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Geico Gen. Ins. Co. v. Virtual Imaging Services, Inc., No. SC12—05, 2013 WL 3332385 (Fla. July 3, 2013)
The Supreme Court of Florida held that a PIP insurer may not limit reimbursement based on the Medicare fee schedules identified in section 627.736(5)(a)2, Florida Statutes (2008) unless the insurer provided notice in its policy of an election to use the permissive Medicare fee schedules as the basis for calculating reimbursements. The court stated it agreed with all of the appellate court decisions that have addressed this issue
Geico issued an automobile policy that provided personal injury protection (“PIP”) benefits to its insured. The insured was involved in a motor vehicle accident that occurred on September 4, 2008. Virtual Imaging rendered health care services to the insured and obtained an assignment of PIP benefits under the insured’s policy with Geico.
The Geico insurance policy provided that it would pay PIP benefits in accordance with the Florida Motor Vehicle No-Fault Law, as amended, at eighty percent of “medical expenses,” which the policy defined as “reasonable expenses for medically necessary medical, surgical, X-ray, dental, ambulance, hospital, professional nursing and rehabilitative services for prosthetic devices and for necessary remedial treatment and services recognized and permitted under the laws of the state for an injured person.”
Virtual Imaging billed Geico $3600 for two MRIs it provided to the insured. Geico paid the bill, but limited its reimbursement to eighty percent of 200% of the applicable Medicare fee schedule, in accordance with the formula described in section 627.736(5)(a)2, Florida Statutes. This subsection allows insurers to limit reimbursement to 80 percent of certain maximum charges. Specifically, subsections (a) through (e) provide maximum reimbursement calculations for emergency transport, services and care, as well as in-patient and out-patient hospital health care. Subsection (f) provides a maximum reimbursement for “all other medical services, supplies, and care” in the amount of “200 percent of the allowable amount under the participating physician’s schedule of Medicare Part B.”
This statutory provision permitting Geico and other insurers to limit reimbursement based on the Medicare fee schedules became effective January 1, 2008, as part of the 2008 amendments to Florida’s PIP statute, which is part of the broader Florida Motor Vehicle No-Fault Law, sections 627.730—627.7405, Florida Statutes (2008). Geico’s policy, however, did not set forth notification of Geico’s election to use Medicare fee schedules as its basis for calculating reimbursements.
The trial court entered summary judgment against Geico. The Third District affirmed the trial court’s order and certified a question of great public importance to the Supreme Court of Florida regarding a PIP insurer’s right to limit reimbursements for medical services based on the Medicare fee schedules.
The court addressed the following certified question (as rephrased by the court): With respect to PIP policies issued after January 1, 2008 (and before July 1, 2012), may an insurer limit reimbursements based on the Medicare fee schedules identified in section 627.736(5)(a), Florida Statutes (2008), without providing notice in its policy of an election to use the Medicare fee schedules as the basis for calculating reimbursements?
Under the 2008 amendments to the PIP statute, a PIP insurer cannot limit reimbursements based on the Medicare fee schedules unless the insurer has provided it’s insured (and the insured’s medical providers) notice in the insurance policy of the insurer’s election to use the fee schedules. Because the policy, in this case, did not reference the permissive method of calculation based on the Medicare fee schedules, Geico could not limit its reimbursements based on those fee schedules.
The court noted that the provisions of the PIP statute authorizing insurers to limit reimbursements for medical services rendered pursuant to Medicare fee schedules had its “genesis” in a series of amendments to the PIP statute, beginning in 2001, that were designed to regulate the amount providers could charge PIP insurers and policyholders for expenses related to medically necessary services PIP insurers are required to reimburse.
In the present case, the court interpreted the plain language of the 2008 amendments to the PIP statute. The 2008 amendments provide specific guidelines regarding a PIP insurer’s ability to limit reimbursements for medical expenses. Specifically, the court interpreted the language of the provisions allowing an insurer to choose between the following two different payment calculation methodologies: (1) payment of 80 percent of medically necessary expenses as provided in subsection 627.736(1)(a) (requiring medical benefits to be paid at 80 percent of “all reasonable expenses for medically necessary” services) and 627.736(5)(a)1 (stating providers may charge “only a reasonable amount” based on consideration of several factors, including the provider’s usual and customary charges, reimbursement levels in the community, and other information relevant to reasonableness); or (2) payment of the limited reimbursement amount based on the schedule provided in subsection 627.736(5)(a)2 (stating insurers “may limit reimbursement” to 80 percent of a schedule of maximum charges, including “200 percent of the allowable amount under the participating physicians schedule of Medicare Part B”).
The court concluded that the 2008 amendments were clearly permissive (not mandatory) and offered insurers a choice in dealing with their insureds as to whether to limit reimbursements based on the Medicare fee schedules (as provided in section 627.736(5)(a)2) or whether to continue to determine the reasonableness of provider charges for necessary medical services rendered to a PIP insured based on the factors enumerated in section 627.736(5)(a)1. The court stated a policy election is required in order to provide notice to the insured and medical providers of the insurer’s election of its option to utilize the Medicare fee schedules.
After the dispute over the 2008 amendments arose, the 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. Fla. Stat. § 627.736(5)(a)5 (2012). The 2012 amendment became effective on July 1, 2012.