Application of the PIP Deductible to Bills Submitted by Hospitals and Other Non-emergency Physician Providers

Let’s face it, accidents happen. But, when they do, we hope for a host of reasons that the injuries are not severe enough to warrant a visit to the hospital. For insurers, this concern goes beyond the concern for the claimant’s physical well-being. Rather, the insurer must also concern itself with how to tender Personal Injury Protection benefits to those providing medical services in a hospital setting. In particular, insurers must decide whether they are obligated to apply 100 percent of the contracted for Personal Injury Protection (“PIP”) deductible to the full amount of charges that a hospital (Chapter 395 provider) submits, or whether they should apply 100 percent of the contracted for PIP deductible to the adjusted amount of the total charges.

The fact is that there is no binding statewide appellate authority on this issue. In addition, courts throughout Florida are split on the issue. As such, from a defense perspective, this article discusses how the issue should be resolved based upon legislative analysis and a statewide canvass of all relevant, recently published opinions.

I. “Nay, whoever hath an absolute Authority to interpret any written, or spoken Laws; it is He, who is truly the Lawgiver, to all Intents and Purposes; and not the Person who first wrote, or spoke them.”1

Legislative intent guides a court’s construction of a statute.2 “To discern legislative intent, a court must look first and foremost at the actual language used in the statute.”3 “[W] hen the language of the statute is clear and unambiguous and conveys a clear and definite meaning, there is no occasion for resorting to the rules of statutory interpretation and construction; the statutes must be given its plain and obvious meaning.”4 Courts cannot construe an unambiguous statute in a manner that would “extend, modify, or limit, its express terms or its reasonable and obvious implications” because “[t]o do so would be an abrogation of legislative power.”5 Moreover, when two statutes relate to the same object or subject, the Florida Supreme Court has repeatedly urged Florida Courts to “read statutes relating to the same subject or object in pari materia, in order to harmonize the provisions and give effect to the Legislative intent.”6

The clear and unambiguous language of the relevant statutes, when read together, firmly establishes that an insurer is not required to apply PIP deductibles to 100 percent of whatever the face amount of the provider’s bill may be. Instead, an insurer may apply the deductible to the eligible and “reasonable” amounts of an insured’s medical expenses.

The relevant statutory language is found within the “Deductible Statute”, or §627.739(2), Florida Statutes, which states as follows:

Insurers shall offer to each applicant and to each policyholder, upon the renewal of an existing policy, deductibles, in amounts of $250, $500, and $1000. The deductible amount must be applied to 100 percent of the expenses and losses described in s. 627.736. After the deductible is met, each insured is eligible to receive up to $10,000 in total benefits described in s. 627.736(1). APPLICATION OF THE PIP DEDUCTIBLE TO BILLS SUBMITTED BY HOSPITALS AND OTHER NON-EMERGENCY PHYSICIAN PROVIDERS However, this subsection shall not be applied to reduce the amount of any benefits received in accordance with s. 627.736(1)(c). 7

From a straightforward reading of the Deductible Statute, it appears that the contracted for PIP deductible should be applied to 100 percent of the expenses and losses described in the “PIP Statute”, or §627.736, Florida Statutes. Importantly, several sections of the PIP Statute describe expenses as those that are lawfully rendered; reasonable in charge; related and medically necessary. Yet, the plaintiff bar, and those courts that find the provider’s arguments persuasive, refuse to parse the language of the statute. They merely stop on the surface, reading the language to mean only those benefits that are described in subsection one (1) of the PIP Statute, or 80 percent of the total amount submitted. The plaintiff bar’s proposed method of applying the PIP deductible, however, is arguably inconsistent with the legislative intent.

Providers urge that the Deductible Statute requires that the deductible be applied to 100 percent of the expenses and losses described in the PIP Statute. This position is inapposite to the clear and unambiguous language of the PIP statute’s archetypal requirement that medical benefits are defined as “reasonable” benefits. Not only would such an interpretation render portions of the PIP Statute meaningless,8 but it also disregards established principles of statutory construction.

