Allstate Ins. Co. v. Orthopedic Specialists

• Decision Date: 26 January 2017
• Docket Number: No. SC15–2298,SC15–2298
• Citation: 212 So.3d 973
• Parties: ALLSTATE INSURANCE COMPANY, Petitioner, v. ORTHOPEDIC SPECIALISTS, etc., Respondents.
• Court: Florida Supreme Court

212 So.3d 973

ALLSTATE INSURANCE COMPANY, Petitioner,

v.ORTHOPEDIC SPECIALISTS, etc., Respondents.

No. SC15–2298

Supreme Court of Florida.

[January 26, 2017]

Suzanne Youmans Labrit and Douglas Gerard Brehm of Shutts & Bowen LLP, Tampa, Florida; Peter J. Valeta of Cozen O'Connor, Chicago, Illinois; and Richard C. Godfrey of Kirkland & Ellis, LLP, Chicago, Illinois, for Petitioner

Gary M. Farmer and Gary Michael Farmer, Jr. of Farmer Jaffe Weissing Edwards Fistos & Lehrman P.L., Fort Lauderdale, Florida; David Michael Caldevilla of De La Parte & Gilbert, P.A., Tampa, Florida; and Stephen Douglas Deitsch and Lindsay Capri Porak of Deitsch & Wright, P.A., Lake Worth, Florida, for Respondents

Edward Herbert Zebersky of Zebersky Payne, LLP, Fort Lauderdale, Florida; and Lawrence Mark Kopelman of Lawrence M. Kopelman, P.A., Fort Lauderdale, Florida, for Amicus Curiae Florida Medical Association

CANADY, J.

In this case we consider whether a personal injury protection ("PIP") insurance policy provides legally sufficient notice of the insurer's election to use the permissive Medicare fee schedules identified in section 627.736(5)(a)2., Florida Statutes (2009), to limit reimbursements for medical expenses. The case is before the Court for review of the decision of the Fourth District Court of Appeal in Orthopedic Specialists v. Allstate Insurance Co. , 177 So.3d 19 (Fla. 4th DCA 2015), which held that the policy language is not legally sufficient to authorize Allstate to apply the Medicare fee schedules. The Fourth District certified that its decision is in direct conflict with the decision of the First District Court of Appeal in Allstate Fire & Casualty Insurance v. Stand–Up MRI of Tallahassee, P.A. , 188 So.3d 1, 3 (Fla. 1st DCA 2015), which held that identical policy language "g[ave] sufficient notice of [the insurer's] election to limit reimbursements by use of the fee schedules." We have jurisdiction. See art. V, § 3(b)(4), Fla. Const. For the reasons that follow, we hold that Allstate's insurance policy provides legally sufficient notice of Allstate's election to use the permissive Medicare fee schedules identified in section 627.736(5)(a)2. to limit reimbursements. We therefore quash the decision of the Fourth District in Orthopedic Specialists and approve the decision of the First District in Stand–Up MRI on the conflict issue.

I. BACKGROUND

In the case on review, Orthopedic Specialists and various medical services providers ("the Providers") challenged the reimbursements made by Allstate Insurance Company ("Allstate") under PIP no-fault insurance policies issued to Allstate's insureds. Orthopedic Specialists , 177 So.3d at 20. The Providers argued that Allstate's policy is ambiguous as to whether Allstate has elected to reimburse the Providers in accordance with the Medicare fee schedules provided for in section 627.736(5)(a)2. or merely reserved its right to elect to do so. Id. at 20–21. Specifically, the Providers argued that the "shall be subject to" provision, contained within an endorsement to the Allstate policy, is ambiguous. Id. at 21.

The policy at issue provides that Allstate will make payments as follows:

Allstate will pay to or on behalf of the injured person the following benefits:

1. Medical Expenses

Eighty percent of all reasonable expenses for medically necessary medical, surgical, X-ray, dental, and rehabilitative services, including prosthetic devices, and medically necessary ambulance, hospital, and nursing services.

Id. An endorsement to the policy provides:

Limits of Liability

....

Any amounts payable under this coverage shall be subject to any and all limitations, authorized by section 627.736, or any other provisions of the Florida Motor Vehicle No–Fault Law, as enacted, amended or otherwise continued in the law, including, but not limited to, all fee schedules.

Id. (emphasis and alterations omitted).

On appeal, the Fourth District examined this Court's decision in Geico General Insurance Co. v. Virtual Imaging Services, Inc. , 141 So.3d 147 (Fla. 2013), and concluded that " Virtual Imaging 's central holding is clear: To elect a payment limitation option, the PIP policy must do so ‘clearly and unambiguously.’ " Orthopedic Specialists , 177 So.3d at 25. The Fourth District explained that in order to provide legally sufficient notice in accordance with Virtual Imaging , a policy must "plainly and obviously limit [ ] reimbursement to the Medicare fee schedules exclusively." Id. at 25–26. The Fourth District further concluded that "[t]he policy must make it inescapably discernable that it will not pay the ‘basic’ statutorily required coverage [mandate of eighty percent of reasonable expenses for medically necessary services] and will instead substitute the Medicare fee schedules as the exclusive form of reimbursement." Id. at 26.

