Orthopedic Specialists, as Assignee of Kelli Serridge v. Allstate Insurance Company

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT

ORTHOPEDIC SPECIALISTS, as Assignee of KELLI SERRIDGE,
Appellant,

v.

ALLSTATE INSURANCE COMPANY,
Appellee.

Nos. 4D14-287, 4D14-288, 4D14-289, 4D14-290, 4D14-291, 4D14-292,
4D14-293, 4D14-294, 4D14-295, 4D14-296, 4D14-297, 4D14-298,
4D14-299, 4D14-300, 4D14-301, 4D14-302, 4D14-303, 4D14-304,
4D14-305, 4D14-306, 4D14-307, 4D14-308, 4D14-309, 4D14-310,
4D14-311, 4D14-312, 4D14-313, 4D14-314, 4D14-315, 4D14-316,
4D14-317 and 4D14-318

[August 19, 2015]

Appeal from the County Court for the Fifteenth Judicial Circuit, Palm
Beach County; Ted S. Booras, Judge; L.T. Case Nos.
502012SC002031XX, 502012SC002035XX, 502012SC003157XX,
502012SC003172XX, 502012SC003182XX, 502012SC003677XX,
502012SC003679XX, 502012SC003682XX, 502012SC003683XX,
502012SC003690XX, 502012SC003692XX, 502012SC003695XX,
502012SC003696XX, 502012SC003732XX, 502012SC004802XX,
502012SC004809XX, 502012SC006658XX, 502012SC007634XX,
502012SC020766XX, 502012SC020782XX, 502012SC020791XX,
502012SC021284XX, 502012SC021295XX, 502012SC021678XX,
502012SC021797XX, 502012SC022899XX, 502013SC000982XX,
502013SC001002XX, 502013SC001003XX, 502013SC001823XX,
502013SC003154XX, and 502013SC005090XX.

Gary M. Farmer, Sr. of Farmer Jaffe Weissing Edwards Fistos &
Lehrman P.L., Fort Lauderdale; David M. Caldevilla of De La Parte &
Gilbert, P.A., Tampa; and Stephen Deitsch, William Foman and Lindsay
Porak of Deitsch & Wright, P.A., Lake Worth, for appellants.

Suzanne Y. Labrit and Douglas G. Brehm of Shutts & Bowen LLP,
Tampa; and Peter J. Valeta of Meckler Bulger Tilson Marick & Pearson
LLP, Chicago, Illinois, for appellee.
CIKLIN, C.J.

This appeal comprises thirty-two consolidated cases in which PIP
claims were brought by medical services providers (“the Providers”)
against the appellee, Allstate Insurance Company (“Allstate”), under no-
fault insurance policies issued to their insureds. At issue is whether, as
asserted by the Providers, the language in the Allstate policy is
ambiguous as to Allstate’s election to reimburse the Providers pursuant
to certain Medicare fee schedules provided for in section 627.736(5)(a)2.,
Florida Statutes (2009). The trial court agreed with Allstate and found
that the policy language was, in fact, not ambiguous and certified the
following question to this court:

Whether the Defendant’s PIP insurance policy language is
legally sufficient to authorize [Allstate] to apply the [Medicare
fee schedule] reimbursement limitations set forth in section
627.736(5)(a)2., Florida Statutes.

We answer that question in the negative, finding the policy language
to be inherently unclear and reverse the summary judgment entered in
favor of Allstate.

The only dispute between the parties concerns the meaning of a
particular endorsement to the policy. The policy provision language
chosen by Allstate resulted in the trial court’s decision to enter the
underlying summary judgment for Allstate.

The policy provides the following in pertinent part with respect to PIP
benefits:

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.

An endorsement to the policy provides the following:

Limits of Liability

....

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 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.

(Emphasis added).

The Providers argue that the “shall be subject to” provision in the
endorsement is ambiguous, as it is unclear whether Allstate has actually
and in fact elected to limit its reimbursements to the Providers under the
Medicare fee schedules as provided for in section 627.736(5)(a)2.-5.,
Florida Statutes (2009), or is simply announcing that it is reserving its
right to elect to do so. They analogize the policy at issue here to the ones
found lacking in Geico General Insurance Co. v. Virtual Imaging Services,
Inc., 141 So. 3d 147 (Fla. 2013) (“Virtual Imaging”), and Kingsway Amigo
Insurance Co. v. Ocean Health, Inc., 63 So. 3d 63 (Fla. 4th DCA 2011)
(“Kingsway”). In those cases, the courts found that the bare reference to
the PIP statute was insufficient to put the insured and providers on
notice that the insurer was, in fact, electing to employ the Medicare fee
schedules. The Providers argue the language in the instant policy is
similarly vague and only permissive in nature and merely incorporates
the PIP statute. Our decision hinges on interpretation of contract of
insurance language; thus our review is de novo. See Virtual Imaging, 141
So. 3d at 152 (citations omitted).