Indeed, as noted in the Preface to the Florida Statutes, “a cross reference to a specific statute incorporates the language of the referenced statute as it existed at the time the reference was enacted.”9 In this case, the Deductible Statute states that the deductible must be applied to 100 percent of the expenses and losses “described in s. 627.736.” Therefore, by its very own language, the Deductible Statute contains a descriptive reference to the entire PIP Statute, not just the provisions “cherry-picked” by the provider. Accordingly, by expressly referencing the entire PIP Statute, it was arguably the Legislature’s intent to incorporate the “reasonableness” limitation on expenses and losses.

Although there are many published opinions on the general issue of proper application of the deductible, only one case involves a hospital’s submission of bills. Nevertheless, the majority of the decisions support the position that an insurer must apply 100 percent of the contracted for deductible to the reasonable amount of the charges as opposed to the face value of the bills submitted.10 The following is a review of the most recent, persuasive and informative cases.

II. While Legislative Intent is the Polestar that Guides the Court’s Construction of Statutes, Not All Courts Arrive at the Same Destination.

There is, perhaps, no more difficult task that judges perform than that of construing or interpreting statutes. There are also few tasks more difficult. This is the case for several reasons. Statutes are made up of words. Words are, by their nature, at best imprecise approximations of the ideas they are intended to convey. A word almost always has more than one meaning. Moreover, statutes are often a group product, and the members of the group may not have shared the same understanding regarding the words used. If all of this were not enough, legislative bodies frequently draft statutes using general, rather than specific, language because they cannot agree on the full reach of the statute. Or, even if they can, they wish to leave room for interpretive growth in order to cover those potential future situations that cannot be clearly foreseen. This is why not all courts, while guided by the same “polestar”, arrive at the same destination. As for the courts’ interpretation of the Deductible Statute, this has certainly been the case.

A recent county court decision out of the Eleventh Judicial Circuit, Royal Care Medical Center (a/a/o Samantha Gonzalez) v. Esurance Property and Casualty Ins. Co., held that where the PIP policy clearly elects to pay pursuant to the permissive statutory fee schedule, the insurer properly applied the fee schedule to bills before applying the deductible.11 In the case, the court reasoned that the defendant properly applied its policy deductible to plaintiff’s medical bills by first applying the Medicare Fee Schedule reductions as elected by the subject policy of insurance, and by then applying the deductible. The court reasoned that the deductible only applies to losses covered under the policy of insurance, not simply the total bills submitted.12

Therefore, the insurer should first determine which bills are deemed reasonable, related and necessary under the policy of insurance, and then apply the deductible. If the insurer has properly elected to pay pursuant to the applicable fee schedules as described in the PIP Statute, then the insurer may first apply the fee schedules to the submitted bills, and then apply the deductible.13 Moreover, courts have held that the PIP Statute and the Deductible Statute must be read together, in pari materia. By applying the Medicare Fee Schedule limitations prior to the application of the policy deductible, defendant has complied with the Deductible Statute and applied the deductible to 100 percent of the expenses and losses as described in the PIP Statute.14

The courts of Pinellas County reached a similar holding in the case of Bayfront Health Education and Research Org. Inc. v. Progressive Am. Ins. Co.15 In Bayfront Health Education and Research Org. Inc., the court found no merit to the argument that the insurer was required to apply the deductible to 100% of medical provider’s billed expenses, and expressed the following rationale in reaching its decision:

Section 627.739(2), Fla. Stat. states ‘The deductible amount must be applied to 100 percent of the expenses and losses described in §627.736.’ As §627.739(2), Fla. Stat. refers to the ‘expenses and losses described in §627.736,’ this Court must look to §627.736 to determine the expenses and losses described. Section 627.736 describes the payable expenses as ‘reasonable expenses for medically necessary medical, surgical, X-ray, dental and rehabilitative services. . .’ and payable losses as ‘any loss of gross income and loss of earning capacity per individual from inability to work. . .’ As such, the statute requires the deductible be applied to 100 percent of the reasonable expenses for medically necessary medical, surgical, etc. services and loss of gross income and loss of earning capacity related to the accident. If the insurer, Defendant, reduced the medical expenses to a “reasonable” amount, then the deductible should be applied to 100% of the reasonable amounts, not necessarily the amount billed by the medical provider. While the Plaintiff argued that §627.739(2), Fla. Stat. requires that the deductible be applied to ‘100% of all expenses and losses,’ it fails to reference the remaining part of the statute that states ‘described in §627.736.’ Plaintiff argues the deductible should be applied to 100% of all expenses billed by the medical provider. (emphasis added) Plaintiff suggests that the Legislature’s amendment to §627.739, in 2003, supports this argument. However, Plaintiff is incorrect; prior to 2003, the deductible was being applied after the reasonable expenses were reduced by the 80% P.I.P. coverage. See Bankers Ins. Co. v. Arnone, 552 So. 2d 908 (Fla. 1989). Now, the insurer is required to apply the deductible to 100% of the reasonable expenses (not necessarily the billed expenses), before the expenses are reduced for the 80% P.I.P coverage. As such, Plaintiff’s argument fails as it relates to §627.739(2), Fla. Stat.16