After examining the endorsement to the Allstate policy, the Fourth District held that the policy language is not legally sufficient to authorize Allstate to apply the Medicare fee schedules because the "shall be subject to" language at issue is "ambiguous," "inherently unclear," and "must therefore be construed in favor of the Providers." Id. at 21, 26. The Fourth District reasoned that it is ambiguous concerning whether Allstate will apply the Medicare fee schedule limitations to limit reimbursements:

Here, providing that any amounts payable would be "subject to" "any and all limitations" authorized by the statute or any amendments thereto, Allstate did nothing more than state the obvious by indicating that there was a possibility (and the statutory authorization) for Allstate to apply a specific reimbursement limitation. The only reasonable way to read the language is as a general recital of Allstate's reservation of its right to apply limitations authorized by law, with the accompanying and corresponding obligation to notify its policy holders of the election.

Id. at 24. The Fourth District rejected Allstate's argument that the use of the term "shall" removes any possible ambiguity regarding whether the Medicare fee schedule limitations were to be applied:

The word "shall" is meaningless because it simply emphasizes the obvious. Broken down to its most simple form, Allstate's policy says that "any amounts payable under this coverage shall be subject to any and all limitations" in the PIP statute. The policy text does not say that the limitations "shall be applied"; only that they shall be subject to being applied. The word "shall" does not make it clear whether Allstate will utilize the alternative method or is simply recognizing its entitlement to do so.

Id. at 25.

II. ANALYSIS

"Because the question presented requires this Court to interpret provisions of the Florida Motor Vehicle No–Fault Law—specifically, the PIP statute—as well as to interpret the insurance policy, our standard of review is de novo." Virtual Imaging , 141 So.3d at 152.

"Where the language in an insurance contract is plain and unambiguous, a court must interpret the policy in accordance with the plain meaning so as to give effect to the policy as written." Washington Nat. Ins. Corp. v. Ruderman , 117 So.3d 943, 948 (Fla. 2013). "Further, in order for an exclusion or limitation in a policy to be enforceable, the insurer must clearly and unambiguously draft a policy provision to achieve that result." Virtual Imaging , 141 So.3d at 157. "Policy language is considered to be ambiguous ... if the language ‘is susceptible to more than one reasonable interpretation, one providing coverage and the other limiting coverage.’ " Travelers Indem. Co. v. PCR Inc. , 889 So.2d 779, 785 (Fla. 2004) (quoting Swire Pac. Holdings v. Zurich Ins. Co. , 845 So.2d 161, 165 (Fla. 2003) ). "[A]mbiguous insurance policy exclusions are construed against the drafter and in favor of the insured." Auto–Owners Ins. Co. v. Anderson , 756 So.2d 29, 34 (Fla. 2000). "To find in favor of the insured on this basis, however, the policy must actually be ambiguous." Penzer v. Transp. Ins. Co. , 29 So.3d 1000, 1005 (Fla. 2010) (emphasis omitted).

"When interpreting insurance contracts, we may consult references commonly relied upon to supply the accepted meanings of words." Garcia v. Fed. Ins. Co. , 969 So.2d 288, 291–92 (Fla. 2007). Moreover, "when analyzing an insurance contract, it is necessary to examine the contract in its context and as a whole, and to avoid simply concentrating on certain limited provisions to the exclusion of the totality of others." Swire , 845 So.2d at 165. This Court has "consistently held that ‘in construing insurance policies, courts should read each policy as a whole, endeavoring to give every provision its full meaning and operative effect.’ " Id. at 166 (quoting Auto–Owners , 756 So.2d at 34 ).

The PIP Statute

"[T]he PIP statute sets forth a basic coverage mandate: every PIP insurer is required to—that is, the insurer ‘shall’—reimburse eighty percent of reasonable expenses for medically necessary services." Virtual Imaging , 141 So.3d at 155. This provision—the reasonable medical expenses coverage mandate—is "the heart of the PIP statute's coverage requirements." Id. "[T]here are two different methodologies for calculating reimbursements to satisfy the PIP statute's reasonable medical expenses coverage mandate." Id. at 156 (emphasis omitted). Compare § 627.736(5)(a)1., Fla. Stat. (2009), with § 627.736(5)(a)2., Fla. Stat. (2009). Under the first payment methodology contained within section 627.736(5)(a)1., "reasonableness is a fact-dependent inquiry determined by consideration of various factors." Virtual Imaging , 141 So.3d at 155–56. Under the alternative, permissive payment methodology contained within section 627.736(5)(a)2., "insurers ‘may limit reimbursement’ to eighty percent of a schedule of maximum charges set forth in the PIP statute." Id. at 154 (quoting § 627.736(5)(a)2., Fla. Stat.). Reimbursements made under section 627.736(5)(a)2. satisfy the PIP statute's reasonable medical expenses coverage mandate. See id. at...