Historical Context

Provisions of the PIP statute, section 627.736, Florida Statutes, are at
the center of the instant controversy. The statute lays out the benefits
that a personal injury protection policy must provide and the methods of
calculating reimbursements thereunder. Subsection 627.736(1)(a),
Florida Statutes (2012), provides that “[e]very insurance policy . . . shall
provide personal injury protection” to specified individuals as follows:
“Medical benefits – Eighty [80] percent of all reasonable expenses for
medically necessary medical . . . services.” As recognized by the Florida
Supreme Court in Virtual Imaging, this provision requiring
reimbursement of eighty percent of reasonable expenses for medically
necessary services is “a basic coverage mandate” which is “the heart of
the PIP statute’s coverage requirements.” 141 So. 3d at 155. Section
627.736(5)(a)1., Florida Statutes (2009), recites factors to consider in
determining reasonableness.

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 As explained in Virtual Imaging, the statute was amended in 2008 to
provide an additional method of calculating reasonableness. Virtual
Imaging, 141 So. 3d at 156. Section 627.736(5)(a)2., Florida Statutes
(2008), provides an alternative way in which “[t]he insurer may limit
reimbursement to 80 percent” of a recited schedule of maximum charges,
many of which are tied to Medicare fee schedules. For example,
subsection 627.736(5)(a)2.f., Florida Statutes (2008), provides that
insurers may limit reimbursement to “200 percent of the allowable
amount under the participating physicians schedule of Medicare Part
B.”1

In Virtual Imaging, the Florida Supreme Court explained that an
insurer’s Medicare fee schedule election under section 627.736(5)(a)2.
does not conflict with the basic “reasonable expenses” coverage mandate
of section 627.736(1). Id. at 157. By electing to utilize the Medicare fee
schedules, an insurer meets the mandate of providing “reasonable
expenses” coverage. Id. The court further explained the effect of the
2008 amendments:

[T]he 2008 amendments provided an alternative, permissive
way for an insurer to calculate reimbursements to satisfy the
PIP statute’s reasonable medical expenses coverage mandate,
but did not set forth the only methodology for doing so.

The 2008 fee schedule amendments used the word “may” to
describe an insurer’s ability to limit reimbursements based
on the Medicare fee schedules. See § 627.736(5)(a)2., Fla.
Stat. . . . [I]f an insurer is not required to use the Medicare
fee schedules as a method of calculating reimbursements,
the insurer must have “recourse to some alternative means
for determining a reimbursement amount” if it chooses not
to use the Medicare fee schedules. . . .

This alternative calculation mechanism is the same
mechanism that was in place before the Legislature amended
the PIP statute to incorporate the Medicare fee schedules: in
the event of a dispute, a fact-finder must determine whether

1 The statute was again amended in 2012 to add the following requirement:
“Effective July 1, 2012, an insurer may limit payment as authorized by this
paragraph only if the insurance policy includes a notice at the time of issuance or
renewal that the insurer may limit payment pursuant to the schedule of
charges specified in this paragraph.” Virtual Imaging, 141 So. 3d at 154
(emphasis in original) (quoting section 627.736(5)(a)5., Fla. Stat. (2012)).

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 the amount billed was reasonable. The permissive language
of the 2008 amendments, therefore, plainly demonstrates
that there are two different methodologies for calculating
reimbursements to satisfy the PIP statute’s reasonable
medical expenses coverage mandate.

....

Accordingly, we conclude that the 2008 amendments were
clearly permissive and offered insurers a choice in dealing
with their insureds as to whether to limit reimbursements
based on the Medicare fee schedules or whether to continue
to determine the reasonableness of provider charges for
necessary medical services rendered to a PIP insured based
on the factors enumerated in section 627.736(5)(a)1. In
other words, we do not conclude that payment under section
627.736(5)(a)2. could never satisfy the PIP statute’s basic
“reasonable expenses” coverage mandate, set forth in section
627.736(1). Instead, what we conclude is that the fee
schedule payment calculation methodology in section
627.736(5)(a)2. was permissive.

