23 Fla. L. Weekly Supp. 943a
Online Reference: FLWSUPP 2309ADAMInsurance — Personal injury protection — Coverage — Medical expenses — Neither approval of PIP policy by Office of Insurance Regulation nor use of OIR sample language in policy constitutes per se compliance with requirement that policy provide unambiguous notice of intent to limit reimbursement to permissive statutory fee schedule — PIP policy that includes fact-dependent factors in its definition of “reasonable charge” while also attempting to reimburse in accordance with statutory fee schedule commingles payment methodologies and does not provide clear and unambiguous notice of intent to limit reimbursement to fee schedule — Requirement of clear and unambiguous notice of election to use statutory fee schedule enunciated by Florida Supreme Court in Virtual Imaging relative to 2008 version of PIP statute is equally applicable to 2012 amendments to PIP statute
FIRST COAST MEDICAL CENTER A/A/O KEVIN ADAMS, Plaintiff, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY (“STATE FARM”), Defendant. County Court, 4th Judicial Circuit in and for Duval County. Case No. 16-2014-SC-3619. January 15, 2016. Dawn Hudson, Judge. Counsel: Adam Saben, Shuster & Saben, Jacksonville, for Plaintiff. David Gagnon, Taylor, Day, Grimm & Boyd, Jacksonville, for Defendant.
ORDER DENYING DEFENDANT’S MOTIONFOR SUMMARY JUDGMENT
THIS MATTER comes before this Court for hearing on December 3, 2015 on Defendant’s Motion for Summary Judgment. This Court, having reviewed the Court file and having heard argument of counsel and being otherwise advised in the premises DENIES the Defendant’s Motion for Summary Judgment and finds that State Farm did not properly elect the permissive payment methodology of F.S. 627.736(5)(a)1(2012)1 in the language of endorsement 9810A.LEGAL ANALYSIS
The issue before the Court is whether State Farm’s language in its Form 9810A policy permits it to limit reimbursement of a properly submitted bill for medical services pursuant to the schedule of maximum charges described in F.S. 627.736(5)(a)1(2012). The Defendant advances four arguments in support of its position, each of which will be briefly addressed:
I. State Farm’s policy was “approved” by the Office of Ins. Regulation (“OIR”)
The Court had an opportunity to review the insurance policy at issue in this case.2 Defendant’s position is that the “approval” of Policy Form 9810A by the OIR amounts to regulatory consent that the Defendant may reimburse pursuant to the “permissive” payment methodology of F.S. 627.736(5)(a)1(2012). There is no dispute that the Defendant’s insurance policy in this case was “approved” by the OIR. Further, there is no dispute that “[C]ourts are bound to give deference to an agency’s interpretation of statutes the agency is charged with implementation.” Florida Interexchange Carrier’s Ass’n v Clark, 678 So.2d 1267 (Fla. 1996) [21 Fla. L. Weekly S337a].3 However, the issue before the Court is not whether the Defendant’s policy was approved; it’s whether the approved policy makes a “clear and unequivocal election” that reimbursements will be based on the “permissive” payment methodology instead of the “default” payment methodology, as explained by the Florida Supreme Court in Geico v. Virtual Imaging Services, 141 So.3d 147 (2013) [38 Fla. L. Weekly S517a]. While the policy may be approved by the OIR for use by State Farm for its business of insuring Floridians, the Defendant presents no authority showing that such “approval” constitutes a finding of compliance with the notice requirement contained in F.S. 627.736(5)(a)5(2012).4
Allstate Insurance Company advanced the same argument that its policy was “approved” by the OIR and, therefore, there was a “proper election” to pay pursuant to the “permissive” payment methodology of F.S. 627.736(5)(a)1(2012) in MR Services I, Inc. a/a/o William White v. Allstate Insurance Company, (Order of Broward County Court Judge Robert Lee, Broward County Court case number 13-12538 COCE (53) dated November 4, 2015) [23 Fla. L. Weekly Supp. 637b]. In rejecting Allstate’s argument, Judge Lee wrote:
“Otherwise, 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”.
This Court agrees with Judge Lee and finds that “approval” by the OIR does not rise to compliance with Virtual and F.S. 627.736(5)(a)5(2012) regarding a “clear and unambiguous” election. Also see, Neurology Partners, P.A. d/b/a Emas Spine & Brain a/a/o Willie Brown v. State Farm Mut. Auto. Ins. Co., (Order of Duval County Court Judge Scott Mitchell dated July 28, 2015, case number 2014-SC-5472) [23 Fla. L. Weekly Supp. 550a](“There is no language in the OIR “approval” showing that there was a proper notice or election to comply with F.S. 627.736(5)(a)5”).
II. State Farm incorporated the OIR Sample Endorsement into its 9810A policy
Florida Statute 627.736(5)(a)5(2012) was amended during the 2012 legislative session and added language regarding a notice requirement. The pertinent part of the subsection 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. A policy form approved by the office satisfies this requirement.”
F.S. 627.736(5)(a)5(2012).
The “office” referred to in the above section is the OIR. The Court finds that the Defendant did, essentially, incorporate the OIR Sample Fee Schedule Endorsement form into its policy. However, mere incorporation of the OIR sample form, “Use of Medical Fee Schedule for Personal Injury Protection Claims” is not the end of the Court’s inquiry; it’s the beginning. The Court is still mandated to review the policy “as a whole” to determine if the Defendant made a “clear and unambiguous” election to choose the “permissive” payment methodology as the means to determine PIP reimbursements. This second inquiry is mandated both by case law and the OIR Informational Memorandum itself. First, in Virtual, the Supreme Court stated:
“Accordingly, 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.
