No. 13102 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1976 

MELVIN FASSIO and MARITA JUNE FASSIO, 

husband and wife, 

Plaintiffs and Respondents, 

-vs - 

MONTANA PHYSICIANS' SERVICE, 

Defendant and Appellant. 

Appeal from: District Court of the Fourth Judicial District, 

Honorable E. Gardner Brownlee, Judge presiding. 

Counsel of Record: 

For Appellant : 

Hughes, Bennett, Cain and Stuart Kellner, Helena, 

Montana 

Alan Cain argued, Helena, Montana 

For Respondents: 

Garnaas, Hall, Riley and Pinsoneault, Missoula, 

Montana 

H. J. Pinsoneault argued, and Robert J. Riley, 

appeared, Missoula, Montana 

- -- 

Submitted: March 3, 1976 

Decided : >.I 1 1 1976 

Filed : yfiy 11 1976 
Hon. W. W. Lessley, District Judge, sitting in place of Mr. 

Chief Justice James T. Harrison. 

The Fassios are the parents of a daughter Marita, who 

is afflicted by a cytogenetic disorder known as Mongolism; 

they were members of the Montana Physicians' Service; their 

membership secured to them and to Marita coverage for enumerated 

hospital, medical and surgical services. 

We are concerned specifically with three health coverage 

agreements running from April to April for the years 1971, 1972 

and 1973. The treatments administered to Marita by the physician 

Dr. Turkel were on June 18, 1971, January 7, 1972, November 17, 

1972 and finally on July 23, 1973. On August 4, 1971 the respondents were informed that the appellant would deny payment of 

the claim for the above services. 

The case was tried to the district court without a jury. 

Before submission of the proposed facts, the judge issued what 

he termed "Opinions" that stated his position and decision; after 

submission of findings by the attorneys, the judge adopted his 

"Opinions" as the court's findings of fact and conclusions of 

law. The judge concluded that the respondent Fassios should be 

reimbursed in full for all the medical services performed for 

their infant daughter by Dr. Henry Turkel, M.D. of Detroit, 

Michigan. 

Montana Physicians' Service appeals. Its appeal is 

premised on the proposition that the services so performed by 

Dr. Turkel for Marita were worthless and unnecessary and therefore 

not covered by the health agreements. 

The district court's "Opinions" describe poignantly the 

Fassios' odyssey in treatment of their daughter in these words: 

"In January, 1970, the Plaintiffs herein suffered 

one of life's most unfortunate tragedies when 

their daughter was born with a chromosome deficiency resulting in a condition commonly known as 
Mongolism. They were immediately advised to 

commit the girl to the Montana School for the 

Retarded at Boulder, Montana; within a week 

they were at that institution talking with Dr. 

Philip Pallister, one of the country's leading 

medical experts on Mongolism. Dr. Pallister 

gave them a prescription which was based on his 

experience and knowledge, and which would bring 

about a one hundred per cent improvement in the 

baby's future. That prescription was: 'Take the 

baby home and give her lots of love and attention.' 

The Plaintiffs have followed his advice and their 

daughter's present physical, emotional and mental 

state is witness to its effectiveness. After the 

first year passed the Plaintiffs began more 

earnestly to search for more help from the medical 

profession. This search lead them to Dr. Henry 

Turkel of Detroit, Michigan. * * *" 

The record shows that the plaintiffs were referred to Dr. 

Turkel by Dr. J. M. Law, M.D. of Missoula, Montana; that they 

made their first visit to Dr. Turkel on June 28, 1971; his charge 

was $750; and that this claim and his subsequent claims of $3,000 

for reimbursement were denied by Montana Physicians' Service. 

The appellant told the Fassios its denial was justified because 

the services as performed by Dr. Turkel were at best "experimental" 

and "unacceptable medical practice". 

Chronologically and timewise, Dr. Turkel's treatments 

of June 28, 1971 and January 7, 1972 are clearly within the ambit 

of the April, 1971 contract; the treatment of November 17, 1972 

is covered by the 1972 agreement and the final treatment of July 

23, 1973 is under the time limit of the 1973 agreement. 

We will discuss the three contracts separately. Considering the 1971 contract we cut through the verbiage and go directly 

to the portion entitled "Group Major Medical Endowment." We find 

the controlling definition of the covered medical expenses in 

Subsection 1 of Section A in the following language: 

* * * usual, customary, and reasonable charges 

incurred by a Member for necessary services performed or prescribed by a licensed Doctor of 

Medicine for an illness * * *." 

Section C of the endorsement called Exclusions and 
Limitations spells out the limiting or nullifying language on 

the coverage stated. The pertinent language of the exclusion 

states no benefits shall be provided for "services and supplies 

not incidental to or necessary for treatment of illness." 

The provisions of the 1972 contract are identical with 

the 1971 agreement. 