Id. at 156-57 (footnote and internal citations omitted).

Analysis

Insurance Contract Interpretation

The Florida Supreme Court has elaborated on insurance contract
language interpretation:

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. In construing insurance contracts, “courts
should read each policy as a whole, endeavoring to give every
provision its full meaning and operative effect.” Courts
should “avoid simply concentrating on certain limited
provisions to the exclusion of the totality of others.”
However, “[p]olicy 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.’”

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Washington Nat’l Ins. Corp. v. Ruderman, 117 So. 3d 943, 948 (Fla. 2013)
((alteration in original) (internal citations omitted). “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.

‘“Whether a document is ambiguous depends upon whether it is
reasonably susceptible to more than one interpretation. However, a true
ambiguity does not exist merely because a document can possibly be
interpreted in more than one manner.’” Smith v. Shelton, 970 So. 2d
450, 451 (Fla. 4th DCA 2007) (citation omitted). “In the event policy
provisions are ambiguous . . . then well-established rules of construction
must be applied. The most basic of these rules is that ambiguous policy
provisions are to be construed in favor of the insured and against their
drafter, the insurer.” Discover Prop. & Cas. Ins. Co. v. Beach Cars of W.
Palm, Inc., 929 So. 2d 729, 732 (Fla. 4th DCA 2006) (citations omitted).

Alleged Ambiguity of Subject Policy Language

The Providers argue that the language in the endorsement is
ambiguous, and that the trial court’s ruling is contrary to Kingsway and
Virtual Imaging. Those cases did not involve policies that referenced the
Medicare fee schedules, as does the policy here. Instead, those policies
broadly referenced the PIP statute. The policy in Kingsway “cite[d] the
No-Fault Act, state[d] it will pay ‘80% of medical expenses,’ and define[d]
medical expenses as those that it is required to pay ‘that are reasonable
expenses for medically necessary . . . services.’” Kingsway, 63 So. 3d at
67. This court rejected the argument that “because the PIP statute is
incorporated into the policy, [the insurance company] had the unilateral
right to ignore the only payment methodology referenced in the policy.”
Id. We adopted the trial court’s reasoning, which relied on State Farm
Florida Insurance Co. v. Nichols, 21 So. 3d 904 (Fla. 5th DCA 2009):

If the [insurer] wanted to take advantage of the permissive
fee schedule, it should have clearly and unambiguously
selected that payment methodology in a manner so that the
insured patient and health care providers would be aware of
it.

Kingsway, 63 So. 3d at 68 (alteration in original).

In Virtual Imaging, the insurance policy also merely referenced the PIP
statute and with no specific reference to the Medicare fee schedules. It
provided the following:

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 Under Personal Injury Protection, the Company [GEICO] will
pay, in accordance with, and subject to the terms,
conditions, and exclusions of the Florida Motor Vehicle No-
Fault Law, as amended, to or for the benefit of the injured
person:

(a) 80% of medical expenses . . . .

Virtual Imaging, 141 So. 3d at 157. In finding that this language was not
sufficient for the insurance company to utilize the fee schedule limits, the
Florida Supreme Court pointed out that “[t]he . . . policy does not include
any reference to the Medicare fee schedules . . . .” Id. at 158. The court
agreed with the reasoning in Kingsway and held that in order to limit
coverage to the Medicare fee schedules, “the insurer must clearly and
unambiguously elect the permissive payment methodology . . . .” Id.

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.

We cite to the solid reasoning contained in a final judgment penned
by County Judge Robert W. Lee, who cogently parsed the language at
dispute here and found it to be ambiguous:

The “subject to provision” is intrinsically ambiguous, with
many possible meanings. In context all of them create
ambiguity. See Affinity Internet Inc. v. Consol. Credit Couns.
Serv., Inc., 920 So. 2d 1286, 1289 (Fla. 4th DCA 2006) . . .
(subject to means “liable, subordinate, inferior, obedient to;
governed or affected by; provided; answerable” (quoting
BLACK’S LAW DICTIONARY 1425 (6th ed[.] 1990)). In fact
its customary legal use is really only to “indicate a condition
to one party’s duty of performance and not a promise by the
other.” BGT Group Inc. v. Tradewinds Eng. Serv. LLC, 62 So.
3d 1192 (Fla. 4th DCA 2011) . . . (because of lack of detailed
description of terms in document referred to as subject to,
terms could not be deemed binding on party). Allstate’s
“subject to provision” just incants a statutory truism, namely
that all PIP policies are subject to the PIP statute. Allstate’s

