Florida’s Latest PIP Conundrum: Medical Fees

Florida’s high court is poised to decide how much money insurers owe some medical providers in cases where an auto policy does not specifically state that the fees will be based on a fee schedule approved by state lawmakers in 2008.

The Florida Supreme Court recently heard arguments in a case [Geico General Insurance Co. v Virtual Imaging Services, Inc. SC12-477] addressing the matter that is currently being litigated in hundreds of cases. At issue is a 2008 change to Florida’s no-fault personal injury protection automobile law that created a new reimbursement formula. Under the formula, most healthcare providers, with the exception of specialists such as surgeons, are paid based on a rate of 80 percent of 200 percent of the Medicare rate. The previous law called for insurers to pay 80 percent of all reasonable expenses, as set by healthcare providers.

When lawmakers approved the 2008 change they failed to instruct whether the fee schedule should be specifically referenced in an individual’s auto policy.

The Florida Third District Court of Appeals recently ruled this created a situation whereby the law “impermissibly and ambiguously incorporated into PIP insurance policies ‘two different’ calculation methodologies.” Namely, the 2008 fee schedule and the one it was intended to replace. The court ruled that Virtual Imaging was within its rights to charge Geico 80 percent of its reasonable expenses for two MRIs. Based on that ruling, Geico owed Virtual Imaging $2,880 as opposed to the $1,989 it would have owed under the 2008 reimbursement formula.

Justice Barbara Pariente summed up the case, which she said hinged on whether the 2008 fee schedule could be inferred as part of a PIP policy even if it is not directly referred to.

“Our task is to look first at what the policy provides, then what the statute provides, to see if Geico can get there without explicitly incorporating it,” said Pariente.

Geico attorney Suzanne Labrit said that the 2008 fee schedule should be viewed as being automatically incorporated in a policy. She said it meets the requirement that insurers pay providers reasonable medical expenses.

“Limiting provider reimbursements under established fee schedules does not result in reimbursements below what is reasonable,” said Labrit.

Some judges noted that the 2008 fee schedule would be considered incorporated in the policy if it were viewed as being mandatory. However, it’s complicated if insurers have a choice of using other payment rates. “Is it a choice to use one reimbursement to pay everything or can (Geico) mix and match?” Judge Peggy Quince asked Labrit.

Labrit acknowledged that insurers have some latitude over what to pay insurers under the law. She said insurers under certain circumstances may pay more or less than the statutory rate.

Labrit said the 2008 schedule was designed to provide insurers with a “safe harbor,” whereby an insurer can meet the terms of a policy and be protected from lawsuits like the one filed by Virtual Imaging.

Virtual Imaging counsel Harley Kane, however, argued that the change in reimbursements should be spelled out in a policy.

Judge Charles Canady said that the law stated that any PIP policy in effect on or after January 1, 2008 is deemed to incorporate all of the provisions of the amended no-fault law. Given that, Canady asked why it would be necessary for an insurer to specify the fees in a policy.

Kane said if that is what lawmakers intended they would have stated it as mandatory in the law, as is the case with other medical provisions.

The 2008 fee schedule is merely on option for insurers to reimburse healthcare providers, Kane said. And unless that option is specifically noted in a policy, providers such as Vital Imaging are within their right to charge 80 percent of reasonable expenses.

“If insurers want to avail themselves of the option to limit reimbursement according to the fee schedule, they need to put it in the policy, tell the insured about it and tell the provider about it,” said Kane.

Otherwise, said Kane, the policy unfairly benefits insurers at the expense of policyholders and providers.

“The insured bought a policy paying the maximum amount of benefits based on the reasonable charge, but is now being reimbursed at the minimum amount that the PIP statute allows,” said Kane. “That’s not what they purchased.”