WEST PALM BEACH – A Florida court has reversed a decision concerning deductibles, ruling in favor of insurance companies rather than health care providers.

The March 14 ruling came out of an appeal in the 4th District Court of Appeal. The case is regarding an automobile accident in which Virginia Bardon-Diaz sustained injuries and sought treatment at Care Wellness Center, according to the ruling. Bardon-Diaz made a claim for personal injury protection (PIP) benefits under an automobile insurance policy with State Farm that had a limit of $10,000 in PIP benefits with a $1,000 deductible.

The State Farm received bills for services totaling $1,812, which was reduced to $825.96 after the insurer applied the fee schedule. Care Wellness Center argued that “the reduction of [provider’s] bills prior to applying said bills to the deductible resulted in an underpayment of [provider’s bills].”

How the deductible is applied when an insured person seeks benefits under a vehicle insurance’s personal injury protection (PIP) policy is an issue the courts have inconsistently ruled on, the court notes in its opinion. The health care provider argues the deductible must be applied to the total amount billed before reducing the charges, pursuant to the fee schedule.

“On the other hand, the insurer argues the billed amount must be reduced to the amount in the approved fee schedule before applying the deductible and issuing payment,” the court said.

In a November decision on Progressive vs. Florida Hospital Medical Center, the 5th District Court of Appeal ruled in favor of the providers, saying the law “currently requires that the deductible be applied to 100 percent of the expenses and losses.”

But in its decision, the 4th District Court of Appeal noted that applying the fee schedule to the billed charges only after applying the deductible “would allow the provider to recover different amounts depending on the amount of the deductible.” The court also noted that it would allow providers to recover more than the amount found reasonable in the fee schedule.

“We hold that an insurer must reduce the provider’s charges to the statutorily-approved permissive fee schedule before applying the deductible,” the court said. "As a result, we reverse the decision of the county court.”

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