Presented by the Insurance Coverage/Bad Faith Litigation Practice Group

Legal Updates for Coverage and Bad Faith - Special Alert

Edited by Allison L. Krupp, Esq.

Florida 4th DCA holds that PIP endorsement is ambiguous and insufficient to authorize application of reimbursement limitations set forth in Florida Statutes.

In Orthopedic Specialists a/a/o Kelli Serridge v. Allstate Insurance Company, 40 Fla. L. Weekly D1918a (Fla. 4th DCA Aug. 19, 2015), the Fourth District Court of Appeal held that an endorsement in Allstate’s personal automobile insurance policy regarding personal injury protection is ambiguous and not legally sufficient to authorize Allstate to apply reimbursement limitations set forth in section 627.736(5)(a)(2), Florida Statutes. The matter came before the Fourth District Court of Appeal after a trial court ruling finding that the endorsement was unambiguous. The Allstate policy included the following provisions:

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.

*           *           *           *

Limits of Liability

. . . .

Any amounts payable under this coverage shall be subject to any and all limitations, authorized by section 627.736, [which would apply a Medicare fee schedule limitation] 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.

Relying on the holdings of the Florida Supreme Court in Geico Gen. Ins. Co. v. Virtual Imaging Services, 141 So. 3d 147 (Fla. 2013) and its prior ruling in Kingsway Amigo Ins. Co. v. Ocean Health, Inc., 63 So. 3d 63 (Fla. 4th DCA 2011), the court held that the “shall be subject to” language contained in the limit of liability endorsement was insufficient to put an insured on notice that Allstate elected to limit reimbursements to medical providers pursuant to the Medicare fee schedules provided under section 627.736(5)(a)(2). The court based its holding on the tenants of statutory and contractual interpretation under Florida law, which is settled that, “Insurance contracts are construed in accordance with the plain language of their provisions.” Hale v. State Farm Florida Ins. Co., 51 So. 3d 1169 (Fla. 4th DCA 2010); Taurus Holdings, Inc. v. U.S. Fid. and Guar. Co., 913 So. 2d 528 (Fla. 2005). Clear and unambiguous language in an insurance policy is interpreted according to its plain meaning, giving effect to the policy as written. Policy provisions that are ambiguous are construed in favor of the insured and to provide broader coverage.

The Fourth District Court of Appeals held that the “shall be subject to” language contained in the Allstate endorsement is ambiguous and merely serves to state that which is already known, that there was a possibility for Allstate to specifically limit its payment of reimbursements under the 2008 PIP amendments. The court held that the language was insufficient to alert a policyholder that Allstate was, in fact, incorporating the permissive payment option allowed by section 627.736(5)(a)(2). The court held that Allstate must explicitly state that it will limit payment as provided by section 627.736(5)(a)(2).

The court’s holding conflicts with the First District Court of Appeal’s holding in Allstate Fire & Cas. Ins. v. Stand-Up MRI of Tallahassee, P.A., 40 Fla. L. Weekly D693 (Fla. 1st DCA Mar. 18, 2015) which provides that the same policy language interpreted in Orthopedic Specialists was not ambiguous and provided sufficient notice of Allstate’s election to limit reimbursements by use of the fee schedules provided for in section 627.736(5)(a)(2). The Fourth District Court of Appeal certified conflict with the Stand-Up decision, stating that the Allstate policy must limit reimbursement to the Medicare fee schedules exclusively to be sufficient.

The determination of whether the “shall be subject to” language in the Allstate policy is, in fact, ambiguous will ultimately be decided by the Florida Supreme Court based on the Fourth District Court of Appeals certification of conflict. 

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