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 “subject to provision” fails to state anywhere in clear, plain
text that it will not pay 80% of medically necessary services –
which its primary coverage clause requires. Nor does
Allstate express in any way that it pay no more than FS
627.736(5)(a)(2)(a-1) allow. Giving due effect to all relevant
words, Allstate fails to state anywhere in explicit, plain,
simple, apt words that Allstate will not pay 80% of
reasonable charges and will actually limit payment to FS
627.736(5)(a)(2)(a-f).

In DPI of North Broward LLC (a/a/o Lauren Goldstein v.
Allstate Fire and Cas. Co., 20 Fla. L. Weekly Supp. 161a (Fla.
Broward County, Cnty. Ct. 2012) (Lee, J.) this Court held:

By use of the phrase “subject to,” Allstate has not
incorporated the optional provisions of the Medicare fee cap
into the policy. See St. Augustine Pools, Inc. v. James M.
Barker, Inc., 687 So. 2d 957, 958 (Fla. 5th DCA 1997) . . .
(the words “subject to” in a contract are distinct from
“incorporating” provisions of another document). Allstate
has said nothing more than what is already true. All PIP
policies are “subject to” these provisions; however, Allstate
must clearly and unambiguously take the next step to
incorporate these optional provisions into the policy if it
desires to use the alternative methodology provided.

....

For Allstate to be allowed, after the fact, to pick and choose
which ‘limitation’ amongst “any and all limitation” would
render the Supreme Court’s ruling in [Virtual Imaging]
meaningless.

Synergy Chiropractic & Wellness Ctr., Inc. v. Allstate Prop. & Cas. Ins. Co.,
22 Fla. L. Weekly Supp. 750a (Broward County Court, Jan. 20, 2015)
(footnote omitted).

The Word “Shall”

Allstate relies on the placement of the word “shall,” to precede the
words, “be subject to.” According to Allstate, the use of the word “shall”
removes any possible ambiguity regarding whether the fee schedule
limitations were to be applied: “This is a clear election which puts the
insured on notice of Allstate’s intent to limit reimbursements in

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accordance with the fee schedules.”

We agree with the Providers that this single word, read in the context
of the entire policy, does not transform an ambiguous provision to one
that is unambiguous. 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.2

The First District’s Opinion in Stand-Up

Our sister court recently found the provision at issue here to be
unambiguous and legally sufficient to give the required notice to policy
holders. In Allstate Fire & Casualty Insurance v. Stand-Up MRI of
Tallahassee, P.A., 40 Fla. L. Weekly D693 (Fla. 1st DCA Mar. 18, 2015),
the First District reasoned that the plain language of the “subject to”
provision “gives sufficient notice of [Allstate’s] election to limit
reimbursements by use of the fee schedules.” Id. at 694. The court was
persuaded by the use of the word “shall” in the provision. Id. The court
also opined that Virtual Imaging provides for a “simple notice
requirement,” and that the policy in Virtual Imaging was found deficient
because it “failed to ‘indicate in any way . . . that it intended to limit its
reimbursement to a predetermined amount of set reasonable medical
expenses’ using the fee schedules.” Id. (quoting Virtual Imaging, 141 So.
3d at 158-59).

Although the Virtual Imaging court took note that the policy at issue
was devoid of any indication that the insurer elected the Medicare fee
schedules, this does not in turn mean that any type of reference to the
fee schedules will suffice. Virtual Imaging’s central holding is clear: To
elect a payment limitation option, the PIP policy must do so “clearly and
unambiguously.” A policy is not sufficient unless it plainly and obviously
limits reimbursement to the Medicare fee schedules exclusively. The
policy cannot leave Allstate’s choice of reimbursement method in limbo
under the guise of the words, “subject to” without incorporating specific
words to that effect. The policy must make it inescapably discernable

2 Allstate’s policy language simply incorporates the PIP statute (including but
not limited to all fee schedules) into its insurance contract. Allstate reserves a
plethora of options for itself but does not specify or enumerate anything.

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that it will not pay the “basic” statutorily required coverage and will
instead substitute the Medicare fee schedules as the exclusive form of
reimbursement.