The basic provisions and exclusions limitation of both 

the 1971 and 1972 agreements limit reimbursement by the carrier, 

Montana Physicians' Service, to necessary services performed 

or prescribed by a licensed Doctor of Medicine. Dr. Turkel is 

a Doctor of Medicine and he, as a Medical Doctor, performed 

the services for Marita; a more compelling fact is that the 

Fassios were sent to Dr. Henry Turkel by referral of Dr. J. M. 

Law, M.D. of Missoula, Montana. 

We look at the problem of characterization of the actual 

services performed by Dr. Turkel for Marita. The appellant describgthose services as "worthless and unnecessary" and further 

of no real value in treating the conditions for which they were 

prescribed. It is admitted that the district court's "Opinions" 

are not complimentary as to Dr. Turkells services and his fees 

shocked the court, but it does state: 

" * * * This illness, this birth defect calls for 

attention from a medical doctor just as much as 

any other terminal illness. It may even be that 

the medical attention can do nothing more than 

to assure the parents that everything is being 

done that can be done, but even this is important 

for the proper administration by the parents of 

Dr. Pallister's original prescription." 

The notice of disallowance from Montana Physicians1 Service signed by Dr. James J. McCabe did not call Dr. Turkel's 

services "worthless and unnecessary" and of no real value in 

treating the conditions for which prescribed, rather the services 

performed under the 1971 and 1972 contracts were described as 

"unacceptable medical practice" or "experimental." 
We consider the word necessary. It is an adjective 

and therefore is a term of degree. Implicit in the use of the 

word necessary in the area of medical services, as prescribed 

by a medical doctor, is the conclusion that such services are 

necessary and more particularly a necessary expense when so prescribed or performed. An exhaustive search of cases and law 

review articles fails to give us an exact definition of the word 

necessary. In this context we might say the word necessary is 

ambiguous, but we do not so hold as it is used in these contracts 

in the context of medical services performed or prescribed by a 

physician. In any event we must liberally construe it for the 

benefit of the party insured under these agreements. Travelers 

Ins. Co. v. American Casualty Co., 151 Mont. 198, 441 P.2d 177; 

Williams v. Ins. Co. of North America, 150 Mont. 292, 434 P.2d 

395; St. Paul Fire & Marine Ins. Co. v. Thompson, 150 Mont. 182, 

433 P.2d 795, 27 ALR 3d 1048; Jones v. Virginia Surety Co., 145 

Mont. 440, 401 P.2d 570; Aleksich v. Mutual Acc. Ass'n., 118 

Mont. 223, 164 P.2d 372, 162 A.L.R. 263. 

The language of these insurance contracts was carefully 

chosen. This was done in the absence of the Fassios and used to 

carefully limit and protect the carrier, Montana Physicians' 

Service, against extended liability. If Montana Physicians' 

Service wishes to exclude or limit the risk contracted for, then 

let them do so in words that leave no doubt. The law is clear 

in this jurisdiction that exclusion clauses are construed narrowly 

against the insurer. Atcheson v. Safeco Insurance Company, 165 

Mont. 239, 527 P.2d 549; State Farm Mutual Automobile Co. v. 

Partridge, 109 Cal.Rptr. 811, 514 P.2d 123. 

We are dealing with group health insurance contracts. 

The coverage agreements for the years 1971 and 1972 provide reimbursable coverage to the Fassios for necessary medical services. 
As in the instant case those services are prescribed and performed by a licensed Doctor of Medicine. That should be and 

is sufficient to meet the demands of the language of the 1971 

and 1972 contracts. 

The 1973 health coverage agreement concerns itself with 

the services rendered on July 23, 1973. The language in this 

agreement is in the main the same as the language contained in 

the agreements of 1971 and 1972; there is however an interesting 

change or addition. We find this change or addition in Subsection (J) of the exclusion article: 

" * * * and surgery or medical treatment which 

is experimental in nature or which does not 

constitute accepted medical practice." (Emphasis 

supplied.) 

The appellant, Montana Physicians1 Service, supplied this language 

in the 1973 coverage agreement; the self-same language used in the 

letters of James J. McCabe, Secretary of Montana Physicians1 Service. This specific change using the word "experimental" and the 

phrase "unacceptable medical practice" specifically excludes the 

services bargained for and paid for by the Fassios from Dr. Turkel 

on July 23, 1973. It follows then that the rules of construction 

as we have applied them on the agreements of 1971 and 1972 are not 

applicable. 

Considering the 1973 agreement it is stated in 55 A.L.R. 

