Big Win for Florida Auto Insurers
The Florida Personal Injury Protection System, the bane of private passenger insurers who have deployed large amounts of capital to combat persistent fraud, took a turn in favor of the insurance industry. This development did not come from a Florida Legislature striving to make the system work or trying to create an environment where insurance rates can come down for the consumer, the vote for controlling the cost of insurance came from the Florida Supreme Court. The Florida Supreme Court ruled in favor of Allstate Insurance Company Thursday January 26, 2017, upholding, by a slim majority, Allstate’s product design that uses policy language limiting reimbursement of personal injury protection benefits to the fee schedules used by the Medicare program. The court found that Allstate’s policies provided “legally sufficient notice” that they would use the Medicare fee schedules. This decision effectively overturned the 4th District Court of Appeal decision in 2015 involving 32 consolidated cases. See Allstate Insurance Company v. Orthopedic Specialists, No.SC15-2298.
At the crux of this decision is the 2008 amendments to the PIP statute. The Court explained that Section 627.736 requires the insurer to pay for “reasonable expenses …for medically necessary…services,” but merely permits an insurer to use the Medicare fee schedules to limit reimbursements. The Court cited to the 4th District Court of Appeal’s decision in GIECO v. Virtual Imaging Services, Inc., 141 So. 3d 147 (Fla 2013), which stated: “[b]ecause the fee schedule provision of section 627.736(5)(a)2.f is permissive and not mandatory, and because the Medicare fee schedules are not the only mechanism for calculating reimbursements…the insurer cannot take advantage of the Medicare fee schedules to limit reimbursements without notifying its insured by electing those fee schedules.” The policy must provide legally sufficient notice of the insurer’s election to use the permissive Medicare fee schedules. The policy (or endorsement) language must clearly and unambiguously state that “any amounts payable for medical expense reimbursements shall be subject to any and all limitations authorized by section 627.736, Florida Statutes, including all fee schedules.” The court could find no other meaning in the phrase “subject to” and found that this language puts the insured on adequate notice of the limitations their insurer will apply to determine the amount to be reimbursed. They found that the use of the word “shall” makes the provision mandatory. In conclusion, the court held the policy language was sufficient to permit Allstate to use the Medicare fee schedule to determine PIP reimbursements.
This blog is not intended as legal advice. Insurance companies should seek advice from an insurance compliance or legal professional to assist with the matters discussed in this blog. The Nash Group LLC may be engaged for this type of research.
Copyright © 2017. The Nash Group LLC.
