Coastal Wellness Ctrs., Inc. v. Progressive Am. Ins. Co.
Docket: CASE NO. 0:17–CV–61951–WPD; CASE NO. 0:17–CV–61974–WPD
Court: District Court, S.D. Florida; April 4, 2018; Federal District Court
The Court is considering a Motion to Dismiss filed by Defendant Progressive American Insurance Company regarding a class action lawsuit initiated by Plaintiff Coastal Wellness Centers, Inc. The case stems from a November 2014 auto accident involving Janeece Farley, who had a personal injury protection (PIP) insurance policy with Progressive. Following the accident, Farley assigned her insurance benefits to Coastal, allowing the clinic to bill Progressive directly for treatment provided. Coastal claims Progressive underpaid for chiropractic services rendered, alleging a discrepancy of approximately $2 per treatment session based on the applicable reimbursement rate.
The Complaint includes three counts: Count I seeks a Declaratory Judgment, Count II seeks Injunctive Relief, and Count III alleges Breach of Contract for Unpaid PIP Benefits. Progressive's motion to dismiss argues that the Complaint fails to state a plausible claim under Federal Rules of Civil Procedure Rule 12(b)(6). The Court outlines the standard for evaluating such motions, emphasizing that it must assess whether the plaintiff has presented sufficient factual content to establish a plausible claim for relief while accepting the allegations as true, except for conclusory statements. Ultimately, the Court is tasked with determining the plaintiff's right to present evidence supporting their claims, rather than assessing the likelihood of success.
A court's evaluation of a motion to dismiss is confined to the content of the complaint and relevant documents integral to the claims, as established in Wilchombe v. TeeVee Toons, Inc. and further clarified in Brooks v. Blue Cross Blue Shield of Fla., Inc. The case at hand involves the interpretation of the Florida No-Fault PIP Statute (Fla. Stat. 627.736), which mandates that PIP insurers reimburse 80% of reasonable medical expenses. The statute allows for two methods of calculating reimbursements: (1) a fact-dependent inquiry regarding reasonableness and (2) a 'schedule of maximum charges.' The parties agree that Progressive Insurance is permitted to adhere to the 'schedule of maximum charges' for reimbursement, specifically for chiropractic services billed under CPT code 98940.
According to the statute, this schedule limits payments to 200% of the allowable amount under the Medicare Part B Physicians Fee Schedule (PPFS-MPB). The PPFS-MPB outlines reimbursement rates for numerous medical services, derived from a formula that includes the relative value of the service, a conversion factor, and a geographic adjustment factor. The reimbursement rates for chiropractic services from 2012-2014 were affected by a 2% reduction implemented to fund a Medicare study regarding the expansion of chiropractic coverage. This reduction was mandated by the Medicare Prescription Drug, Improvement and Modernization Act of 2003 and applied to specific chiropractic codes, including 98940, from 2010 through 2014.
OACT projected that CMS would recover $10 million annually from 2010 to 2014 by decreasing Medicare claim payments. HHS clarified that the 2% reduction applied solely to Medicare claims, not RVUs, to maintain the integrity of the Medicare Physician Fee Schedule (PFS), which affects many private payers' payment structures. The PFS Final Rules from 2010 to 2014 reiterated that reductions applied only to Medicare claims. The plaintiff contends that the defendant misinterpreted the Medicare Part B Physicians Schedule and improperly applied the CMS Payment Files, resulting in unauthorized 2% reductions for chiropractic manipulations. The Court agrees, noting that no statutes or federal regulations allowed private payers like the defendant to impose such reductions for specific chiropractic codes (98940, 98941, 98942) during 2012-2014, leading to systematic underpayments of PIP chiropractic claims. The Court dismisses the defendant's argument that it could apply the 2% reduction based on CMS payment files, emphasizing that the statute clearly allows limiting reimbursements to 200% of Medicare's allowable amounts without incorporating the reduction. The Medicare PFS does not include the 2% reduction for the specified CPT codes. The defendant's reliance on CMS Payment Files for underpayment was improper and contrary to the intended application of the reductions. Consequently, the defendant's motion to dismiss the claims for declaratory and injunctive relief is denied. While the 2% reduction was only applicable from 2010 to 2014, the statute of limitations for the plaintiff's underpaid claims has not expired, and the plaintiff has sufficiently alleged ongoing improper payment practices by the defendant.
The Court has decided not to dismiss the Plaintiff's claim for injunctive relief, rejecting the Defendant's argument that an adequate remedy at law precludes such claims. According to Rule 57 of the Federal Rules of Civil Procedure, the existence of an alternative remedy does not prevent a valid request for declaratory judgment. The Court affirms that the Plaintiff can plead for both injunctive and declaratory relief alongside a legal remedy, as equitable relief may still be sought until an adequate legal remedy is proven.
The Defendant's assertion that the Plaintiff failed to comply with the pre-suit notice requirement of the PIP statute was also dismissed. The Court agrees with a prior appellate ruling that claims for declaratory and injunctive relief do not seek damages and hence are not subject to the statutory notice requirement. Furthermore, the Plaintiff has adequately demonstrated compliance with the pre-suit requirements for their breach of contract claim, asserting that they and the Class members sent necessary demand letters before filing the suit. The necessity of individual notice for each class member is deemed premature for decision-making prior to class certification, although case law suggests that individual notice may not be required if the class plaintiff has complied.
As a result, the Court ordered the Defendant's Motion to Dismiss to be denied and mandated the Defendant to file an answer within fourteen days. The Court’s conclusions are based on the allegations in the Complaint, which are assumed true for this motion.
