Supreme Court of Florida
____________
No. SC18-278
____________
PROGRESSIVE SELECT INSURANCE COMPANY,
Petitioner,
vs.
FLORIDA HOSPITAL MEDICAL CENTER, etc.,
Respondent.
December 28, 2018
CANADY, C.J.
In this case, we consider the proper method of applying a personal injury
protection (“PIP”) insurance policy deductible to a medical provider’s bill for
hospital emergency services and care. The issue presented is whether section
627.739(2), Florida Statutes (2014), requires the deductible to be applied before or
after medical charges are reduced under the reimbursement limitation in section
627.736(5)(a)1.b., Florida Statutes (2014). We have for review the decision of the
Fifth District Court of Appeal in Progressive Select Insurance Co. v. Florida
Hospital Medical Center (Progressive), 236 So. 3d 1183 (Fla. 5th DCA 2018).
There, the district court held that the deductible should be subtracted from the total
charges—prior to application of the reimbursement limitation—and certified the
following question to be of great public importance:
WHEN CALCULATING THE AMOUNT OF PIP BENEFITS DUE
AN INSURED, DOES SECTION 627.739(2), FLORIDA
STATUTES, REQUIRE THAT THE DEDUCTIBLE BE
SUBTRACTED FROM THE TOTAL AMOUNT OF MEDICAL
CHARGES BEFORE APPLYING THE REIMBURSEMENT
LIMITATION UNDER SECTION 627.736(5)(a)1.b., OR MUST
THE REIMBURSEMENT LIMITATION BE APPLIED FIRST AND
THE DEDUCTIBLE SUBTRACTED FROM THE REMAINING
AMOUNT?
Id. at 1192. We have jurisdiction. See art. V, § 3(b)(4), Fla. Const.
While this case was pending in this Court, the Fourth District issued its
opinion in State Farm Mutual Automobile Insurance Co. v. Care Wellness Center,
LLC (Care Wellness), 240 So. 3d 22 (Fla. 4th DCA 2018). The Fourth District
concluded that the deductible should be applied after charges are reduced under
any fee schedule found in section 627.736. See id. at 24. Accordingly, it certified
conflict with the Fifth District in Progressive. Id.
We answer the certified question by holding that section 627.739(2) requires
the deductible to be applied to the total medical charges prior to reduction under
the reimbursement limitation in section 627.736(5)(a)1.b. Therefore, we approve
the Fifth District’s decision in Progressive and disapprove the Fourth District’s
decision in Care Wellness.
-2-
BACKGROUND
Reimbursement for hospital emergency services and care is made under the
framework established in section 627.736(5), subject to the deductible provided for
in section 627.739(2). Section 627.736(5)(a)1. authorizes insurers to “limit
reimbursement to 80 percent of” a “schedule of maximum charges.” Under the
schedule of maximum charges, reimbursement for hospital emergency services and
care is limited to “75 percent of the hospital’s usual and customary charges.”
§ 627.736(5)(a)1.b., Fla. Stat. Under section 627.739(2), insureds may elect a
deductible of $250, $500, or $1,000. Central to the dispute here is this provision of
section 627.739(2): “The deductible amount must be applied to 100 percent of the
expenses and losses described in s. 627.736.”
Progressive issued a PIP insurance policy to Jonathan Parent, who elected a
$1,000 deductible. See Progressive, 236 So. 3d at 1185. After Parent was injured
in an automobile accident, he received treatment at Florida Hospital Medical
Center (“Florida Hospital”). Id. Florida Hospital submitted the resulting medical
bills to Progressive under an assignment of benefits. Id.
The dispute in this case arose when Florida Hospital challenged the way that
Progressive applied the deductible to its bill. Florida Hospital’s bill subtracted the
deductible before reducing the fee under section 627.736(5)(a)1.b. The Fifth
-3-
District illustrated the calculation that Florida Hospital asserted was appropriate as
follows:
$2,781.00 Total hospital charge
-$1,000.00 Parent’s PIP deductible
$1,781.00
x 75% Applying section 627.736(5)(a)1.b.
