The Florida Motor Vehicle No Fault Law has been described over and again by the Florida Supreme Court as designed to “provide swift and virtually automatic payment” for medical treatments to car accident victims “so that the injured insured may get on with his life without undue financial interruption.” [E.g., Custer Med. Ctr. v. United Auto Ins. Co., No. SC 08-2036, 2010 WL 4340809].
But under recent 4th DCA decisions, payment of Personal Injury Protection (PIP) benefits for medical treatment seems anything but “virtually automatic.” For every PIP claim they submit, providers are now responsible for knowing in advance, and specifying on their claim forms, the exact amount the insurer is required by law to pay for the treatment at issue. Getting paid from PIP benefits has thus become even harder than claiming payment from standard health plans.
Background – the PIP Statute
In case you need a refresher on the PIP payment procedure (codified at Florida Statutes Section 627.736) here’s my simplified gloss:
1. Insured accident victim sees medical provider.
2. Medical provider must notify the accident victim’s car insurer of the fact and amount of the claim within 35 days of treating the insured (or must give notice of starting treatment within 21 days, and submit bills within 75 days);
a. On an approved standard claim form that includes the amount of the claim and the provider’s medical license information;
b. Charging the insurer and the insured “only a reasonable amount,” determined by looking at the provider’s usual charges for the services in question, other providers’ charges for those services, insurers’ fee schedules, and other information; (More on this detail later).
3. Insurer reimburses medical provider;
a. A reasonable amount based on statutory criteria; or
b. May limit its payments to 200% of the amount allowed by Medicare Part B for non-hospital treatments, or if not covered by Medicare Part B, to 80% of the maximum amount allowed for workers’ compensation claims.
4. The insurer must pay within 30 days of receiving “reasonable proof of such loss and the amount of expenses and loss incurred which are covered by the policy.”
5. Payment is “overdue” if not made within 30 days, unless “the insurer has reasonable proof to establish that the insurer is not responsible for the payment.”
6. If the insurer doesn’t pay the provider, the provider must send the insurer a demand letter.
a. The demand letter can’t be sent until the payment is “overdue”; and
b. Must “state with specificity” the name of the provider that treated the insured and “each exact amount, the date of treatment, service, or accommodation, and the type of benefit claimed to be due.”
7. If the insurer pays in response to the demand letter, it must pay also pay a 10% penalty, up to $250.
8. If it still doesn’t pay, the provider or insured can sue, and if successful, recover the claimed amount, the 10% penalty, and attorneys’ fees.
In other words, at first glance, PIP appears to work like other health insurance. The provider submits a claim, the insurer determines whether it’s covered, and if so, it pays. One would assume that the amount the provider may charge may be greater than the amount the insurer deems to be reasonable or whatever other measure it uses to value claims, and that the insurer will pay less than the amount billed. The difference is that PIP is “swift” and “automatic”: coverage is automatic up to $10,000 regardless of fault; time periods are shorter; there are penalties for paying late, and there’s a procedure for resolving disputes quickly.
Does the PIP Statute Seek to Prevent Providers From Asking for Too Much?
In its May 4, 2011 decision in MRI Associates of America, LLC v. State Farm Fire & Casualty Company, No. 4D10-2807, the 4th DCA held that the PIP statute streamlines payment procedures in another way: By eliminating “gamesmanship” in the prices providers charge for treatment.
The result of MRI is perhaps not a shock for providers in Palm Beach County that regularly treat PIP insureds, because the Palm Beach Circuit Court reached the same result in an influential 2007 decision. (Because PIP cases by definition, involve less than $10,000 in controversy, in Florida’s court system structure, they are tried in County Courts. Three-judge panels of Circuit Court judges hear most appeals and often have the final word on PIP issues.)
But other providers may be surprised to learn that if they want to get paid by a PIP insurer, they will have to submit a claim stating not the amount the provider charges for treatments, but the amount the insurer will pay for the treatments under its policy.
The Facts Underlying the MRI Decision
The provider in MRI submitted claims of $1816.17 and $1707.33 for administering MRIs to the insured. The insurer denied the claims. The provider then sent a demand letter restating the charges claimed. The demand letter also said the amounts of the claims “if Paid at 80%,” would be $1146.22 (which is actually 80% of $1432.78) and 1061.31 (80% of $1326.64).
The Holding of MRI
The 4th DCA held that the provider’s demand letter was premature, because despite the passage of more than 30 days since the provider billed the insurer, payment to the provider wasn’t “overdue.” Why not? According to the court, the provider had never the insurer “notice of the amount due” for treating the insured.
True, the provider had submitted a claim form to the insurer. But, the court explained, the claim form request payment of the amount charged by the provider, not “the exact amount owed under the statute”, which the court said, at that time was capped at 175% of the Medicare Part B maximum in 2001. So the claims did not give the insurer “written notice of the fact of a covered loss and of the amount of” the loss. Without that notice, no payment ever became overdue.