Based upon the two cases discussed above, we see that courts in Florida are finding that simple statutory construction of the PIP Statute and the Deductible Statute requires an insurer to apply 100 percent of the elected deductible to the “reasonable amount” of medical expenses. In determining the reasonable charge, the insurer may have elected to apply the fee schedule methodology of payment or the fact intensive methodology. However, regardless of the methodology used, it comes down to whether the insurer determined what the “reasonable amount” was before applying the deductible to said amount.

III. Alas, All Ships May Enter the Same Harbor.

We may yet gain closure on this issue as the Fourth District Court of Appeal has accepted jurisdiction and will hear the appeal of Care Wellness Center, LLC (a/a/o Virginia BardonDiaz) v. State Farm Mutual Automobile Insurance Company, wherein the Seventeenth Judicial Circuit has certified the following as a question of great public importance: “Pursuant to Fla. Stat. §627.739, is an insurer required to apply the deductible to 100% of an insured’s expenses and losses prior to applying any permissive fee schedule payment limitation found in §627.736(5) (a)1, Fla. Stat. (2013)?”17

Care Wellness Center, LLC (a/a/o Virginia Bardon-Diaz) arose out of an automobile accident in which Virginia Bardon-Diaz sustained injuries and sought treatment, making a claim for PIP benefits under a policy of insurance that had a limit of $10,000 in PIP benefits with an elected $1,000 deductible. Following the motor vehicle accident, Ms. Bardon-Diaz treated at various medical providers, including three prior to Care Wellness, LLC. The insurer reduced the bills of these three providers according to the fee schedules contained in subsection (5)(a)1 of the PIP Statute and applied the reduced amount to the deductible. Thereafter, the defendant received bills from Care Wellness, LLC, which the PIP carrier likewise reduced and then applied entirely to the remaining deductible.

Care Wellness, LLC disputed the reduction and application of the deductible. The provider filed, in part, a request for declaratory relief on the pure legal question of whether it was appropriate for the insurer to make fee schedule reductions to bills that are applied to the deductible. Care Wellness, LLC sought a declaration that both the policy and relevant statutes limit the applicability of the fee schedules to bills that are actually reimbursed, that the injured insured’s deductible should have been completely satisfied prior to receipt of Care Wellness’s first bill, and that the insurer erred by failing to reimburse its bills. The insurer’s position, in summary, is that since the policy of insurance permits it to reimburse providers in accordance with the fee schedules, it may reduce all bills (including those falling under the deductible or outside of policy limits) to the fee schedule rates. The county court agreed with plaintiff’s position, finding that neither the statutes nor the policy permitted the insurer to make fee schedule reductions to bills that are applied to the deductible.

The county court’s ruling, as important as it is to the parties involved in the dispute, has far greater import to the rest of the community. In fact, the court found that the issue presented is one of great public importance affecting the uniform administration of justice. Indeed, two circuit courts, sitting in their appellate capacity, are in conflict over this issue, and several county courts have diverged on this same issue.18 This divergence of opinions has created a tremendous amount of uncertainty for insureds, insurers, and medical providers. Accordingly, the County Court of the Seventeenth Judicial Circuit certified the question to the Fourth District Court of Appeal as a matter of great public importance.

Until this conflict of law is resolved, the issue of how insurers may apply the PIP deductible remains uncertain. However, the lawyers at CSK remain watchful. Once the appellate court resolves this conflict, CSK will promptly inform you of the decision by e-blast.


