No. 12555 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1973 

BETTY L. IJARDLOTJ, 

Plaintiff and Appellant, 

KALISPELL GENERAL HOSPITAL and 

BLUE CROSS OF MONTANA, 

Defendants and Respondents. 

Appeal from: District Court of the Eleventh Judicial District, 

Honorable Robert Sykes, Judge presiding. 

Counsel of Record : 

For Appellant : 

Measure, Cumming and Salansky, Columbia Falls, Montana 

James A. Cumming argued, Columbia Falls, Montana 

For Respondents: 

Korn, Warden, Walterskirchen and Christiansen, Kalispell, 

. Montana 

Church, Harris, Johnson and F?il.liams , Great Falls, 

Montana 

Donald A. LaBar argued, Great Falls, Montana 

Submitted: November 26, 1973 

Decided : FE8 1 5 1974 

Filed :FEB 15 1974 
Mr. Justice Gene B. Daly delivered the Opinion of the Court. 

This is an action wherein plaintiff Betty L. Wardlow stated 

a claim against defendants Kalispell General Hospital and Blue 

Cross of Montana for failure to pay claimed medical benefits due 

her as a result of an illness. Plaintiff appeals from a summary 

judgment entered by the district court of Flathead County dismissing defendant Blue Cross as a defendant. Defendant Kalispell 

General Hospital is not a party in this appeal. 

Plaintiff was employed by Kalispell General Hospital as 

a licensed practical nurse on December 6, 1964. On December 31, 

1964, she applied and was accepted for membership in the hospital's 

health insurance group, Blue Cross of Montana. By agreement, 

Mrs. Wardlow paid her premiums for the first three months and 

subsequently premiums were paid to Blue Cross by the hospital 

without deduction from Mrs. ~ardlow's wages. 

In the last week of May 1965, Mrs. Wardlow's doctor informed 

her she had cervical cancer requiring immediate treatment. On 

or about May 31, 1965, she informed her employer of the emergency 

and inquired about leave and her health insurance coverage. She 

testified by deposition that at the time she was in an emotionally 

distressed and frightened state of mind. She stated she inquired 

of Eleanor Disbrow, the hospital employee administering the Blue 

Cross group health plan, concerning her premium payment due during 

her leave of absence for sickness, which she understood had been 

granted to her. She testified Mrs. Disbrow told her "Ilon't worry 

about a thing, everything is completely all right, your insurance 

is just fine. If 

The "Hospital Personnel Policy" which was furnished to all 

new employees provided that sick leave was available only after 

six months of full time employment and accumulated at the rate of 

one day per month up to a total of 24 days and that employees 

on leave of absence must pay their own Blue Cross premiums to 

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 approximately $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 in any one of them would constitute 

grounds for reversal of the summary judgment. The record does not 

disclose the legal rationale applied by the district court in 

granting summary judgment. 

In her third, fourth and sixth issues on appeal, plaintiff 

contends that her Blue Cross coverage was in force at the time her 

physician informed her of the cancerconditim and at the time she 

commenced treatment for it. She contends that occurrence and 

commencement of the peril insured against while the contract was 

in force obligates the insurer to pay directly related and 

continuing expenses. 

Plaintiff asserts no cases have been found dealing in the 

hospitalization insurance area, therefore she cites cases involving 

accident and disability policies which extend the insurer's liability to 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 is favorable in many respects, but 

differs substantially in the contract language. There, considerable 

weight was given to the "ambiguity, if any" contained in the 

termination clause of the policy --- "* * * such termination shall 

be without prejudice to any claim originating prior thereto. 1 I 

(Emphasis ours). 

Blue Cross contends that if this principle were applied to 

group health coverage the insured would no longer have to pay 

premiums once she became sick, and construes plaintiff's argument 

to mean she is entitled to membership in Blue Cross and resulting 

benefits, but not required to pay premiums after she became sick. 

