Case Name: NESBITT v. AMERICAN COMMUNITY MUTUAL INSURANCE COMPANY
Court: Michigan Court of Appeals
Jurisdiction: Michigan
Decision Date: 1999-06-15
Citations: 236 Mich. App. 215
Docket Number: Docket No. 205764
Parties: NESBITT v AMERICAN COMMUNITY MUTUAL INSURANCE COMPANY
Judges: Before: Holbrook, Jr., P.J., and O’Connell and Whitbeck, JJ.
Reporter: Michigan appeals reports; cases decided in the Michigan Court of Appeals.
Volume: 236
Pages: 215–239

Head Matter:
NESBITT v AMERICAN COMMUNITY MUTUAL INSURANCE COMPANY
Docket No. 205764.
Submitted December 8, 1998, at Detroit.
Decided June 15, 1999, at 9:05 A.M.
Clarence Nesbitt brought an action in the Wayne Circuit Court against American Community Mutual Insurance Company, alleging that the defendant had breached a medical insurance policy that it had issued to the plaintiff’s now-deceased wife, Ethel Nesbitt, by refusing to cover the expenses attendant to the treatment of Mrs. Nesbitt’s lung cancer on the basis that the lung cancer was a preexisting condition and that the defendant had violated the consumer protection laws of Michigan and Ohio by intentionally misrepresenting to him the meaning of the “preexisting condition” provision in the policy in order to discourage him from pursuing his cause of action. Mrs. Nesbitt had visited her physician, complaining of cough, congestion, and shortness of breath. The physician had referred her for a lung x-ray, which was performed four days later and revealed a large right pleural effusion. Five days after the x-ray, Mrs. Nesbitt filed an application with the defendant for a six-month medical insurance policy. The application indicated that there would be no benefits for a “sickness first manifested before the Policy Date.” The policy issued by the defendant, which had as its effective date the date of the application, included a provision that excluded from coverage any preexisting condition, which was defined as “an illness, disease, accidental bodily damage or loss that first appears (makes itself known) before the Effective Date.” Continuing medical attention of Mrs. Nesbitt ultimately led to a diagnosis of the lung cancer that led to her death three months after the date of the original visit to the physician. The defendant denied coverage of the expenses relating to the deceased’s treatment for cancer on the basis of the exclusion for preexisting conditions, and the plaintiff commenced this action. The defendant moved for summary disposition of the contract claim on the basis that there was no genuine issue of fact that the deceased’s illness was a preexisting condition that was not covered by the insurance policy and of the consumer protection claim on the basis that the Michigan Consumer Protection Act (mcpa), MCL 445.901 et seq.; MSA 19.418(1) et seq., did not apply to the insurance industry. The court, Timothy M. Kenny, J., granted summary disposition for the defendant with respect to the mcpa claim, but denied summary disposition for the defendant with respect to the contract claim on the basis that there was a material question of fact concerning whether the deceased’s illness was a preexisting condition. The plaintiff moved for summary disposition with respect to the contract claim on the basis that the deceased’s cancer did not appear or make itself known before the policy went into effect as required by the preexisting condition provision of the policy. The court granted summary disposition for the plaintiff with respect to the contract claim. The defendant appealed, and the plaintiff cross appealed.
The court of Appeals held,-.
1. The parties agree that the interpretation of this insurance contract should be governed by the law of Ohio, the state in which the contract was executed and the Nesbitts resided. Because pertinent Ohio case law respecting the interpretation of insurance contracts comports well with the case law of this state, Ohio case law will be used to guide the resolution of the contract issue.
2. On the basis of Ohio case law, along with the case law of other states, it must be concluded that an illness is a preexisting condition within the meaning of a medical insurance policy that defines a preexisting condition as one which “appears” or “makes itself known” before the effective date of the policy if the symptoms and the medical investigation attendant to the symptoms are sufficient to provide a physician possessing the skill and knowledge of an ordinary specialist in the area with the means to ascertain the probable nature of the illness.
