Title: WARDLOW v KALISPELL GEN HOSP

State: montana

Issuer: Montana Supreme Court

Document:

No. 12555 I N T H E SUPREME C O U R T O F THE STATE O F M O N T A N A 1973 BETTY L. IJARDLOTJ, P l a i n t i f f and Appellant, KALISPELL GENERAL HOSPITAL and B L U E CROSS O F M O N T A N A , Defendants and Respondents. Appeal from: D i s t r i c t Court of t h e Eleventh J u d i c i a l D i s t r i c t , Honorable Robert Sykes, Judge presiding. Counsel of Record : For Appellant : Measure, Cumming and Salansky, Columbia F a l l s , Montana James A. Cumming argued, Columbia F a l l s , Montana For Respondents: Korn, Warden, Walterskirchen and Christiansen, K a l i s p e l l , . Montana Church, Harris, Johnson and F?il.liams , Great F a l l s , Montana Donald A. LaBar argued, Great F a l l s , Montana Submitted: November 26, 1973 Decided : FE8 1 5 1974 F i l e d :FEB 1 5 1974 M r . J u s t i c e Gene B. Daly delivered the Opinion of the Court. This i s an action wherein p l a i n t i f f Betty L. Wardlow s t a t e d a claim against defendants Kalispell General Hospital and Blue Cross of Montana f o r f a i l u r e t o pay claimed medical b e n e f i t s due her a s a r e s u l t of an i l l n e s s . P l a i n t i f f appeals from a summary judgment entered by t h e d i s t r i c t court of Flathead County dis- missing defendant Blue Cross a s a defendant. Defendant Kalispell General Hospital i s not a party i n t h i s appeal. P l a i n t i f f was employed by Kalispell General Hospital a s a licensed p r a c t i c a l nurse on December 6, 1964. O n December 31, 1964, she applied and was accepted f o r membership i n t h e h o s p i t a l ' s health insurance group, Blue Cross of Montana. B y agreement, Mrs. Wardlow paid her premiums f o r the f i r s t three months and subsequently premiums were paid t o Blue Cross by the hospital without deduction from M r s . ~ a r d l o w ' s wages. In the l a s t week of May 1965, Mrs. Wardlow's doctor informed her she had cervical cancer requiring immediate treatment. O n o r about May 31, 1965, she informed her employer of t h e emergency and inquired about leave and her health insurance coverage. She t e s t i f i e d by deposition t h a t a t the time she was i n an emotionally distressed and frightened s t a t e of mind. She s t a t e d she inquired of Eleanor Disbrow, t h e hospital employee administering the Blue Cross group health plan, concerning her premium payment due during her leave of absence f o r sickness, which she understood had been granted t o her. She t e s t i f i e d Mrs. Disbrow told her "Ilon't worry about a thing, everything i s completely a l l r i g h t , your insurance i s just fine. If The "Hospital Personnel Policy" which was furnished t o a l l new employees provided t h a t sick leave w a s available only a f t e r s i x months of f u l l time employment and accumulated a t the r a t e of one day per month up t o a t o t a l of 24 days and t h a t employees on leave of absence must pay t h e i r own Blue Cross premiums t o continue membership. Under the care of a Billings physician, Mrs. Wardlow commenced treatment for her cancer condition on June 1, 1965. She was hospitalized at St. inc cent's Hospital in Billings from June 13 to June 17, 1965, and again from June 24 to July 25, 1965, at which time she was released as cured. The Kalispell General Hospital notified Blue Cross on or about July 2, 1965, that Mrs. Wardlow's employment had been terminated. It does not appear that the hospital notified Mrs. Wardlow. She contends she first learned of her termination in August 1965, when she attempted to resume work. On July 2, 1965, Blue Cross mailed a form notification letter to Mrs. Wardlow at her home address, advising her of nonpayment of premiums and stating that she must pay $37.05 for the period from June 15 to September 15, 1965, to avoid a lapse in coverage. Mrs. Wardlow contends she did not receive the notice. Mrs. Wardlow incurred medical expenses totaling approxi- mately $1,800. Blue Cross paid hospital expenses totaling $170.95. Blue Cross counterclaimed for $46, contending that Mrs. wardlow's coverage ended on June 15, 1965, and the payment made by Blue Cross for hospitalization covered the period from June 13 through June 17, 1965. Plaintiff presents six issues on appeal: 1 . Was plaintiff entitled to termination notice from Blue Cross? 2. If so, did Mrs. Wardlow receive termination notice? 