On February 16, 2017, the Florida Supreme Court issued its opinion in State Farm v. Shands [1] which resolved a conflict between the First and Fourth District Courts of Appeal over the scope and extent of pre-suit discovery that a Personal Injury Protection (PIP) insurer may seek from medical providers such as hospitals and physicians under the PIP statutes. [2] The PIP statutes provide a mechanism which allows PIP insurers to seek documents regarding the reasonableness of the charges and medical necessity.
The First District had taken a more restrictive view of the allowable discovery in Shands Jacksonville Medical Center, Inc. v. State Farm Mutual Automobile Insurance Co.,[3] limiting discovery to those documents set out in section 627.736(6)(c), Florida Statutes. The First District reversed the trial court which had allowed State Farm to take the deposition of Shands’ corporate representative and obtain copies of Shands’ third-party contracts containing negotiated discount rates with other insurers and payors. The First District took the position that “discovery of facts” was limited to the production of documents specifically delineated in the statute. In rendering its opinion, The First District certified conflict with the prior opinion from the Fourth District in Kaminester v. State Farm Mutual Automobile Insurance Co.[4]
In Kaminester, the Fourth District opined that PIP insurers could utilize more expansive means to obtain the information identified in the statute. The Fourth District found that the phrase “discovery of facts”[5] was not limited to document production, but included “deposition testimony and other means of obtaining information authorized by the Florida Rues of Civil Procedure.”
The Florida Supreme Court attempted to discern the legislative intent of the PIP statute from the plain meaning of the statute but found that the phrase “discovery of facts” was susceptible to more than one interpretation. Therefore, the Court utilized principles of statutory construction to ascertain legislative intent . The Court confirmed that “the purpose of the no-fault statutory scheme is to ‘provide swift and virtually automatic payment….’” [6] The Court recognized and noted the statutory provisions allowing a PIP insurer to verify the legitimacy of the claim before making payment and the enforcement mechanism for the provider’s failure to comply with its mandatory disclosure requirement.
The Court agreed with the First District that the PIP statutes provide PIP insurers with a pre-litigation procedure “to obtain specified information about the treatment provided to its insured and the charges for that treatment.”[7] The Court went on to find that the disclosures required under subsection (6)(b)[8] are limited to the treatment provided and the charge for that treatment and that “discovery of facts” is limited to the “specific facts of treatment and to the related billing of the injured person.”[9]
Although the Court did not directly address the issue, the opinion implicitly confirmed that the statute does not allow discovery “regarding the amount others paid… for the same services and treatments.”[10] The Court concluded that discovery is limited to the production of “a written report of the history, condition, treatment, dates and costs of such treatment of the injured person and why the items identified by the insurer were reasonable in amount and medically necessary, together with a sworn statement …” as well as the production, inspection and copying of “records regarding such history, condition, treatment, dates, and costs of treatment….”[11] The Court found that the discovery tools in the Florida Rules of Civil Procedure, which would include depositions, are not available until litigation over the reasonableness of the charges is initiated.
The Florida Supreme Court’s opinion in Shands provided clarity to medical providers regarding the form and scope of the materials they must provide PIP insurers seeking information under Section 627.736(6)(b), Florida Statutes. This ruling should streamline the process and reduce the costs associated with complying with the medical provider’s obligation to provide information to the PIP insurers. The ruling will also curtail some of the pre-litigation tactics employed by PIP insurers to force the production of extensive proprietary and sensitive documents.
[4] 775 So.2d 981 (Fla. 4th DCA 2000).
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