3. Because the trial court record contains evidence expressing opposing views whether the symptoms and x-ray results that were available before the effective date of the policy were sufficient to allow a physician the means to ascertain the probable nature of the deceased’s illness, there existed a material question of fact whether the deceased’s lung cancer was a preexisting condition within the meaning of the policy. Accordingly, the trial court erred in granting summary disposition for the plaintiff with respect to the contract claim, but properly denied summary disposition for the defendant with respect to that claim.
4. The case on which the trial court relied in concluding that the mcpa did not apply to the insurance industry, Kekel v Allstate Ins Co, 144 Mich App 379 (1985), has been overruled by Smith v Globe Life Ins Co, 223 Mich App 264 (1997), which held that an insurer’s misconduct is actionable in a private suit brought under § 11, of the mcpa, MCL 445.911; MSA 19.418(11). There is nothing in the language of the mcpa that excludes a resident of another state who buys in another state a policy of insurance issued by a Michigan insurer from asserting the rights protected by or from seeking the remedies provided by the mcpa. Accordingly, the trial court erred in granting summary disposition for the defendant with respect to the mcpa claim.
Affirmed in part, reversed in part, and remanded.
Holbrook, Jr., P.J., concurring in part and dissenting in part, stated that although the trial court erred in granting summary disposition for the plaintiff with respect to the contract claim because there remains a question of fact concerning whether the deceased’s lung cancer was a preexisting condition within the meaning of the policy exclusion, Ohio case law does not include a “reasonable physician” standard. Further, because the contract issue is properly decided under Ohio law, this case is not the proper case in which to determine the proper standard to be adopted in Michigan.
1. Insurance — Medical Insurance — Preexisting Conditions.
An illness is a preexisting condition within the meaning of a medical insurance policy that defines a preexisting condition as one which “appears” or “makes itself known” before the effective date of the policy if the symptoms and the medical investigation attendant to the symptoms are sufficient to provide a physician possessing the skill and knowledge of an ordinary specialist in the area with the means to ascertain the probable nature of the illness.
2. Consumer Protection — Consumer Protection Act — Actions — Insurance Companies.
Section 11 of the Michigan Consumer Protection Act allows private actions to be brought against insurance companies under the provisions of the act (MCL 445.911; MSA 19.418[1]).
3. Consumer Protection — Consumer Protection Act — Actions — Insurance Companies — Out-of-State Insureds.
A resident of another state who buys in that state a policy of insurance issued by a Michigan insurer is not excluded from the class of persons who may assert the rights protected by or seek the remedies provided by the Michigan Consumer Protection Act (MCL 445.901 et seq.; MSA 19.418[1] et seq.).
Halbower, Mabbitt & Halbower (by Matthew C. Halbower), for the plaintiff.
Cummings, McClorey, Davis & Acho, P.C. (by Colleen A. O’Brien), for the defendant.
Before: Holbrook, Jr., P.J., and O’Connell and Whitbeck, JJ.

Opinion:
O'Connell, J.
Defendant appeals as of right, and plaintiff cross appeals, from orders on motions for summary disposition concerning plaintiff's statutory and contract claims. We affirm in part, reverse in part, and remand for further proceedings.
Plaintiff's wife, Ethel Nesbitt, a smoker, visited a physician on October 16, 1993, complaining of cough, congestion, and shortness of breath. The doctor referred Mrs. Nesbitt for a lung x-ray, which, four days later, indicated a large pleural effusion on the lung. Five days after the x-ray, Mrs. Nesbitt applied for a six-month, short-term insurance policy with defendant. The application stated that the insurance, if issued, would include no benefits for "sickness first manifested before the Policy Date." Defendant issued a policy with an effective date of October 25. The policy included a statement excluding from coverage any preexisting condition, defined as "an illness, disease, accidental bodily damage or loss that first appears (makes itself known) before the Effective Date." Continuing medical attention for Mrs. Nesbitt ultimately led to a diagnosis of lung cancer. Mrs. Nesbitt died in January 1994.
