Supreme Court Finds PIP Insurers Must Disclose Use of Medicare Schedule
On July 3, 2013, the Florida Supreme Court answered the following certified question relating to insurers’ efforts to limit medical reimbursements in Personal Injury Protection policies based on the Medicare fee schedules:
WITH RESPECT TO PIP POLICIES ISSUED AFTER JANUARY 1, 2008, MAY AN INSURER LIMIT REIMBURSEMENTS BASED ON THE MEDICARE FEE SCHEDULES IDENTIFIED IN SECTION 627.736(5)(a), FLORIDA STATUTES, WITHOUT PROVIDING NOTICE IN ITS POLICY OF AN ELECTION TO USE THE MEDICARE FEE SCHEDULES AS THE BASIS FOR CALCULATING REIMBURSEMENTS?
The Supreme Court answered this question in the negative– an insurer cannot limit reimbursements based on the Medicare fee schedules unless it discloses in its policies that it will do so. The Court reasoned that Section 627.736 requires insurers to pay the reasonable expenses for medically necessary services, but it merely permits insurers to use the Medicare fee schedules in doing so. Stated differently, the Medicare fee schedules are not the only method by which insurers may determine the reasonable expenses for medically necessary services. Therefore, according to the Supreme Court, an insurer adopting this limitation of reimbursements was obligated to disclose it in its policies.
The Supreme Court noted that the Florida legislature amended the PIP statute in 2012 to specifically incorporate a notice requirement. The Court therefore stated that its holding applies to PIP policies in effect from January 1, 2008 (the implementation date of the prior PIP statute) through July 1, 2012 (the effective date of the 2012 amendment).