3 . Was the treatment for the cancer condition commenced prior to termination of her coverage? 4 . If the treatment was commenced prior to termination of coverage, was the entire course of treatment for the same illness covered ? 5, Were the alleged representations made by the hospital to Mrs. Wardlow imputable to Blue Cross? 6. Was summary judgment proper? The issues contain mixed elements of law and fact and are such that finding of merit i n any one of them would constitute grounds for reversal of the summary judgment. The record does not disclose the legal rationale applied by the d i s t r i c t court i n granting summary judgment. In her third, fourth and sixth issues on appeal, plaintiff contends that her Blue Cross coverage was i n force a t the time her physician informed her of the cancerconditim and a t the time she commenced treatment for it. She contends that occurrence and commencement of the p e r i l insured against while the contract was i n force obligates the insurer to pay directly related and continuing expenses. Plaintiff asserts no cases have been found dealing i n the hospitalization insurance area, therefore she c i t e s cases involving accident and disability policies which extend the insurer's l i a - b i l i t y t o furnish subsequent ensuing medical expenses. Intercoast Mutual Life Insurance Co. v. Andersgn, 75 Nev. 457, 345 P.2d 762, 75 ALR2d 870. Intercoast Mutual Life i s favorable i n many respects, but d i f f e r s substantially i n the contract language. There, considerable weight was given t o the "ambiguity, i f any" contained i n the termination clause of the policy --- "* * * such termination shall be without prejudice t o any claim originating prior thereto. 1 I (Emphasis ours). Blue Cross contends that i f t h i s principle were applied to group health coverage the insured would no longer have t o pay premiums once she became sick, and construes p l a i n t i f f ' s argument t o mean she i s entitled t o membership i n Blue Cross and resulting benefits, but not required t o pay premiums a f t e r she became sick. Here, we do not view the problem t o be, as Blue Cross contends., but offers no supporting authority, whether o r not p l a i n t i f f was entitled t o continuing membership without payment of premiums. The instant l i t i g a t i o n presents the problem of payment of benefits under the contract a f t e r termination. It does not con- cern continued membership. Involved i s a health service contract which provides hospital and medical benefits f o r i t s members. The contract does not distinquish between health coverage and accident coverage. The same limitations and conditions, so f a r a s pertinent t o t h i s case, apply t o t h e hospital and medical coverage. To resolve the issues here, we look t o t h e terms of t h e contract and employ the r u l e s generally applicable t o the i n t e r - pretation of insurance contracts. W e must a l s o resolve a l l ambiguities i n an insurance contract i n t h e l i g h t most favorable t o the insured. The contract provision involved here which governs e l i g i b i l i t y and benefits s t a t e s : "This i s t o c e r t i f y t h a t , i n consideration of the payment of required membership dues, the Subscriber whose name appears on t h e membership card, and such e l i g i b l e members of h i s o r her family ( i f any) who have been accepted f o r membership, a r e e n t i t l e d t o the benefits herein- a f t e r described subject t o the terms, conditions, and limitations s e t f o r t h i n t h i s Certificate. I 1 Following t h - i s provision the benefits, terms, conditions and limitations a r e s e t f o r t h i n Articles I through IX. As s t a t e d heretofore, the contract i s s i l e n t a s t o cause of hospitaliza- t i o n and merely deals i n services. The contract i s a l s o s i l e n t a s it pertains t o when the r i g h t t o receive benefits w i l l vest. There a r e no specific conditions concerning the termination of benefits, once vested under the contract. The matter of dues and termination of membership i s covered i n A r t i c l e V I I : " V I I . C H A N G E S I N ME14BERSHIP D U E S OR PROVISIONS OF THIS CERTIFICATE AND TEF3IINATION I I a . Provisions of t h i s C e r t i f i c a t e o r Membership dues may be changed a t any time by the Board of Trustees of the Plan by mailing w r i t t e n notices t h i r t