No. 12555 INTHE SUPREME COURT OF THE STATE OF MONTANA 1973

BETTY L. IJARDLOTJ, Plaintiff and Appellant,

KALISPELL GENERALHOSPITAL and BLUE CROSS OF MONTANA, Defendants and Respondents.

Appeal from: District Court of the Eleventh JudicialDistrict, 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 

## 15

## 1974 Filed

## :FEB 

## 151974Mr. Justice Gene B. Daly delivered the Opinion of the Court.
This isan actionwherein plaintiff Betty L. Wardlow stated
a claim against defendants Kalispell General Hospital and Blue Cross of Montana for failure topay 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 

### isnot a party inthis 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 formembership inthe 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 lastweek 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 testifiedby deposition that at the time she was inan 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 toher. She testified

### Mrs. Disbrow told her "Ilon't worry about a thing, everything iscompletely allright, your insurance isjust fine.If The "Hospital Personnel Policy" which was furnished to all
new employees provided that sick leave

### was available only after sixmonths of fulltime employment and accumulated atthe 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. Shewas 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 shewas released as cured. The Kalispell General Hospitalnotified 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 resumework. On July 2, 1965,Blue Cross mailed a formnotification letter to Mrs. Wardlow at her home address,advising her of nonpayment of premiums and stating that shemust 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 terminationnotice from Blue Cross? 2. If so,did Mrs. Wardlow receive terminationnotice? 

### 3. Was the treatment for the cancer condition commenced prior to termination of her coverage? 

### 4. If the treatmentwas commenced prior to termination of coverage,was the entire course of treatment for the same illness covered? 5, 

### Were the alleged representationsmade 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 summaryjudgment. In her third, fourth and sixth issues on appeal, plaintiff contends that her Blue Cross coverage was in force atthe 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 assertsno 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 isfavorable inmany 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. 1I (Emphasis ours). Blue Cross contends that if this principle were applied to group health coverage the insured would no longer have topay premiums once she became sick, and construes plaintiff's argument to mean she 

### isentitled to membership inBlue Cross and resulting benefits, but not required to pay premiums after she became sick. Here, we do not view the problem tobe, as Blue Cross contends.,but offersno supporting authority, whether ornot 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 

### itsmembers. The contract does not distinquish between health coverage and accident coverage. The same limitations and conditions, so far aspertinent tothis case, apply tothehospital 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 alsoresolve all ambiguities inan insurance contract inthe light most favorable tothe insured. The contract provision involved herewhich governs eligibility and benefits states: "This istocertify that, inconsideration of the payment of required membership dues, the Subscriberwhose name appears on themembership card, and such eligiblemembers of his orher family (if any) who have been accepted for membership, are entitled tothebenefits hereinafterdescribed subject to the terms, conditions, and limitations set forth inthis Certificate. I1 Following th-isprovision the benefits, terms, conditions and limitations are set forth inArticles I through IX. As stated heretofore, the contract 

### is silent as tocause of hospitalization and merely deals inservices. The contract isalso silent
as it pertains towhen the right toreceive benefits willvest. There areno specific conditions concerning the termination of benefits, once vested under the contract. The matter of dues and termination of membership iscovered inArticle VII: "VII. CHANGES INME14BERSHIP DUES OR PROVISIONS OF THIS CERTIFICATE AND TEF3IINATION

IIa. Provisions of this Certificateor Membership dues may be changed atany time by the Board of Trustees of the Plan by mailing writtennotices thirty (30) days or more prior tothe date of change to the Subscriber or the employer of the organization inwhich the Subscriber participates ina group. Payment of the firstpayment due after the effective date of the change shallbe deemed asconclusive proof of the ~ubscriber's agreement with the change

# . "b. This Certificate 

### isterminated immediatelyupon non-payment of dues. In such event,reinstatement of,thisCertificate shallbe at the sole discretion of, and under such conditions asmay be specifiedby the Plan. "c. This Certificate may be terminated by the Plan by giving the Subscriber atleast thirty (30) days prior written notice, however, tf a Member is-receivinghospital service on 

### - the date of termination, benefits shallbe provided under this Certificateuntil the discharge of the Member from the hospital or until alldays of care available under this Certificate areused---whichever shall first occur. "d. This Certificatemay be terminated by the Subscriber by giving the Plan atleast thirty (30) days prior written notice. Dues, if any, paid by the subscriber beyond the date - of termination willbe refunded by the Plan." (Emphasis ours). The only reference tobenefits is the reference contained
If 11 in subsection c 

## ,which continues benefits when cancellation is atthe hand of Blue Cross, however there isno exclusionary Language inthe section concerned with voluntary termination (subsection "d"), or termination fornonpayment of dues (subsection "bff) 

# . TO the contrary subsection "b" seems tobe subject toreinstatement atthe discretion of Blue Cross. Testing this contract by any rule, we have to conclude that the matters and distinctions urged by Blue Cross are eithernot covered by the contract or atbest are ambiguous. The problem here istreated from two points of view in
a majority opinion and a concurring opinion ina 1970Washington case, Myers v. Kitsap Physicians Service, 78 W.2d 286, 

### 474 P.2d 109. There the majority opinion holds the contract open tomore 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 inthe instant caseby Blue Cross as pertaining only to "accident" coverage and not applicable. The concurring opinion inMyers recognizes this position but because of the ambiguous language construes the contract in favor of the employee forwhose benefit the group contract 

### is drawn.

### For the purpose of our considerationof the contract involved here both views are reasonableunder the circumstances and we so hold. The factual issue---whetherthe expenseswere incurred in the continuing course of treatment of an illness contracted during the period the coveragewas in force and effect---isa 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 Justice14r. 

### JusticeWesley 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 leaveuntil 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. Inmy view, summary judgment in favor of Blue Cross was proper, and 

### Iwould affirm.

Justice I