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Why Medical Providers can Freely Contract and Not Fear PIP Insurance Retaliation

I recently attended a hearing in front of one of our distinguished judges at the Broward County Courthouse. It was a discovery matter regarding our client’s private contracts with non-PIP providers. The defendant, State Farm Insurance, requested all of our client’s contracts, arrangements and agreements with HMO’s, PPO’s, Medicare, Medicaid and Workers Compensation. I argued that these non-PIP agreements have no relevance as to what State Farm should reimburse our client for the medical treatment they provided to a PIP (Personal Injury Protection Insurance) patient. The defendant argued that these agreements help identify what a medical provider has accepted as a reasonable amount for the same services/treatment in the past. The defendant attempted to establish that because our client accepted lesser amounts in the past from other insurance providers, their charges, in this case, were unreasonable, and State Farm’s reimbursement, in this case, was “in-line” with what our client accepted from other insurers.

The judge agreed with our position, ruling that HMOs, PPO’s, and contracts between medical providers and other insurers are confidential, trade secret protected, not discoverable, and not relevant in the scope of a claim for Personal Injury Protection benefits. He further stated that the insurance company cannot all of a sudden attempt to retrieve confidential information when they are not part of the HMO or PPO contract. Likewise, the judge indicated that comparing PIP to negotiated rate contracting is like comparing apples to oranges.

Why are these contracts with other insurers protected?

Negotiated rate contracts are generally contracts between medical providers and other insurers. These “other insurers” generally do not include PIP insurance carriers. As such, a medical provider will enter into a contract with a PPO or an HMO (“other insurers”), accept reduced negotiated rates from these entities, and in exchange, they will receive a volume of patients, as they are usually part of the “network of providers.” In the context of a PIP arrangement, a PIP insurer is not sending any clients to the medical provider, nor is there a network of providers. The patient will treat with a medical provider, and the PIP insurance carrier will determine whether or not to reimburse the providers for medical treatment.

In our case, State Farm was not a party to any contract between our client and other insurers, and as such, the judge ruled that the reduced rate contractual terms/information is confidential, trade secret protected, not discoverable, and not relevant in the scope of a claim for PIP benefits.

Comparing Apples to Oranges

The basis of the judge’s ruling stems from an April 23, 2014 order in which the Honorable Judge Cohn from Miami-Dade County ruled the following:

  1. Florida Statutes 627.736(5)(a)(1) does not make mention of negotiated contract rates between medical providers and other insurers, and
  2. PIP insurance and negotiated contracts (HMOs, PPO’s) are like comparing apples to oranges because the PIP insurance company is not a party to reduced negotiated rate contracts between a Medical Provider and other insurers (HMO, PPO, etc.). The PIP statute does not state that negotiated contract rates should be relied upon to determine whether or not the provider’s charges were reasonable or whether the insurers’ reimbursements are reasonable.

Judge Cohn reasoned that Florida Statutes Section 627.736(5)(a)(1) governs medical provider charges. It considers certain factors in determining whether the provider’s charges were reasonable. Judge Cohn ruled that this section does not make mention of negotiated contract rates between the medical provider “in this dispute” and other insurers. Thus, reduced negotiated contracts have no relevance to a determination of whether a provider’s charges are reasonable in the context of a PIP suit.

Because a PIP insurer isn’t a party to the negotiated rate contract, the confidential contents of a contract should not be disclosed to a non-party to that contract! Judge Cohn likewise held that Medicare Fee Schedules are not relevant in PIP. He stated that Medicare is a “social welfare program and not an insurance or reimbursement plan within the everyday and ordinary meaning of these terms.”

Medical providers can freely contract for negotiated contract rates

You, the medical provider, can continue to freely contract for negotiated contract rates with HMOs, PPO’s, etc without the fear of a PIP insurance company becoming privy to the actual terms of your contracts. Both judges clearly ruled that comparisons between PIP charges and negotiated contract rate amounts are like comparing apples to oranges. Simply put, unless the PIP insurer is a part of the reduced negotiated contract, that PIP insurer is not a part of the contract and cannot avail itself of the reduced negotiated rates. Because the PIP insurer is most likely not going to be a party to the negotiated rate contact, they should not receive confidential terms/contents of the contract.

Black letter contract law does not allow a non-party to the contract to receive confidential terms of a contractual arrangement. Our hope is that the remainder of our distinguished judges follow suit and allow our medical providers to contract freely with insurance entities without the fear of disclosing the confidential/pertinent terms of their contracts with other insurers to PIP insurance companies.

It is crucial that you discuss these important evidentiary matters with an experienced PIP litigation attorney. We will ensure that all of your confidential contracts, documents, and the like are safeguarded and remain sealed. Do not feel pressured into divulging confidential contracts because the PIP insurer threatens non-payment. It is well settled that PIP is not a vehicle for acquiring trade secrets, proprietary information that would ordinarily be prohibited in a non-PIP setting. At LaBovick Law Group, we have found that many judges will wait for their counterparts to rule on issues prior to taking a position on important matters. We have taken it upon ourselves to litigate these issues to ensure that the other judges are aware of these important rulings!   

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