28 Fla. L. Weekly Supp. 435a

Online Reference: FLWSUPP 2806VOSInsurance — Personal injury protection — Coverage — Medical expenses — Statutory fee schedules — “Clear and unambiguous election” standard set by Virtual Imaging was superceded by 2012 amendment to PIP statute — In order to utilize statutory fee schedules, insurer was required only to give notice that it may limit reimbursement based on fee schedules — Policy at issue gave legally sufficient notice that it may limit reimbursements based on applicable Medicare fee schedules

NEUROLOGY PARTNERS, P.A. d/b/a EMAS SPINE AND BRAIN SPECIALIST, a/a/o Almern L. Vos, Appellant, v. PROGRESSIVE AMERICAN INSURANCE COMPANY, Appellee. Circuit Court, 4th Judicial Circuit (Appellate) in and for Duval County. Case No. 2017-AP-39. L.T. Case No. 2016-SC-000095. April 20, 2018. Counsel: Adam Saben and Melissa R. Winer, Shuster & Saben, LLC, Jacksonville, for Appellant. Michael C. Clarke, Kubicki Draper, P.A., Tampa, for Appellee.

OPINION

(ERIC C. ROBERSON, J.) In this Personal Injury Protection (“PIP”) appeal, the Appellant seeks review of the trial court’s Final Judgment and preceding Order Granting Defendant’s Motion for Summary Judgment. For the reasons set forth below, the trial court’s Order is AFFIRMED under the “tipsy coachman” rule. See Dade County Sch. Bd. v. Radio Station WQBA, 731 So. 2d 638, (Fla. 1999) [24 Fla. L. Weekly S216a] (“[I]f a trial court reaches the right result, but for the wrong reasons, it will be upheld if there is any basis which would support the judgment in the record.”).

Factual and Procedural Background

Mr. Vos was injured in a vehicle accident on June 11, 2013. At that time, Mr. Vos was insured through a policy issued by Appellee Progressive American Insurance Company (“Progressive”). Thus, this case involves a policy in effect after July 1, 2012.

Mr. Vos sought treatment for his injuries with Neurology Partners, P.A. d/b/a Emas Spine and Brain Specialist (“Neurology Partners”). As part of his treatment, Mr. Vos assigned his benefits under the subject policy to Neurology Partners.

The relevant language of Progressive’s policy includes:

UNREASONABLE OR UNNECCESSARY MEDICAL BENEFITS

If an insured person incurs medical benefits that we deem to be unreasonable or unnecessary, we may refuse to pay for those medical benefits and contest them.

We will determine to be unreasonable any charges incurred that exceed the maximum charges set forth in Section 627.736(5)(a)(1)(a through f) of the Florida Motor Vehicle No Fault Law, as amended. Pursuant to the Florida law, we will limit reimbursement to, and pay no more than, 80 percent of the following schedule of maximum charges:

***

f. For all other medical services, supplies and care, 200 percent of the allowable amount under the participating physicians’ fee schedule for Medicare Part B. . . .

Neurology Partners filed the underlying small claims lawsuit seeking recovery of sums allegedly due and owing for Mr. Vos’s medical treatment. The parties both moved for summary judgment on the dispositive issue of whether the subject insurance policy gave legally sufficient notice that the insurer was limiting reimbursement for medical services based on various Medicare fee schedules. See Fla. Stat. § 627.736(5)(a) 2-5. If there was not sufficient notice, payment determinations would revert to the “default” methodology utilizing a fact-intensive analysis of the “reasonable” amount of the charges. See Fla. Stat. § 627.736(5)(a)1. After hearing, the trial court granted Progressive’s Motion for Summary Judgment and denied Neurology Partners’ motion.

The trial court ultimately found Progressive’s policy to be “unambiguous” and “expressly state[d] that [Progressive] will limit reimbursement to pay no more than the fee schedules. . . .” Progressive had, according to the court’s ruling, satisfied its statutory obligations to Neurology Partners. As the issues on summary judgment were dispositive, a Final Judgment in favor of Progressive was entered shortly thereafter. This timely appeal ensued.

