Legal Alert: Second District Court Makes Significant Ruling in Personal Injury Protection (PIP) Case

Posted in Legal Alerts on May 18, 2018

SECOND DISTRICT COURT OF APPEAL RULES THAT STATE FARM POLICY PROPERLY PROVIDES IT WILL PAY 80% OF REASONABLE CHARGES FOR MEDICALLY NECESSARY SERVICES BUT ALSO CAPS REIMBURSEMENT TO “SCHEDULE OF MAXIMUM CHARGES.”

On May 18, in State Farm Mutual Auto. Ins. Co. v. MRI Assoc. of Tampa, Inc. d/b/a Park Place MRI, the Second District Court of Appeal sided with State Farm regarding its policy language pertaining to the manner of determining the amount of reasonable expenses for medically necessary services.  A unanimous appellate panel found State Farm’s policy language consistent with the No-Fault statute amended in 2012, and properly allows State Farm to reimburse medical benefits on PIP claims based on consideration of the statutory factors governing reasonableness of medical expenses, and also allows State Farm to cap reimbursement to the “schedule of maximum charges,” a limitation allowed under the PIP statute.

The following policy language is contained in the State Farm policy:

We will pay in accordance with the No-Fault Act properly billed and documented reasonable charges for bodily injury to an insured caused by an accident resulting from the ownership, maintenance, or use of a motor vehicle as follows:

….

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, including applicable modifiers.

However, the policy also provides that in determining a reasonable reimbursement amount, State Farm can consider one or more of the factors listed in the PIP statute under the “reasonableness” approach, including “usual and customary charges,” “payments accepted by the provider, and “reimbursement levels in the community.” 

The provider, which provided services to insureds injured in 2013 accidents, argued that State Farm’s policy provides for an unlawful “hybrid” approach to determining reasonable reimbursement amounts.  In prior cases, the courts had held that insurers could elect one reimbursement method or the other.  But, as noted by the Second District, the statute was amended in 2012, and no longer requires an insurer to choose only one method of determining reimbursements for medical expenses.  However, the court certified the following question to the Florida Supreme Court as a question of great public importance:

DOES THE 2013 PIP STATUTE AS AMENDED PERMIT AN INSURER TO CONDUCT A FACT-DEPENDENT CALCULATION OF REASONABLE CHARGES UNDER SECTION 627.736(5)(a) WHILE ALLOWING THE INSURER TO LIMIT ITS PAYMENT IN ACCORDANCE WITH THE SCHEDULE OF MAXIMUM CHARGES UNDER SECTION 627.736(5)(a)(1)?

For more information, please contact appellate attorney Diane H. Tutt at dtutt@conroysimberg.com or (954) 518-1351.