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Florida Fourth DCA reverses trial court, rules that plaintiff entitled to determination of whether PIP insurer underpaid medical providers and exposed plaintiff to balance billing

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).