On May 17, 2017, in
Green v. State Farm, No. 4D16-1013, the Florida Fourth DCA reversed a trial court’s
dismissal of the plaintiff’s declaratory judgment complaint challenging
State Farm’s methodology for calculating PIP policy medical reimbursements.
The plaintiff sought a declaratory judgment that State Farm had improperly
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. Pursuant
to section 627.736, Florida Statutes, an insurer may elect one of two
methods to calculate PIP medical reimbursements: 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 (which provides for 80% reimbursement of the
fee schedule amounts). 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, Florida Statute § 627.736(5)(a)5 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.” State Farm did not elect the Medicare fee
schedule in the plaintiff’s policy, but the plaintiff alleged in
her complaint that State Farm in fact relied on the fee schedules in reimbursing
medical providers. Because State Farm did not provide notice to the medical
providers of its intent to use the fee schedules, the medical providers
in turn were free to balance bill the plaintiff for the difference between
the amount that they charged and the amount they were compensated by State
Farm. The trial court concluded that since State Farm did not make the
policy election in the insurance contract, and was not required to do
so, it could not be held responsible for the medical provider’s
subsequent balance billing. The Fourth DCA recognized the fallacy in this
reasoning, because if State Farm did not make the statutory election to
use the Medicare schedules in the insurance contract, the plaintiff had
the right to challenge the reasonableness of the reimbursements. The Fourth
DCA reversed the judgment so the plaintiff could amend her claim to seek
this specific relief, consistent with the Fourth DCA’s recent decision
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).