y (30) days o r more p r i o r t o the date of change t o the Subscriber or the employer of t h e organization i n which the Sub- s c r i b e r p a r t i c i p a t e s i n a group. Payment of the f i r s t payment due a f t e r the e f f e c t i v e date of t h e change s h a l l be deemed a s conclusive proof of the ~ u b s c r i b e r ' s agreement with the change . "b. This C e r t i f i c a t e i s terminated immed- i a t e l y upon non-payment of dues. I n such event, reinstatement o f , t h i s C e r t i f i c a t e s h a l l be a t t h e sole discretion o f , and under such condi- tions a s may be specified by the Plan. "c. This C e r t i f i c a t e may be terminated by the Plan by giving the Subscriber a t l e a s t t h i r t y (30) days p r i o r written notice, however, t f a Member i s - r e c e i v i n g hospital service on - the date of termination, benefits s h a l l be provided under t h i s C e r t i f i c a t e u n t i l the dis- charge of the Member from the hospital or u n t i l a l l days of care available under t h i s C e r t i f i c a t e a r e used---whichever s h a l l f i r s t occur. "d. This C e r t i f i c a t e may be terminated by the Subscriber by giving t h e Plan a t l e a s t t h i r t y (30) days p r i o r written notice. Dues, i f any, paid by the subscriber beyond the date - of termination w i l l be refunded by the Plan." (Emphasis ours). The only reference t o benefits i s the reference contained I f 11 i n subsection c , which continues benefits when cancellation i s a t the hand of Blue Cross, however there i s no exclusionary Language i n the section concerned with voluntary termination (subsection "d"), o r termination f o r nonpayment of dues (subsec- t i o n "bff) . TO the contrary subsection "b" seems t o be subject t o reinstatement a t the discretion of Blue Cross. Testing t h i s contract by any r u l e , we have to conclude t h a t the matters and d i s t i n c t i o n s urged by Blue Cross a r e e i t h e r not covered by t h e contract or a t b e s t a r e ambiguous. The problem here i s treated from two points of view i n a majority opinion and a concurring opinion i n a 1970 Washington case, Myers v. Kitsap Physicians Service, 78 W.2d 286, 474 P.2d 109. There the majority opinion holds t h e contract open t o more than one reasonable i n t e r p r e t a t i o n and because of the ambiguity i t was resolved i n favor of the insured, following a contingent event vested r i g h t theory. The majority opinion c i t e s 75 ALR2d 876(1961) as a reasonable application t o a health service contract. This i s a c i t a t i o n objected t o i n the i n s t a n t case by Blue Cross a s pertaining only t o "accident" coverage and not applicable. The concurring opinion i n Myers recognizes t h i s position but because of t h e ambiguous language construes the contract i n favor of the employee f o r whose benefit the group contract i s drawn. For the purpose of our consideration of the contract involved here both views are reasonable under the circumstances and we so hold. The factual issue---whether the expenses were incurred in the continuing course of treatment of an illness contracted during the period the coverage was in force and effect---is a disputed material fact. Accordingly, we find the district court erred in granting summary judgment dismissing Blue Cross as a defendant. We need not discuss the remaining issues raised by plaintiff, except to state that under the express terms of the contract existing between the litigants, we find them to be without merit. The order granting summary judgment is reversed and the cause remanded to the district proceedings. Justice We Concur: -----------l----&--------- Chief Justice 1 4 r . Justice Wesley Castles dissenting: I dissent. The facts reveal that Wardlow read the hospital's personnel policy which stated clearly that an employee was not entitled to sick leave until six months of service as a full time employee. She did not qualify. Neither, under the personnel policy, did she establish a leave of absence and at no time did she attempt to pay a premium for the period involved. Appellant Wardlow made various allegations against the hospital, which, if proven, may have merit against the hospital, but these allegations cannot support a claim against respondent Blue Cross. In my view, summary judgment in favor of Blue Cross was proper, and I would affirm. Justice I