$1,335.75
x 80% Applying section 627.736(5)(a)1.
$1,068.60 Amount due
Id. Progressive submitted payment, but adjusted the charge by applying the
reimbursement limitation before subtracting the deductible:
$2,781.00 Total hospital charge
x 75% Applying section 627.736(5)(a)1.b.
$2,085.75
-$1,000.00 Parent’s PIP deductible
$1,085.75
x 80% Applying section 627.736(5)(a)1.
$ 868.60 Amount due
Id. Florida Hospital then filed suit in county court to recover the $200 difference
between the amount billed and the reduced sum paid by Progressive. Id. The
county court granted summary judgment in favor of Florida Hospital. Id.
Progressive appealed, and the circuit court affirmed the judgment. Id.
Progressive next filed a petition for writ of certiorari with the Fifth District,
seeking second-tier review. See id. After rehearing, the district court found “no
divergence from the correct law in the circuit court’s decision.” Id. at 1192. The
Fifth District held that section 627.739(2) “indicates that the deductible applies to
-4-
‘100 percent of the [insured’s] expenses and losses.’ ” Id. at 1186. The district
court therefore rejected Progressive’s argument that the provider’s charges should
be reduced under the reimbursement limitation before subtracting the deductible.
Id. at 1187. “[U]sing [this] methodology,” the Fifth District concluded, “would
render meaningless the requirement” that the deductible be applied to all expenses
and losses. Id.
The district court next contrasted the present version of section 627.739(2)
with an earlier version of the statute. Id. at 1187-89. The Fifth District noted that
section 627.739(2) previously required the deductible to be subtracted “from the
benefits otherwise due” an insured. Id. at 1188. In 2003, the district court
recognized, the Legislature amended the statute to provide for the deductible’s
application to “100 percent of . . . expenses and losses.” Id. The Fifth District
determined that this “substantive change” to the statute demonstrated legislative
intent for the deductible to be subtracted from the total charges. Id. at 1189. The
district court also acknowledged “that during the 2016 legislative session, the
Florida Legislature failed to enact a proposed bill” that would have amended
“section 627.739(2) to incorporate the method[] of subtracting the deductible”
advanced by Progressive. Id.
Finally, the Fifth District rejected Progressive’s argument that its
interpretation of section 627.739(2) would prevent medical providers from
-5-
“render[ing] a bill for services that is unreasonable.” Id. at 1190. The district
court found the assertion unpersuasive for three reasons. First, the court
determined that Progressive’s reading of the statute “overlook[ed] the distinctions
between a deductible and a statutory reimbursement limitation.” Id. A deductible,
the Fifth District explained, is an amount for which the policyholder agrees to self-
insure. Id. Reimbursement limitations, on the other hand, “provide a
methodology” for calculating benefits owed the insured after the deductible is met
and “coverage is triggered under the policy.” Id. at 1190-91. Second, the district
court reasoned that the policyholder is free “to contest any bill that” he or she “is
required to pay to meet the deductible.” Id. at 1191. Third, the Fifth District
invoked the principle that the Florida Motor Vehicle No-Fault Law “must be
construed in favor of the insured.” Id. Interpreting section 627.739(2) in the
manner advocated by Progressive would not further that principle, the district court
opined, because it “would allow the insurer to pay less in benefits than would
otherwise be due.” Id. at 1191-92. Therefore, the Fifth District denied the petition
for writ of certiorari and certified the above question to be of great public
importance. Id. at 1192.
ANALYSIS
Because resolving the certified question requires us “to interpret provisions
of the Florida Motor Vehicle No-Fault Law,” the “standard of review is de novo.”
-6-
Allstate Ins. Co. v. Orthopedic Specialists, 212 So. 3d 973, 975 (Fla. 2017)
(quoting Geico Gen. Ins. Co. v. Virtual Imaging Servs., Inc., 141 So. 3d 147, 152
(Fla. 2013)). We explain our decision in two parts. First, we examine the text of
section 627.739(2) and consider its relationship to section 627.736. Second, we
review the history of section 627.739(2).