Second, the OIR Informational Memorandum disclaimed mere incorporation of its sample form stating:
“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.”
Based on the memorandum by the OIR, inclusion of the approved form in an insurer’s policy is not dispositive of the issue of election and notice. To the contrary, the OIR directs insurers to review its forms, research the law, and confer with counsel in addition to using its “sample form” as a notice mechanism. The inclusion of the sample form cannot be read “in a vacuum” when determining whether a policy contains a proper election for payment under the permissive payment methodology as per F.S. 627.736(5)(a)5(2012). Therefore, based on the OIR memorandum and Virtual, incorporation of the OIR form does not rise to a de facto proper election of the “permissive” payment methodology.
III. State Farm’s 9810A policy contains a “clear and unambiguous” election
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 but could now opt for an alternative mechanism for determining reasonableness: by reference to the Medicare fee schedules. The Florida Supreme Court in Virtual explained that the first “default” payment methodology was a “fact-dependent inquiry determined by consideration of various factors”, stating:
“The 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” Virtual, at 156 (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].
The second payment methodology, found in F.S. 627.736(5)(a)2(2008) is not fact-dependent. This “permissive” payment methodology does not rely on any analysis regarding the reasonableness of a submitted charge or upon a study into reimbursements accepted by the medical provider. Instead, it relies on a mere application of the “schedule of maximum charges” to the charge submitted for a particular service or supply irrespective of the reasonableness of the submitted charge. However, in order to avail itself of the option in F.S. 627.736(5)(a)2(2008), the insurer must provide notice in the policy of its election to use the fee schedules in “clear and unambiguous” language. Virtual, at 159.
As stated above, there is no issue that the Defendant incorporated the OIR sample form on page 16 of 9810A policy, placing an insured on notice of its intent to limit reimbursement pursuant to the “permissive” payment methodology.5 However, as State Farm properly states in its Motion for Summary Judgment, “In construing an insurance policy, courts should read the policy as a whole, endeavoring to give every provision its full meaning and operative effect”6 In reading the policy as a whole, the Court notes the definition of “Reasonable Charge” as found on page five of State Farm’s Policy Form 9810A, which states:
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.
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(2012). 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.”
State Farm also relies on Allstate Fire and Casualty Insurance v. Stand-Up MRI of Tallahassee, 2015 WL 1223701 Fla. 1st DCA (Opinion of March 18, 2015) [40 Fla. L. Weekly D693b](“Stand-Up MRI”).7 In Stand-Up MRI, the First DCA found the policy language on an Allstate policy places the insured on notice that Allstate was going to pay pursuant to the permissive payment methodology. However, the First DCA found that Allstate properly placed its insured on notice with a “plain statement that reimbursements shall be subject to the limitations in F.S. 627.736, including all fee schedules”. Unlike the Allstate policy in Stand-Up MRI, the State Farm 9810A policy includes a definition of “reasonable charge” that commingles the payment methodologies.
IV: The holding in Virtual no longer applies to policies after 2012
State Farm also asks this Court to disregard Virtual, stating that the opinion only addressed the “effect of the 2008 amendments on an insurers ability to limit reimbursement prior to the Legislature’s 2012 amendment of F.S. 627.736 with House Bill 119”.8 However, the Court finds that Virtual is still applicable for three reasons:
1) The 2012 PIP statute, as amended, kept the same essential language regarding the two payment methodologies (albeit the Legislature re-numbered the sections). If the Legislature intended to eliminate the dichotomy of payment methodologies during the 2012 legislative session, keeping both methodologies (from the prior statute) intact contradicts such an intent;
2) Even assuming that the Supreme Court restricted its opinion in Virtual to policies before July 1, 2012, the rationale of Virtual of providing notice of an election is equally sound to the amended version of the statute. As the Supreme Court said, “election gives notice to the insured — and to the provider who renders service based on an assignment of benefits in the insured’s policy — regarding the amount of PIP coverage the insurer will provide.” Virtual, at 158. Such a purpose applies equally before and after 2013; and,
3) Florida Statute 627.736(5)(a)5(2012) infers that notice and a proper election are still required for an insurer to avail itself of the permissive payment methodology. In fact, the Supreme Court in Virtual states “the Legislature has now specifically incorporated a notice requirement into the PIP statute, effective July 1, 2012, see, F.S. 627.736(5)(a)5. Virtual, at 150. The fact that the Court in Virtual emphasizes the importance of “notice” and then references F.S. 627.736(5)(a)5 as the “notice” requirement connotes that the Court was satisfied that F.S. 627.736(5)(a)5 codified the rationale of Virtual; not eliminated it.
Therefore, for the reasons stated above, this Court rules that State Farm Policy 9810A does not place its insured on notice of the election to pay pursuant to F.S. 627.736(5)(a)1(2012) and it may not avail itself of the permissive payment methodology. The Defendant’s Motion for Summary Judgment is DENIED.
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1Formally F.S. 627.736(5)(a)2(2008).
2See, Defendant’s Notice of Filing Certified Policy filed on October 26, 2015, introduced without objection.
3See, Defendant’s Amended Motion for Summary Judgment, page 11, filed October 26, 2015.
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.” F.S. 627.736(5)(a)5(2012).
5The pertinent part of the policy states:
“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. . .” (emphasis in original).
6 See, Defendant’s Motion for Summary Judgment page 4, filed October 26, 2015, citing Auto-Owners Ins. Co. v. Anderson, 756 So.2d 29, 34 (Fla. 2000) [25 Fla. L. Weekly S211a].
7See, Defendant’s Motion for Summary Judgment, page 13-14, filed October 26, 2015.
8See Page 13 of the Defendant’s Motion for Summary Judgment, citing Virtual at 150.