Insurance companies did not fare well in three recent Florida Supreme Court decisions. Two cases sprang from policyholder complaints, while the third involved a medical provider. If policyholders -- be they individuals or businesses -- take one thing away from these decisions, it should be to read every policy carefully.
The medical care provider case did not involve a health insurance company. Rather, it involved an auto insurance company and reimbursement for tests following a car accident.
The policyholder suffered an injury in the accident, and her doctor ordered two MRIs. The imaging center submitted the bill to the auto insurance company under the policyholder's personal injury protection coverage. The center expected the insurer to reimburse the full amount of $3,600.
Instead, the center received a check for less than $2,000. The insurance company had calculated the payment according to a formula based on Medicare fees. The formula, the insurer argued, was allowed under Florida law.
The center disagreed. Nowhere in the insurance policy did the company say that reimbursement would be based on this formula. The insurance company cannot use a payment scheme that it has not disclosed in the policy.
The Supreme Court found that state law does allow insurers to use the Medicare fee formula in personal injury protection claims. The operative word, however, is "allow." State law does not mandate that insurance companies use the formula. As a result, the insurer must notify the insured (and providers) that it will be following the Medicare fee formula. That notification should take the form of an election in the policy.
The court also discussed policy language in general and how courts interpret policies. That, however, is a subject better addressed in the context of one of the other cases -- and in our next post.
Source: Flagler Live, "Florida Supreme Court Again Hammers Insurance Industry in Three Rulings," July 4, 2013