Analysis of Section 627.739(2)
Section 627.739(2), Florida Statutes, states, in relevant part:
Insurers shall offer to each applicant and to each policyholder, upon
the renewal of an existing policy, deductibles, in amounts of $250,
$500, and $1,000. 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).
§ 627.739(2), Fla. Stat. (emphasis added). Interpreting the statute requires us to
identify “the expenses and losses described in [section] 627.736.” Though
“expenses and losses” are not expressly defined in section 627.736, the terms are
used throughout section 627.736(1). Section 627.736(1)(a) references “reasonable
expenses” for medically necessary services provided after an automobile accident.
§ 627.736(1)(a), Fla. Stat. (emphasis added). Section 627.736(1)(b) discusses
“loss of gross income and loss of earning capacity” caused by the insured’s
inability to work, and “expenses reasonably incurred in obtaining” services for
household chores that the insured would have otherwise performed.
§ 627.736(1)(b), Fla. Stat. (emphasis added).
-7-
Section 627.739(2) contrasts these “expenses and losses” with the “benefits”
available to an insured “[a]fter the deductible is met.” Section 627.736(1)
describes “benefits” and places them in two relevant categories: disability and
medical benefits.1 Disability benefits, as explained in section 627.736(1)(b),
include 60% of loss of income due to the insured’s inability to work, and 60% of
expenses for services he or she is unable to perform. Section 627.736(1)(a)
provides that medical benefits—at issue in this case—are 80% of reasonable
expenses for medical services. As previously mentioned, in calculating reasonable
medical expenses, section 627.736(5)(a)1. permits insurers to “limit reimbursement
to 80 percent of” a “schedule of maximum charges.” Under the fee schedule,
compensation for hospital emergency services and care is capped at 75% of the
provider’s “usual and customary charges.” § 627.736(5)(a)1.b., Fla. Stat.
A plain reading of the statutory provisions makes clear that the deductible
must be subtracted from the provider’s charges before the reimbursement
limitation is applied. In the context of section 627.736(1), “expenses and losses”
refers to something different from “benefits.” “Benefits” are the amount paid by
the insurer—determined by the 60% and 80% methodologies, and governed by the
1. Section 627.736(1)(c) describes a third category, “[d]eath benefits of
$5,000 per individual,” but these benefits are exempt from application of the
deductible. § 627.739(2), Fla. Stat.
-8-
fee schedule, when applicable. “Expenses and losses,” on the other hand, refers to
the total charges submitted to the insured—not only those which may be recovered
as benefits. And section 627.739(2) provides that the deductible must be applied to
100% of such “expenses and losses.” Subtracting the deductible from the reduced
fee schedule amount would violate this requirement. The reference in section
627.739(2) to “100 percent of the expenses and losses described in [section]
627.736” thus is to the amount charged before the application of the
reimbursement limitation authorized by section 627.736(5)(a)1. To conclude
otherwise would deprive the statute’s reference to “100 percent” of its manifest
meaning.
Progressive argues that when an insurer limits reimbursement under section
627.736(5)(a)1., the “expenses” identified in section 627.739(2) may not exceed
the schedule of maximum charges. In support of its claim, Progressive relies on
the Fourth District’s decision in Care Wellness. There, the Fourth District
recognized that “[s]ection 627.736 contains several references to ‘expenses,’ ” and
found each relevant section to contain a direct or indirect “requirement that the
expenses be reasonable.” Care Wellness, 240 So. 3d at 26. Section 627.736(5)(a),
the district court noted, specifically required that “the insurer and injured party” be
charged “a reasonable amount.” Id. at 27. Therefore, the Fourth District
concluded that the reasonableness requirement was not limited to the benefits paid
-9-
by the insurer, and instead “applie[d] to the totality of the charges.” Id. at 26-27.
