Progressive Select Ins. Co. v. In House Diagnostic Services, Inc. a/a/o Darryl Frazier, No. 4D21-2581

This suit involved the legal issue of whether Progressive Select Insurance Company incorrectly determined the reimbursement rate for the imaging services provided by In House Diagnostic Services while treating Darryl Frazier for an injury sustained in a motor vehicle accident.

The trial court had originally ruled in favor of In House Diagnostic, concluding that Progressive had erred by reimbursing the imaging services at the lower participating price, as opposed to the higher Limiting Charge Rate. In reaching this conclusion, the lower court relied on two prior decisions, Allstate Fire & Casualty Insurance Co. v. Jeffrey L. Katzell, M.D., P.A., 323 So. 3d 191 [Fla. 4th DCA 2021) and Priority Medical Centers, LLC v. Allstate Insurance Co., 319 So. 3d 724 (Fla. 3d DCA 2021).

In Priority, the dispute was the result of an exhaustion of PIP benefits in which the insurer had paid the higher 2007 Limiting Charge Rate during the course of exhaustion. The plaintiff in that case argued that the insurer should have used the lower Participating Price instead of the Limiting Charge in determining the reimbursement rates and that, had it done so, a partial portion of its bill would have been eligible for payment prior to the exhaustion of PIP benefits. The court rejected this argument and ruled that the reimbursement rate for the non-party provider had been correctly calculated utilizing the higher Limiting Charge. As a result of this ruling, Allstate confessed error in the Katzell case.

Accordingly, in the instant appeal, the Fourth District Court of Appeals analyzed the reasoning in Priority. The court noted that neither Priority nor Katzell included any argument as to the nature of the Limiting Charge. In the instant case, Progressive argued that the Limiting Charge is not a fee schedule but is, rather, the amount that a provider may directly bill an insured if it does not accept an assignment on a Medicare claim, and that the trial court did not properly analyze the Limiting Charge’s function. Additionally, the court noted that Katzell court only looked at the omission of the phrase “participating Physician Fee Schedule” in subparagraph 2 instead of how the post-2012 amendment phrase “applicable fee schedule,” in its place, related to the reimbursement rate for the services enumerated in sub-subparagraphs 1.a-f. The Fourth District Court of Appeals noted that in interpreting the statute after the 2012 amendment, both the Third District Court of Appeals in Priority and the Fourth District Court in Katzell “discounted the importance of the Legislature retaining the phrase “Participating Physician Fee schedule” in subparagraph 1.f(I) and overlooked the fact that nowhere in the relevant statutory provision is the phrase “Limiting Charge” even mentioned.” Accordingly, the Fourth District Court of Appeals receded from Katzell and certified conflict with the Third District Court of Appeals.

The importance of this case cannot be understated. Insurance carriers have been paying the Limiting Charge on diagnostic codes ever since the Priority decision. The consequences are twofold. On one hand, most insurance carriers have now overpaid on these codes, thus allowing them to assert overpayment, off-set and unjust enrichment arguments in proper payment cases. On the other hand, carriers must recognize the fact that these Limiting Charge payments are likely to be used against them in exhaustion cases as gratuitous payments.