1 Benjamin Hoadly, Lord Bishop of Winchester, The Nature of the Kingdom, or Church, of Christ (March 31, 1717), in Sixteen Sermons , 1754, at 291. 2 Larimore v. State,
2 So. 3d 101, 106 (Fla. 2008) (citing Bautista v. State, 863 So.2d 1180, 1185 (Fla. 2003)).
3 Id.
4 Holly v. Auld, 450 So. 2d 217, 219 (Fla. 1984) (quoting A.R. Douglass, Inc. v. McRainey, 137 So. 157, 159 (Fla. 1931)).
5 Id. (quoting Am. Bankers Life Assur. Co. of Fla. v. Williams, 212 So. 2d 777, 778 (Fla. 1st DCA 1968)).
6 Geico v. Virtual Imaging Servs., Inc., 90 So. 3d 321, 323 (Fla. 3d DCA 2012); see also Florida Dep’t of Highway Safety v. Hernandez, 74 So. 3d 1070, 1075 (Fla. 2011); Hill v. Davis, 70 So. 3d 572, 577 (Fla. 2011).
7 § 627.739(2), Fla. Stat. (emphasis added).
8 Courts are “required to give effect to ‘every word, phrase, sentence, and part of the statute, if possible, and words in a statute should not be construed as mere surplusage.” Heart of Adoptions, Inc. v. J.A., 963 So. 2d 189, 198 (Fla. 2007) (quoting Am. Home Assur. Co. v. Plaza Materials Corp., 908 So.2d 360, 366 (Fla. 2005)). A “basic rule of statutory construction provides that the Legislature does not intend to enact useless provisions, and courts should avoid readings that would render part of a statute meaningless.” Id. The plaintiff bar’s proposed method of deductible application would render portions of the PIP Statute meaningless and disregard the explicit “reasonable” and “allowable” reimbursement methodology set forth therein.
9 Preface at viii, Fla. Stat. (1995); Golf Channel v. Jenkins, 752 So. 2d 561, 564 (Fla. 2000) (quoting Preface at viii, Fla. Stat. (1995)); see also Overstreet v. Blum, 227 So.2d 197 (Fla. 1969); Hecht v. Shaw, 151 So. 333 (Fla. 1933); 48A Fla. Jur. 2d Statutes § 12 (“Where a statute adopts a part of or all of another statute by specific or descriptive reference thereto, the effect is the same as if the provisions adopted were written into the adopting statute.”) (emphasis added).
10 For a list of cases reviewed with analysis, please feel free to contact the author directly.
11 22 Fla. L. Weekly Supp. 948a (Fla. 11 Cir. Ct. Jan. 21, 2015).
12 Id.; see also General Star Indem. v. W. Fla. Village Inn, 874 So. 2d 26, 33-34 (Fla. 2d DCA 2004) (discussing the functional purpose of a deductible – to apply only to losses covered under the policy of insurance).
13 Id.; Order Denying Plaintiff’s Motion for Summary Judgment, New Medical Group, Inc. a/a/o Elisa Collazo v. United Auto. Ins. Co., Case. No. 11-01871 SP 26 (Fla. 11th Cir. Ct. Mar. 15, 2013) (denying summary judgment where plaintiff was alleging defendant improperly applied its policy deductible).
14 22 Fla. L. Weekly Supp. 948a; see also Goldcoast Physicians Center, Inc. (a/a/o Charles Bradford) v. Garrison Prop. & Cas. Ins. Co., 20 Fla. L. Weekly Supp. 711a (Fla. 17th Cir. Ct. Apr. 29, 2013); Gen. Star. Indem., 874 So. 2d at 34.
15 22 Fla. L. Weekly Supp. 934a (Fla. 6th Cir. Ct. Feb. 20, 2015).
16 Id. (emphasis in original).
17 23 Fla. L. Weekly Supp. 985a (County Court, Broward, May 12, 2016). A similar appeal is currently pending in the Fifth District Court of Appeal.
18 Compare Progressive American Insurance Co. v. Chambers Medical Group, Inc. (a/a/o Sheila Wilcox), Case No. 2015 AP 000850 NC (Fla. 12th Cir. Ct. App. Div. Feb. 23, 2016), with Garrison Property and Cas. Ins. Co v. New Smyrna Imaging, LLC (a/a/o Megan McClanahan), 23 Fla. L. Weekly Supp. 708a (Fla. 18th Cir. Ct. App. Div. Jan. 12, 2015).

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