Source: http://insurancesidebar.com/Home/tabid/427/entryid/64/Insurance-101-Florida-High-Court-s-Ruling-on-Policy-Ambiguity-in-Washington-National-v-Ruderman.aspx
Timestamp: 2019-04-20 22:54:39+00:00

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The practical challenge for litigants and their counsel in any jurisdiction is determining how the court will approach conflicting interpretations of the insurance contract. Does the insurer automatically lose the ambiguity battle? Is the court confined to the policy’s terms in ascertaining the parties’ intent, or will the court admit extrinsic evidence of intent? Does it matter if the disputed provision is contained in an exclusionary clause? Or whether the ambiguity is latent or patent?
While the policyholders’ bar welcomed the Florida Supreme Court’s recent opinion in Washington National Insurance v. Ruderman with open arms, just as many practitioners (and one dissenting justice) scratched their heads, trying to make sense of the state’s earlier jurisprudence. Florida is not alone. Judicial opinions interpreting ambiguous policies are difficult to reconcile—from state to state and even within the same jurisdiction. Even the phrase contra proferentem presents conflict—some courts and authors opting to spell the phrase contra proferentum.
Coverage lawyers facing policy interpretation issues must then connect the dots and make sense of the outcomes, inconsistent as they are.
The Florida Supreme Court recently issued a definitive opinion addressing the interpretation of an ambiguous insurance policy in response to a certified question from the Eleventh Circuit. The case, Washington National Insurance v. Ruderman, involved the construction of limited-benefit home health care coverage insurance policies and, specifically, the effect of a policy provision that automatically increased benefits. The insurer argued that the automatic increase applied only to the maximum daily benefit; the insured argued that the increase applied to the daily benefit, the lifetime maximum benefit, and the per occurrence maximum benefit.
In this case, does the policy’s “Automatic Benefit Increase Percentage” apply to the dollar values of the “Lifetime Maximum Benefit Amount” and the “Per Occurrence Maximum Benefit”?
The court of appeals further identified three sub-questions(a) is the policy ambiguous; (b) if the policy is ambiguous, should courts first attempt to resolve the ambiguity by examining available extrinsic evidence; and (c) applying the Florida law principles of policy construction, does the policy’s “Automatic Benefit Increase Percentage” apply to the “Lifetime Maximum Benefit Amount” and to the “Per Occurrence Maximum Benefit,” or does it apply only to the “Home Health Care Daily Benefit”?
Finding the policy to be ambiguous, the Florida Supreme Court stated conclusively that the policy must therefore be construed against the insurer and in favor of coverage without resort to extrinsic evidence. In this area riddled with inconsistencies, the methodology applied by the Ruderman court may be more instructive than the outcome.
[W]here the provisions of an insurance policy are at issue, any ambiguity which remains after reading each policy as a whole and endeavoring to give every provision its full meaning and operative effect must be liberally construed in favor of coverage and strictly against the insurer.
As Ruderman confirms, the rule of contra proferentem applies in Florida insurance cases not as a rule of “last resort” when extrinsic evidence fails to illuminate the parties’ intent, but as an automatic consequence of ambiguity in the policy.
Practitioners and commentators have observed that the order in which the rules of interpretation are applied may affect the outcome, urging the application of an algorithm in which steps are taken in a particular order. The Ruderman court, for example, considered whether to admit extrinsic evidence in connection with its ambiguity determination, rather than after finding the policy to be ambiguous. This may have been more a function of the court’s efforts to reconcile seemingly inconsistent Florida law than deliberate application of an algorithm. Specifically, the insurer offered extrinsic evidence to demonstrate the insureds’ understanding of which benefits would increase annually.
The methodology applied by the Ruderman court stems from the widely held notion that the insurer is in the best position to ensure that the parties’ intent is stated with clarity in the written instrument. If that is the case, the insurer should not benefit from the confusion that ensues when the parties’ intentions are not clearly expressed in the policy.
While litigants facing policy interpretation disputes governed by Florida law have some clearly enunciated guidelines for evaluating the potential outcomes, both sides of the insurance coverage bar can be expected to continue pushing for the application of rules—and exceptions to those rules—that best serve the interests of their clients. Courts, meanwhile, will strive to reach the right outcomes based on the parties’ intentions. While the results seem far from consistent in some jurisdictions, the underlying principles and motivating factors are instructive, as demonstrated by the court’s analysis in Ruderman.
 No. SC12-323, 2013 Fla. LEXIS 1388 (Fla. July 3, 2013).
 Contra proferentem appears to be, by far, the more prevalent spelling. But see Marquette Gen. Hosp. v. Goodman Forest Indus., 315 F.3d 629, 633 n.1 (6th Cir. 2003).
 Washington Nat’l Ins. Corp. v. Ruderman, No. SC12-323, 2013 Fla. LEXIS 1388.
 Washington Nat’l Ins. Corp. v. Ruderman, 2013 Fla. LEXIS 1388, at *7.
 Washington Nat’l Ins. Corp. v. Ruderman, 2013 Fla. LEXIS 1388, at *8, quoting Ruderman ex rel. Schwartz v. Wash. Nat’l Ins. Corp., 671 F.3d 1208, 1211 (11th Cir. 2012).
 Ruderman ex rel. Schwartz v. Wash. Nat’l Ins. Corp., 671 F.3d 1208, 1212 (11th Cir. 2012).
 Washington Nat’l Ins. Corp. v. Ruderman, 2013 Fla. LEXIS 1388, at *22.
 Washington Nat’l Ins. Corp. v. Ruderman, 2013 Fla. LEXIS 1388, at *10–11 (internal citations omitted).
 Washington Nat’l Ins. Corp. v. Ruderman, No. SC12-323, 2013 Fla. LEXIS 1388, at *15–16 (Fla. July 3, 2013).
 Robert Friedman, “Florida Supreme Court to 11th Circuit on Policy Ambiguities: “We Meant What We Said and Said What We Meant,” Ins. L. Fla. Blog, July 9, 2013.
 R. Brent Cooper et al., Algorithm for Construction of Insurance Policies under Texas Law (presented at the Tenth Annual Insurance Law Inst., Dec. 8–9, 2005).
 Ruderman, 2013 Fla. LEXIS 1388, at *9–10.

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