As The Pip World Turns: Insurance Carriers Do Not Have To Pay 100% Of The Billed Amounts Under Section 627.736, Florida Statutes

May 7, 2024

A plethora of litigation exists in Florida’s state and federal courts regarding the amounts an insurance carrier must reimburse a medical provider for personal injury protection (PIP) benefits. Such challenges carry a heavy price tag if attorneys’ fees are awarded to the successful insured. A recent contention is that insurance carriers must pay 100% of the amount billed by medical providers if that amount is less than 80% of the Schedule of maximum charges. Battling over minuscule individual amounts, these contentions are pending in multiple class actions over the issue. The Florida Supreme Court just put a stop to such contentions (in most cases) in Allstate Insurance Company v. Revival Chiropractic, LLC, SC2022-0735, 2024 WL 1776115 (Fla. Apr. 25, 2024), where the court analyzed section 627.736, Florida Statute (2017) when answering a certified question posed by the Eleventh Circuit.

Section 627.736(5)(a)1, Florida Statutes, states that “[t]he insurer may limit reimbursement to 80 percent of the [listed] schedule of maximum charges.” Subsection (5)(a)5. requires that an insurer provide notice of:

In Revival, Allstate Insurance Company (Allstate) agreed to pay “eighty percent of reasonable expenses” for “medically necessary services”:

Allstate issued auto insurance policies to Ms. Rivera and Ms. Padin, who were subsequently involved in auto accidents and sought medical treatment from Revival Chiropractic, LLC (Revival). After assigning their benefits, Revival submitted a charge of $100 to Allstate for services that had a maximum charge of $149.92 under the statutory schedule. Allstate paid $80 of the $100 charge.[1]  Revival argued that Allstate had a duty to pay the entire $100 charge under the statute. 

            Revival filed a class action lawsuit in state court, and the case was removed to the federal court for the Middle District of Florida. Allstate and Revival both moved for summary judgment. Allstate argued that the provision in subsection (5)(a)5., specifying that an “insurer may pay the amount of the charge submitted,” was permissive, and Allstate was not required to pay 100% of the amount billed. Conversely, Revival argued that because Allstate elected to use the schedule of maximum charges, Allstate was exclusively required to use the provisions related to that schedule. Therefore, Allstate was either required to pay 80% of the charge specified by the schedule, regardless of the amount billed, or pay 100% of “the amount of the charge submitted” when the charge submitted was for “an amount less than the amount allowed under” subsection (5)(a)1. The Middle District Court agreed with Revival, and Allstate appealed to the Eleventh Circuit Court of Appeals. The Eleventh Circuit certified the following question to the Florida Supreme Court:

The Florida Supreme Court recently held the PIP statute did not “preclude an insurer that elects to limit PIP reimbursements based on the schedule of maximum charges from also using the separate statutory factors for determining the reasonableness of charges.” MRI Associates of Tampa, Inc. v. State Farm Mutual Automobile Insurance Co., 334 So. 3d 577 (Fla. 2021). In other words, the reasonableness of charges was not limited to one methodology under the statute. When examining MRI Associates in Revival, the Supreme Court explained that the clause “an insurer may limit payment [if the policy contains notice that] the insurer may limit payment pursuant to the schedule of charges … cannot be reconciled with the argument that an election to use the limitations of the schedule of maximum charges must be an exclusive election.”  Rather, the Supreme Court specifically recognized that the “permissive nature of the statutory notice language … signals that the insurer is given an option that may be used in addition to other options that are authorized.”   Therefore, the schedule of maximum charges should be understood “simply as an optional method of capping reimbursements rather than an exclusive method for determining reimbursement rates— that is, as a ceiling but not a floor.”

            Recognizing that the amounts the provider chose to bill for the services rendered were reasonable, Allstate appropriately paid 80% of those amounts, regardless of the fact/notwithstanding that the schedule of maximum charges permitted a higher amount to be billed. Even though an insurer gives notice that it may use the schedule of maximum charges, it is not precluded from paying 80% of reasonable charges as a “hybrid payment methodology” If its policy so provides. Therefore, the Florida Supreme Court answered “yes” to the following reframed question:

            The Florida Supreme also examined Hands On Chiropractic PL v. GEICO General Insurance Co., 327 So. 3d 439 (Fla. 5th DCA 2021), and Geico Indemnity Co. v. Muransky Chiropractic P.A., 323 So. 3d 742 (Fla. 4th DCA 2021), which provided support for Revival’s position. However, both of these cases were decided before the Florida Supreme Court’s decision in MRI.

Based on Revival, if an insurer’s policy contains language that it will pay a) 80% of reasonable expenses for medically necessary services, b) the policy may limit payment to the statutory Medicare schedule of maximum charges, and c) the insurer will pay 80% of a submitted charge even if the charge is less than 80% of the maximum charge under the schedule, the insurer is permitted to pay 80% of the submitted PIP charge. Even if an insurance policy only specifies elements (a) and (b), MRI and Revival support an insurer’s payment of 80% of the billed amount despite the fact that the billed amount is less than 80% of the schedule of maximum charges. 

            A related issue of contention on the class action front addresses an insurance carrier’s payment obligation when it receives a bill for less than the maximum scheduled charge but it is not less than 80% of the maximum scheduled charge. Even though the Florida Supreme Court did not specifically address this issue, its reasoning in Revival and MRI fully supports the propriety of an insurer’s payment of 80% of the billed amount. This case, therefore, provides clarity to insurance companies and medical providers regarding an insurer’s PIP payment obligations.

For any further questions, please contact Kathy Maus or Blake Hunter.

[1] Revival also submitted another PIP charge less than the maximum charge under the statutory schedule and Allstate paid 80% of the amount charged.