Defendant declined to cover the expenses attendant to Mrs. Nesbitt's treatment for her lung cancer, maintaining that it was a preexisting condition. Plaintiff commenced the present litigation in response, alleging both breach of contract and a violation of the consumer protection laws of Ohio and Michigan. Defendant filed a motion for summary disposition, arguing that there was no genuine issue of fact that the deceased's illness was a preexisting condition that was therefore not covered by her insurance policy with defendant. Defendant also argued that the Michigan Consumer Protection Act (MCPA), MCL 445.901 et seq.; MSA 19.418(1) et seq., did not apply to the insurance industry. The trial court granted defendant's motion with respect to plaintiff's claim under the mcpa. However, the court found that whether the deceased's illness had been a preexisting condition was a question of material fact and denied defendant's motion in that regard.
Plaintiff then filed a motion for summary disposition, asserting that the deceased's illness did not appear or make itself known before the insurance policy with defendant was in effect. Plaintiff argued that the language of the policy was ambiguous and thus should be construed against the insurer. The trial court, upon consideration of the documentary and other evidence, granted plaintiff's motion.
The parties stipulated the entry of a final order without prejudice in order to expedite their respective appeals.
i
Defendant argues that the trial court erred in granting plaintiff summary disposition with respect to the breach of contract claim. This Court reviews a trial court's decision on a motion for summary disposition de novo as a matter of law. Miller v Farm Bureau Mut Ins Co, 218 Mich App 221, 233; 553 NW2d 371 (1996). When reviewing a decision on a motion under MCR 2.116(C)(10), a reviewing court must examine all relevant documentary evidence in the light most favorable to the nonmoving party to determine whether a genuine issue of material fact exists on which reasonable minds could differ. Farm Bureau Mut Ins Co of Michigan v Stark, 437 Mich 175, 184-185; 468 NW2d 498 (1991); Shirilla v Detroit, 208 Mich App 434, 437; 528 NW2d 763 (1995). Where the moving party has produced evidence in support of the motion, the opposing party bears the burden of producing evidence to establish that a genuine question of material fact exists. Skinner v Square D Co, 445 Mich 153, 160; 516 NW2d 475 (1994), citing MCR 2.116(G)(4). "Summary judgment should only be granted when the plaintiffs claim is so clearly unenforceable as a matter of law that no factual development can possibly justify a right to recovery." Young v Michigan Mut Ins Co, 139 Mich App 600, 603; 362 NW2d 844 (1984).
The parties agree that Ohio law should govern the inteipretation of this insurance contract, which was executed in that state, where plaintiff and Mrs. Nes-bitt resided at the time. Because the parties' reasons for applying Ohio contract law are sound, see Chrysler Corp v Skyline Industrial Services, Inc, 448 Mich 113, 122; 528 NW2d 698 (1995), and because the pertinent Ohio case law well comports with the case law of this state governing the inteipretation of insurance contracts, we will allow Ohio case law to guide our resolution of this issue.
"The construction of written contracts is a matter of law." Knowlton v Nationwide Mut Ins Co, 108 Ohio App 3d 419, 423; 670 NE2d 1071 (1996). Accord Sunshine Motors, Inc v New Hampshire Ins Co, 209 Mich App 58, 59; 530 NW2d 120 (1995) ("Construction of an insurance contract is a matter of law for the court."). "When the language of an insurance contract is reasonably susceptible of more than one interpretation, it is ambiguous and will be construed in favor of the insured and against the insurer." Knowlton, supra at 423. Accord State Farm Mut Automobile Ins Co v Enterprise Leasing Co, 452 Mich 25, 38; 549 NW2d 345 (1996) (ambiguities should be construed strictly against the drafter); Fire Ins Exchange v Diehl, 450 Mich 678, 687; 545 NW2d 602 (1996) (exclusionary clauses in insurance contracts should be construed strictly against the insurer).
