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Fla. L. Weekly D1119aTop of Form
Fla. L. Weekly D1119aTop of Form
Insurance
— Personal injury protection — Declaratory judgment — Error to dismiss, for
failure to state cause of action, a declaratory judgment complaint seeking
declaration that PIP insurer had improperly relied exclusively on Medicare fee
schedules when determining reasonable amount to reimburse providers — Proper
methodology for calculating reimbursements under section 627.736(5)(a)(1) and
whether Medicare fee schedules could be solely relied on has not been addressed
by prior cases — Remand for reinstatement of claim — Court notes that relief
requested, which was that class members be reimbursed for amounts they were
billed by providers, was inappropriate because plaintiff agreed to balance
billing in her policy — On remand, if plaintiff prevails on claim for
declaratory relief, court will need to address class action issue as it applies
to question of appropriate relief, consider applicability of any notice
requirement under PIP statute, and consider whether class action is untenable
because individual issues would predominate or precluded because of
manageability issues
— Personal injury protection — Declaratory judgment — Error to dismiss, for
failure to state cause of action, a declaratory judgment complaint seeking
declaration that PIP insurer had improperly relied exclusively on Medicare fee
schedules when determining reasonable amount to reimburse providers — Proper
methodology for calculating reimbursements under section 627.736(5)(a)(1) and
whether Medicare fee schedules could be solely relied on has not been addressed
by prior cases — Remand for reinstatement of claim — Court notes that relief
requested, which was that class members be reimbursed for amounts they were
billed by providers, was inappropriate because plaintiff agreed to balance
billing in her policy — On remand, if plaintiff prevails on claim for
declaratory relief, court will need to address class action issue as it applies
to question of appropriate relief, consider applicability of any notice
requirement under PIP statute, and consider whether class action is untenable
because individual issues would predominate or precluded because of
manageability issues
RENA GREEN, Appellant, v. STATE FARM
MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellee. 4th District. Case No.
4D16-1013. May 17, 2017. Appeal from the Circuit Court for the Fifteenth
Judicial Circuit, Palm Beach County; Cheryl Caracuzzo, Judge; L.T. Case No.
50-2015-CA-002899-XXXX-MB. Counsel: Philip M. Burlington and Nichole J. Segal
of Burlington & Rockenbach, P.A., West Palm Beach and Jeffrey M. Liggio and
Geoff S. Stahl of Liggio Law, West Palm Beach, for appellant. Tracy T. Segal of
Akerman LLP, West Palm Beach and Marcy Levine Aldrich and Nancy A.
Copperthwaite of Akerman LLP, Miami, for appellee.
MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellee. 4th District. Case No.
4D16-1013. May 17, 2017. Appeal from the Circuit Court for the Fifteenth
Judicial Circuit, Palm Beach County; Cheryl Caracuzzo, Judge; L.T. Case No.
50-2015-CA-002899-XXXX-MB. Counsel: Philip M. Burlington and Nichole J. Segal
of Burlington & Rockenbach, P.A., West Palm Beach and Jeffrey M. Liggio and
Geoff S. Stahl of Liggio Law, West Palm Beach, for appellant. Tracy T. Segal of
Akerman LLP, West Palm Beach and Marcy Levine Aldrich and Nancy A.
Copperthwaite of Akerman LLP, Miami, for appellee.
[Circuit court order published at 23 Fla. L. Weekly Supp. 1003a.]
(PER CURIAM.) Appellant’s
declaratory judgment complaint challenging State Farm’s methodology for
calculating PIP policy medical reimbursements was dismissed for failure to
state a claim. Because we recently held in Northwest Center for Integrative
Medicine and Rehabilitation, Inc. v. State Farm Mutual Automobile Insurance
Company, 42 Fla. L. Weekly D446 (Fla. 4th DCA Feb. 22, 2017) that this
reimbursement issue has not been conclusively resolved, we reverse for further
proceedings.
declaratory judgment complaint challenging State Farm’s methodology for
calculating PIP policy medical reimbursements was dismissed for failure to
state a claim. Because we recently held in Northwest Center for Integrative
Medicine and Rehabilitation, Inc. v. State Farm Mutual Automobile Insurance
Company, 42 Fla. L. Weekly D446 (Fla. 4th DCA Feb. 22, 2017) that this
reimbursement issue has not been conclusively resolved, we reverse for further
proceedings.
