BARTOW HMA, INC. d/b/a BARTOW REGIONAL CENTER, etc. v. SECURITY NATIONAL INSURANCE COMPANY

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT

BARTOW HMA, INC. d/b/a BARTOW REGIONAL MEDICAL CENTER
a/a/o MARIA APARICIO,
Appellant,

v.

SECURITY NATIONAL INSURANCE COMPANY,
Appellee.

No. 4D21-167

[July 14, 2021]

Appeal from the County Court for the Fifteenth Judicial Circuit, Palm
Beach County; Reginald Roy Corlew, Judge; L.T. Case Nos. 50-2012-SC-
023186-XXXX-SB and 50-2019-AP-000117-CAXX-MB.

Chad A. Barr of Law Office of Chad A. Barr, P.A., Altamonte Springs,
for appellant.

Anthony J. Parrino and Jennifer W. Opiola of Reynolds Parrino &
Shadwick, P.A., St. Petersburg, and Sunia Yvette Marsh of Law Offices of
Christina M. Sanabria, Tampa, for appellee.

MAY, J.

A medical provider appeals a final summary judgment in favor of an
insurer. The provider argues the insurer’s policy fails to “clearly and
unambiguously” choose the permissive reimbursement method required
because it impermissibly allows the insurer to consider factors of both the
default method described in section 627.736(5)(a)1., Florida Statutes
(2011), and the permissive reimbursement method described in section
627.736(5)(a)2. We disagree and affirm.

In 2011, the insurer issued a policy providing PIP coverage to the
insured. The policy provided it would pay 80% of all reasonable expenses
“as defined in this policy [of insurance].” The policy defined “reasonable
expenses” as:

6. Reasonable expenses shall mean the lesser of the amount
provided by any fee schedule or schedule of payment, whether
 mandatory or permissive, as contained in the Florida Motor
Vehicle No-Fault Law (§§627.730–627.7405, Florida Statutes)
as may be amended from time to time, which was in effect on
the date that this policy was issued. We shall not pay any
amount in excess of the amount the person or institution
customarily charges for like services or supplies.

The policy also provided:

Limits of Liability
...
4. We shall limit reimbursement to 80 percent of the following
schedule of maximum charges fee schedule or schedule of
payment, whether mandatory or permissive, as contained in
the Florida Motor Vehicle No-Fault Law (§§627.730–627.7405,
Florida Statutes) as may be amended from time to time, which
was in effect on the date that this policy was issued. We shall
not pay any amount in excess of the amount the person or
institution customarily charges for like services or supplies
....

Lastly, the policy provided that, “[i]f an injured person incurs medical
expenses that we deem to be unreasonable or unnecessary, we may refuse
to pay for those medical expenses and contest them.”

In 2011, the insured suffered injuries from an automobile accident and
sought treatment. The medical provider submitted an invoice for medical
expenses to the insurer.

Under section 627.736(5)(a)2., Florida Statutes, the insurer reduced
the provider’s medical expenses to 200% of Medicare and paid 80% of the
reduced expenses. The provider then sued the insurer for the difference
between the amount billed and the amount paid. Pursuant to the parties’
stipulation, the only disputed issue was whether the policy satisfied the
notice requirement set forth in Geico General Insurance Co. v. Virtual
Imaging Services, Inc., 141 So. 3d 147 (Fla. 2013) (hereinafter “Virtual III”).

The insurer moved for summary judgment. It argued it properly elected
to limit reimbursement to 80 percent of the applicable Medicare Part B fee
schedule in accordance with the applicable limitations provided in section
627.736(5)(a)2.b., Florida Statutes. The provider responded and cross-
moved for summary judgment. It argued the policy failed to “clearly and
unambiguously” choose the permissive reimbursement method required
by Virtual III because it impermissibly allowed the insurer to consider

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factors of both the default and permissive reimbursement methods
described in sections 627.736(5)(a)1. and 2., Florida Statutes, respectively.

Following a hearing on the motion and cross-motion, the trial court
entered a final judgment in the insurer’s favor. The trial court concluded
the policy satisfied the requirements of Virtual III because it provided
sufficient notice of intent to limit reimbursements to the schedule of
maximum charges or fee schedules, and made a clear and unambiguous
election of the payment methodology it utilized for PIP reimbursements.

The provider moved for rehearing, which the trial court denied. The
provider appealed to the circuit court, which transferred the case here.

