Class Certification Denied to Challengers of Medicare Outpatient Prospective Payment System Personal Injury Protection Fee Schedule Reimbursements
Mar 7, 2012
Judge Ursula Ungaro of the Southern District of Florida denied class certification today, March 7, 2012, in a case brought against State Farm Mutuel Automobile Insurance Company (“State Farm”) by a class of providers challenging the application of the Medicare Outpatient Prospective Payment System (“OPPS”) to fee schedule reimbursements for Personal Injury Protection (“PIP”) insurance.
The court had previously ruled against State Farm on the merits of the claim, finding that the PIP statute did not allow the use of OPPS to cap reimbursements. However, in deciding not to certify the class, the trial court specifically found that whether or not a payment utilizing OPPS was “reasonable” was an individual inquiry which depended on the circumstances of each claim. Significantly the court interpreted the recent Kingsway and Virtual Imaging decisions as follows:
In Kingsway Amigo Ins. Co. v. Ocean Health, Inc., Florida’s Fourth District Court of Appeal explained that Fla. Stat. §627.736 provides insurers a choice between two payment calculation methodologies. 63 So. 3D 63 (Fla. 4 DCA 2011). The first method, detailed in Fla. Stat. §§627.736(1)(a) and 5(a)1, requires that insurers reimburse 80 percent of all reasonable expenses. The second method, established by Fla. Stat 627.736(5)(a)(2)(a)-(f), authorizes insurers to limit their reimbursements to 80 percent of the listed schedule of maximum charges, included in which is the PPFS. Relevant to the present motion, the Kingsway court held further that an insurer’s choice of method could be binding, but looked to the contract between the insurer and the provider to determine whether the insurer had so elected to bind itself to one of the two methods available under the Florida statute. Id. See also, Geico Indemnity, Co. v. Virtual Imaging Services, Inc., 2011 WL 5964369 (Fla. 3d DCA 2011) and DCI MRI, Inc. v. Geico Indem Co.2012 WL 126351 (Fla. 4 DCA 2012) (examining the terms of the policy to determine whether the insurer made a binding election).
Because the State Farm insurance contract said it would pay 80 percent of “reasonable expenses” and did not mention the PIP fee schedule, and because State Farm presented testimony that the only method it utilized was the reasonableness method (the company considered the reimbursement amounts in OPPS to be reasonable), the court determined that the Kingsway and Virtual Imaging decisions did not require a finding that State Farm “bound” itself to performance under the fee schedule reimbursement method. Moreover, because the “reasonableness” of a charge could be brought up at any time, including in litigation, and because the parties did not contractually agree to pay pursuant to a fee schedule, Plaintiffs would have to show that each individual claim was “unreasonable.”
The take-away from this decision is the court’s determination that an insurer does not waive the right to claim that a payment was reasonable, simply because it utilizes a fee schedule. Of course, this decision would not apply to policies that have incorporated the fee schedule as the sole method of reimbursement.
Should you have any questions or comments, please contact Maria Elena Abate (mabate@cftlaw.com) at Colodny Fass.