Not in dispute is that before the effective date of the insurance policy, Mrs. Nesbitt came to her doctor with symptoms that led directly to an x-ray that indicated a large pleural effusion on her lung, which, after the effective date, was diagnosed as cancer. At issue is whether Mrs. Nesbitt's symptoms and the attendant medical investigation that occurred before the effective date of the policy constituted a manifestation of her lung cancer even before that specific condition was identified.
In DeMatteis v American Community Mut Ins Co, 84 Ohio App 3d 459; 616 NE2d 1208 (1992), a case involving the same contract language regarding preexisting conditions as the language at issue in the present case, id. at 461, the court held that the meaning of "first appear" was ambiguous as applied to a manifestation of a chronic condition that had generated symptoms requiring diagnosis and treatment in previous years and that accordingly any "reasonable construction which results in coverage of the insured must be adopted by the trial court," id. at 463. However, the present case is distinguishable from DeMat-teis in that there is no suggestion that Mrs. Nesbitt's cancer was similarly a manifestation of a chronic condition, and thus the holding in DeMatteis that the insurance contract should be read in favor of coverage does not compel that result here. Further, the convention of construing insurance policies against the drafter does not require "forced or strained construction." Knowlton, supra at 423. Accord Royce v Citizens Ins Co, 219 Mich App 537, 542-543; 557 NW2d 144 (1996), citing Hosking v State Farm Mut Automobile Ins Co, 198 Mich App 632, 633-634; 499 NW2d 436 (1993).
No published decisions from the appellate courts of Ohio or Michigan are precisely on point concerning whether Mrs. Nesbitt's condition was known for purposes of its coming under her policy's exclusion. However, Goshorn v Hospital Care Corp, 46 Ohio App 3d 47; 545 NE2d 930 (1989), counsels us to bear in mind that insurance policies exist for the purpose of sharing risks, protecting subscribers from the expenses attendant to "unanticipated," meaning "unknown," illnesses or injury. Id. at 48. "Implicit in this system is the understanding that the pool . . . should be able to insulate itself from known expenses." Id. The purpose of exclusionary provisions, then, is to "provide notice that certain expenses will not be covered. This notice fails if the provision is construed so as to exclude an unknown condition, i.e., one which has not manifested symp toms." Id. Further, we find persuasive, and take additional guidance from, the pronouncements in the unreported decision of Novak v American Community Mut Ins Co, Docket No. 72720, 1998 WL 518166 (Ohio App), which like DeMatteis and the present case concerned an exclusion for any condition " 'that appears (makes itself known) before the Effective Date.' " Id. at *3. The court determined that this exclusionary language was not ambiguous, id., then considered "whether a pre-existing condition 'first appears (makes itself known)' by symptoms which are indicative of the condition or a specific diagnosis of the condition by a doctor," id. at *4. At issue was whether the plaintiff's coronary artery disease had been a preexisting condition. Id. The court held that a preexisting condition requires "more than unidentified non-specific symptoms," and that a condition "is made known when it is diagnosed or identified." Id. at *5. Where the plaintiff visited a doctor in response to specific symptoms and the doctor ordered further tests and advised the plaintiff that coronary artery disease was a possibility, that condition was preexisting for purposes of the insurance policy's exclusion. Id. In light of Goshom and Novak from Ohio, along with persuasive cases from other states, we hold that an illness is a preexisting condition, in the sense that it "appears" or "makes itself known," if the symptoms and the medical investigation attendant to them are sufficient to provide a physician possessing the skill and knowledge of an ordinary specialist in the area with the means to ascertain the probable nature of the illness.
In the present case, defendant maintains that Mrs. Nesbitt's cough, chest pain, and pleural effusion on the lung clearly indicated that she had at least the symptoms of lung cancer before her policy took effect. Plaintiff, on the other hand, emphasizes that Mrs. Nesbitt's cancer was not specifically diagnosed until after the effective date of the policy, arguing that because she had no reason to believe she had cancer, the condition was unknown to her and therefore not preexisting. Plaintiff further points out that Mrs. Nesbitt's physician referred her to a pulmonary specialist, not to an oncologist, suggesting that this further indicates that the doctor did not know Mrs. Nesbitt had cancer.
