Geico Gen. Ins. Co. v. Virtual Imaging Servs., Inc.

• Decision Date: 03 July 2013
• Docket Number: No. SC12–905.,SC12–905.
• Citation: 141 So.3d 147
• Parties: GEICO GENERAL INSURANCE COMPANY, Petitioner, v. VIRTUAL IMAGING SERVICES, INC., etc., Respondent.
• Court: Florida Supreme Court

141 So.3d 147

GEICO GENERAL INSURANCE COMPANY, Petitioner,

v.VIRTUAL IMAGING SERVICES, INC., etc., Respondent.

No. SC12–905.

Supreme Court of Florida.

July 3, 2013.

Frank A. Zacherl, Suzanne Youmans Labrit, and Jerel C. Dawson of Shutts & Bowen LLP, Tampa, FL, for Petitioner.

Harley N. Kane of The Greenspan Law Firm, P.A., Boca Raton, FL, and John Berank of Ausley & McMullen, Tallahassee, FL, for Respondent Cynthia S. Tunnicliff and Gerald Don Nelson Bryant IV of Pennington, Moore, Wilkinson, Bell & Dunbar, P.A., Tallahassee, FL, for Respondent.

Nancy M. Wallace of Akerman Seterfitt, Tallahassee, FL, and Marcy Levine Aldrich and Nancy A. Copperthwaite of Akerman Seterfitt, Miami, FL, for Amici Curiae Personal Insurance Federation of Florida and National Association of Mutual Insurance Companies.

Raoul G. Cantero, T. Neal McAliley, and Jesse L. Green of White & Case LLP, Miami, FL, for Amici Curiae The American

Insurance Association and The Property Casualty Insurers Association of America.

Edward H. Zebersky of Zebersky Payne, LLP, Ft. Lauderdale, Florida, and Gary M. Farmer, Sr. of Farmer Jaffe Weissing Edwards Fistos & Lehrman, P.L., Fort Lauderdale, FL, for Amicus Curiae Florida Medical Association.

Lawrence M. Kopelman of Kopelman & Blankman, P.A., for Amicus Curiae Floridians For Fair Insurance, Inc.

Robert N. Pelier of Law Offices of Robert N. Pelier, P.A., Coral Gables, FL, and G. Bart Billbrough of Billbrough & Marks, P.A., Coral Gables, FL, for Amicus Curiae Gables Insurance Recovery, Inc.

David M. Caldevilla and Michael R. Bray of de la Parte & Gilbert, P.A., Tampa, FL, and Craig E. Rothburd of Craig E. Rothburd, P.A., Tampa, FL, and Scott R. Jeeves of The Jeeves Law Group, P.A., St. Petersburg, FL, and Lorca J. Divale of The Divale Law Group, P.A., St. Petersburg, FL.

PARIENTE, J.

The issue presented to the Court is whether the Medicare fee schedules set forth in section 627.736(5)(a), Florida Statutes (2008), authorized an insurer to limit reimbursements for medical services rendered to an insured without giving notice in the insurance policy of the insurer's election to use the Medicare fee schedules as the basis for calculating reimbursements. ¹ In Geico General Insurance Co. v. Virtual Imaging Services, Inc. (“ Virtual II ”), 90 So.3d 321, 322–23 (Fla. 3d DCA 2012), the Third District Court of Appeal answered this question in the negative, concluding that the insurer, GEICO General Insurance Company, could not limit reimbursements without providing notice through an election in its policy. The Third District's conclusion was consistent with the holdings of three previous district court of appeal cases that addressed the same issue. See DCI MRI, Inc. v. Geico Indem. Co., 79 So.3d 840, 842 (Fla. 4th DCA 2012); Geico Indem. Co. v. Virtual Imaging Servs., Inc. (“ Virtual I ”), 79 So.3d 55, 58 (Fla. 3d DCA 2011); Kingsway Amigo Ins. Co. v. Ocean Health, Inc., 63 So.3d 63, 67 (Fla. 4th DCA 2011).

Because the Third District determined that this issue was recurring statewide with respect to personal injury protection (PIP) policies issued after January 1, 2008, the district court certified a question of great public importance to this Court.²We rephrase the certified question ³ as follows:

WITH RESPECT TO PIP POLICIES ISSUED AFTER JANUARY 1, 2008, MAY AN INSURER LIMIT REIMBURSEMENTS BASED ON THE MEDICARE FEE SCHEDULES IDENTIFIED IN SECTION 627.736(5)(a), FLORIDA STATUTES, WITHOUT PROVIDING NOTICE IN ITS POLICY OF AN ELECTION TO USE THE MEDICARE FEE SCHEDULES AS THE BASIS FOR CALCULATING REIMBURSEMENTS?

We have jurisdiction. Seeart. V, § 3(b)(4), Fla. Const.

For the reasons more fully explained below, we agree with all of the appellate court decisions that have addressed this issue, and we therefore answer the rephrased certified question in the negative. We conclude that notice to the insured, through an election in the policy, is necessary because the PIP statute, section 627.736, requires the insurer to pay for “reasonable expenses ... for medically necessary ... services,” § 627.736(1)(a), Fla. Stat., but merely permits the insurer to use the Medicare fee schedules as a basis for limiting reimbursements, see§ 627.736(5)(a) 2., Fla. Stat. In other words, the PIP statute provides that the Medicare fee schedules are one possible method of calculating reimbursements to satisfy the PIP statute's reasonable medical expenses coverage mandate, but does not provide that they are the only method of doing so.