The provider argues the policy fails to provide sufficient notice that the
insurer elected to limit reimbursements pursuant to section
627.736(5)(a)2. It contends the policy ambiguously refers to the
alternative method of reimbursement calculations found in section
627.736(5)(a)1. and therefore violates the notice requirement required by
Virtual III.

The insurer responds Virtual III does not require that a policy provide
notice that it elects the payment methodology of section 627.736(5)(a)2. to
the exclusion of the alternative method of section(5)(a)1. As long as the
policy clearly and unambiguously elects to limit reimbursements pursuant
to section 627.736(5)(a)2., it satisfies Virtual III. We agree and affirm.

The Analysis

We have de novo review of the legal issue. Volusia County v. Aberdeen
at Ormond Beach, L.P., 760 So. 2d 126, 130 (Fla. 2000).

Florida’s No-Fault Law’s “stated purpose is ‘to provide for medical,
surgical, funeral, and disability insurance benefits without regard to fault,
and to require motor vehicle insurance securing such benefits.’” Virtual
III, 141 So. 3d at 152 (quoting § 627.731, Fla. Stat. (2008)). “The PIP
statute, codified in section 627.736, is ‘an integral part of the no-fault
statutory scheme.’” Id. (quoting Flores v. Allstate Ins. Co., 819 So. 2d 740,
744 (Fla. 2002)). “This statutory provision ‘requires motor vehicle
insurance policies issued in Florida to provide PIP benefits for bodily injury
arising out of the ownership, maintenance, or use of a motor vehicle.’” Id.
at 153 (quoting Allstate Ins. Co. v. Holy Cross Hosp., Inc., 961 So. 2d 328,
332 (Fla. 2007)).

• The Reasonable Expenses Section

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 Subsection (1)(a) of the PIP statute requires insurance policies to
provide coverage for 80% of all reasonable medical expenses arising from
motor vehicle related injuries. § 627.736(1)(a), Fla. Stat. (2011).
Subsections (5)(a)1. and 2. provide two methodologies for payment
reimbursements: one incorporates a list of factors to determine whether
a medical expense is reasonable, and the other permits a limit on
reimbursements up to 80 percent of the schedule of maximum charges,
respectively. §§ 627.736(5)(a)1., 2., Fla. Stat. (2011).

Insurance policies are required to clearly and unambiguously elect to
reimburse providers under subsection (5)(a)2. Virtual III, 141 So. 3d at
158. In Virtual III, the supreme court analyzed the PIP statute’s dual
provisions for reimbursement payment methodologies and concluded
subsection (5)(a)2. was “permissive”—that is, that it provided an optional
way for insurers to calculate reimbursements to satisfy the PIP statute’s
reasonable medical expenses coverage mandate. Id. at 157.

In contrast, the supreme court determined subsection (5)(a)1. was a
“default” methodology to be applied if the permissive option was not elected.
See id. at 158. Because one methodology applied automatically but the
other was optional, the supreme court fashioned a requirement for
insurers to notify their insureds and physicians that an insurer intended
to limit reimbursements pursuant to the Medicare fee schedule. Id. at
159. 1

The provider argues that Virtual III’s notice requirement prevents an
insurer from referencing both the default and permissive payment
methodologies provided in subsections (5)(a)1. and (a)2., respectively. We
disagree.

First, Virtual III does not dictate that a policy must specify which of the
two methodologies it intends to rely on in calculating reimbursements.
Rather, it requires an insurance policy provide notice that the insurer may
elect to limit reimbursements pursuant to the fee schedules provided in

1 It should be noted that Virtual III analyzed an older version of the PIP statute
and therefore its holding “applies only to policies that were in effect from the
effective date of the 2008 amendments to the PIP statute that first provided for
the Medicare fee schedule methodology, which was January 1, 2008, through the
effective date of the 2012 amendment, which was July 1, 2012.” 141 So. 3d at
150. Because the policy at issue here was executed in 2011, Virtual III and its
progeny control.

