### No. 13102 

### INTHE 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 theFourth Judicial District, Honorable 

### E. Gardner Brownlee, Judge presiding. Counsel of Record: ForAppellant: Hughes, Bennett, Cain and StuartKellner, 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

# 11976 Filed:

## yfiy

## 111976Hon. W. W. Lessley, DistrictJudge, sitting inplace of Mr. Chief Justice

### James T. Harrison. The Fassios 

### are the parents of 

### a daughter Marita, who 

### is afflicted by a cytogenetic disorder known asMongolism; they 

### weremembers of theMontana Physicians' Service; their membership secured tothem and toMarita coverage for enumerated hospital, medical and surgical services. Weareconcerned specifically with three health coverage agreements running from April toApril for the years 1971, 1972 and 1973. The treatments administered toMarita 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, 1971the 

### respondents were informed that the appellantwould deny payment of the claim for the above services. The 

### case was tried tothe district courtwithout 

### a jury. Before submission of the proposed facts, thejudge issued what he termed "Opinions" that stated his position and decision; after submission of findings by the attorneys, thejudge adopted his "Opinions" asthe court's findings of factand conclusions of 

### law. The judge concluded that the respondent Fassios should be reimbursed in full for allthemedical servicesperformed 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 soperformed by Dr. Turkel for Marita 

### were worthless and unnecessary and therefore not covered by the health agreements. The districtcourt's "Opinions" describepoignantly the Fassios' odyssey intreatment of their daughter inthese words: "In January, 1970, thePlaintiffs herein suffered one of life's most unfortunate tragedies when their daughter 

### was born with 

### a chromosome deficiency resulting ina 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 firstyear 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 subsequentclaims of $3,000 for reimbursement were denied by Montana Physicians' Service. The appellant told the Fassios its denial was justified because the servicesas 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 contractwe cut through the verbiage and go directly to the portion entitled "GroupMajor Medical Endowment." We find the controlling definition of the covered medical expenses in Subsection 1 of SectionA 

### 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 andLimitations spellsout the limiting or nullifying language on the coverage stated. The pertinent language of the exclusion statesno benefits shall be provided for "services and supplies not incidental toor necessary for treatment of illness." The provisions of the 1972 contract areidentical with the 1971 agreement. The basic provisions and exclusions limitation of both the 1971and 1972 agreements 

### limitreimbursement by the carrier, Montana Physicians' Service, tonecessary services performed

orprescribed by a licensed Doctor of Medicine. Dr. Turkel 

### is

a Doctor of Medicine and he, asa 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 forMarita. 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 districtcourt's "Opinions"



### are not complimentary astoDr. Turkells services and his fees shocked the court, but it does state: 

### " 

## * * * This illness, this birthdefect calls for attention from a medical doctor just 

### as much 

### as any other terminal illness. Itmay even be that the medical attentioncan do nothing more than to assure the parents that everything is being done that can be done, but even this 

### is important for theproper 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 callDr. Turkel's services "worthless and unnecessary" and of no real value in treating the conditions forwhich prescribed, rather the services performed under the 1971and 1972 contracts were described 

### as "unacceptable medical practice" or "experimental."Weconsider the word necessary. It is an adjective and therefore 

### is a 

### termof degree. Implicit inthe use of the word necessary inthe area of medical services, asprescribed by a medical doctor, 

### is the conclusion that such services

### are necessary and more particularly a necessary expense when soprescribed or performed. An exhaustive search of cases and law review articles failstogive us an exact definitionof theword necessary. In this context 

### we might say theword necessary 

### is ambiguous, but 

### we do not sohold as 

### it 

### isused inthese contracts inthe context of medical services performed orprescribed 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., 151Mont. 198, 441 P.2d 177; Williams v. Ins. Co. of North America, 150Mont. 292, 434 P.2d 395; St. Paul Fire & Marine Ins. Co. v. Thompson, 150Mont. 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, 162A.L.R. 263. The language of these insurance contracts

### was carefully chosen. This was done inthe absence of the Fassios and used to carefully 

### limitand protect the carrier, Montana Physicians' Service, against extended liability. If Montana Physicians' Service wishes to exclude or 

