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HONORABLE RONALD B. LEIGHTON

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF WASHINGTON

AT TACOMA

RAYMUND McDERMOTT and PHYLLIS

McDERMOTT, a married couple, 

 Plaintiffs,

v.

LIFE INVESTORS INSURANCE

COMPANY OF AMERICA, a Life Insurance

Entity,

Defendant.

Case No. C06-5344RBL

ORDER DENYING PLAINTIFFS’

MOTION FOR SUMMARY JUDGMENT

AND GRANTING DEFENDANT’S

MOTION FOR SUMMARY JUDGMENT

THIS MATTER is before the Court on opposing Motions for Summary Judgment. Plaintiffs Raymund

and Phyllis McDermott seek a ruling as a matter of law that their claim is covered by Defendant Life Investors

Insurance of America’s (Life Investors) long-term insurance care policy. [Dkt. #29]. Defendant, Life

Investors, moves for summary judgment seeking dismissal of plaintiffs’ coverage claim. [Dkt. #34]. For

reasons explained below, the Court DENIES the plaintiffs’ motion [Dkt. #29] and GRANTS the defendant’s

motion [Dkt. #34].

FACTUAL BACKGROUND

On October 31, 2000, Mrs. McDermott was diagnosed with Mild Cognitive Impairment. 

Individuals with this impairment develop Alzheimer’s Disease at a rate higher than that of the population at

large. Mr. McDermott assumed the role of caregiver for his wife. As Mrs. McDermott’s condition

deteriorated, Mr. McDermott took her to Canterbury Gardens first for day care then for respite care, and

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Defendant contends that the reference to “Alzheimers Disease Facility” was inserted as an accommodation to those

facilities meeting the definition of “nursing home” but which operate in states where facilities are licensed as Alzhemier Disease

Facilities and not as “nursing homes.” 

 ORDER

Page - 2

eventually for full-time residential care. Canterbury Gardens is a self-proclaimed “Alzheimer’s Special

Care Residence.” Exh. B to Plaintiff Decl. (Dkt. #32). Since June 14, 2005, Mrs. McDermott has been a

resident of Canterbury Gardens.

In 1997, the McDermotts purchased a long-term care insurance policy for Mrs. McDermott from

Bankers United Life Assurance Company, predecessor company to Life Investors. The policy applied for

was limited to Nursing Home Benefits. The McDermotts expressly rejected Home Health and Community

Rider Benefits which would have provided more expansive coverage, to include boarding homes, assisted

living facilities, and other community care facilities. Redacted Exh. A.1 to Weurdig Aff. at 2 (Dkt. #36). 

The parties agree that Canterbury Gardens is licensed by the State of Washington as a boarding home and

is not a “nursing home” as that term is defined in the 1997 policy purchased by plaintiffs.

In 1999, Life Investors converted the McDermott policy to a tax qualified long-term care insurance

policy. The conversion was not accompanied by a change in premium and, according to defendant, was

not intended to expand benefits. The rider did, however, change the definition of “nursing home” to

include a reference to “Alzheimer’s Disease Facility.”1 That additional reference gives rise to plaintiffs’

contention that Canterbury Gardens qualifies as a “nursing home” and that Mrs. McDermott’s care is

therefore covered under the 1999 policy.

The policy in question provides benefits/coverage for Basic Nursing Home Care, referred to in the

policy as “Nursing Home Basic Benefits.” The maximum benefit is $100 per day with periodic escalators

built in at 5% annually. The insurer promises to “pay the actual charges incurred for each day you are

confined in a Nursing Home, up to the maximum Daily Benefit shown in the Schedule.” Exh. 3 to

Weurdig Aff. (Dkt. #34). The 1999 policy defines nursing home as: 

A facility, or part of a facility which:

(1) is licensed by the state as a nursing home or an Alzheimer’s Disease

facility; and

(2) is engaged in providing, in addition to room and board accommodations,

nursing care and related services on a continuing inpatient basis; and

(3) provides, on a formal prearranged basis, a Nurse who is on duty or on

call at all times; and

(4) has a planned program of policies and procedures developed with the

advice of, and periodically reviewed by, at least one Physician; and

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 ORDER

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(5) maintains a clinical record of each patient. 

Exh. 3 to Weurdig Aff. at 7 (Dkt. #34). 