Appellant had an automobile policy
with PIP benefits from State Farm. She was in an accident and treated by
medical providers. State Farm paid a portion of the providers’ charges and the
providers billed appellant for the remainder.
with PIP benefits from State Farm. She was in an accident and treated by
medical providers. State Farm paid a portion of the providers’ charges and the
providers billed appellant for the remainder.
As we understand it, appellant
sought a declaratory judgment that State Farm relied exclusively on the
Medicare fee schedules when determining the reasonable amount to reimburse her
medical providers, even though State Farm failed to elect this method of
reimbursement in her policy. Appellant requested that State Farm be ordered to
reimburse the class members for the amounts they were billed by their
providers.
sought a declaratory judgment that State Farm relied exclusively on the
Medicare fee schedules when determining the reasonable amount to reimburse her
medical providers, even though State Farm failed to elect this method of
reimbursement in her policy. Appellant requested that State Farm be ordered to
reimburse the class members for the amounts they were billed by their
providers.
Pursuant to section 627.736, Florida
Statutes (2011), an insurer may elect one of two methods to calculate PIP
medical reimbursements: “(a) it can pay a reasonable amount consistent with
subsection (5)(a)(1) of the statute; or (b) it can elect to apply the Medicare
fee schedules, as set forth in subsection (5)(a)(2) of the statute.” Nw.
Ctr., 42 Fla. L. Weekly, at *1. However, to exercise the second option,
“the insurer must provide notice in the policy of its election to use the fee
schedules.” Geico Gen. Ins. Co. v. Virtual Imaging Servs., Inc., 141 So.
3d 147, 159 (Fla. 2013).
Statutes (2011), an insurer may elect one of two methods to calculate PIP
medical reimbursements: “(a) it can pay a reasonable amount consistent with
subsection (5)(a)(1) of the statute; or (b) it can elect to apply the Medicare
fee schedules, as set forth in subsection (5)(a)(2) of the statute.” Nw.
Ctr., 42 Fla. L. Weekly, at *1. However, to exercise the second option,
“the insurer must provide notice in the policy of its election to use the fee
schedules.” Geico Gen. Ins. Co. v. Virtual Imaging Servs., Inc., 141 So.
3d 147, 159 (Fla. 2013).
If an insurer elects the Medicare
fee schedule method, the PIP statute prohibits the medical services provider
from billing or attempting to collect from the insured any amount exceeding the
payment made from the insurer, also known as “balance billing.” §
627.736(5)(a)5.
fee schedule method, the PIP statute prohibits the medical services provider
from billing or attempting to collect from the insured any amount exceeding the
payment made from the insurer, also known as “balance billing.” §
627.736(5)(a)5.
It is undisputed that State Farm did
not elect the Medicare fee schedule method in appellant’s insurance policy.
Appellant alleged in her complaint that despite electing to reimburse her
medical providers a reasonable amount, State Farm was relying exclusively on
the Medicare fee schedules as the basis for reimbursement. Because State Farm
failed to provide notice of its election to use the Medicare fee schedules,
appellant asserted she was improperly subjected to balance billing by her
providers.
not elect the Medicare fee schedule method in appellant’s insurance policy.
Appellant alleged in her complaint that despite electing to reimburse her
medical providers a reasonable amount, State Farm was relying exclusively on
the Medicare fee schedules as the basis for reimbursement. Because State Farm
failed to provide notice of its election to use the Medicare fee schedules,
appellant asserted she was improperly subjected to balance billing by her
providers.
State Farm moved to dismiss the
complaint, making the circular argument that because the policy did not elect
the Medicare fee schedule method, appellant’s allegation that State Farm had
elected that method without notice failed to state a claim. Additionally, State
farm argued the action was inappropriate for class relief.
complaint, making the circular argument that because the policy did not elect
the Medicare fee schedule method, appellant’s allegation that State Farm had
elected that method without notice failed to state a claim. Additionally, State
farm argued the action was inappropriate for class relief.
The trial court granted State Farm’s
motion, finding that after “[a] review of the language of State Farm’s policy,”
it was “clear that State Farm did not make a policy election to limit
reimbursements pursuant to the schedule of maximum charges set forth in Fla.
Stat. § 627.736(5)(a)2. (2008-2012) in the policy.” Therefore, appellant’s
theory, which was “based on such an election — fail[ed] to state a cognizable
claim for relief.” Moreover, because State Farm did not elect to utilize the Medicare
fee schedules, the statutory protection against balance billing did not apply.
motion, finding that after “[a] review of the language of State Farm’s policy,”
it was “clear that State Farm did not make a policy election to limit
reimbursements pursuant to the schedule of maximum charges set forth in Fla.