The trial court stated that "a formal diagnosis is not necessary," but then concluded that Mrs. Nesbitt's condition "had not in fact manifested itself with the type of symptoms that would have caused a reasonable physician to conclude that lung cancer existed." Before the court were two documents in which experts announced opposing views on what Mrs. Nes-bitt's prepolicy symptoms and medical investigation indicated. A letter from Mrs. Nesbitt's physician stated that Mrs. Nesbitt "did not have any symptoms to suspect Carcinoma" at first, Mrs. Nesbitt's initial suspicion being only that her coughing related to her smoking, the doctor's initial suspicion being that it may be only bronchitis. In contrast, an affidavit by defendant's expert, also a physician, stated that review of Mrs. Nesbitt's records established that her condition "made itself known and manifested itself through symptoms at least 9 days prior to the effective date of Ethel Nesbitt's insurance policy."
Defendant argues that the trial court improperly disregarded defendant's expert's indication that Mrs. Nesbitt's condition was apparent from her initial symptoms and x-ray and thus failed to recognize the existence of a material question of fact concerning whether Mrs. Nesbitt's illness was a preexisting condition. We agree. In deciding motions for summary disposition, "[t]he court may not make factual findings or weigh credibility." Manning v Hazel Park, 202 Mich App 685, 689; 509 NW2d 874 (1993). It is for the factfinder to determine at trial whether the prepolicy indications of Mrs. Nesbitt's illness were sufficient to allow a qualified physician to identify the probable nature of the malady. Accordingly, we reverse the trial court's grant of summary disposition with respect to this issue to plaintiff and remand for further proceedings.
Defendant further argues that the undisputed facts of record actually establish as a matter of law that Mrs. Nesbitt's condition was preexisting for purposes of the insurance policy and that the trial court thus erred in failing to grant defendant's motion for summary disposition of that issue. We disagree. Mrs. Nesbitt's physician's letter indicating that her cancer was not identifiable from the prepolicy indications creates sufficient doubts about defendant's premise to render summary disposition in defendant's favor inappropriate.
n
Plaintiff argues that the trial court erred in granting defendant summary disposition with regard to the issue whether there was a violation of the mcpa. We agree.
Plaintiff alleges that defendant's agent intentionally misrepresented the meaning of "preexisting condition" to plaintiff in order to discourage him from pursuing his cause of action and that this was an unfair trade practice in violation of the mcpa. The unfair trade practices listed in subsection 3(1) of the MCPA, MCL 445.903(1); MSA 19.418(3)(1), include the following:
(n) Causing a probability of confusion or of misunderstanding as to the legal rights, obligations, or remedies of a party to a transaction.
(s) Failing to reveal a material fact, the omission of which tends to mislead or deceive the consumer, and which fact could not reasonably be known by the consumer.
(bb) Making a representation of fact or statement of fact material to the transaction such that a person reasonably believes the represented or suggested state of affairs to be other than it actually is.
(cc) Failing to reveal facts that are material to the transaction in light of representations of fact made in a positive manner.
Defendant, citing Kekel v Allstate Ins Co, 144 Mich App 379; 375 NW2d 455 (1985), for the proposition that § 4 of the mcpa, MCL 445.904; MSA 19.418(4), rendered the act inapplicable to plaintiffs allegations, persuaded the trial court that the mcpa did not apply to the insurance industry. Plaintiff, however, cites the recent case of Smith v Globe Life Ins Co, 223 Mich App 264, 281-285; 565 NW2d 877 (1997), aff'd in part, rev'd in part, and remanded 460 Mich 446; 597 NW2d 28 (1999), in which this Court, citing Attorney General v Diamond Mortgage Co, 414 Mich 603; 327 NW2d 805 (1982), overruled Kekel and concluded that an insurer's misconduct is actionable in a private suit under § 11 of the mcpa, MCL 445.911; MSA 19.418(11). Defendant, in its brief in response to plaintiff's issue on cross appeal, stated that in light of Smith it was withdrawing its argument that plaintiff's allegations were not actionable under the mcpa. This leaves for our consideration defendant's other ground for arguing that the mcpa is inapplicable to this case— that the controversy is mainly an Ohio matter and thus lies beyond the reach of the Michigan statute.