Dozens of courts have weighed in on the meaning of the language at
issue in this appeal, and there is a sharp divide as to whether the
language is legally sufficient to invoke utilization of the Medicare fee
schedules and thereby meet its statutory duty to provide clarity and
specificity. And to be sure, Allstate owns the burden to avoid latent
ambiguity. See Ruderman, 117 So. 3d at 950 (recognizing, with regard to
ambiguous language, that ‘“[i]t has long been a tenet of Florida insurance
law that an insurer, as the writer of an insurance policy, is bound by the
language of the policy, which is to be construed liberally in favor of the
insured and strictly against the insurer’” (quoting Berkshire Life Ins. Co.
v. Adelberg, 698 So. 2d 828, 830 (Fla. 1997))). While we recognize that a
lack of consensus among the courts does not raise a presumption of
ambiguity, it would be disingenuous for us to say that this widespread
debate does not make us question Allstate’s suggestion that its policy is,
as it argues, “crystal clear.” As Judge Klein said in State Farm Fire &
Casualty Insurance Co. v. Deni Associates of Florida, Inc., 678 So. 2d 397,
408 (Fla. 4th DCA 1996): “If Judges learned in the law can reach so
diametrically conflicting conclusions as to what the language of the
policy means, it is hard to see how it can be held as a matter of law that
the language was so unambiguous that a layman would be bound by it.”

Conclusion

Virtual Imaging and Kingsway both make clear that insurance
statutes require clarity and specificity in electing fee schedules with
respect to PIP medical benefits coverage. Allstate’s post hoc explanation
of its intent as to the policy language it chose does not now remake
clarity or dispel ambiguities. Based on the foregoing, we find the
language at issue is ambiguous and that it must therefore be construed
in favor of the Providers. We reverse and remand for further proceedings
and certify conflict with Allstate Fire & Casualty Insurance Co. v. Stand-
Up MRI of Tallahassee, P.A., 40 Fla. L. Weekly D693 (Fla. 1st DCA Mar.
18, 2015).

Reversed and remanded for further proceedings. Conflict certified.

LEVINE, J., concurs specially with opinion.
MAY, J., dissents with opinion.

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LEVINE, J., concurring specially.

I concur with the majority opinion and find that the language drafted
by Allstate in its policy is ambiguous and thus compels a reversal.

In considering the specific provisions of this insurance contract, this
case at its core rests on the following determination: if the provisions are
unambiguous, then the insured has the sufficient notice required by the
Florida Supreme Court in Virtual Imaging. However, if the provisions in
question are ambiguous or can be susceptible to differing interpretations,
then the insured does not have the sufficient notice mandated. “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.’” Washington Nat’l Ins. Corp. v.
Ruderman, 117 So. 3d 943, 948 (Fla. 2013) (quoting State Farm Mut.
Auto. Ins. Co. v. Menendez, 70 So. 3d 566, 570 (Fla. 2011)).

The policy included a provision, in accordance with the Florida Motor
Vehicle No-Fault Law, stating that Allstate would pay to or on behalf of
an injured person the following benefits for medical expenses: “Eighty
percent of reasonable expenses for medically necessary medical, surgical,
X-ray, dental and rehabilitative services, including prosthetic devices,
and medically necessary ambulance, hospital and nursing service.”

In a policy endorsement amending the provision, the Allstate policy
included the following: “Any amounts payable under this coverage shall
be subject to any and all limitations authorized by 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.”

Thus, our reading of the policy depends on what words or phrases
would dominate the review. Is it “shall” as a mandatory command, is it
“subject to” as a permissive instruction, or is it “shall be subject to”
which is an amalgamation of both mandatory commands and permissive
suggestions? The basic rules of contract interpretation instruct us to
read the provisions in whole and not in isolated parts. Blackshear Mfg.
Co. v. Fralick, 102 So. 753, 754 (Fla. 1925). “Courts should ‘avoid simply
concentrating on certain limited provisions to the exclusion of the totality
of others.’” Ruderman, 117 So. 3d at 948 (quoting Swire Pac. Holdings v.
Zurich Ins. Co., 845 So. 2d 161, 165 (Fla. 2003)). Further, ambiguities
are to be construed against the drafter. Hurt v. Leatherby Ins. Co., 380
So. 2d 432, 434 (Fla. 1980).