Accordingly, we conclude that the insurer was required to give notice to its insured by electing the permissive Medicare fee schedules in its policy before taking advantage of the Medicare fee schedule methodology to limit reimbursements. We therefore approve the result of the Third District's decision in Virtual II and approve the district court decisions in Kingsway, Virtual I, and DCI MRI to the extent those decisions are consistent with our analysis. Because the GEICO policy has since been amended to include an election of the Medicare fee schedules as the method of calculating reimbursements, and the Legislature has now specifically incorporated a notice requirement into the PIP statute, effective July 1, 2012, see§ 627.736(5)(a) 5., Fla. Stat. (2012),⁴ our holding applies only to policies that were in effect from the effective date of the 2008 amendments to the PIP statute that first provided for the Medicare fee schedule methodology, which was January 1, 2008, through the effective date of the 2012 amendment, which was July 1, 2012.

FACTS AND BACKGROUND

This case arises out of a motor vehicle accident that occurred on September 4, 2008. As a result of injuries sustained in the accident, the insured sought medical services, in the form of two MRIs, from Virtual Imaging Services, Inc., on October 6, 2008. Virtual Imaging rendered the health care services to the insured and obtained an assignment of PIP benefits under the insured's policy with GEICO.

The relevant portions of the GEICO insurance policy at issue provide that GEICO will make payments as follows:

Under Personal Injury Protection, the Company [GEICO] will pay, in accordance with, and subject to the terms, conditions, and exclusions of the Florida Motor Vehicle No–Fault Law, as amended, to or for the benefit of the injured person:

(a) 80% of medical expenses; and

(b) 60% of work loss; and

(c) Replacement services expenses; and

(d) Death benefits.

The above benefits will be provided for injuries incurred as a result of bodily injury, caused by an accident arising out of the ownership, maintenance or use of a motor vehicle and sustained by:

(1) You or any relative while occupying a motor vehicle or, while a pedestrian through being struck by a motor vehicle; or

(2) Any other person while occupying the insured motor vehicle or, while a pedestrian, through being struck by the insured motor vehicle.

The policy defines the term “ medical expenses ” to mean “reasonable expenses for medically necessary medical, surgical, x-ray, dental, ambulance, hospital, professional nursing and rehabilitative services for prosthetic devices and for necessary remedial treatment and services recognized and permitted under the laws of the state for an injured person.”

Virtual Imaging billed GEICO $3600 for the two MRIs it provided to the insured. GEICO has stipulated that the MRIs were medically necessary, related to the accident, and covered as PIP benefits under the terms of the insured's policy with GEICO. GEICO has also agreed, in this case, not to challenge Virtual Imaging's claim that its $3600 charge for the MRIs was reasonable. Additionally, there is no dispute that Virtual Imaging submitted the charges to GEICO in a timely manner and that all statutory and contractual prerequisites for payment were met.

In response to the $3600 charges submitted by Virtual Imaging, GEICO paid the bill on December 14, 2008, but limited its reimbursement to eighty percent of 200% of the applicable Medicare fee schedule, in accordance with the formula described in section 627.736(5)(a), Florida Statutes, which provides as follows:

1. Any physician, hospital, clinic, or other person or institution lawfully rendering treatment to an injured person for a bodily injury covered by personal injury protection insurance may charge the insurer and injured party only a reasonable amount pursuant to this section for the services and supplies rendered....

2. The insurer may limit reimbursement to 80 percent of the following schedule of maximum charges:

....

f. For all other medical services, supplies, and care, 200 percent of the allowable amount under the participating physicians schedule of Medicare Part B.

§ 627.736(5)(a), Fla. Stat. (2008) (emphasis supplied). This statutory provision permitting GEICO and other insurers to limit reimbursements based on the Medicare fee schedules was passed by the Legislature in 2007 and became effective, in its initial form, on January 1, 2008, as part of Florida's PIP statute. See ch.2007–324, § 20, Laws of Fla.⁵ The Florida PIP statute is part of the broader Florida Motor Vehicle No–Fault Law, sections 627.730– 627.7405, Florida Statutes (2008).

Virtual Imaging, as the assignee of PIP benefits under the insured's policy, subsequently sued GEICO in county court, alleging that GEICO's reimbursement was insufficient and failed to satisfy the full amount of PIP insurance benefits due to Virtual Imaging under its assignment of benefits in the insured's policy. After the parties stipulated to the basic facts and filed cross motions for summary judgment, the county court issued an order granting Virtual Imaging's motion for final summary judgment and certifying the following question to the Third District:

MAY AN INSURER LIMIT PROVIDER REIMBURSEMENT TO 80% OF THE SCHEDULE OF MAXIMUM CHARGES DESCRIBED IN F.S. 627.736(5)(a) IF ITS POLICY DOES NOT MAKE A SPECIFIC ELECTION TO DO SO?

On appeal and in reliance on its previous decision in Virtual I,...