Here, we do not view the problem to be, as Blue Cross 

contends., but offers no supporting authority, whether or not 

plaintiff was entitled to continuing membership without payment of 

premiums. The instant litigation presents the problem of payment 

of benefits under the contract after termination. It does not concern continued membership. 
Involved is a health service contract which provides 

hospital and medical benefits for its members. The contract 

does not distinquish between health coverage and accident coverage. 

The same limitations and conditions, so far as pertinent to this 

case, apply to the hospital and medical coverage. 

To resolve the issues here, we look to the terms of the 

contract and employ the rules generally applicable to the interpretation of insurance contracts. We must also resolve all 

ambiguities in an insurance contract in the light most favorable 

to the insured. 

The contract provision involved here which governs 

eligibility and benefits states: 

"This is to certify that, in consideration of 

the payment of required membership dues, the 

Subscriber whose name appears on the membership 

card, and such eligible members of his or her 

family (if any) who have been accepted for 

membership, are entitled to the benefits hereinafter described subject to the terms, conditions, 

and limitations set forth in this Certificate. I 1 

Following th-is provision the benefits, terms, conditions and 

limitations are set forth in Articles I through IX. As stated 

heretofore, the contract is silent as to cause of hospitalization and merely deals in services. The contract is also silent 

as it pertains to when the right to receive benefits will vest. 

There are no specific conditions concerning the termination of 

benefits, once vested under the contract. The matter of dues 

and termination of membership is covered in Article VII: 

"VII. CHANGES IN ME14BERSHIP DUES OR PROVISIONS 

OF THIS CERTIFICATE AND TEF3IINATION 

I I a. Provisions of this Certificate or 

Membership dues may be changed at any time by 

the Board of Trustees of the Plan by mailing 

written notices thirty (30) days or more prior 

to the date of change to the Subscriber or the 

employer of the organization in which the Subscriber participates in a group. Payment of 

the first payment due after the effective date 

of the change shall be deemed as conclusive 

proof of the ~ubscriber's agreement with the 

change . 

"b. This Certificate is terminated immediately upon non-payment of dues. In such event, 
reinstatement of,this Certificate shall be at 

the sole discretion of, and under such conditions as may be specified by the Plan. 

"c. This Certificate may be terminated 

by the Plan by giving the Subscriber at least 

thirty (30) days prior written notice, however, 

tf a Member is-receiving hospital service on 

- 

the date of termination, benefits shall be 

provided under this Certificate until the discharge of the Member from the hospital or 

until all days of care available under this 

Certificate are used---whichever shall first 

occur. 

"d. This Certificate may be terminated 

by the Subscriber by giving the Plan at least 

thirty (30) days prior written notice. Dues, if 

any, paid by the subscriber beyond the date - 

of termination will be refunded by the Plan." 

(Emphasis ours). 

The only reference to benefits is the reference contained 

If 11 in subsection c , which continues benefits when cancellation is 

at the hand of Blue Cross, however there is no exclusionary 

Language in the section concerned with voluntary termination 

(subsection "d"), or termination for nonpayment of dues (subsection "bff) . TO the contrary subsection "b" seems to be subject 

to reinstatement at the discretion of Blue Cross. Testing this 

contract by any rule, we have to conclude that the matters and 

distinctions urged by Blue Cross are either not covered by the 

contract or at best are ambiguous. 

The problem here is treated from two points of view in 

a majority opinion and a concurring opinion in a 1970 Washington 

case, Myers v. Kitsap Physicians Service, 78 W.2d 286, 474 P.2d 109. 

There the majority opinion holds the contract open to more than 

one reasonable interpretation and because of the ambiguity it 

was resolved in favor of the insured, following a contingent event 

vested right theory. The majority opinion cites 75 ALR2d 876(1961) 

as a reasonable application to a health service contract. This 

is a citation objected to in the instant case by Blue Cross as 

pertaining only to "accident" coverage and not applicable. 

The concurring opinion in Myers recognizes this position 

but because of the ambiguous language construes the contract in 

favor of the employee for whose benefit the group contract is 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: 

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Chief Justice 
14r. 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