The Short Answer
Under Florida law, the PIP deductible must be subtracted from the total medical bill first, before the insurance company applies any fee schedule or reimbursement limitation.
The Florida Supreme Court has clearly ruled on this issue.
Why This Issue Comes Up
In many PIP claims, insurers try to:
- First reduce the bill using the PIP fee schedule (such as 80% or 75% of charges), and
- Then subtract the deductible from the reduced amount.
This approach results in lower payments to providers.
The Florida Supreme Court has ruled that this method is wrong.
What the Florida Supreme Court Decided
In Progressive Select Insurance Co. v. Florida Hospital Medical Center, the Florida Supreme Court explained the correct order of calculation.
The Court held that:
The deductible must be subtracted from the provider’s full medical charges before applying any fee schedule or reimbursement limitation.
The Correct Order (Step-by-Step)
The correct method is:
- Start with the total medical charges
- Subtract the PIP deductible
- Then apply any fee schedule or reimbursement limit
Not the other way around.
Why the Deductible Comes First (In Plain Terms)
1. The Law Says “100% of Expenses”
Florida’s PIP statute says the deductible applies to 100% of the medical expenses.
That means the deductible applies to the full bill, not a reduced amount.
If insurers applied the fee schedule first, the deductible would no longer apply to 100% of the expenses—something the law does not allow.
2. A Deductible Is Not a Fee Schedule
- A deductible is the part of the bill the patient agrees to pay.
- A fee schedule limits how much the insurer must reimburse after coverage applies.
The deductible determines when coverage starts.
The fee schedule determines how much the insurer pays after coverage starts.
3. Applying the Fee Schedule First Lowers Payments Improperly
If the fee schedule is applied first:
- The deductible becomes smaller than intended
- The insurer pays less than the statute allows
- Providers are underpaid
The Supreme Court rejected this approach.
Simple Example
Correct (Required by Law):
- Medical bill: $2,781
- Deductible: −$1,000
- Remaining amount: $1,781
- Fee schedule applied to $1,781
Incorrect (Not Allowed):
- Apply fee schedule to $2,781 first
- Then subtract deductible
Only the first method follows Florida law.
What This Means for Providers
- Insurers cannot apply the fee schedule before the deductible
- The deductible must always come off the full bill
- Underpayments based on the wrong order can be challenged
- This rule is settled by the Florida Supreme Court
Bottom Line
Deductible first. Fee schedule second.
Any PIP payment calculation that reverses this order is incorrect under Florida law
Disclaimer: This content is general educational information and is not legal advice. Coverage determinations depend on policy terms and factual circumstances.