Stat. § 627.736(5)(a)2. (2008-2012) in the policy.” Therefore, appellant’s
theory, which was “based on such an election — fail[ed] to state a cognizable
claim for relief.” Moreover, because State Farm did not elect to utilize the Medicare
fee schedules, the statutory protection against balance billing did not apply.
“We review an order dismissing a
complaint for declaratory judgment for an abuse of discretion, although ‘the
complaint’s allegations and all reasonable inferences from them must be
accepted as true.’ ” Northwest Center, 42 Fla. L. Weekly, at *3 (quoting
Acad. Express, LLC v. Broward Cty., 53 So. 3d 1188, 1190 (Fla. 4th DCA
2011)). “The test of the sufficiency of a complaint in a declaratory judgment
proceeding is not whether the complaint shows that the plaintiff will succeed
in getting a declaration of rights in accordance with his theory and
contention, but whether he is entitled to a declaration of rights at all.” N
& D Holding, Inc. v. Town of Davie, 17 So. 3d 819, 820-21 (Fla. 4th DCA
2009) (internal citation omitted). Moreover, “[t]he existence of another
adequate remedy does not preclude a judgment for declaratory relief.” § 86.111,
Fla. Stat. (2015).
complaint for declaratory judgment for an abuse of discretion, although ‘the
complaint’s allegations and all reasonable inferences from them must be
accepted as true.’ ” Northwest Center, 42 Fla. L. Weekly, at *3 (quoting
Acad. Express, LLC v. Broward Cty., 53 So. 3d 1188, 1190 (Fla. 4th DCA
2011)). “The test of the sufficiency of a complaint in a declaratory judgment
proceeding is not whether the complaint shows that the plaintiff will succeed
in getting a declaration of rights in accordance with his theory and
contention, but whether he is entitled to a declaration of rights at all.” N
& D Holding, Inc. v. Town of Davie, 17 So. 3d 819, 820-21 (Fla. 4th DCA
2009) (internal citation omitted). Moreover, “[t]he existence of another
adequate remedy does not preclude a judgment for declaratory relief.” § 86.111,
Fla. Stat. (2015).
As noted above, under section
627.736, there are two available methods for an insurer to calculate policy
medical reimbursements. Subsection (5)(a)(1) allows the insurer to reimburse a “reasonable
amount pursuant to this section for the services and supplies rendered.”
“[R]easonableness is a fact-dependent inquiry determined by consideration of various
factors.” Geico Gen. Ins. Co., 141 So. 3d at 155-56 (emphasis
added). Typically, State Farm’s policies broadly define the scope of a
“reasonableness” inquiry. See Nw. Ctr., 42 Fla. L. Weekly at *1-*2.
627.736, there are two available methods for an insurer to calculate policy
medical reimbursements. Subsection (5)(a)(1) allows the insurer to reimburse a “reasonable
amount pursuant to this section for the services and supplies rendered.”
“[R]easonableness is a fact-dependent inquiry determined by consideration of various
factors.” Geico Gen. Ins. Co., 141 So. 3d at 155-56 (emphasis
added). Typically, State Farm’s policies broadly define the scope of a
“reasonableness” inquiry. See Nw. Ctr., 42 Fla. L. Weekly at *1-*2.
Alternatively, subsection (5)(a)(2)
permits insurers to limit reimbursement to 80% of the maximum charges allowed
by the Medicare Part B fee schedules. Geico Gen. Ins. Co., 141 So. 3d at
154. If an insurer elects this method in its policy, the medical provider is
limited to the reimbursement paid by the insurer and cannot bill the patient. §
627.736(5)(a)5.
permits insurers to limit reimbursement to 80% of the maximum charges allowed
by the Medicare Part B fee schedules. Geico Gen. Ins. Co., 141 So. 3d at
154. If an insurer elects this method in its policy, the medical provider is
limited to the reimbursement paid by the insurer and cannot bill the patient. §
627.736(5)(a)5.
Here, appellant was seeking a
declaration that State Farm relied exclusively on the Medicare fee schedules
when determining the reasonable amount to reimburse her providers. A similar
issue was raised by medical providers who received reimbursement from State
Farm. See Nw. Ctr., 42 Fla. L. Weekly D446.
declaration that State Farm relied exclusively on the Medicare fee schedules
when determining the reasonable amount to reimburse her providers. A similar
issue was raised by medical providers who received reimbursement from State
Farm. See Nw. Ctr., 42 Fla. L. Weekly D446.