"The group insurance contract is peculiar in that 

it is made by the insurer and the employer, instead of between the insurer and the insured, as 

in other contracts of insurance, thus affecting 

four parties,--the insurer, the employer, the 

insured, and the beneficiary. * * *" 

The facts of the instant case clearly emphasize the peculiarity of such an insurance policy. The first one in this series 

of health agreements under which the Fassios were the beneficiaries 

and Missoula County Courthouse, MissoulatMontana was the group- 
employer continued its coverage from April 15, 1971 to April 15, 

1972; the coverage was continued with an identical policy from 

April 15, 1972 toA~il 15, 1973; then suddenly and admittedly 

without notice to the beneficiaries, Fassios, the excluding word 

and phrase "experimental" and "unacceptable medical practice" 

were inserted. 

premium of 

It is elemental that no/group insurance is valid unless 

it satisfies the applicable statutory requirements. Whitney v. 

Continental Life and Accident Company, 89 Ida. 96, 403 P.2d 573. 

The concern and supervision of the legislature is found in this 

pertinent portion of section 40-4102(2), R.C.M. 1947: 

" (2) A provision that the insurer will furnish 

to the policyholder for delivery to each employee 

or member of the insured group, a statement in 

summary form of the essential features of the 

insurance coverage * * *." 

The mandate of this section is the protection of the beneficiary 

rights under a group insurance policy. It requires information 

and knowledge so the individual member of the covered group will 

know. True it relates to the agreement at its initial stage; but 

this basic and equitable "rule of notice" applies with equal 

force to the facts of the 1973 agreement. The even tenor of the 

1971 and 1972 contracts was broken unilaterally as to the Fassios 

and their daughter Marita. It had a personal impact as the words 

of exclusion used were the very words used by Montana Physicianst 

Service in its notice of disallowance under the 1971 and 1972 

contracts. Group life insurance case law does not allow such 

change without notice on the theory that a vested interest is 

involved. Fagan v. John Hancock Mutual Life Ins. Co., 200 F.Supp. 

142, 144; Hayes v. Equitable Life Assur. Soc., 235 Mo.App. 1261, 

150 S.W.2d 1113; (infra) Lindgren v. Metropolitan Life Ins. Co., 

57 Ill.App.2d 315, 206 N.E.2d 734. The rule of group life insurance as to vesting, of course, will not apply here, but it 
does indicate the concern of courts on group insurance. 

In a group insurance situation as here surely there 

must be a notice to allow the beneficiary of such group insurance the opportunity to secure other coverage elsewhere; 

particularly where the risk is so specifically and abruptly 

excluded. Poch v. Equitable Life Assur. Soc. of United States, 

343 Pa. 119, 22 A.2d 590, 142 A.L.R. 1279. 

Hayes v. Equitable Life Assur. Soc., 235 Mo.App. 1261, 

150 S.W. 2d 1113, is persuasive on this point. The facts in 

that case were that the group policy was renewed annually for 

the years 1927 - 1931 inclusive without change. In the year 

1932 the contract was modified to exclude a disability clause. 

The company involved in the group insurance policy sent out 

booklets and letters and posted notices on the bulletin board 

that notified employees of the change. The beneficiary denied 

actual notice, as no letter had been sent to him personally; 

even under those facts the court held that the insured was entitled to coverage under the old policy; the court in effect 

held that the old policy remained in force as to that particular 

beneficiary. 

It is not placing too large a burden upon the insurer 

Montana Physicians' Service to say that they, by the abrupt 

change in the 1973 contract without notice of any kind to the 

Fassios, in effect revived the terms of the 1972 contract by 

such failure to comply with the state law and with simple fairness and equity to the beneficiaries. The time span from April 

15, 1973 (the beginning date of the 1973 agreement) to July 23, 

1973 (the time the services were contracted with Dr. Turkel) 

was a mere 69 days. The Fassios under this group insurance 

policy had been paying monthly payments starting September 15, 

1971 and continuing to and past July 23, 1973. 
We do not hold by this decision as to the 1973 agreement that in group insurance coverage the individual group beneficiaries must have written personal notice with each change, 

but we do hold that in keeping with the thrust of section 40- 

4102, a summary form of the essential features of the change 

should be brought to the attention of the beneficiaries under 

the group insurance. Obviously a specific exclusion of coverage 

is such a change; equally obvious is that equity and fairness 

demand such knowledge be made available to the beneficiaries. 

We affirm. 

sitting in place of Chief JUStice ~ames T. ~arr$n: I 

We concur: 

Justices / 
Mr. Justice John C. Harrison concurring and dissenting. 

I concur and dissent. Clearly the plaintiffs are 

entitled to coverage for the first visit made to Dr. Turkel. 

The reference was made by a licensed practitioner of this state 

and there was no way that they could determine that the treatment 

performed would be found to be "experimental" and "unacceptable 

medical practice" after the fact. 

However, the visits thereafter followed notice by the 

appellant that such treatment would not be paid for, and the 

reasons why the services would be denied. Respondents, in spite 

of this notice continued treatment at their own risk. I would 

not authorize any recovery for the visits following the notice 

from appellant.