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 These principles of contract interpretation share a commonality with
the principles of statutory interpretation. See OB/GYN Specialists of
Palm Beaches, P.A. v. Mejia, 134 So. 3d 1084, 1093 (Fla. 4th DCA 2014)
(stating that a statute is ambiguous “[w]here there is more than one
reasonable interpretation”); Daneri v. BCRE Brickell, LLC, 79 So. 3d 91,
94 (Fla. 3d DCA 2012) (“When interpreting a statute, we interpret its
language and the resulting operation of its terms by reading the statute
as a whole to give it meaning in its entirety.”); Traci Commc’ns, Inc. v. Fla.
Dep’t of Revenue, 737 So. 2d 1255, 1256 (Fla. 4th DCA 1999)
(recognizing rule that ambiguities in tax law are to be construed against
taxing authority and in favor of taxpayer); DeRoin v. State, Dep’t of Bus. &
Prof’l Regulation, Bd. of Veterinary Med., 160 So. 3d 516 (Fla. 4th DCA
2015) (recognizing that statutes authorizing sanctions or penalties
against a person’s professional license are to be interpreted in favor of
the licensee). Because of these commonalities, it is useful to examine
cases involving statutory as well as contractual interpretation in
analyzing the case at bar.

Courts have through the years interpreted the phrase “shall be
subject to” with obvious contradictory results. Some cases state that
“shall be subject to” is a clear mandatory command. See Leslie Salt Co.
v. United States, 55 F.3d 1388, 1397 (9th Cir. 1995) (majority finding
“shall be subject to” imposes mandatory civil penalties); Beardsly v.
Chicago & N. W. Transp. Co., 850 F.2d 1255, 1264 (8th Cir. 1988)
(finding “shall be subject to” is mandatory); Jersey Cent. Power & Light
Co. v. Melcar Util. Co., 59 A.3d 561, 568 (N.J. 2013) (reading phrase
“shall be subject to” as mandatory to give effect to entire provision);
Tilcon Conn., Inc. v. Town of N. Branford, 37 Conn. L. Rptr. 750 (Conn.
Super. Ct. 2004) (listing cases finding “shall be subject to” is mandatory);
TJX Cos., Inc. v. Superior Court, 77 Cal. Rptr. 3d 114, 118 (Cal. Ct. App.
2008) (stating “shall be subject to” imposes a mandatory obligation). See
also Allstate Fire & Cas. Ins. v. Stand-Up MRI of Tallahassee, P.A., 40 Fla.
L. Weekly D693 (Fla. 1st DCA Mar. 18, 2015) (finding, without analyzing
phrase “shall be subject to,” that insurance policy gave sufficient notice
as required by statute).

Alternatively, other cases declare that “shall be subject to” is
permissive and thus discretionary in nature. Fallis v. City of N. Miami,
127 So. 2d 883, 884 (Fla. 1961) (finding that “shall be subject to
referendum” permits a referendum); Leslie Salt, 55 F.3d at 1397-98
(dissent concluding that “shall be subject to” imposed a discretionary
civil penalty); Pace Props., LLC v. Excelsior Constr., Inc.,
3:08CV345/MCR/EMT, 2008 WL 4938412, at *3 (N.D. Fla. 2008) (listing
cases finding “shall be subject to” is permissive); City of Rochester v.

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Corpening, 907 A.2d 383, 387 (N.H. 2006) (majority finding that clause
“shall be subject to” granted authority rather than imposed an
obligation); Mena Films, Inc. v. Painted Zebra Prods., Inc., 831 N.Y.S.2d
348 (N.Y. Sup. Ct. 2006) (finding “shall be subject to” language in
jurisdiction-conferring clause permissive).

Once again, by demonstrating there is more than one reasonable
interpretation of this provision, the basic rules of contract interpretation,
which we are bound by, instruct us to find against the drafter, and find
for more expansive insurance coverage.

The case of Fallis v. City of North Miami is instructive. In Fallis,
taxpayers attempted to contest a municipal bond by stating that the
bond issuance required a referendum by the voters, where the provision
stated that “[a]ll bonds or other evidence of indebtedness issued
hereunder shall be subject to referendum . . . .” 127 So. 2d at 884.

The Florida Supreme Court stated,

A casual examination of the quoted provision might suggest
merit in appellants’ position. However, upon closer scrutiny,
it will be seen that all that this section provides is that the
described evidences of indebtedness ‘shall be subject to
referendum.’ The provision is not mandatory; it is obviously
intended to permit a referendum on a bond ordinance when
such is demanded in accordance with other provisions of the
municipal charter.