Legal Analysis

One of the most frequently litigated issues in County Court is the exact issue before this Court: Whether a PIP insurance policy provided legally sufficient notice that it would limit reimbursement of medical expenses pursuant to certain Medicare fee schedules. This issue has divided the Duval County Court and now divides the Fourth Judicial Circuit Court, sitting in its appellate capacity. We are not alone; this issue has divided courts throughout the state.

Section 627.736, Florida Statutes (the “PIP Statute”) provides insurers with two separate and distinct methods of reimbursing charges for the treatment of injured persons. These are commonly referred to as the default method and the permissive method. The default method is found in Section 627.736(5)(a) and utilizes a fact-intensive ‘reasonableness’ analysis. To determine whether a particular charge 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.” Fla. Stat. § 627.736(5)(a). The default methodology apparently results in higher reimbursements. See Allstate Fire & Cas. Ins. v. Stand-Up MRI of Tallahassee, P.A., 188 So. 3d 1, 3 (Fla. 1st DCA 2015) [40 Fla. L. Weekly D693b] (“Stand-Up MRI”).

On the other hand, the permissive method found in Section 627.736(5)(a)2-5 is closer to a mathematical equation, setting reimbursements based on various Medicare fee schedules.

Virtual Uncertainty

There is a threshold issue that is both fundamental and potentially dispositive. Does the standard established in Geico Gen. Ins. Co. v. Virtual Imaging Servs., Inc., 141 So. 3d 147 (Fla. 2013) [38 Fla. L. Weekly S517a] (“Virtual”) remain applicable to policies in effect after July 1, 2012? If it does, then the courts must engage in a linguistic analysis of specific policy language. Having to engage in a fresh analysis of each insurer’s policy — with all the variations in language — will ensure that there is no predictability to potential litigants. This will result in great uncertainty (not to mention multiplying exponentially the cost of litigation) until the inevitable conflicts between the Districts are resolved by our Supreme Court.

If, however, the 2012 amendment language supersedes Virtual, then the highly deferential standard requires only that insurers give notice that the Medicare fee schedules could apply. Such a standard will provide certainty to potential litigants and greatly reduce either the volume of PIP cases or the amount of attorney’s fees incurred in litigation.

In Virtual, the Supreme Court addressed whether Geico’s policy provided legally sufficient notice of electing the permissive payment method and gave what appears to be a definitive answer. PIP insurers must “clearly and unambiguously elect the permissive payment methodology in order to rely on it.” Virtual, 141 So. 3d at 158. But the devil lies in the details.

Although decided in 2013, Virtual, by its clear and unambiguous terms, stated that its “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.” Virtual, 141 So. 3d at 150.

The Supreme Court’s standard of requiring insurers to “clearly and unambiguously elect the permissive payment methodology” filled in the absence of a legal standard in the 2008 version of the PIP Statute. Before the 2012 amendment, Section 627.763(5)(a)5 read:

If an insurer limits payment as authorized by subparagraph 2. [setting forth the fee schedules], the person providing such services, supplies, or care may not bill or attempt to collect from the insured any amount in excess of such limits, except for amounts that are not covered by the insured’s personal injury protection coverage due to the coinsurance amount or maximum policy limits.

Virtual, 141 So. 3d at 159 (quoting, with emphasis added, Fla. Stat. 627.763(5)(a)5 (2008)). Thus, there was no standard to determine “if” an insurer properly elected the permissive method.

That changed in 2012 when the statute was amended to read:

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. If a provider submits a charge for an amount less than the amount allowed under subparagraph 1., the insurer may pay the amount of the charge submitted.

Fla. Stat. § 627.763(5)(a)5 (2012).

The Supreme Court recognized that the 2012 amendment provided a standard to determine if an insurer could rely on the permissive method. Specifically, the court said “the Legislature has now specifically incorporated a notice requirement into the PIP statute, effective July 1, 2012. . . .” Virtual, 141 So. 3d at 150.