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subsection (5)(a)2. to avoid blindsiding insureds and providers with an
otherwise unknown option to limit reimbursements. The supreme court
stated:

Because the fee schedule provision of section 627.736(5)(a)2.f.
is permissive and not mandatory, and because the Medicare
fee schedules are not the only mechanism for calculating
reimbursements, we conclude that . . . the insurer cannot take
advantage of the Medicare fee schedules to limit
reimbursements without notifying its insured by electing
those fee schedules in its policy. In other words, the Medicare
fee schedules set forth in section 627.736(5)(a)2. provide an
option for insurers, not the method of how the insurer
exercises this option. In order to exercise the option, the
insurer must provide notice in the policy of its election to use
the fee schedules.

Subsection 5 of section 627.736(5)(a), Florida Statutes (2008),
further supports this conclusion . . . . The Legislature’s use
of the conditional word “[i]f” in this statutory provision to
describe an insurer’s ability to limit reimbursements in
accordance with the Medicare fee schedules indicates that an
insurer is not required to use those schedules. As the Fourth
District explained in Kingsway [Amigo Insurance Co. v. Ocean
Health, Inc., 63 So. 3d 63, 67 (Fla. 4th DCA 2011)], the
language in section 627.736(5)(a)5. “anticipates that an
insurer will make a choice.” Accordingly, even if the Medicare
fee schedules are incorporated into the insured’s policy,
neither the insured nor the provider knows, without the policy
providing notice by electing the Medicare fee schedules, that
the insurer will limit reimbursements.

Id. at 158–59 (third alteration in original).

This conclusion is consistent with the current version of the PIP statute:

5. An insurer may limit payment as authorized by this
paragraph only if the insurance policy includes a notice at the
time of issuance or renewal that the insurer may limit
payment pursuant to the schedule of charges specified in this
paragraph.

§ 627.736(5)(a)5., Fla. Stat. (2020) (emphasis added).

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 The provider’s argument that the policy is required to exclude any
reference to the default methodology to give proper notice of the insurer’s
election to limit reimbursements pursuant to subsection (5)(a)2. is simply
unsupported by Virtual III and was rejected in Allstate Insurance Co. v.
Orthopedic Specialists, 212 So. 3d 973 (Fla. 2017).

The supreme court reasoned in Orthopedic Specialists that, although
Allstate’s policy did not provide for only one payment methodology and
referenced “all fee schedules,” when read in context, the policy “clearly and
unambiguously” provided that “reimbursements will be made in
accordance with all of the fee schedule limitations contained within section
627.736(5)(a)2.” Id. at 977. The court explained:

A PIP policy cannot contain a statement that the insurer will
not pay eighty percent of reasonable charges because no
insurer can disclaim the PIP statute’s reasonable medical
expenses coverage mandate. Furthermore, a PIP policy
cannot state that the insurer will calculate benefits solely
under the [permissive methodology] because the Medicare fee
schedules are not the only applicable mechanism for
calculating reimbursements under the permissive payment
methodology.

Id. (emphasis added) (internal citation omitted).

Here too, when read in context, the policy’s provisions unambiguously
elect to limit reimbursements pursuant to subsection (5)(a)2. The policy
provides the insurer would pay 80% of all reasonable expenses “as defined
in this policy [of insurance].” The policy defines “reasonable expenses” as:

the lesser of the amount provided by any fee schedule or
schedule of payment, whether mandatory or permissive, as
contained in the Florida Motor Vehicle No-Fault Law
(§§627.730–627.7405, Florida Statutes) as may be amended
from time to time, which was in effect on the date that this
policy was issued. We shall not pay any amount in excess of
the amount the person or institution customarily charges for
like services or supplies.

When read in context, the policy provides the requisite notice that the
insurer will reimburse providers pursuant to the fee schedules in
subsection (5)(a)2.

The provider next argues the policy is ambiguous because it suggests

6
the insurer may elect either the default or permissive payment
methodologies in calculating reimbursements. Once again, we disagree.

Here, the policy’s limits of liability provision clearly elected to limit
reimbursements under subsection (5)(a)2. Because the contract must be
read as a whole, the reasonable expenses provision’s references to the term
“mandatory” and factors mirroring subsection (5)(a)1. do not negate the
insurer’s notice of its intent to limit liability pursuant to subsection
(5)(a)2., as provided in the policy’s limitations provision. They are therefore
irrelevant to the analysis. See Virtual III, 141 So. 3d at 156 (explaining
default methodology of subsection (5)(a)1. exists for insurer to have
“‘recourse to some alternative means for determining a reimbursement
amount’ if it chooses not to use the Medicare fee schedules.” (emphasis
added) (citations omitted)).