### limitthe risk contracted for, then let them do so inwords that leave no doubt. The 

### law is clear in thisjurisdiction that exclusion clauses areconstrued narrowly against the insurer. Atcheson v. Safeco Insurance Company, 165 Mont. 239, 527 P.2d 549; StateFarm Mutual Automobile Co. v. Partridge, 109 Cal.Rptr. 811, 514 P.2d 123. We aredealing with group health insurance contracts. The coverage agreements for the years 1971and 1972 provide 

### reimbursable coverage tothe Fassios for necessary medical services.As inthe instant case those services areprescribed 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 inthemain the same asthe language contained in the agreements of 1971and 1972; there is however an interesting change or addition. We find thischange or addition inSubsection (J)of the exclusion article: 

### " 

## * * * and surgery ormedical treatment which 

### is experimental innature orwhich does not constitute accepted medical practice." (Emphasis supplied.) The appellant, Montana Physicians1 Service, supplied this language inthe 1973 coverage agreement; the self-same language used inthe 

### letters of James J. McCabe, Secretary of Montana Physicians1 Service. This specific change using theword "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 1971and 1972 arenot applicable. Considering the 1973 agreement 

### it is stated in 55 A.L.R.

"The group insurance contract 

### ispeculiar inthat it 

### ismade by the insurer and the employer, instead of between the insurer and the insured, 

### as inother contracts of insurance, thus affecting four parties,--the insurer, the employer, the insured, and the beneficiary. 

## * * 

## *" The factsof the instant case clearly emphasize the peculiarityof such an insurance policy. The firstone inthis 

### 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, 1971toApril 15, 1972; the coverage was continued with an identicalpolicy 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 satisfiesthe 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 inthis pertinent portion of section 40-4102(2), R.C.M. 1947: 

### "(2) A provision that the insurer 

### willfurnish tothe policyholder fordelivery toeach employee ormember of the insured group, 

### a statement in summary form of the essential featuresof 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 tothe agreement 

### atits initial stage; but thisbasic and equitable "ruleof notice" applieswith equal force tothe factsof the 1973 agreement. The even tenor of the 1971and 1972 contractswas broken unilaterally as tothe Fassios and their daughter 

### Marita. It had a personal impact asthewords of exclusion used 

### were the very words used by Montana Physicianst Service in

### its notice of disallowance under the 1971and 1972 contracts. Group lifeinsurance 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 LifeAssur. 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 lifeinsurance 

### as tovesting, of course, 

### willnot apply here, but 

### itdoes indicate the concern of courts on group insurance. In a group insurance situation ashere surely there must be a notice toallow 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 LifeAssur. Soc., 235 Mo.App. 1261, 150 S.W. 2d 1113, is persuasive on thispoint. The facts in that case

### were that the group policy was renewed annually for the years 1927

## - 1931inclusive without change. In the year 1932 the contractwas 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, asno 

### letter had been sent tohim personally; even under those facts the courtheld that the insured 

### was entitled tocoverage under the oldpolicy; the court ineffect held that the old policy remained in force astothat particular beneficiary. It isnot placing too large a burden upon the insurer Montana Physicians' Service to say that they, by the abrupt change inthe 1973 contract without notice of any kind tothe Fassios, ineffect revived the 

### terms of the 1972 contract by such failure tocomply with the statelaw and with simple fairness and equity tothe beneficiaries. The 

### time span from April 15, 1973 (thebeginning dateof the 1973 agreement) toJuly 23, 1973 (the

### timethe 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, 1971and 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 beneficiariesmust have written personal notice with each change, but 

### we do hold that inkeeping with the thrust of section 

### 40- 4102, a summary form of the essential featuresof the change should be brought tothe 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 tothe beneficiaries. We affirm.

sitting inplace of Chief JUS

### tice ~ames T. ~arr$n: 

# I

Weconcur:

Justices /Mr. 

### JusticeJohn C. 

### Harrison concurring and dissenting. I 

### concur and dissent. Clearly the plaintiffs 

### are entitled tocoverage for the firstvisitmade toDr. 

### Turkel. The referencewas made by a 

### licensed practitioner of this state 

### and therewas no way that they could determine that the treatment performed would be found tobe "experimental" and "unacceptable medical practice" after the fact. However, thevisits thereafter followed notice by the appellant that such treatment would not be paid for, and the

reasons why the serviceswould be denied. Respondents, in spite of 

### this notice continued treatment attheir own risk. I 

### would not authorizeany recovery for the visits following the notice from appellant.