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PIP Case Law Update – 80% of Reasonable Expenses

PIP Case Law Update - 80% of Reasonable Expenses

CASE: Gables Insurance Recovery, Inc. a/a/o Orlay Lima v. American Independent Insurance Co., 17 Fla. L. Weekly Supp. 685a (11th Judicial Circuit, Miami-Dade County, May 14, 2010)

ISSUE: May an insurer limit PIP payments for medical service benefits owed to the permissive 80% of 200% of Medicare Part B fee schedule of the Florida PIP statute, when their policy states insured will be paid at a rate of 80% of reasonable expenses?

FACTS: Orlay Lima (“the insured”) was involved in a motor vehicle accident on Feb. 27, 2008. At that time, he had a policy with American Independent Insurance Company (“AIICO”) with a policy period of Jan. 9, 2008, through July 9, 2008.

After the accident, the insured sought treatment with All X-Ray Diagnostic Services (“All X-Ray”). After AIICO received the bill for these services, it issues a check for $604.80 to All X-Ray. AIICO was then served with a demand letter for the difference between 80% of amount billed, and the amount AIICO paid pursuant to the permissive 80% of 200% of Medicare Part B fee schedule of the Florida PIP statute. Gables Insurance Recovery , Inc. (“Gables”) then instituted suit to recover the outstanding PIP benefits owed to All X-Ray.

RULE: Where provision of 2008 PIP Statute allowing insurer to limit reimbursement to 80% of 200% of Medicare fee schedule is permissive, policy language providing that insured will pay 80% of reasonable expenses controls reimbursement.

ANALYSIS: The court first reasoned that in interpreting insurance contracts, they are to be construed according to their plain meaning, with any ambiguities construed against the insurer in favor of coverage. The court continued that when a policy of insurance is susceptible to more than one reasonable interpretation, one providing coverage and another limiting coverage, the policy is ambiguous. With this in mind, the court then looking to the reinstated and revised 2008 Florida PIP statute, and opined that it allows two separate ways for insurers to pay for benefits: one is mandatory, and states that benefits shall be paid at 80% of reasonable and necessary medical expenses. Alternatively, the statute permissively allows an insurer to pay at 80% of 200% of the Medicare Part B fee schedule.

The court then looked to the policy of insurance to determine how AIICO will have to pay for benefits owed. Nowhere in the policy or Declarations does AIICO limit its liability. Rather, the policy and endorsements contain the same language, i.e., that AIICO will pay 80% of all reasonable expenses incurred for medically necessary services.


Based on the ambiguity of the policy of insurance as drafted by AIICO, the court held that benefits shall be payable at 80% of reasonable expenses.

Please note, this case has been appealed by AIICO and is currently pending in the appellate division. However, there are other cases coming out that are ruling the same way, even in the arguably pro-insurer judicial venue of Hillsborough County, Florida, in the case of MRI Assoc. of St. Pete d/b/a Saint Pete MRI a/a/o Craig Volpe v. Safeco Ins. Co. of Illinois, and MRI Assoc. of St. Pete d/b/a Saint Pete MRI a/a/o Chase Atari v. Safeco Ins. Co. of Illinois, (Consolidated Cases) 17 Fla. L. Weekly Supp. 686a (Hillsborough County, 2010).

If you have any questions about this case or any other PIP cases, please do not hesitate to contact Attorneys Lyle B. Masnikoff or Leandro Carvahlo at 1-561-598-7120.


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