Personal Injury Protection (PIP) Insurance Fee Schedules: Statutory or Contractual?

By George Lott
In the case of Geico General Insurance Co. v. Virtual Imaging Services, Inc., the Court was presented with the issue of whether Geico General Insurance Co. must give notice that it will use a fee schedule method to determine payment amounts for an insured’s medical bills.
In 2008, a Geico policy holder, Ms. Tirado, was injured in an automobile accident and received two MRI tests from Virtual Imaging Services, Inc. The $3,600 bill was sent directly to Geico who subsequently paid $1,989.57 for the services. This reduced payment was based on the Medicare fee schedule, recognized in the 2008 Florida Motor Vehicle No-Fault Law. Section 627.736(5)(a)2.f., Fla. Stat. (2008) Imaging Services brought suit to recover the difference. Both the trial court and the Third District entered judgment against Geico and certified the issue to this Court.
In Geico’s initial brief, it argued that the statute’s plain language shows that the Legislature intended to enable insurers to limit their reimbursements according to fee schedules even if the individual policy made no reference to the schedules. Geico further argued that if the Legislature had intended to require a clear statement referencing fee schedules in individual policies, it would have done so. This argument was premised on the fact that several provisions of the No-Fault Law require insurers to provide specific notice for certain actions, but there was no such language regarding fee schedules. Geico argued that this proves that the Legislature intended to omit such language in the fee schedule provision.
Geico’s next argument was based on the 2012 amendments to the No-Fault Law. Section 627.736(5)(a), Florida Statutes, in particular was amended to make it mandatory to provide notice of the use of fee scheduling at the issuance of policies. Geico argued that these amendments are not retroactive and that notice was not required before the amendments took effect.
Geico’s final argument was simply that the previous fee schedule cases were wrongly decided. It pointed to the alleged flaws in the cases of Kingsway Amigo Ins. Co. v. Ocean Health, Inc. and Geico Indem. Co. v. Virtual Imaging Servs., Inc., and argued that these cases undermine the Legislature’s intent. Kingsway Amigo Ins. Co. v. Ocean Health, Inc., 63 So.3d 63 (Fla. 4th DCA 2011); GEICO Indem. Co. v. Virtual Imaging Servs., Inc., 79 So.3d 55 (Fla. 3d DCA 2012). Each of these cases held that companies must give their policyholders and the medical providers notice of the use of the Medicare schedule. Finally, Geico referenced a case, Allstate Ins. Co. v. Holy Cross Hosp. Inc., in which the Court held that insurers can make payments at reduced rates as long as it is authorized by a personal injury protection statute. Allstate Ins. Co. v. Holy Cross Hosp., Inc., 961 So.2d 328 (Fla. 2007). It argued that Holy Cross is binding on this Court and that previous cases “diverg[ed]” from the Court’s holding.
In Virtual Imaging Services answer brief, it argued that the 2012 amendments to the No-Fault Law were simply codifications of previous case law. In other words, the amendments were made with the intention of clarifying the law that “PIP insurers must comply with the plain language of their insurance policies and cannot pay the lower level benefits in the fee schedule unless and until they give notice to their policy holders and medical providers . . . .” This seems to be the crux of its argument. Virtual further argued that without providing notice to its policy holders, Geico was essentially charging for the maximum benefits while only paying out at the lowest rate. It Virtual’s opinion, this is not what the policy holders bargained for.
Virtual next argued that Geico was in direct violation of a number of Florida insurance statutes, requiring insurance contracts to include all terms and conditions of the individual policy. These statutes also mandate that insurance companies must provide the “formula or criteria” used to calculate the amount to be paid.
Virtual’s last argument analyzed a number of Florida cases that have held that PIP insurance companies must give notice of their reliance on the Medicare schedules. It also distinguished the instant case from that of Holy Cross and argued that Geico wrongly interpreted the holding in that particular case.