214 So. 3d 679
Fla. Dist. Ct. App.2017Background
- Three State Farm insureds were injured in separate 2008 accidents; medical providers received assignments of benefits and billed State Farm for PIP-covered care.
- State Farm policies promised payment of "80% of all reasonable expenses incurred for ... medically necessary" services and stated the insurer may consider "usual and customary" charges, community reimbursement levels, and "various federal and state medical fee schedules" when determining reasonableness, but did not elect to use the Medicare fee-schedule election in § 627.736(5)(a)2.
- Despite no § 627.736(5)(a)2. election, State Farm reimbursed providers at Medicare Fee Schedule amounts.
- Providers filed a class-action declaratory judgment suit seeking a declaration that State Farm’s methodology improperly used Medicare rates as the sole basis under the fact‑dependent reasonableness standard in § 627.736(5)(a)1., and that providers are entitled to re‑adjustments under the policy.
- Trial court dismissed the fifth amended complaint with prejudice, finding the Florida Supreme Court’s decision in GEICO Gen. Ins. Co. v. Virtual Imaging Services, Inc. (Virtual Imaging) already resolved the issue; plaintiffs appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Virtual Imaging resolved whether an insurer may use Medicare rates as the sole basis under § 627.736(5)(a)1. | Virtual Imaging did not resolve it because State Farm did not elect (5)(a)2.; State Farm used (5)(a)1)'s fact‑dependent reasonableness standard but in practice limited payment solely to Medicare rates. | Virtual Imaging allows insurers to consult Medicare schedules among other sources under (5)(a)1., so no live controversy exists; dismissal appropriate. | The court held Virtual Imaging did not fully answer the question presented here and reversed the dismissal for further proceedings. |
| Whether plaintiffs stated a bona fide controversy suitable for declaratory relief. | Plaintiffs alleged a systematic practice of using Medicare rates exclusively and sought a declaratory ruling on that methodology; this alleges a present, adverse controversy. | State Farm argued no live controversy exists because Virtual Imaging controls and plaintiffs’ claim was unsuitable for class treatment (alternative argument). | The court found plaintiffs sufficiently alleged a bona fide controversy and remanded; it did not decide the class‑action adequacy issue. |
Key Cases Cited
- GEICO Gen. Ins. Co. v. Virtual Imaging Servs., Inc., 141 So.3d 147 (Fla. 2013) (insurer must elect in the policy to use Medicare fee schedules under § 627.736(5)(a)2. before relying on them to limit reimbursements)
- Olive v. Maas, 811 So.2d 644 (Fla. 2002) (elements and limits of declaratory judgment relief)
- Bartsch v. Costello, 170 So.3d 83 (Fla. 4th DCA 2015) (summarizing bona fide controversy requirements for declaratory relief)