In early 2005, Mr. McDermott inquired in writing as to whether Canterbury Gardens met the

“Nursing Home” definition in the policy. In response to a prior verbal request from defendant’s claims

department, Mr. McDermott included a copy of Canterbury Gardens’ license to operate issued by the State

of Washington. Following a review of the policy, the facility license and relevant licensing regulations, Life

Investors informed Mr. McDermott that Canterbury Gardens did not qualify as a nursing home under the

1999 policy. Life Investors did refer Mr. McDermott to facilities nearby that would qualify as “nursing

homes” under the policy. 

According to Life Investors, Canterbury Gardens does not qualify as a “nursing home” under the

policy for at least four reasons: (1) it is not licensed by the State of Washington as a nursing home; (2) it is

not licensed by the State of Washington as an Alzheimer’s Disease Facility; (3) it is not authorized by state

law to offer nursing care and related services “on a continuing impatient basis;” and (4) it is licensed as a

“boarding home” which the policy definition of “nursing home” specifically excludes.

Notwithstanding its determination that Canterbury Gardens did not qualify as a “nursing home”

under the policy, in order “to resolve this disputed matter,” Life Investors agreed to pay for $2,100 for 21

days of respite care at $100 per day. The benefit was paid to plaintiffs, who did not waive any claim in

order to receive the payment. Life Investors informed plaintiffs that no further benefits would be paid

because Canterbury Gardens did not satisfy the requirements of the policy’s Nursing Home definition. 

Exh. 17 to Weurdig Aff. (Dkt. #34). This lawsuit ensued.

Plaintiffs claim that the 1999 policy language, including reference to “Alzheimer Disease Facility”

renders the definition of “nursing home” ambiguous. They claim that their reasonable interpretation of the

policy language should be adopted by the Court and coverage thereby extended to Mrs. McDermott’s care

at Canterbury Gardens.

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DISCUSSION

I. Summary Judgment

A. Summary Judgment Standard

Summary Judgment is appropriate “if the pleadings, depositions, answers to interrogatories and

admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material

fact and the moving party is entitled to a judgment as a matter of law.” Fed. R. Civ. P. 56(c). The moving

party is entitled to summary judgment if, after satisfying its initial burden, the non-moving party fails to

present specific facts showing that there is a genuine issue for trial. Celotex Corp. v. Catrett, 477 U.S.

317, 324 (1986). “The mere existence of a scintilla of evidence in support of the non-moving party's

position is not sufficient.” Triton Energy Corp. v. Square D Co., 68 F.3d 1216, 1221 (9th Cir. 1995). 

Factual disputes whose resolution would not affect the outcome of the suit are irrelevant to the

consideration of a motion for summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248

(1986). In other words, summary judgment should be granted where the nonmoving party fails to offer

evidence from which a reasonable finder of fact could return a decision in the nonmoving party's favor. 

Triton Energy, 68 F.3d at 1220. 

B. Interpretation of Insurance Contracts

Insurance policies are construed as contracts in Washington State. RCW 48.01.040 (defining

insurance as “a contract whereby one undertakes to indemnify another or pay a specified amount upon

determinable contingencies”). The interpretation of insurance contracts is a question of law, Weyerhaeuser

Co. v. Aetna Cas. and Sur. Co., 123 Wash. 2d 891, 897 (1994), and the standard for interpretation is well

settled: 

In Washington, insurance policies are construed as contracts. An insurance

policy is construed as a whole, with the policy being given a “fair, reasonable,

and sensible construction as would be given to the contract by the average

person purchasing insurance.” If the language is clear and unambiguous, the

court must enforce it as written and may not modify it or create ambiguity

where none exists. If the clause is ambiguous, however, extrinsic evidence of

the intent of the parties may be relied upon to resolve the ambiguity. Any

ambiguities remaining after examining applicable extrinsic evidence are

resolved against the drafter-insurer and in favor of the insured. A clause is

ambiguous when, on its face, it is fairly susceptible to two different

interpretations, both of which are reasonable. 

Weyerhaeuser Co. v. Commercial Union Ins., 142 Wash. 2d 654, 665-66 (2000) (citations 

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omitted). In construing the insurance contract as a whole, the specific terms control generic terms. See

McGary v. Westlake Investors, 99 Wash. 2d 280, 286 (1983); Wash. Local Lodge 104 of the Int'l Bhd. of

Boilermakers v. Int’l Bhd. of Boilermakers, 28 Wash. 2d 536, 541 (1947); Restatement Second of

Contracts, § 203(c). When there is ambiguity about the meaning of a policy term, parol evidence is

admissible only to show the situation of the parties, not to modify or contradict the written contract’s

terms, except in cases involving fraud, accident, or mistake. Berg v. Hudesman, 115 Wash. 2d 657, 669

(1990). 