Because it found that the Legislature had “established what is reasonable through
the adoption of” the schedule of maximum charges, the Fourth District determined
that “there is no PIP claim until the provider’s bill is reduced, if necessary, to the
amount set forth in section 627.736(5)(a)1.” Id. at 29. And “[i]f there is no PIP
claim until the amount is reduced to the amount found to be reasonable by the
legislature, then there is nothing to apply the deductible to until the amount is
reduced.” Id. Accordingly, the Fourth District held that the deductible should be
applied to medical charges after adjustment under the fee schedule. Id.
We conclude that the Fourth District’s position contradicts the plain
language of section 627.736(5)(a)1. The Fourth District concluded that charges
must be decreased under the fee schedule prior to application of the deductible.
But section 627.736(5)(a)1. only permits an “insurer” to limit “reimbursement”
based on the schedule of maximum charges. Before the deductible is satisfied,
“the insurer is not reimbursing the medical provider”; rather, the policyholder is
compensating the provider. USAA Gen. Indem. Co. v. Gogan, 238 So. 3d 937, 943
(Fla. 4th DCA 2018) (Gross, J., dissenting); see Int’l Bankers Ins. Co. v. Arnone,
552 So. 2d 908, 911 (Fla. 1989) (stating that “an insurance company’s obligation
to pay” will not “ripen” until the deductible is met). There is no basis for
concluding that the reimbursement limitation applies to charges included in the
- 10 -
deductible, “which the insured alone is obligated to pay and which are not
recoverable as benefits under the policy.” Progressive, 236 So. 3d at 1191.
History of Section 627.739(2)
The history of section 627.739(2) further indicates that it currently requires
the deductible to be subtracted from the total medical charges before the
reimbursement limitation is applied. Prior to 2003, section 627.739(2) stated, in
pertinent part:
Insurers shall offer to each applicant and to each policyholder, upon
the renewal of an existing policy, deductibles, in amounts of $250,
$500, $1,000, and $2,000, such amount to be deducted from the
benefits otherwise due each person subject to the deduction.
§ 627.739(2), Fla. Stat. (2002) (emphasis added). In Govan v. International
Bankers Insurance Co., 521 So. 2d 1086 (Fla. 1988), we construed the earlier
version of the statute. We determined that “benefits otherwise due” referred to the
“amount of . . . medical expenses payable under the policy.” Id. at 1087 (emphasis
omitted) (quoting Int’l Bankers Ins. Co. v. Govan, 502 So. 2d 913, 914 (Fla. 4th
DCA 1986)). Because coverage was limited to 80% of medical expenses, id., we
found that the deductible should be applied to the medical provider’s charges after
the 80% reduction. Id. at 1088.
In so ruling, we recognized that we lacked the “authority to change the clear
intent and purpose of a statute that is not vague and ambiguous,” even if we
“disagree[d] with the legislative policy underlying the statute.” Id. We suggested
- 11 -
that any complaints about the policy “be addressed to the legislature,” which, we
noted, had “failed to enact a bill which would have amended the statute to make it
consistent with the statutory interpretation presented . . . by the petitioner.” Id. at
1088 & n.*.
In 2003, the Legislature amended section 627.739(2) to require that “[t]he
deductible amount . . . be applied to 100 percent of the expenses and losses
described in s. 627.736.” Ch. 2003-411, § 9, Laws. of Fla. Then, “[a]fter the
deductible is met, each insured is eligible to receive up to $10,000 in total benefits
described in s. 627.736(1).” Id.
That it replaced the phrase “benefits otherwise due” with “100 percent of the
expenses and losses” indicates that the Legislature—in response to Govan—
amended the statute to require that the deductible apply to the total charges
submitted to the insured. The 2003 amendment further moved the term “benefits”
to the next sentence of section 627.739(2)—“which discusses the insurer’s liability
after the deductible is satisfied.” Progressive, 236 So. 3d at 1189 (emphasis
omitted). Thus, the revised statute distinguishes between the total “expenses and
losses” from which the deductible is subtracted and the “benefits” that may be
received after the reimbursement limitation is applied. Id.
Progressive argues that “100 percent of the expenses and losses described in
[section] 627.736” refers not to the provider’s total charges, but instead to 100% of
- 12 -
the reasonable expenses set out in the “schedule of maximum charges” in section
627.736(5)(a)1. Essentially, Progressive erroneously contends the 2003
amendment clarifies that the deductible should be applied to 100%—rather than
80%—of the applicable fee schedule amount.