Far from Virtual‘s exacting standard of ‘clearly and unambiguously electing’ the permissive method, the 2012 amendment merely requires “notice at the time of issuance or renewal that the insurer may limit payment pursuant to” the Medicare fee schedules. Fla. Stat. § 627.763(5)(a)5 (emphasis added).

Here, the Legislature’s choice of the word ‘may’ at two points shows that it intended to give insurers broad leeway in choosing the Medicare fee schedule methodology. From day one, aspiring lawyers are taught the difference between the mandatory ‘shall’ and the permissive ‘may.’ See e.g. Blair Nurseries, Inc. v. Baker Cnty,, 199 So. 3d 534, 539 (Fla. 1st DCA 2016) [41 Fla. L. Weekly D2121a] (“There is ample case law holding that the use of the term “may” ordinarily denotes discretionary or permissive authority.”) (Bilbrey, J., dissenting). In other contexts, courts have found the word ‘may’ to provide breadth and flexibility. See Dept. of Children and Families v. J.D., 198 So. 3d 960, 961 (Fla. 5th DCA 2016) [41 Fla. L. Weekly D1822b] (“The use of the word ‘may’ rather than ‘shall’ in this section recognizes the courts must be free to exercise broad discretion when choosing the appropriate remedy. . . .”); Andrews v. State, 181 So. 3d 526, 528 (Fla. 5th DCA 2015) [40 Fla. L. Weekly D2456a] (“The emphasis on the word ‘may’ reflects Daubert’s description of the Rule 702 inquiry as a ‘flexible’ one.); Doe v. City of Palm Bay, 169 So. 3d 1211, 1219 (Fla. 5th DCA 2015) [40 Fla. L. Weekly D1671a] (Ordinance banning sexual offender from performing work in any “other place where children or vulnerable adults may reside or regularly congregate . . . is broad enough to apply to virtually every residence in the City, as well as a vast number of businesses. . . .”).

The definitions of the word ‘may’ in Black’s Law Dictionary demonstrate how open-ended the word can be, especially in the context of this specific statute. The first definition is “to be permitted to” while the second definition is “to be a possibility.” Black’s Law Dictionary (10th ed. 2014), available at Westlaw BLACKS. These two definitions coincide with the two uses of the word “may” in Section 627.763(5)(a)5, Florida Statutes.

Thus, if the 2012 amendment is applied, all that is required is notice that an insurer could possibly limit reimbursements to the Medicare fee schedule — not that the insurer will do so or can only utilize the fee schedules.

Post-Virtual Decisions

The decisions following Virtual have failed to delineate whether the “clear and unambiguous election” standard applies to insurance policies in effect after July 1, 2012.

The First District, in Stand-Up MRI, analyzed an Allstate policy containing the following relevant policy language:

In accordance with the Florida Motor Vehicle No-Fault Law, [Allstate] will pay to or on behalf of the injured person the following benefits. . .

1. Medical Expenses

Eighty percent of reasonable expenses for medically necessary . . . services . . .

Any amounts payable under this coverage shall be subject to any and all limitations, authorized by section 627.736, or any other provisions of the Florida Motor Vehicle No-Fault Law, as enacted, amended or otherwise continued in the law, including but not limited to, all fee schedules.

The First District held “that the policy gives sufficient notice of its election to limit reimbursements by use of the fee schedules.” Stand-Up MRI, 188 So. 3d at 3. The court’s reasoning stemmed from “the policy’s plain statement that reimbursements ‘shall’ be subject to the limitations in § 627.736, including ‘all fee schedules’.” Id. The First District then quoted Virtual to say that “plain and unambiguous” policy language must be interpreted with the “plain meaning of the language” to give effect to the policy. Id. (citations omitted).

The Supreme Court approved Stand-Up MRI‘s reasoning and quashed a conflicting Fourth District opinion in Allstate Ins. Co. v. Orthopedic Specialists, 212 So. 3d 973 (Fla. 2017) [42 Fla. L. Weekly S38a] (“Orthopedic Specialists”). To highlight the division and confusion in applying Virtual‘s standard, Stand-Up MRI was a consolidation of 14 cases and Orthopedic Specialists involved 32 consolidated cases.