In Northwest, the medical
providers brought a claim for declaratory judgment that “State Farm’s
calculation of PIP policy medical reimbursements [was] based solely on Medicare
fee schedules, where the insurance policy did not provide notice that the
insurance company elected to apply the fee schedules pursuant to section
627.736(5)(a)(2), Florida Statutes (2009).” Id. at *1. The trial court
dismissed the complaint for failure to state a cause of action. Id. at
*3. We held that the proper methodology for calculating reimbursements under
subsection (5)(a)(1) and whether the Medicare fee schedules could be solely
relied on had not been addressed by prior cases and reversed for reinstatement
of the claim. Id.
providers brought a claim for declaratory judgment that “State Farm’s
calculation of PIP policy medical reimbursements [was] based solely on Medicare
fee schedules, where the insurance policy did not provide notice that the
insurance company elected to apply the fee schedules pursuant to section
627.736(5)(a)(2), Florida Statutes (2009).” Id. at *1. The trial court
dismissed the complaint for failure to state a cause of action. Id. at
*3. We held that the proper methodology for calculating reimbursements under
subsection (5)(a)(1) and whether the Medicare fee schedules could be solely
relied on had not been addressed by prior cases and reversed for reinstatement
of the claim. Id.
In the present case, the trial
court’s dismissal for failure to state a claim relied heavily on the rationale
discussed by the trial court in Northwest. Because the question
presented here regarding State Farm’s actual practice is essentially the same
as in Northwest, we again reverse for reinstatement of the claim. Appellant
should be given leave to amend her claim after remand for declaratory relief to
seek relief similar to that approved of in Northwest Center.
court’s dismissal for failure to state a claim relied heavily on the rationale
discussed by the trial court in Northwest. Because the question
presented here regarding State Farm’s actual practice is essentially the same
as in Northwest, we again reverse for reinstatement of the claim. Appellant
should be given leave to amend her claim after remand for declaratory relief to
seek relief similar to that approved of in Northwest Center.
We note that the relief appellant
requested was inappropriate because she agreed to balance billing in her policy.
Under her best case scenario, the problem is not that she was billed by the
provider, but that she was billed a higher amount because State Farm did not
reimburse a reasonable amount. If appellant prevails on her declaratory relief
action and establishes that State Farm relied only on the Medicare fee
schedules, a determination of the proper relief would be a multi-step process.
First, it would be necessary to determine a “reasonable amount” for the medical
services or supplies provided. It may be that the amount specified in the
Medicare fee schedule is reasonable under the statute. If the reasonable amount
owed is greater than the fee schedule amount, appellant would be entitled to
recover the difference to partially compensate her for what she was balance-billed
by the provider.
requested was inappropriate because she agreed to balance billing in her policy.
Under her best case scenario, the problem is not that she was billed by the
provider, but that she was billed a higher amount because State Farm did not
reimburse a reasonable amount. If appellant prevails on her declaratory relief
action and establishes that State Farm relied only on the Medicare fee
schedules, a determination of the proper relief would be a multi-step process.
First, it would be necessary to determine a “reasonable amount” for the medical
services or supplies provided. It may be that the amount specified in the
Medicare fee schedule is reasonable under the statute. If the reasonable amount
owed is greater than the fee schedule amount, appellant would be entitled to
recover the difference to partially compensate her for what she was balance-billed
by the provider.
On remand, if appellant prevails on
the claim for declaratory relief, it will be necessary to address the class
action issue as it applies to the question of appropriate relief. The court
shall consider the applicability of any notice requirement under the PIP
statute. The court should also consider whether a class action is untenable
because individual issues would predominate and whether a class action is
precluded because of manageability issues.
the claim for declaratory relief, it will be necessary to address the class
action issue as it applies to the question of appropriate relief. The court
shall consider the applicability of any notice requirement under the PIP
statute. The court should also consider whether a class action is untenable
because individual issues would predominate and whether a class action is
precluded because of manageability issues.
Reversed and remanded for reinstatement
of the complaint and for further proceedings thereon. (CIKLIN, C.J., GROSS and CONNER, JJ., concur.)
of the complaint and for further proceedings thereon. (CIKLIN, C.J., GROSS and CONNER, JJ., concur.)
* * *