One purpose of the personal injury protection, or PIP, requirement in Florida’s Motor Vehicle No-Fault Law is to provide medical, surgical, funeral, and disability insurance benefits without regard to fault. Although the amount an insurance company is required to pay is set by law, recent court decisions may force insurance companies to adjust either their insurance policies or their reimbursement practices.
Under the PIP statute, insurers are generally required to pay 80 percent of all reasonable expenses for medically necessary medical services (Actual Amount). The statute, however, gives insurers the option of paying 80 percent of “200 percent of the allowable amount” under applicable Medicare Part B fee schedules (Medicare Amount). Thus, insurers can pay 80 percent of actual expenses or 80 percent of two times the amount authorized under Medicare.
If an insurance policy does not clarify which amount will be paid, can the insurance company limit its reimbursement to the Medicare Amount? Two Florida appellate courts faced with this question have said no.
The policies at issue stipulate that the insurance company “will pay in accordance with the Florida Motor Vehicle No Fault Law, as amended, to or for the benefit of the injured person…80% of medical expenses.” Despite this language, the insurance company paid the Medicare Amount, which turned out to be lower than the Actual Amount.
In both cases, the court held that the insurance company breached the insurance policy by paying the Medicare Amount rather than the Actual Amount. The courts noted that since the PIP statute gives insurance companies the option of paying the Actual Amount or the Medicare Amount, “it is important for the PIP insurer to clearly and unambiguously choose and identify its selected payment methodology” in the policy.
According to the courts, the policies clearly chose the Actual Amount option, failing to even mention the Medicare Amount option. Additionally, one court noted that a policy indicating that an insurer may distribute reimbursements according to one method without clarifying alternative methods or selection criteria is ambiguous. Since ambiguities in insurance contracts are resolved in favor of the insured, the court found another reason to rule against the insurance company.
Insurance companies are no doubt aware of these cases, and have adjusted their reimbursement practices or policy language accordingly. However, those insureds with similar language in their own policies who are currently dealing with a PIP claim may want to confirm the sufficiency of their medical reimbursement payments.
If you would like more information about PIP insurance, or if you would like to explore your insurance options, please contact us.