While unstated in the court’s opinion, if no payment became ever overdue, no payment ever became due either. And since 35 (or 75) days have passed since the treatment, the result of the 4th DCA’s holding seems to be that provider is out of luck – and the insurer is off the hook.
The Court’s Reasoning
Here’s the rub. The court took a circuitous route to reach its conclusion. That’s because subparagraph (5)(d) sets forth the claims procedure and doesn’t say that claims must “specify the exact amount owed under the statute.” It only says that the provider must completely fill out one of the approved standard claim forms and submit it within the specified time period.
It’s only in describing the requirements of demand letters, in subparagraph (10) that the PIP statute requires the provider to “state with specificity” the names of all treating medical providers and to provide “an itemized statement specifying each exact amount…claimed to be due.”
But the 4th DCA held that both claim forms and demand letters, based on the reasoning of a Palm Beach County Circuit Court decision in an appeal from County Court. The analysis involves two steps. First, the 4th DCA read subparagraph (10)’s “exact amount…claimed to be due” language as requiring demand letters to state not the amount of the provider’s charges, but “the exact amount owed under the statute” per the insurer’s policy.
Then the court observed that subparagraph (10)(b)3 says that a completed claim form “may be used as the itemized statement,” required in a demand letter. If it can be used for that purpose, the 4th DCA reasoned, a completed claim form, must also state the “exact amount owed under the statute.”
My analysis below the fold.
Dissecting the Court’s Reasoning and Result
Sometimes you read an appellate decision, and it’s easy to see why the court ruled the way it did – the result seems to be compelled by the statutory or constitutional text. This is not one of those cases for me.
I find both prongs of the court’s reasoning difficult – and I think there are some pretty strong counterarguments. I’d expect a vigorous challenge if further review of MRI’s holding is sought, as I imagine it will be, whether by the losing party in the case itself or another medical provider in another case.
- First, there’s the court’s reading of “amount … claimed to be due,” as meaning the provider could only demand reimbursement of 175% of the Medicare maximum in its demand letter. This reading is hard to square with the language of subparagraph (5), which is where the statute appears to define how much the provider can “claim to be due,” i.e., how much the provider can charge, as well as how much the insurer must pay.
Subparagraph (5)(a)1 describes the amount the provider may charge the insurer (and insured), which appears to means the amount it may it may state in its completed claim form. That subparagraph says only that charges must be “reasonable” (defined by reference to a variety of metrics) and not more than the provider usually charges for the same treatment. How is a provider to know what an insurer may consider to be “reasonable” for the treatment provided?
- Medicare maximums come in only in subparagraph (5)(a)2. It says “the insurer may limit reimbursement to 80 percent of” certain maximum charges, one of which is the Medicare Part B maximum the 4th DCA referred to. But that subparagraph speaks in terms of the amounts to which the insurer may limit its reimbursement of claims, not the amounts the provider may claim.
- Even accepting the premise that demand letters must include the exact amount the insurer must pay under its policy for the treatment, the logical leap from demand letter contents to claim form contents is difficult. Even if (A) demand letters require specification of the amount owed under the statute, and (B) a claim form may be used to provide that specification, it doesn’t necessarily follow that (C) a claim form must provide that specification.
That language may instead mean no more than that a claim form “may” be used as the specification of the exact amount owed if that claim form does happen to state the exact amount owed under the statute.
- Finally, there’s this. If you wanted to create a simple, no nonsense system for providers to bill insurers and get paid, why would you make the PIP claims process so difficult, and so different from providers’ general billing practices? And if you wanted to make them alter their billing practices in such a radical way, wouldn’t you at least say so explicitly? Of course, legislatures can be less than 100% rational in crafting legislation!
So What Happened?
The Court gave only a short explanation for its decision, so it’s hard to know exactly what’s behind it. That said, the insurer in the case had a few things going for it that may have influenced the court’s decision:
- The Circuit Court’s precedent. Because PIP cases originate in the County Court, Circuit Courts are supposed to have the final say on them. District Courts aren’t supposed to intervene unless the Circuit Court’s decision is really off. So the District Court was required to be predisposed to accept the Circuit Court’s interpretation if possible.
- In addition to that deferential standard of review, the Circuit Court’s interpretation had been around, and presumably relied on by Palm Beach County providers and insurers, since 2007. Courts are loathe to upset such settled expectations of industry players.
- Policy concerns. The 4th DCA made it clear that policy concerns provided part of the justification for requiring providers to bill for the precise amount allowed by statute, noting that “this requirement of precision in medical bills discourages gamesmanship…”
- Some bad facts in MRI may have bolstered that concern. It may have struck the court as outrageous that the provider originally billed for $3500+, or more than 35% of the insured’s PIP benefits, merely to take MRIs. And that amount was knocked down by almost a third in the final amount requested in the demand letter. All of this may have led the court to see the provider’s conduct as a prime example of gamesmanship.
It’s also possible that the Court didn’t think it a big deal for providers to figure out how much an insurer will pay for the treatment at issue before submitting a claim. I suspect that providers and their billing services might disagree.