Defendant asserts that the MCPA exists for the protection of Michigan consumers and therefore does not cover an insurance policy purchased in Ohio by Ohio residents. However, defendant does not dispute that its home office is in Livonia, Michigan, or that it was from its Michigan base of operations that defendant conducted all correspondence with plaintiff and his wife. Further, the language of the MCPA itself not only implies no exclusion of residents from other states, but instead implies broad applicability. "Person" is defined as "a natural person, corporation, trust, partnership, incorporated or unincorporated association, or other legal entity." MCL 445.902(c); MSA 19.418(2)(c). "Trade or commerce" is defined as "the conduct of a business providing goods, property, or service primarily for personal, family, or household purposes____" MCL 445.902(d); MSA 19.418(2)(d). We hold that any person with whom a Michigan-licensed company, operating from its home office within this state, has engaged in trade or commerce may invoke the protections of the MCPA that concern disputes arising from that trade or commerce.
Because this controversy implicates the interests of this state sufficiently to bring the MCPA to bear, and because the trial court relied on the overruled case of Kekel, supra, in concluding that plaintiffs allegations fell under exclusionary language of § 4 of the act, we reverse the trial court's order dismissing plaintiff's claim under the MCPA and reinstate that claim.
Affirmed in part, reversed in part, and remanded for further proceedings. We do not retain jurisdiction.
Whitbeck, J., concurred.
Plaintiff abandoned his Ohio statutory claim, having failed to develop it in the proceedings below or address it on appeal.
The trial court did not specify the subrule under which it decided the motions for summary disposition. However, because the court looked beyond the pleadings, it is evident that the court was invoking MCR 2.116(C)(10), and we will review this issue accordingly.
Unpublished or "informally published" decisions from Ohio appellate courts may be cited freely as persuasive authority. See Rule 2(G) of Ohio Supreme Court Rules.
See also Boston v Nat'l Life & Accident Ins Co, 405 So 2d 943, 944 (Ala Civ App, 1981) ("a disease . . . will ordinarily be deemed to originate or have its inception when it first becomes manifest or active or when there is a distinct symptom or condition from which one, learned in medicine, can, with reasonable accuracy, diagnose the disease"); Malone v Continental Life & Accident Co, 89 Idaho 77, 83; 403 P2d 225 (1965) ("the origin of a sickness or disease is deemed to be the time when it first becomes manifest or active, or when there is a distinct symptom or condi tion from which one learned in medicine can diagnose the disease with reasonable certainty"); McDaniel v State Farm Mut Ins Co, 3 Kan App 2d 174, 178; 591 P2d 1094 (1979) (for a disease to have "manifested" itself requires not merely "that the insured be aware of the existence of the disease" but that there be "symptoms which would lead a physician to diagnose the illness").
Although in the present case Ohio case law both governs this issue and informs our analysis, we conclude that Ohio and Michigan are on equal footing with respect to their jurisprudence regarding when a condition "appears" or "makes itself known" for purposes of being excluded from insurance coverage as a preexisting condition. Thus, our conclusion holds not only for the present controversy but for this state's jurisprudence generally.
We suspect that even most laypersons would instinctively suspect lung cancer from the combination of a smoker's cough and related discomfort that were sufficiently intense to cause the patient, a smoker, to seek medical attention and the determination through x-rays of abnormalities in the lung. Nonetheless, we leave this question for resolution by the factfinder at trial with the help of the parties' experts.
In fairness to the trial court, we observe that it decided this issue without the benefit of Smith, which was issued after the date of the trial court's decision.