at 158. The Court reaffirmed that framework in Allstate Ins. Co. v. Orthopedic Specialists, 212 So. 3d 973 (Fla. 2017) [42 Fla. L. Weekly S38a]. When Allstate’s endorsement referenced language strictly tied to the permissive fee schedule, it constituted enough of a clear and unambiguous election to the permissive fee method. Id. at 977.
Here, although Progressive’s policy does make clear statements to operate under the “permissive” method, the endorsement also includes language that is strictly limited to the “reasonable expenses” method. These sentences and captions read as follows:
Unreasonable or Unnecessary Medical Benefits
If an insured person incurs medical benefits that we deem to be unreasonable or unnecessary, we may refuse to pay those medical benefits and contest them.
We will reduce any payment to a medical provider under this Part II(A) [PIP coverage] by any amounts we deem to be unreasonable medical benefits.
The two cases above did not address whether an insurer may draft its policies in a manner that expressly gives the insurer the discretion to alternate between the two different methods.
The underlying purpose of the “permissive” method is to eliminate the need to challenge the reasonableness of the medical payments. Allowing insurers to limit reimbursements under the “permissive” method, while the same claim may be further reduced to a discretionary lower amount, nullifies the distinction between the two reimbursement concepts and renders those concepts meaningless.
Furthermore, hybrid policies, on their face, are at odds with the Supreme Court’s ruling in Virtual. There, the Court’s holding suggests that the purpose for requiring the insurer’s policy based election notice to be clear and unambiguous is to enable the insured and their providers to become meaningfully informed. By including language that is strictly reserved for the reasonable expense method, while also incorporating language that attempts to provide notice of the selection of the “permissive” method, Progressive creates an impermissible ambiguity.
When ambiguities exist in an insurance policy, the ambiguities are interpreted liberally in favor of the insured and strictly against the insurance company who drafted the policy. See, e.g., Washington Nat. Ins. Corp. v. Ruderman, 117 So. 3d 943, 951 (Fla. 2013) [38 Fla. L. Weekly S511a]; Prudential Prop. & Cas. Co. v. Swindell, 622 So. 2d 467, 470 (Fla. 1993). Progressive’s insurance policy does not provide clear notice to its insureds and their health care providers as to which method it has chosen in calculating PIP medical reimbursements. Accordingly, this Court reverses the County Court’s decision and remands it with instructions to enter summary judgement in favor of the appellant. (SIMON and WOLFSON, JJ. concur.)