The policy’s reasonable expenses provision merely provides that it
would pay the lesser of the fee schedule limitation amount found in
subsection (5)(a)2. There simply is no ambiguity. See Swire Pac. Holdings,
Inc. v. Zurich Ins. Co., 845 So. 2d 161, 165 (Fla. 2003).

• Limits of Liability Section

The policy also provides:

Limits of Liability
...
4. We shall limit reimbursement to 80 percent of the following
schedule of maximum charges fee schedule or schedule of
payment, whether mandatory or permissive, as contained in
the Florida Motor Vehicle No-Fault Law (§§627.730–627.7405,
Florida Statutes) as may be amended from time to time, which
was in effect on the date that this policy was issued. We shall
not pay any amount in excess of the amount the person or
institution customarily charges for like services or supplies
....

This section provides the insurer shall “limit” reimbursement to 80
percent of the “following schedule of maximum charges fee schedule or
schedule of payment, whether mandatory or permissive . . . .” Because
the provision references the “schedule of maximum charges fee schedule
or schedule of payment,” it limits reimbursement under subsection
(5)(a)2., thereby electing the permissive payment methodology. See
Orthopedic Specialists, 212 So. 3d at 977–79.

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 This section is almost indistinguishable from the same section in
Orthopedic Specialists. Although Orthopedic Specialists did not expressly
mention the term “mandatory” as the policy does here, it expressly
referenced “any and all limitations” and “all fee schedules” of section
627.736, which includes both the default and permissive payment
methodologies of subsections (5)(a)1. and (a)2. See id.

This conclusion is further supported by the limitations section tracking
the fee schedule provided in subsection (5)(a)2. It is also consistent with
the legislative amendments to section 627.736(5), which no longer contain
two mutually exclusive methodologies for calculating reimbursement
payments. See State Farm Mut. Auto. Ins. Co. v. MRI Assocs. of Tampa,
Inc., 252 So. 3d 773, 778 (Fla. 2d DCA 2018) (rejecting argument that
State Farm’s policy contains an “unlawful hybrid method” of
reimbursement calculation by referencing both default and permissive
payment methodologies because statute now “includes the fact-dependent
calculation of reasonable charges as part of the definition of ‘[c]harges for
treatment of injured persons’ under section (5)(a).’”).

In short, the limits of liability section clearly and unambiguously elects
the permissive fee reimbursement methodology of subsection (5)(a)2.

• Unreasonable Expenses Section

Lastly, the provider argues the policy’s unreasonable or unnecessary
medical expenses provision creates ambiguity between whether the
insurer will limit reimbursements pursuant to the fee schedule of
subsection (5)(a)2. or its own determination of “unreasonable or
unnecessary” charges. Like the reasonable expenses provision, this
section does not negate the insurer’s notice to limit reimbursements
pursuant to the fee schedules.

In fact, the section is identical to that in Orthopedic Specialists, which
was found to provide legally sufficient notice. Although the supreme court
did not directly address this section in Orthopedic Specialists, its de novo
review suggests that nothing in the policy rendered the election
ambiguous. See Orthopedic Specialists, 212 So. 3d at 975; see also Hanna
v. WCI Cmtys., Inc., 348 F. Supp. 2d 1322, 1329 (S.D. Fla. 2004) (“Courts
have traditionally defined ‘de novo review’ to mean ‘that the whole process
before the district court would start from scratch, as if the proceedings
[below] had never occurred.’” (alteration in original) (quoting United States
v. Koenig, 912 F.2d 1190, 1192 (9th Cir. 1990))).

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 The section is also consistent with the rest of the policy because it
provides the insurer will not pay expenses it deems unreasonable. It then
defines reasonable charges to include the lesser of the amounts provided
in the fee schedule of subsection (5)(a)2. In short, the provision does not
create an ambiguity regarding the insurer’s intent to limit
reimbursements. Swire Pac. Holdings, Inc., 845 So. 2d at 165.

Conclusion

Because the policy clearly and unambiguously provides notice that the
insurer intends to limit reimbursements pursuant to the permissive
payment methodology of subsection (5)(a)2., the trial court did not err in
finding the policy comported with the notice requirements of Virtual III.

We therefore affirm.

Affirmed.

LEVINE and FORST, JJ., concur.

* * *

Not final until disposition of timely filed motion for rehearing.

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