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Geico General Insurance Co. vs. Virtual Imaging Services Decision Finally Handed Down

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A very recent decision handed down by the Florida Supreme Court, in Geico General Insurance. Co. v. Virtual Imaging Servs., Inc., is drawing attention due to its important implications regarding Florida’s PIP laws. PIP is an acronym that stands for “Personal Injury Protection.” PIP makes Florida a “no fault state,” where insurance benefits are paid out to cover reasonable expenses for medically necessary services, up to $10,000.00, irrespective of who was at fault in an accident.  The legislative purpose behind Florida PIP coverage is to provide expeditious medical treatment to injury victims regardless of fault and lessen the already overburdened state trial dockets.

The language in the statute that insurance companies must pay reasonable expenses for medically necessary services is vital to the decision. In this case, an MRI service provider, Virtual Imaging Services, performed a diagnostic study on an individual who injured in an auto accident.  An MRI stands for magnetic resonance imaging. An MRI is a diagnostic study that allows physicians to visualize pathology that cannot be seen with the naked eye.  Virtual Imaging sent a bill for services rendered to the insurance company, Geico.  Geico during the course of litigation conceded that the bill was a “reasonable expense” and that the MRI was a “medically necessary service.”

However, Geico refused to pay the full bill. Rather, they created a mathematical formula based on the Medicare fee structure- and based upon that paid a sum less than the total bill. This fee structure was not, in and of itself, unlawful or unreasonable. It is important to note that in the actual insurance contract there was no language, clause, or provision stating the insurance company had elected to use such a formula in determining what and how much they would pay toward these types of claims.  It was a failure to notify the insured, through language in the insurance contract, that such a fee structure was going to be used that was dispositive in this case.

Virtual Imaging filed a lawsuit asserting that Geico could not limit their reasonable fee because in the insurance contract there was no explicitly stated provision providing for Geico’s election to use a certain fee schedule. The trial court agreed with Virtual Imaging. The appeals court, the 3rd DCA, also agreed with Virtual Imaging. Ultimately, the Florida Supreme Court agreed as well. At every stage of the legal process, the Florida Courts ratified Virtual Imaging’s assertion that notice was required if insurance companies were going to use a fee schedule. Since this litigation began, the Florida legislature has amended the PIP statute to explicitly state that such notice is required. However, this decision confirms that notice was required even before the additional language was added to the statute.

The implications of this decision are going to be far reaching. During the course of  litigation nearly every major insurance company that operates in Florida filed briefs in support of Geico’s position.  Geico asserted that such notice was not required. They did this, ultimately, because they realized that a practice commonly employed by all Florida insurance carriers be admonished by our legal system- opening the door for countless lawsuits against them all for bills paid on an arbitrary fee schedule not provided in their actual insurance contracts. Medical providers all across Florida could now sue for and get unpaid bills for services provided on hundreds of thousands of patients since the PIP statute was passed.