1. The Definition of “Nursing Home” Under the Policy.

Plaintiffs contend they bought a long-term care insurance policy for Mrs. McDermott that by 1999

purported to cover care received at an Alzheimer’s Disease Facility. The parties acknowledge that Mrs.

McDermott has Alzheimer’s and qualifies for benefits at a facility which meets certain policy requirements. 

The facility where Mrs. McDermott receives her care treats patients with Alzheimer’s and other forms of

dementia exclusively. Decl. of Cyndie Bryant, (Dkt. #30). Moreover, the parties agree that Washington

only licenses nursing homes, boarding homes, and adult family care homes, and that all three types of

facilities may provide dementia care. See RCW 18.20.320(1)(d) (boarding homes); Exh. D to Wolf Aff. at

14 (Dkt. #34); Exh. C to Ammons Decl. at 14 (Dkt. #39). Plaintiffs conclude that Canterbury Gardens

qualifies as an Alzheimer’s Disease Facility because it meets most, if not all, of the essential criteria

established by the policy definition and to the extent it does not, the requirement is unreasonable and

therefore unlawful and unenforceable. 

Defendant acknowledges that Canterbury Gardens is licensed by the State and that it is authorized

to care for Alzheimer patients/residents. It acknowledges that, unlike some licensed boarding homes,

Canterbury Gardens has specific authority to lock doors and confine patients/residents who might be

inclined to wander. Finally, defendant does not dispute that Canterbury Gardens has a nurse on duty 24

hours a day, seven days a week and that it maintains a clinical record of each person staying there. 

Nevertheless, defendant rejects any assertion that Canterbury Gardens meets the definition of “nursing

home” under the 1999 policy.

Under Washington law, a facility licensed as a “boarding home” cannot provide nursing care to its

residents on a continuous inpatient basis. Instead, intermittent care can be provided at a boarding home

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under certain limited circumstances. RCW 18.20.020(7); 18.20.160. There is no dispute about this

significant point and it proves fatal to plaintiffs’ claim.

The definition of “nursing home” has a licensing component deferring to the regulatory scheme of

each state. It also has a minimum services requirement that identifies all services that must be provided by

the health care provider to meet the policy definition requirements. Finally, the policy defines what is not a

“nursing home.” The Court can certainly understand and sympathize with plaintiffs’ confusion over the

apparent mismatch between what the policy allows and what the state provides by way of license

designation. While other states may have a specific license for Alzheimer’s Disease Facility, Washington

does not. The Court also recognizes that Canterbury Gardens provides much more by way of services than

contemplated by state law descriptions of boarding homes and other facilities not qualified as licensed

nursing homes. See RCW 18.51.010. It provides an on-duty nurse and planned program of policies and

procedures which, if not developed with the advice of a Physician, is periodically reviewed by a Physician. 

It also maintains a clinical record of each patient/resident. The Court cannot however, escape the clear

limitation imposed by law upon Canterbury Gardens’ ability to provide continuous nursing care. The

policy definition for “nursing home” benefits requires the facility, no matter its license designation, to

provide continuous nursing care. By law, Canterbury Gardens cannot meet that requirement. Canterbury

Gardens cannot therefore fulfill the requirements of either a “nursing home” or Alzheimer’s Disease

Facility as provided by the policy.

CONCLUSION

In 1997 the McDermotts bought insurance for long-term health care benefits provided at a “nursing

home.” As of the date of purchase, the McDermotts clearly understood that a facility like Canterbury

Gardens was not a “nursing home” under the policy. While the 1999 modification may have created some

ambiguity concerning whether Canterbury Gardens was licensed by the State of Washington as an

Alzheimer’s Disease Facility and although the services provided by Canterbury Gardens correspond to

some of the minimal requirements imposed by the subject policy, one essential qualification cannot be met. 

Canterbury Gardens is prohibited by law from providing continuous inpatient nursing care. On that fact

there is no dispute. No reasonable interpretation of the policy can write the requirement out of the policy

nor can any reasonable interpretation of the facts satisfy the plain meaning of the policy language. The

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continuous inpatient nursing requirement is not ambiguous, is not a gatekeeper provision, as that term is

used by plaintiffs, and more importantly, is not unreasonable. 

The subject policy does not provide coverage for long-term or respite care provided at Canterbury

Gardens and defendant’s motion for summary judgment [Dkt. #34] is GRANTED. Plaintiffs’ motion for

summary judgment [Dkt. #29] is DENIED. 

IT IS SO ORDERED.

Dated this 1st day of November, 2007.

ARONALD B. LEIGHTON

UNITED STATES DISTRICT JUDGE

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