Florida Supreme Court hammers insurers

Jim Saunders, The News Service of Florida

The insurance industry took a beating Wednesday in the Florida Supreme Court.

In three cases with widely different circumstances, Supreme Court justices ruled against insurance companies and in favor of policyholders and medical providers. The cases divided the court and, ultimately, all had financial implications for insurers and the other parties.

Perhaps the most closely watched case involved a dispute between Geico and medical provider Virtual Imaging Services Inc., about payments for magnetic-resonance imaging tests that were performed after Geico customer Maria Tirado was injured in an auto accident in 2008.

Virtual Imaging sent a $3,600 bill to Geico under Tirado's personal-injury protection coverage. But Geico, using a formula derived from Medicare fees, paid slightly less than $2,000, prompting a legal fight.

The Supreme Court, in a 5-2 opinion, ruled in favor of Virtual Imaging because it said Geico had not disclosed in the policy that it would use the Medicare-based payment formula. The Miami-Dade County case drew briefs from some major insurance-industry groups that supported Geico, while Virtual Imaging received briefs from groups including the Florida Medical Association.

Justice Barbara Pariente, who wrote the majority opinion, said state law allowed Geico to use the Medicare-based formula, but that the insurer needed to disclose its intent to do so. She pointed, for example, to an FMA argument that medical providers are concerned about reduced reimbursement rates and need to receive notice.

"In other words, the Medicare fee schedules set forth in (state law) provide an option for insurers, not the method of how the insurer exercises this option,'' wrote Pariente, who was joined in the opinion by justices Jorge Labarga, R. Fred Lewis, James E.C. Perry and Peggy Quince. "In order to exercise the option, the insurer must provide notice in the policy of its election to use the fee schedules."

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