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Mercury Insurance Policy Found Ambiguous: Why Insurance Policies Must Specifically State a Fee Schedule

On May 30, 2014, the Palm Beach County court, sitting in its appellate capacity, rendered a verdict for the plaintiff medical provider in a lawsuit for unpaid personal injury protection (PIP) benefits. The plaintiff medical provider filed suit against Mercury Insurance Company alleging that Florida’s PIP policy did not allow them to limit reimbursement pursuant to the permissive statutory fee schedule. Mercury argued that its insurance policy (U85 Endorsement) clearly afforded them the right to pay an amount less than 80% of the medical provider’s total charges.

Dr. Kehrig rendered medical services to Ms. Vega in connection with a motor vehicle accident in September of 2010. Dr. Kehrig received an assignment of benefits from Ms. Vega, allowing Dr. Kehrig to collect proceeds from her insurance policy. Dr. Kehrig billed Mercury for the medical services he provided Ms. Vega. Mercury paid Dr. Kehrig a portion of what he actually billed for the medical treatment. The insurer and Dr. Kehrig both filed Motions for Summary Judgment. The trial court believed Mercury to be correct and granted their Motion, holding that Mercury paid Dr. Kehrig in full, pursuant to the permissive fee schedule (627.736(5)(a)(2)(f)). Dr. Kehrig appealed the trial court’s decision.

What is the permissive fee schedule?

The permissive fee schedule mentioned above allows an insurance company to limit its payment to 200% of the allowable amount under the participating physicians’ schedule of Medicare Part B. If the policy did not expressly allow for an insurer to elect Medicare Part B, the insurer would be liable to pay the medical provider 80% of their “total charges, for all medically necessary and reasonable medical charges/expenses.” Dr. Kehrig argued that Mercury’s policy was ambiguous, in that the policy did not clearly state whether or not it was electing to pay medical providers pursuant to 200% of the allowable amount under the participating physician’s schedule of Medicare Part B. A policy has to clearly and unambiguously elect this schedule so that notice is given regarding these payments.

Mercury, through its U85 Endorsement, alleged that it clearly and unambiguously elected to pay pursuant to the permissive fee schedule. The U85 Endorsement states, “for medically necessary services, supplies, treatment, and care that do not exceed the maximum reimbursement allowance as set forth in the applicable fee schedules and payment limitations, and other guidelines, in the No-Fault law, and any schedules and limitations under federal or state law for medical expenses.” Medical benefits were defined as “80% of all reasonable expenses allowed by the No-Fault law, subject to the applicable fee schedules and payment limitations.” The policy, though, did not mention that a specific payment methodology would be followed. The policy likewise did not mention any payment limitations other than mentioning the Florida No-Fault law and briefly stating that it would pay pursuant to any schedules and limitations under federal or state law for medical expenses.

Why was Mercury’s policy found ambiguous?

Mercury’s policy was held to be ambiguous; it did not clearly elect the permissive fee schedule. Nowhere in the above policy language did Mercury state, “we may pay pursuant to the permissive fee schedule or pursuant to 627.736(5)(a)(2)(f).” The policy fails to specifically choose a payment methodology, in that, the policy did not announce to the world that Mercury was going to pay one way or the other. Mercury merely made a general statement that it would pay pursuant to the No-Fault law without clarifying which schedule it was following. Mercury likewise had the option of paying pursuant to Florida Statutes Section 627.736(5)(a)(1), which is a fact-specific inquiry, allowing an insurer to give consideration to evidence of usual and customary charges and payment accepted by the provider and reimbursement levels in the community and various federal and state medical fee schedules, etc. The insurer failed to reference either statute subsection in a clear or unambiguous manner.

The U85 Endorsement was unsure of what it was setting out to do. The drafters of this endorsement failed to specify what payment methodology Mercury was electing to use. Mercury could have chosen to add the above language regarding Florida Statutes Section 627.736(5)(a)(1) by indicating that it would make a reasonable payment based on consideration to evidence of usual and customary charges, payment accepted by the provider, reimbursement levels in the community, and various federal and state medical fee schedules, etc. The actual Florida statute subsection did not need to be cited. On the other hand, Mercury could have expressly elected the permissive fee schedule by indicating that it would invoke Section 627.736(5)(a)(2)((f), by stating the same, or unambiguously stating that Mercury will pay 80% of all medically necessary/reasonable medical expenses. They could have also stated that they would only pay 80% of … and listed: 200% of the allowable amount under the participating physician’s schedule of Medicare Part B, etc. However, in this case, Endorsement U85 of Mercury’s PIP policy failed to elect either.

Other Ambiguous/Unclear Insurance Policies

The Palm Beach County Appellate Division held that Mercury’s policy was unclear and ambiguous. Moreover, this honorable court cited a Progressive policy and a multitude of other Mercury cases to demonstrate what ambiguous policies look like. At least 20 county courts ruled that Mercury’s insurance policy failed to elect which fee schedule it would elect to pay PIP benefits. Most of those county court decisions occurred in Broward County.

Why it is crucial to contact a PIP litigation attorney that will fight for your rights under the PIP statute.

Many policies are poorly written as reflected above. If you are a medical provider who has been paid pursuant to the Medicare Fee Schedule or some other fee schedule such as Workers’ Compensation, you may be owed hundreds upon thousands of dollars. Our team at LaBovick Law Group will review your files and charts, review the insurer’s policy, and help you obtain what is due and owing by the insurance company. Give us a call to discuss the importance of this ruling and what we can offer to you as a medical provider.

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