Id. Similarly, in the present case, an initial or “casual examination” may
seem to suggest a mandatory provision, but under “closer scrutiny,” the
provision “shall be subject to” is “not mandatory.”

Further, judges and commentators have recognized that even the
solitary use of the word “shall” is “in short . . . a semantic mess. Black’s
Law Dictionary records five meanings for the word.” Antonin Scalia &
Bryan A. Garner, Reading Law: The Interpretation of Legal Texts 113
(2012). As Scalia and Garner noted, to solve the problem of the diverse
meanings of “shall,” there has been a movement “to rewrite the federal
rules . . . to remove all the shalls and otherwise restyle them. . . . Each
shall became must, is, or may.” Id. at 114. See also Bryan A. Garner,
Legal Writing in Plain English 106 (2001) (“[T]he Federal Rules of
Appellate Procedure and the Texas Rules of Appellate Procedure have

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recently been revamped to remove all shalls.”).3 “In just about every
jurisdiction, courts have held that shall can mean not just must and
may, but also will and is. Even in the U.S. Supreme Court, the holdings
on shall are cause for concern.” Id. at 105 (footnotes omitted).4

Of course, Allstate could have written its policy to explicitly say that it
“must” or “will” pay according to the limitations authorized by the
statute. Then the policy would be clear and unambiguous. At oral
argument, Allstate stated that in order to explicitly write in its policy that
it will pay a certain rate as allowed by statute, such as 80% of 200% of
the Medicare rates, Allstate would have to amend its policy each time the
legislature changed the statute. Although that is an understandable
concern, it does not make the language of that provision any less
ambiguous or make the drafter of the policy any less required to write
unambiguously if it wants to rely on such a provision as a binding
interpretation.

The logic and reasoning of Judge O’Scannlain is also persuasive in
Leslie Salt v. United States, where he, like Justice Scalia, recognized that
even terms such as “shall” can lack precision and clarity. Salt concerned
a statute with the same common phrase that confronts us here, “shall be
subject to.” The Clean Water Act provided that “[a]ny person who
violates [one of the enumerated sections of the Act] shall be subject to a
civil penalty not to exceed $25,000 per day for each violation.” 55 F.3d
at 1397.

Judge O’Scannlain dissented from reading “this language to mean
that civil penalties are mandatory.” Id. He stated, “If section 309(d) had
provided ‘Any person who violates . . . shall pay a civil penalty,’ I would
readily agree with the majority’s interpretation. However, it does not so
provide, and we cannot ignore the three words following the word ‘shall.’”
Id. Similarly, in the present case we cannot ignore the same three words
following the word “shall,” that being “be subject to.”

3 “As Joseph Kimble, a noted drafting expert, puts it: ‘Drafters use it [shall]
mindlessly. Courts read it any which way.’” Garner at 106 (citation omitted).
Garner concludes that one should adopt the style of “transactional drafters
[who] have adopted the shall-less style” with remarkable clarity. Id.
4 See Garner at 105-06 n.5-10 (citing Moore v. Illinois Cent. R. Co., 312 U.S.

630, 635 (1941); Railroad Co. v. Hecht, 95 U.S. 168, 170 (1877); W. Wis. Ry. V.
Foley, 94 U.S. 100, 103 (1876); Scott v. United States, 436 U.S. 128, 146 (1978)
(Brennan, J., dissenting); Gutierrez de Martinez v. Lamagno, 515 U.S. 417, 434
n.9 (1995); United States v. Montalvo-Murillo, 495 U.S. 711, 718 (1990)).

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 Judge O’Scannlain went on to state that the applicable section

did not use the words “shall pay”; it used the words “shall be
subject to.” The latter phrase is synonymous with “shall be
liable to” or “shall be answerable to.” Read literally, the
section merely states that a violator is liable to be assessed a
civil penalty, not that he or she must be. In other words,
civil penalties are discretionary.”

Id. at 1397-98 (citation omitted). He concludes that “[i]f Congress had
meant civil penalties to be mandatory, it could have written [the section]
to state that a violator ‘shall pay’ a civil penalty.” Id. at 1398.

Similarly, in the present case, if the drafter wanted to notify the
insured that the medical bills would be paid pursuant to a particular
statutory provision, the policy would state “shall pay” (or “must pay” or
“will pay”) according to that provision, and not state “shall be subject to.”

In summary, I concur and would reverse the trial court and find the
language in the policy ambiguous.

MAY, J., dissenting.

