The Florida Supreme Court heard arguments Wednesday, March 8, 2023, in the case of Allstate Insurance Co. et al. v. Revival Chiropractic LLC, case number SC22-735, regarding payment of medical expenses that could affect thousands of insurance policies.  The case was before Florida’s highest court on a certified question from the Eleventh Circuit District Court of Appeal: “whether an insurer that has given notice that  it  will  limit  payments  according  to  the statutory schedule of maximum charges may nonetheless pay 80% of the charge submitted as a reasonable expense.” Revival Chiropractic LLC v. Allstate Insurance Company, et al., No. 21-10559, at 2 (11th Cir. June 2, 2022). The issue centers around the practice of medical providers charging less than the statutory fee schedule amount for a service to maximize the amount the provider is reimbursed.  Though the amounts in dispute may be small, they can lead to significant attorney fee awards.

What does the Florida PIP statute say?

Under the Florida Personal Injury Protection Statute (Florida PIP Statute), an automobile insurer is required to pay 80% of all “reasonable” medical expenses. Fla. Stat. §627.736(1)(a).  However, if the insurer provides proper notice, the insurer may limit the payments to 80% of the schedule of maximum charges provided for in the statute or pay 100% of the amount submitted if less than the scheduled amount. Id.  §627.736(5)(a)1, (5)(a)5. Under Florida law, “[w]hen the language of a statute is clear and unambiguous and conveys a clear and definite meaning . . . the statute must be given its plain and obvious meaning.” See State of Fla. V. Warren, 796 So. 2d 489, 490 (Fla. 2001).

What was in dispute?

The Revival case involves Allstate’s issuance of two separate automobile insurance policies, both of which provided notice that it intended to limit payments of personal injury protection benefits in accordance with the statutory schedule defined in the Florida PIP Statute. Specifically, the  policies stated “Allstate will pay . . . eighty percent of reasonable expenses . . . . [T]he amount we will pay for such expenses shall . . . be limited to eighty percent of the . . . schedule of maximum charges . . . .” The policies also stated that “[i]f  a  provider  submits  a  charge  for  an  amount  less  than  the  amount determined by the fee schedule . . . we will pay eighty percent of the charge that was submitted.” Revival, No. 21-10559 at 3.

After two of Allstate’s insureds were involved in separate automobile accidents, they sought treatment from and assigned their benefits to Revival Chiropractic.  Revival billed one service at $100 which corresponded with a maximum charge of approximately $150 under the statutory fee schedule, 80% of which was almost $120, nearly $20 more than the submitted charge. Because the submitted charge was less than the statutory fee amount, the PIP statute allowed Allstate to pay the lesser $100 billed amount. However, Allstate took the position that, based on its policy language combined with the PIP statute, it could still pay $80,  80% of the billed amount.  Allstate took the same position with regard to a second charge from Revival that was lower than the maximum charge under the fee schedule.

Revival, on the other hand, took the position that Allstate was required to pay 80% of the scheduled fee amount or the full amount of the bill ($100).  As a result, Revival submitted a putative class action against Allstate seeking a declaratory judgment that Allstate violated the Florida PIP Statute by paying only 80% of the billed amount where the charges were less than the amounts allowed under the statute. Fla. Stat. §627.736(5)(a)1.  The trial court sided with Revival and granted summary judgment in its favor.  Allstate appealed and the appellate court agreed to certify the question that was argued before the Florida Supreme Court.

Why was the question certified?

The Eleventh Circuit certified the issue to the Florida Supreme Court as there is no clear precedent. The Fourth and Fifth Florida District Courts of Appeal were faced with similar issues and held that when an insurer provides notice that it will reimburse according to the fee schedule, it must pay either 80% of the fee scheduled rate, or 100% of the bill.^[1]Put differently, these courts found “the statute creates a floor that an insurance company cannot go below: the lower  of  80% of the schedule or 100% of  the charge.” Revival, No. 21-10559 at 7.

However, later, the Florida Supreme Court’s ruling in MRI Associates of Tampa, Inc. v. State Farm Mutual Automobile Insurance Co.^[2] undermines these circuit court decisions.  In MRI Associates, the Court held an insurer can use both the “reasonable charge” method for calculating reimbursements, and also elect the “schedule of maximum charges” limitation. Id. at 583-85.  Contradicting the Fourth and Fifth Circuits, the Court found that the schedule “establishes a ceiling but not a floor.” Id. at 585.

What was argued?

At Revival’s oral arguments before the Florida Supreme Court, Allstate argued the district court rewrote the PIP statute when it previously ruled that Allstate had to pay 100% of Revival’s bills because the statute only requires insurance companies to pay 80% of the medical bills, but they “may” pay 100%.  In short, Allstate contends the trial court’s ruling permits providers to create the “floor” that the Florida Supreme Court arguably said does not exist.  In response to Allstate’s arguments, Revival reiterated its successful trial court arguments that the clear language of the PIP statute gives insurers two options, they may pay 1) 80% of two times the Medicare fee schedule amount; or 2) 100% of the charge submitted.

Why this is important?

The Eleventh Circuit has asked the Florida Supreme Court to rule on this issue in order to provide clarity for both medical providers and insurance companies.  For defense attorneys, this ruling will be important as insurers are often faced with small billed amount issues that sometimes lead to paying significant attorney fees to providers. The ruling will provide clarity and help insurers navigate through the nuances of Florida PIP law.  In turn, the ruling will also help decongest the courts as there are thousands of pending cases dealing directly with this issue. 

[1] Hands  On  Chiropractic  PL  a/a/o  Justin Wick v. GEICO Gen. Ins. Co., 327 So. 3d 439, 441–44 (Fla. 5th DCA  2021); Geico Indem. Co. v. Muransky Chiropractic P.A., 323 So. 3d 742, 744 (Fla. 4th DCA 2021). 

[2] 334 So. 3d 577 (Fla. 2021).