Confusion remains, however, for multiple reasons. First, the post-Virtual decisions do not include in their analysis whether the subject policies were in effect before or after July 1, 2012 and what, if any, difference that would have on the outcome. For example, the lead case in Stand-Up MRI, assigned Case No. 2012-SC-2640 in Leon County, Florida, involved injuries allegedly sustained on May 20, 2012. Similarly, the lead case in Orthopedic Specialists was filed on February 22, 2012 and assigned Case No. 2012-SC-3692 in Palm Beach County, Florida. Accordingly, neither case involved a policy in effect after July 1, 2012.

Second, there is uncertainty because the distinctly different concepts of (i) actually electing the permissive payment method and (ii) merely providing notice that an insurer may utilize the permissive payment method seem to be used interchangeably. The pre-2012 version of Section 627.763(5)(a)5, Florida Statutes applied “if an insurer limit[ed] payment” to the fee schedules. Thus, the insurer was required to actually choose or “elect” to utilize the fee schedules. This is consistent with Virtual‘s holding that:

[W]e conclude that the insurer was required to give notice to its insured by electing the permissive Medicare fee schedules in its policy before taking advantage of the Medicare fee schedule methodology to limit reimbursements.

Virtual, 141 So. 3d at 150 (emphasis added). Stated differently, “the insurer must clearly and unambiguously elect the permissive payment methodology in order to rely on it.” Id. at 158.

The 2012 amendment, however, only requires notice and not an actual election of the permissive payment methodology. Specifically, the amendment allows an insurer to utilize the Medicare fee schedules “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. . . .” Fla. Stat. 627.763(5)(a)5 (emphasis added). But Virtual appears to conflate election and notice by stating:

[T]he Legislature amended the PIP statute to include a specific requirement that insurers notify their policyholders at the time of issuance or renewal of the insurer’s election to limit payment pursuant to the fee schedules set forth in the PIP statute.

Virtual, 141 So. 3d at 154.

This was repeated in Orthopedic Specialists‘ holding that “Allstate’s PIP policy provides legally sufficient notice of Allstate’s election to use the permissive Medicare fee schedules”. Orthopedic Specialists, 212 So. 3d at 979 (emphasis added). The question remains: does the 2012 amendment to Section 627.763(5)(a)5 providing a notice requirement supersede Virtual‘s requirement that an insurer “clearly and unambiguously elect” the permissive method?

Fourth Circuit Appellate Decisions

This Court’s opinion conflicts with two prior Fourth Circuit appellate opinions addressing the legal sufficiency of an insurer’s notice of relying on the permissive payment method. Because this opinion is decided by holding that Virtual‘s “clear and unambiguous election” standard was superseded by the 2012 amendment to Section 627.736(5)(a)5, the analysis below will be confined to that narrow issue.

Most recently, Neurology Partners, P.A., d/b/a Emas Spine and Brain Specialists a/a/o Roderick A. Williams v. Progressive Express Ins. Co., 2017-AP-34 (Fla. 4th Cir. Jan. 25, 2018) (“Williams”) dealt with 10 separate appeals involving insurance policies that were in effect after July 1, 2012. That opinion held that the standard in Virtual still applied. The entirety of Williams’ analysis on that point was set forth in the following footnote:

The holding in Virtual Imaging applies to policies in effect from the effective date of the 2008 amendments to the PIP statute that first provided for the Medicare fee schedule methodology through the effective date of the 2012 amendment. See id. at 150. Although the instant policies fall outside that timeframe, Virtual applies to the analysis here.

Williams, D.E. 39, p. 7, N. 1. The footnote contradicts itself and lacks any reasoning or citation to authority to conclude that Virtual still applies. Accepting this reasoning, the 2012 amendment to Section 627.736(5)(a)5 is judicially scrubbed from the Florida Statutes.

In addition to the explicit limitation in Virtual, the Court disagrees with Williams because of established rules of statutory construction and the binding precedent of the Supreme Court that the Circuit Court must follow.