I respectfully dissent. For me, this issue was correctly decided in
Allstate Fire & Casualty Insurance v. Stand-Up MRI of Tallahassee, 40
Fla. L. Weekly D693 (Fla. 1st DCA Mar. 18, 2015), and South Florida
Wellness, Inc. v. Allstate Insurance Co., No. 13-61759-CIV, 2015 WL
897201 (S.D. Fla. Feb. 13, 2015). Both courts encountered the same
insurer and the same policy language. Without struggling to create an
ambiguity, the First District held “that Allstate’s policy language gave
legally sufficient notice to its insureds of its election to use the Medicare
fee schedules as required by Virtual Imaging.” Id. at D694. And as
Judge Dimitrouleas found, “the relevant language unambiguously
provides notice of Allstate’s election to use the Subsection 5(a)(2) fee
schedule method.” S. Fla. Wellness, Inc., 2015 WL 897201, at *4. I agree
with the conclusions reached by both courts and would affirm.

As Judge Osterhaus noted: “The crux of the PIP dispute here
concerns whether Allstate’s policy language adequately notifies insureds
of its election to limit reimbursements via the Medicare fee schedules in §
627.736(5)(a)2., as required by Virtual Imaging.” Id. The First District’s
conclusion “stem[med] from the policy’s plain statement that
reimbursements ‘shall’ be subject to the limitations in § 627.736,
including ‘all fee schedules.’” Id. That is precisely what Allstate has

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done here. It has placed the insured on notice that reimbursements are
subject to the Medicare fee schedule-based limitation set forth in the PIP
statute. There is nothing ambiguous in the policy’s language.

Unfortunately, the providers have led the majority down the yellow
brick road. The issue is not whether the policy is ambiguous, but rather
whether the policy adequately put the insured on notice of the insurer’s
election to limit reimbursements according to the Medicare fee schedules
set forth in section 627.736. See Geico Gen. Ins. Co. v. Virtual Imaging
Servs., Inc. (Virtual Imaging), 141 So. 3d 147, 149–59 (Fla. 2013).
Instead of simply reading the policy’s plain language for what it says, the
majority spends fourteen pages trying to convince the reader that an
ambiguity exists.

After all, let’s remember the purpose of PIP coverage. “[T]he purpose
of the no-fault statutory scheme is to provide swift and virtually
automatic payment so that the injured insured may get on with his [or
her] life without undue financial interruption.” Id. at 153 (second
alteration in original) (quoting Ivey v. Allstate Ins. Co., 774 So. 2d 679,
683–84 (Fla. 2000)) (internal quotation marks omitted). Providers,
however, look to get paid as much as possible, but that does not inure to
the insured’s benefit. The less costly the services provided, the more
services the insured can receive. While some providers may choose to
not treat an insured if their fee is limited to the Medicare fee schedules,
that problem is one of the provider’s making, not that of the insurer.

Since its inception, the PIP statute has been the playing field where
providers and insurers battle over the meaning of its language. The
legislature continues to amend the PIP statute so that it serves the
purpose for which it was intended. Indeed, the majority notes the
numerous times the PIP statute has been amended. Each time that
happens, insurers are required to review their policies and change
language. That comes at a cost. And it is the insured that bears that
cost.

Yet, time after time, the battle rages on. As the Pope once asked
Michelangelo during the painting of the Sistine Chapel: “When will there
be an end?”

Our supreme court noted that “[t]he permissive language of the 2008
amendments . . . plainly demonstrates that there are two different
methodologies for calculating reimbursements to satisfy the PIP statute’s
reasonable medical expenses coverage mandate.” Id. at 156. The
majority suggests that the policy must make it “inescapably discernable”

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what methodology will be used. As the First District articulated, “the
language of [Allstate’s] policy makes reimbursements subordinate to the
fee schedules in rather unmistakable terms.” Stand-Up MRI of
Tallahassee, 40 Fla. L. Weekly at D694.

Here, Allstate specifically elected the limitations provided by the
Medicare fee schedules and gave notice to the insured that it will pay
according to their limitations. In short, the policy language is
unambiguous. I would affirm.
5

* * *

Not final until disposition of timely filed motion for rehearing.

5 In my view, it is unclear whether Virtual Imaging actually required an election
of one of the two methodologies provided by the PIP statute as long as the
insured is given notice that it would opt for one of the methodologies provided.
That would still not make a policy ambiguous; it would simply allow the insurer
discretion in choosing the methodology to be used.

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