It is correct that the “schedule of maximum charges” in section
627.736(5)(a)1.—with the limitation of charges for hospital emergency services
and care to “75 percent of the hospital’s usual and customary charges,”
§ 627.736(5)(a)1.b., Fla. Stat.—was not adopted until four years after the adoption
of the provision requiring application of the deductible to “100 percent of the
expenses and losses described in [section] 627.736.” See ch. 2007-324, § 20, Laws
of Fla. But there is no basis for concluding that the “100 percent” requirement
extends to one statutory provision that limits reimbursements for expenses but not
to another similar provision that also limits reimbursements for expenses. The
“100 percent” requirement mandates that the deductible be applied to the full
amount of the expenses identified in section 627.736 not only before imposition of
the reimbursement limitation existing when the “100 percent” requirement was
adopted, but also before imposition of the subsequently adopted reimbursement
limitation.
- 13 -
CONCLUSION
Section 627.739(2) requires the deductible to be subtracted from “100
percent” of expenses and losses, not 75% of a provider’s customary charges. We
therefore hold that, when calculating the PIP benefits due an insured, the
deductible must be subtracted from the total medical charges before applying the
reimbursement limitation in section 627.736(5)(a)1.b. Accordingly, we approve
Progressive and disapprove Care Wellness.
It is so ordered.
PARIENTE, LEWIS, QUINCE, POLSTON, LABARGA, and LAWSON, JJ.,
concur.
NO MOTION FOR REHEARING WILL BE ALLOWED.
Application for Review of the Decision of the District Court of Appeal – Certified
Great Public Importance
Fifth District - Case No. 5D16-2333
(Orange County)
Michael C. Clarke of Kubicki Draper, P.A., Tampa, Florida,
for Petitioner
Chad A. Barr of Law Office of Chad A. Barr, P.A., Altamonte Springs, Florida,
for Respondent
William W. Large of Florida Justice Reform Institute, Tallahassee, Florida; and
Peter J. Valeta of Cozen O’Connor, Chicago, Illinois,
for Amicus Curiae Florida Justice Reform Institute
- 14 -
Rebecca O’Dell Townsend and Scott W. Dutton of Dutton Law Group, P.A.,
Tampa, Florida; and David Dougherty of Law Office of David S. Dougherty,
Tampa, Florida,
for Amici Curiae GEICO General Insurance Company, GEICO Indemnity
Company and Government Employees Insurance Company
Matthew Coleman Scarfone and Maria Elena Abate of Colodny Fass, Sunrise,
Florida; and Suzanne Youmans Labrit, Jason Gonzalez, and Amber Stoner of
Shutts & Bowen LLP, Tallahassee, Florida,
for Amici Curiae Property Casualty Insurers Association of America and
Personal Insurance Federation of Florida
David M. Caldevilla of de la Parte & Gilbert, P.A., Tampa, Florida; and Mac S.
Phillips of Phillips Tadros, P.A., Fort Lauderdale, Florida,
for Amicus Curiae Floridians for Fair Insurance, Inc.
Anthony D. Barak of Barak Law Group, Bradenton, Florida; Christopher P. Calkin
and Mike N. Koulianos of The Law Offices of Christopher P. Calkin, P.A., Tampa,
Florida; Lorca Divale of The Physician Collections Group, P.A., Tampa, Florida;
and Chad L. Christensen of Ged Lawyers, LLP, Boca Raton, Florida,
for Amici Curiae The Chambers Medical Group, Inc., Clearview Imaging,
LLC, MRI Associates of St. Pete, Inc., and Pagano Chiropractic, P.A.
Edward H. Zebersky and Mark S. Fistos of Zebersky Payne, LLP, Fort Lauderdale,
Florida; and Lawrence M. Kopelman of Lawrence M. Kopelman, P.A., Fort
Lauderdale, Florida,
for Amicus Curiae Florida Medical Association
- 15 -