In construing the 2012 amendment, this Court must give the effect to the statutory language and not read it in a way that renders it ineffective or surplusage. See Gracie v. Deming, 213 So. 2d 294, 296 (Fla. 2d DCA 1968) (“courts should not construe a statute in such a manner as to reach an illogical or ineffective conclusion when another construction is possible”). As the Fifth District succinctly stated:

We are required to give effect to every word, phrase, sentence, and part of the statute, if possible, and words in a statute should not be construed as mere surplusage. Moreover, a basic rule of statutory construction provides that the Legislature does not intend to enact useless provisions, and courts should avoid readings that would render part of a statute meaningless.

Quarantello v. Leroy, 977 So. 2d 648, 652 (Fla. 5th DCA 2008) [33 Fla. L. Weekly D517a] (cleaned up).

Here, the reasoning in Williams would not only render the 2012 amendment meaningless, it would also render the Supreme Court’s explicit limitation of Virtual application a nullity. The Court does not have to speculate whether the 2012 amendment was added to provide a notice provision — the Supreme Court explicitly said as much. Virtual, 141 So. 3d at 150 (2012 amendment “incorporated a notice requirement into the PIP statute”). The Court also does not have to speculate whether the Supreme Court meant to limit its holding in Virtual to policies in effect prior to the 2012 amendment — even the Williams opinion recognized that it did. This Court cannot, and will not, ignore the clear instructions of the Supreme Court in limiting the application of Virtual.

Before Williams, another Circuit Court appellate opinion engaged in significant analysis of whether Virtual applied after July 1, 2012. See Progressive Select Ins. Co. v. Neurology Partners, P.A. d/b/a Emas Spine and Brain Specialist a/a/o Phyllis Easley, 2016-AP-61 (Fla. 4th Cir. Ct. September 7, 2017) (“Easley”).

Easley reasoned that the 2012 amendment “codif[ied] the judicially-created notice requirement when electing the permissive payment method.” Easley, D.E. 53, p. 12. The “judicially created notice requirement” refers to two District Court opinions in Kingsway Amigo Ins. Co. v. Ocean Health, Inc., 63 So. 3d 63 (Fla. 4th DCA 2011) [36 Fla. L. Weekly D1062a] and Geico Indem. Co. v. Virtual Imaging Servs., Inc., 79 So. 3d 55 (Fla. 3d DCA 2011) [36 Fla. L. Weekly D2597a]. The reasoning in those two cases was affirmed in Virtual.

But if the 2012 amendment was a mere codification of earlier district court opinions, it would make no sense for the Supreme Court to then explicitly limit its application based on the new “notice requirement” added to the PIP Statute. Instead, the Supreme Court made the limitation because the 2012 amendment “incorporated a notice requirement into the PIP Statute.” Virtual, 141 So. 3d at 150. There is simply no basis to conclude that the 2012 amendments were made to adopt prior intermediate appellate decisions. Moreover, any alleged motivation underlying the amendment is irrelevant.

The Court does not attempt to find the “intent” of the 2012 amendment. Absent an express declaration of intent within the statute, it is a legal fiction to believe that a bicameral legislature and an executive signing the bill into law had a singular intent. Instead, the Court turns first, as always, to the text of the statute. The words are given their plain and ordinary meaning. If the statutory wording is unambiguous, then judicial inquiry is complete. Klonis v. State Dept. of Revenue, 766 So. 2d 1186, 1189 (Fla. 1st DCA 2000) [25 Fla. L. Weekly D2230a]. The Court finds the 2012 amendment to be unambiguous and it will be applied according to its terms.

More troubling is Easley’s determination of which branch of government is tasked with creating the substantive rules and policies governing PIP — such as the notice requirements for utilizing the permissive payment method. According to Easley, the legislature cannot make substantive changes to the PIP Statute and is bound to a court’s interpretation of a prior version of Section 627.736(5)(a)5. Specifically, Easley stated:

Progressive’s argument is also inconsistent with binding authority on legislative adoption of judicial construction of statutes. In 2011, the year immediately preceding the amendment to §627.736(5)(a)5, the Florida judiciary held in Kingsway Amigo Ins. Co. v. Ocean Health, Inc., 63 So. 3d 63 (Fla. 4th DCA 2011) [36 Fla. L. Weekly D1062a] (“Kingsway”), and Geico Indem. Co. v. Virtual Imaging Servs., Inc., 79 So. 3d 55 (Fla. 3d DCA 2011) [36 Fla. L. Weekly D2597a] (“Geico”) that insurers must “clearly and unambiguously” elect the permissive fee schedule in order to rely on it. The legislature is presumed to know the judicial construction of a law when enacting a new version of that law. Therefore, this Court takes the position, as a matter of law, that when the statute was amended in 2012, the legislature adopted the judicial construction of Geico and Kingsway, requiring notice of clear and unambiguous election to use the permissive payment method.

Easley, D.E. 53, p. 14-15 (certain citations and quotations omitted, emphasis in original). This reasoning would mean that the legislature is forever stripped of its power to enact substantive changes to the law once the judiciary has weighed in. Such an approach is fundamentally flawed and runs afoul of the most basic principles of the separation of powers.

In our constitutional scheme, the three branches are assigned separate powers that are not intended to overlap. The legislative power is reserved solely for our state’s legislature. Art. III, §1, Fla. Const. No other branch may exercise legislative power unless the Constitution specifically permits it. Art. II, §3, Fla. Const.

The legislature has the power to enact substantive laws. Johnson v. State, 336 So. 2d 93, 95 (Fla. 1976); see also Citizens for Strong Schools, Inc. v. Fla. State Bd. of Educ., 232 So. 3d 1163, 1171 (Fla. 1st DCA 2017) [42 Fla. L. Weekly D2640c] (“the legislative branch has sole power to appropriate and enact substantive policy”). The legislature, frequently and directly accountable to the electorate, has the prerogative to enact policy choices into law. See The Federalist No. 78 (“The legislature . . . prescribes the rules by which the duties and rights of every citizen are to be regulated.”).

The judiciary is limited to enforcing the substantive law where constitutional. Johnson, 336 So. 2d at 95. While it is “emphatically the province and duty of the judicial department to say what the law is”, Marbury v. Madison, 5 U.S. (1 Cranch) 137, 177 (1803), it is not the judiciary’s role to say what the law should be or what the law will be.

The series of events leading up to the 2012 amendment shows the different branches operating exactly as our constitution intends.¹ The 2008 amendment to Section 627.736(5)(a)5 allowed a PIP insurer to elect the permissive payment method but did not establish the substantive requirements for doing so. The judiciary, through Kingsway and Virtual (both in the Third District and Supreme Court), established a legal standard requiring a clear and unambiguous election in the absence of a statutory standard. The legislature later enacted its 2012 amendment, which the Supreme Court explicitly held established a notice requirement. Thus, the judicially-created standard became obsolete once the legislature established a notice requirement for PIP insurers to utilize the permissive method.

Conclusion

The Court holds that the “clear and unambiguous election” standard set by Virtual was superseded by the 2012 amendment to Section 672.736(5)(a)5. Applying that statutory standard, the insurance policy at issue gave legally sufficient notice that it may limit reimbursements based on applicable Medicare fee schedules. Accordingly, the order under review is AFFIRMED.

As set forth above, this is an issue causing significant confusion — and increased litigation — in the County Courts throughout the state. The County Court can certify questions to the District Court of Appeal if the question has statewide application and (i) is of great public importance or (ii) will affect the uniform administration of justice. Fla. Stat. § 34.017. The Court has no doubt that the issue here easily satisfies both of those requirements.

Unfortunately, the Circuit Court has no similar mechanism of certifying questions to the District Court of Appeal. If this Court had such an option, it would consider certifying the following question:

FOR POLICIES IN EFFECT AFTER JULY 1, 2012, WHAT IS THE STANDARD FOR PIP INSURERS TO UTILIZE THE PERMISSIVE PAYMENT METHOD PURSUANT TO SECTION 627.736(5)(a)5?

__________________

¹The analysis would be different if Virtual found that the PIP Statute offended constitutional requirements. However, Virtual, as well as Kingsway and Geico, was limited to statutory and contractual interpretation.