Florida Supreme Court Resolves PIP Deductible Debate
Just before the new year, the Florida Supreme Court released its opinion in Progressive Select Insurance Company v. Florida Hospital Medical Center resolving a split among Florida’s appellate courts about the proper application of the deductible in Personal Injury Protection (PIP) claims. The underlying question related to whether the PIP deductible should be applied before or after statutory fee schedules are applied reducing the amounts paid to providers as PIP benefits.
Florida’s Fifth District Court of Appeal (5th DCA) had determined that the deductible should apply first, and then the fee schedules should reduce any remaining charges paid by the insurer. The Fourth District Court of Appeal (4th DCA) found the opposite– the fee schedules first should be applied to reduce the applicable charges, and then the deductible should be subtracted to determine the insurer’s remaining obligation. The 5th DCA’s approach results in slightly higher reimbursements to providers, whereas the 4th DCA’s approach favored insurers (and, to a degree, policyholders as their out-of-pocket obligations would be slightly lower and their PIP benefits would cover more).
The case depended heavily on statutory construction. The Florida Supreme Court analyzed the relationship between the PIP deductible statute and a separate statute limiting reimbursements to providers. The Court determined that the 5th DCA’s conclusion is appropriate– the first step in the process is to apply to deductible to providers’ billed charges. Then, the remaining balance is reduced by the applicable fee schedules to arrive at the amount to be reimbursed by the PIP insurer.