Florida’s Fourth District Court of Appeal has issued a significant decision for auto insurers dealing with personal injury protection (PIP) reimbursements. On July 2, 2025, the court reversed a lower court ruling and sided with State Farm Mutual Automobile Insurance Company in a dispute over whether it was obligated to pay more than the amount actually billed by a medical provider, simply because it referenced Medicare rates in its policy.
The case involved Samantha Small, a State Farm policyholder who was injured in a car accident. After the incident, she received chiropractic treatment from DSE Health Systems and assigned her PIP benefits to the provider. DSE submitted bills to State Farm for various treatments, including spinal manipulations and rehab services. Some of the charges were under the reimbursement limit set by Florida’s PIP statute, specifically 80% of 200% of the Medicare Part B fee schedule.
State Farm reimbursed 80% of the actual amounts billed. But DSE argued the insurer should have paid 80% of 200% of the Medicare rate, even when that amount was higher than the bill itself. Their argument hinged on the fact that State Farm had referenced the Medicare-based fee schedule as part of its policy's reimbursement methodology.
A county court in Broward County agreed with DSE’s position and granted summary judgment in its favor. The court reasoned that by incorporating the Medicare schedule, State Farm had elected to follow that standard exclusively and therefore could not cherry-pick lower reimbursement when the billed amount came in under the statutory cap. In its ruling, the court suggested that State Farm was bound to pay the higher calculated Medicare-based amount, regardless of what the provider actually charged.
On appeal, State Farm pushed back, citing recent Florida Supreme Court decisions that clarified the intent of the No-Fault Law. In MRI Associates of Tampa, Inc. v. State Farm (2021) and Allstate Insurance Co. v. Revival Chiropractic, LLC (2024), the state’s highest court ruled that the Medicare fee schedule is intended to serve as a cap, not a required reimbursement amount. According to those rulings, insurers remain free to pay 80% of what the provider actually billed if it falls below the statutory threshold.
The appellate court followed that reasoning. It noted that State Farm’s policy merely included the Medicare-based schedule as a factor in determining reasonable charges but did not commit the insurer to paying that amount in every instance. The court emphasized that the policy language did not override the flexibility allowed under Florida law. It concluded that State Farm had not breached its obligations by reimbursing based on the lower, actual billed amount and was not contractually bound to pay the higher figure preferred by DSE.
As a result, the Fourth DCA reversed the county court’s decision and directed that judgment be entered in favor of State Farm. The opinion is not final until the disposition of any motion for rehearing.
For insurance professionals, particularly those working with auto claims and PIP coverage, the case serves as a useful benchmark. It underscores that incorporating statutory reimbursement formulas like Medicare’s fee schedule does not lock insurers into paying the maximum allowed. Instead, insurers retain the discretion to treat those amounts as ceilings, not targets.
This ruling also highlights the importance of maintaining clear and carefully drafted policy language. By doing so, insurers can better withstand challenges when providers argue for higher reimbursement under the guise of statutory interpretation. The court’s position affirms that practicality and flexibility still govern how PIP reimbursements should be processed, especially when the law permits insurers to pay less than the capped amount if the bill is lower.
While the decision may not rewrite the rules, it gives insurers added confidence in applying cost-control measures that reflect actual billing practices. For the insurance business in PIP-heavy jurisdictions like Florida, that is more than a small win. It is a notable affirmation of common-sense claims handling.
