Florida No Fault Coverage – Insurers May Reimburse Medical Providers at the Providers’ PPO Contract Rates

Florida’s personal injury protection (“PIP”) statute, Florida Statute § 627.736, requires Florida insureds to maintain at least $10,000 in “no fault” coverage for automobile accidents and compels insurers to pay 80% of all reasonable, related, and necessary medical expenses.  However, subsection (10) of the PIP statute creates an alternative to standard PIP coverage options.  It allows PIP insurers to: (i) enter into contracts directly with preferred providers and, after satisfying statutory requirements, (ii) issue PPO policies.  Subsection (10) effectively allows an insurer to create its own PPO network directly with medical care providers.

In Allstate Ins. Co. v. Holy Cross Hospital, No. SC05-435 (July 12, 2007), the Florida Supreme Court recently held that automobile insurers can pay PIP or “No Fault” claims at PPO contract rates without complying with subsection (10).  Because the hospital and Allstate were members of Beech Street, an existing PPO network, Allstate reimbursed the hospital for its treatment of Allstate’s insureds at 80% of Beech Street’s PPO, contract rates.  The hospital then sued Allstate, pursuant to an assignment of benefits from Allstate’s insured, for underpaid PIP benefits.  The hospital claimed that Allstate could not pay PIP benefits to Holy Cross at the reduced PPO rate Holy Cross had contractually agreed to accept because Allstate had not complied with the requirements of subsection (10).

The Florida Supreme Court ruled that subsection (10) did not apply because Allstate was not issuing PPO policies.  Thus, the court held that Allstate did not have to comply with the requirements of subsection (10) when it reimbursed a medical provider at rates established in the medical provider’s contract with the PPO.  The decision can be found here.

Florida’s PIP statute is scheduled to sunset on October 1, 2007.  Governor Charlie Crist, Florida’s Chief Financial Officer Alex Sink, and Florida’s legislative leadership are discussing the impending sunset and contemplating what, if any, action to take.  On July 17, 2007, CFO Sink sent a letter, outlining the potential impacts of the PIP sunset to the Governor, the President of the Florida Senate, and the Speaker of the Florida House.  That letter can be found here.