Florida’s Fourth District Court of Appeal made an important ruling for auto insurance companies regarding personal injury protection (PIP) reimbursements. On July 2, 2025, the court overturned a lower court decision and sided with State Farm Mutual Automobile Insurance Company in a case about payment obligations when medical providers reference Medicare rates.
The case revolved around Samantha Small, a State Farm policyholder who was injured in a car accident. After her accident, she received chiropractic care from DSE Health Systems and assigned her PIP benefits to them. DSE submitted bills for various treatments, including spinal manipulations, some of which were below the reimbursement limit set by Florida law, which allows for 80% of 200% of the Medicare Part B fee schedule.
State Farm reimbursed DSE 80% of the actual billed amounts. However, DSE argued that State Farm should have paid 80% of the Medicare rate instead, even if that amount was higher than what they billed. They based their argument on the fact that State Farm’s policy mentioned the Medicare fee schedule as part of its reimbursement process.
Initially, a county court in Broward County agreed with DSE, stating that by including the Medicare schedule in its policy, State Farm had to adhere to that standard and could not choose to pay less when the billed amount was lower than the Medicare-based calculation.
On appeal, State Farm countered this decision by referencing recent rulings from the Florida Supreme Court that clarified the No-Fault Law. In cases like MRI Associates of Tampa, Inc. v. State Farm and Allstate Insurance Co. v. Revival Chiropractic, the court determined that the Medicare fee schedule serves as a cap, not a mandatory reimbursement amount. Insurers can opt to pay 80% of the actual billed amount if it is below the statutory limit.
The appellate court agreed with State Farm’s interpretation. It noted that the policy only used the Medicare schedule as a guideline for reasonable charges, not as a strict rule for payments. The court emphasized that State Farm did not violate its obligations by reimbursing based on the lower billed amount and was not required to pay the higher Medicare figure.
Consequently, the Fourth DCA reversed the earlier ruling and ordered that judgment be entered in favor of State Farm. This decision is not final until any motions for rehearing are resolved.
For professionals in the insurance industry, especially those handling auto claims and PIP coverage, this ruling is significant. It highlights that including statutory reimbursement formulas like Medicare’s fee schedule does not commit insurers to pay the maximum amount. Instead, insurers can treat those figures as limits rather than targets, allowing for more flexibility in handling claims.
This ruling also underscores the importance of clear policy language. Insurers can better defend against challenges when providers seek higher reimbursements based on statutory interpretations. The court’s stance affirms that practicality and flexibility should guide PIP reimbursements, especially when the law allows insurers to pay less than the capped amount if the bill is lower.
While this decision may not change the landscape dramatically, it provides insurers with greater confidence to apply cost-control measures that align with actual billing practices. For the auto insurance industry in PIP-heavy states like Florida, this ruling is a meaningful win, reinforcing sensible claims management.