It looks like I spoke too soon. Not long after I wrote that the 3rd DCA would not be offering its view on when auto insurers may take advantage of the 2008 amendments to Florida’s No Fault Law to limit personal injury protection reimbursements, declining to answer certified questions in  U.S. Security Insurance Company v. Professional Medical Group, Inc., the court decided to address the issue confronted by the 4th DCA in Kingsway Amigo after all. In Geico Indemnity Company v. Virtual Imaging Services, Inc. (released on November 30, 2011), the 3rd DCA answered a question certified as a matter of great public importance similar to the question in Kingsway Amigo (covered here):

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?

Over Judge Rothenberg’s vigorous 20 page dissent, Judge Cortinas, writing for the court majority consisting of himself and an associate judge, said no, agreeing with the 4th DCA that an auto insurer cannot limit reimbursements to 80% of 200% of the amount provided in Medicare Part B fee schedules unless the insurance policy states explicitly that this reimbursement methodology may be used.

The majority relied in part on Kingsway Amigo and the primary case that decision relied on, State Farm Insurance Co. v. Nichols, 21 So. 3d 904 (Fla. 5th DCA 2009), but diverged a bit from their reasoning. The primary thrust of the analysis in Geico deals with whether using the Medicare Part B-based reimbursement limits under section 627.736(5)(a)(2)(f) is an alternative to reimbursing for “reasonable” expenses per section 627.736(a)(1), or is merely a statutorily defined method of fixing what “reasonable” expenses are.

That question mattered because Geico’s policies stated that it would pay, “in accordance with and subject to the terms, conditions, and exclusions of the Florida Motor Vehicle No-Fault Law, as amended…80% of medical expenses,” with “medical expenses” defined as “reasonable expenses.” So if 80% of 200% of Medicare Part B = reasonable expenses, then the policies could be characterized as stating that this reimbursement formula might be used. Judge Rothenberg agreed with Geico that this was the proper way to understand the statute and the policies, and as such, the policies could not reasonably be read to affirmatively elect to reimburse based on reasonableness rather than taking advantage of the Medicare Part B methodology.

The majority, however, understood section 627.736(5)(a)(2)(f) to offer an alternative option for calculating reimbursements:

Geico was faced with at least two ways of reimbursing reasonable medical expenses: (a) reimbursing Virtual Imaging for 80% of the amount billed, or (b) reimbursing them for 80% of 200% of the amount listed on the Medicare fee schedule.

At the very least, according the majority, the statute is ambiguous on this point. If it is ambiguous, then the policies, which incorporate the statute by reference, are also ambiguous. And when an insurance policy provision is ambiguous, i.e., susceptible to two reasonable interpretations, Florida law requires courts to adopt the interpretation that favors coverage. Thus, the majority concluded that the policies had to be understood as not allowing Geico to limit reimbursements based on Medicare Part B rates.

Judge Rothenberg disagreed, explaining that prior to the 2008 amendments, insurers could anyway have reimbursed based on Medicare Part B if they stated in their policies that they would use that methodology. In her view, the point of the 2008 amendments was to avoid litigation over what reimbursement amounts were “reasonable,” by giving insurers “safe harbor” amounts (80% of 200% of Medicare Part B amounts) that the statute deems to be per se reasonable. As such, there aren’t alternative options for reimbursing providers under PIP; there’s only one: paying “reasonable” rates. Using the Medicare schedules is simply a safe harbor for determining what “reasonable” means.

The Bottom Line

The result in Geico obviously reinforces the 4th DCA’s decision in Kingsway Amigo, and avoids the inter-district conflict that insurers might have hoped would lead the Florida Supreme Court to take up these issues in Kingsway Amigo (or Geico). Given that the issue has been certified as an issue of great public importance by at least two trial courts, Geico’s best hope might be in trying to convince the 3rd DCA to do the same, which would seem its best available route to the Supreme Court.

The 3rd DCA’s decision may also may make it more difficult to convince other DCAs to reach a different result from the 4th DCA if and when they confront the issue addressed in Kingsway Amigo. On the other hand, ithe fact that a District Judge has now issued a long, reasoned explanation (albeit in dissent) for why the opposite result should be reached might give other District Judges reason for pause.

But pending further developments, Kingsway Amigo and Geico are effectively the law of the land throughout Florida, so section 627.736(5)(a)(2)(f) cannot be used to limit reimbursements unless the insured’s policy states that those limits will be used. And insurers that want to take advantage of the statutory maximums going forward should ensure that their policies unambiguously disclose the intent to do so.