The insurance industry may be feeling like it is taking a beating in the Florida Supreme Court lately.
In three different cases with very different circumstances, the 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.
The first case involved a dispute between Geico and medical provider Virtual Imaging Services, Inc. regarding 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 ("PIP") 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.
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.
The court split along the same 5-2 lines in a second case that involved how much Florida Peninsula Insurance Co. should pay policyholder Amado Trinidad, whose home was damaged in a fire in 2008. Trinidad had what is known as a "replacement cost policy", but did not repair or contract with someone else to repair the home. While Florida Peninsula was still required to pay replacement costs, the legal battle centered on whether those costs should include what otherwise would go to a general contractor's overhead and profit.
In an opinion again written by Pariente, the majority said those general-contractor costs should be factored in, just like other potential replacement expenses such as labor and materials.
In the third insurance case, the justices split 4-3 in a class-action lawsuit that involved interpretation of policies for home health-care services. The dispute focused on the scope of automatic benefit increases included in the policies. The majority, which ruled against Washington National Insurance Co., said language in the policies was ambiguous and, as a result, should be interpreted broadly in favor of policyholders.
The Court is clearly signaling the need for the insurance industry to be absolutely clear in the policies issued to its insureds. Failure to be crystal clear on just what is being excluded or what is being covered can be fatal.
If you are interested in receiving copies of any of these decisions or wish to contact me, you may do so by writing to me at firstname.lastname@example.org.