Insurers Get Green Light to Pay Less Than Billed Charges in Florida PIP Cases

By William Rabb | April 29, 2024

The Florida Supreme Court has given auto insurers more flexibility in reducing payments for medical services under the state’s no-fault auto insurance law and may have finally put to rest years of questions about the much-debated statute.

In answering a certified question from a federal appeals court, the Florida justices said that the no-fault law does not force insurers to choose between paying 80% of the maximum reimbursement allowed by Medicare or paying the full amount of the charges submitted by a medical provider. The insurer may, if the policy gives notice, choose to pay 80% of the charged amount, even if that amount is less than the maximum, the court decided.

“Allstate correctly characterizes this 80% of reasonable expenses requirement as the ‘overarching mandate’ of the PIP statute,” the justices wrote in the April 25 opinion.

The court’s decision is the long-awaited result from a 2019 class-action lawsuit brought by Revival Chiropractic in Altamonte Springs, Florida, and others against Allstate Insurance Co. The chiro practice had treated two Allstate policyholders involved in auto accidents, and took exception when Allstate would not pay the full bill. More than 28,000 other medical claims were similarly underpaid, the initial lawsuit noted.

The chiropractors argued that the wording of Florida’s Personal Injury Protection act (the PIP or no-fault statute), allowed the insurer to reduce its payout only when it chooses to adhere to the maximum reimbursement method, based on Medicare or, in some instances, the state workers’ compensation fee schedules.

A federal district court agreed with the health care providers. Allstate appealed and the 11th U.S. Circuit Court of Appeals said that multiple courts had reached differing conclusions on the confusing PIP statute.

In its answer to the federal court’s certified question, the Florida Supreme Court found that Revival Chiropractic had misunderstood the law.

“Revival’s position is that Allstate’s election to limit reimbursements based on the schedule of maximum charges effectively provided an exception to the statutory provision limiting reimbursements to 80% of reasonable charges,” the high court noted. “But Revival’s understanding is based on a misreading of the provisions of both section 627.736 and Allstate’s PIP policy.”

The PIP statute is permissive, not mandatory, the court said. It provides that an insurer may pay 80% of the maximum, but that reasonableness of fees is the overriding thrust of the law.

“… Revival contends that the policy reflects an election to exclusively proceed pursuant to the statutory provisions governing the schedule of maximum charges,” the justices wrote. “Revival’s approach subverts the manifest purpose of both the PIP statute and Allstate’s PIP policy by ignoring the clear terms of both texts.”

The court explained the fees at the heart of the litigation: The maximum on the fee schedule for the medical procedure was $115; 80% of that would be $120. Revival had submitted a charge of just $100, believing that Allstate would have to pay that amount. But the insurer elected to pay 80% of that charge, or just $80. That practice had deprived medical providers of more than $5 million, from 2014 to 2019.

The Supreme Court had settled a similar question in late 2021, in its opinion in MRI Associates of Tampa vs. State Farm Mutual Automobile Insurance. That decision found that State Farm was not bound by the 80%-of-maximum” rule but could utilize its own, hybrid reimbursement schedule that paid less than what the medical provider billed for.

But the Revival case was in litigation when the MRI Associates decision was handed down, and at least two other recent Florida appellate court rulings have conflicted on key issues. Those state cases had been undermined but not fully repudiated by the MRI ruling, the 11th Circuit said in explaining why the Supreme Court’s definitive opinion was needed.

The state justices tweaked the certified question to read:

“Under a PIP policy providing notice that the insurer (a) will pay 80% of reasonable expenses for medically necessary services, (b) may limit payment pursuant to the statutory schedule of maximum charges and other statutory limitations, and (c) will pay 80% of a submitted charge if that charge is less than the amount reimbursable under the schedule or other statutory provisions, may the insurer pay 80% of the charge submitted by a medical provider, even if the charge submitted is for less than the amount reimbursable under the schedule?”

The answer is yes, the justices agreed.

The Revival case now goes back to the 11th Circuit for final consideration.

In light of the ruling, some Floridians may wonder what is to stop providers from simply charging the fee-schedule maximum every time, going forward. For one thing, not all medical procedures are covered by the Medicare and workers’ comp maximum reimbursement schedule. And the PIP law requires that reasonable medical charges be in line with customary fees charged to most patients.

“… Such a charge may not exceed the amount the person or institution customarily charges for like services or supplies,” the no-fault statute reads. “In determining whether a charge for a particular service, treatment, or otherwise is reasonable, consideration may be given to evidence of usual and customary charges and payments accepted by the provider involved in the dispute, reimbursement levels in the community and various federal and state medical fee schedules applicable to motor vehicle and other insurance coverages, and other information relevant to the reasonableness of the reimbursement for the service, treatment, or supply.”

The Supreme Court opinion can be seen here. The initial complaint by Revival Chiropractic can be seen here. The Personal Insurance Federation of Florida also filed an amicus curiae brief in support of Allstate’s position.

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