Following an automobile accident, injured parties need immediate funds to pay for medical expenses. To ensure that injured persons have the ability to obtain necessary healthcare, Florida law requires auto insurers to provide up to $10,000 of Personal Injury Protection (PIP) coverage for medical expenses. This coverage is available regardless of who is at fault for the crash. Typically, PIP insurers have to pay medical bills within 30 days. This "prompt payment" requirement is great news for injured insureds and the medical providers who treat them. But, what if the amount charged for care is unreasonable?
If a medical provider’s bill is unreasonably high, payment based on the billed amount would prematurely deplete the insured’s limited PIP benefits. The premature depletion of benefits may leave injured insureds without enough money left in PIP benefits to pay for other necessary care. To avert this problem, the legislature made clear that insurance companies are only required to pay a reasonable amount for the care rendered. So, who decides how much is reasonable? Often, a jury.
Following years of litigation between medical providers and insurance companies over the reasonableness of healthcare charges, the legislature amended the PIP statue to include a schedule of maximum charges. The current version of the statute (Fla. Stat. § 627.737(5)(a)1.) states:
The insurer may limit reimbursement to 80 percent of the following 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.
Florida's auto industry interpreted the simple phrase “may limit reimbursement” to be a green light for reducing medical bills to the scheduled rates. After all, the statute does say that the insurer "may limit reimbursement," right? Well, no. Not exactly.
Medical providers challenged the insurance industry's interpretation of the statute, asserting that in order to apply the statutory schedule of maximum charges, insurance companies have to clearly state in their insurance policies that the amount paid for PIP benefits will be limited to the statutory fee schedule. Auto insurers thought their policies were clear. An extraordinary number of legal actions were filed by medical providers seeking payment of reduced claims. Following hundreds of thousands of lawsuits filed against PIP insurers, the issue finally reached Florida's high court. The Florida Supreme Court sided with the medical providers. In a landmark 2013 decision, Geico General Insurance Company vs. Virtual Imaging Services, Inc., 141 So.3d 147 (Fla. 2013), the Florida Supreme Court held that notice to the insured, through a clear election in the policy that policy benefits are limited to the fee schedule amount, is required for the insurer to limit its payment to the scheduled rates.
Insurers throughout the state immediately revised their policy language. Each insurance company crafted its own wording to make clear that benefits will be limited to the amount set forth in the PIP schedule of maximum charges. Allstate Insurance Company was the first to have their new policy language scrutinized by the Florida Supreme Court. In Allstate Insurance Company vs. Orthopedic Specialists, -- So.3d ----, Case No. SC 15–2298 (Fla. January 26, 2017), the Florida Supreme Court analyzed the following policy language. Under the heading "Limits of Liability," Allstate's new policy provided:
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 fees schedules.
In a 4-3 decision in favor of Allstate, the Florida Supreme Court found that, taken in context, the language "shall be subject to any and all limitations, authorized by section 627.736" made it clear that reimbursement would be limited to the statutory schedule of maximum charges. Thus, Allstate's election to limit payment to the statutory schedule of maximum charges was deemed unambiguous and fully enforceable.
Insurers throughout the state are hoping to ride this wave based on their own new policy language. Allstate is in the clear. Ultimately, however, the specific language of each insurer's policy will have to be reviewed. Nonetheless, this new case law has the potential to unburden insurers from onerous litigation, considerably lighten court dockets, and bring clarity to insurers, medical providers, and insureds on the preeminent issue that has plagued PIP coverage for many years: the reasonableness of medical provider charges.
*The parties have until February 10th to file motions for rehearing or clarification. Until such motions are resolved, the decision is not final.
