Opinion ID: 3010765
Heading Depth: 2
Heading Rank: 2

Heading: The Modern Model -- Mahon and Kievit

Text: About thirty years after Runyon II, the New Jersey Superior Court Appellate Division broke from Runyon's apparently strict dictates in Mahon v. American Casualty Co. of Reading, 167 A.2d 191 (N.J. Super. Ct. App. Div. 1961). The facts of Mahon can be simply stated. The deceased, a nine year old boy who appeared to be in good health, was playing in his schoolyard during recess when he accidentally bumped his head against the head of a schoolmate. Soon thereafter, the boy developed symptoms prompting a medical examination. That examination and subsequent diagnostic operations revealed that the boy had a condition known as the Arnold-Chiari malformation. According to expert testimony at trial, the malformation was caused by a tumor deep within the boy's brain; while the tumor and the malformation existed prior to the head injury, they were in a quiescent state and it took the trauma of the head injury to cause the boy's acute symptoms. See id. at 194-95. Moreover, the expert testified that but for the tumor, the acute symptoms would not have occurred; yet, but for the head trauma, the tumor would not have caused the malformation to become acutefor a further interval of time. See id. at 195. The court recognized that cases like Runyon II reflected a pronounced tendency in the law to hold for the insurer as a matter of law, if there is uncontroverted evidence of causal contribution by disease or abnormality to the loss. Id. at 198. At the same time, the court noted a not inconsiderable number of decisions which held that such evidence could still support a verdict for the insured if the jury was to find that the accident operated as the proximate or predominant cause of the loss. See id. The court also distinguished between two types of limitation clauses found in ADB policies. The first (found in Mahon and in the stipulation here), known as a limited coverage clause, is typically of the form: loss resulting directly and independently of all other causes from injury caused by accident. Id. at 196. The second (found in Runyon II) is known as an exclusionary clause, and is of the form: which bodily injuries, or their effects, shall not be caused wholly or in part, directly or indirectly, by any bodily or 13 mental disease, defect, or infirmity. Id. Examining cases from several jurisdictions, the court concluded that the exclusionary clause constitutes a significantly more restrictive contract than the limited coverage clause. See id. at 199. In light of these considerations, Mahon held that the mere conjunction of disease or abnormality and accident, each `but for' causes of the resulting disability, and neither alone efficient to produce it does not necessarily bar recovery as a matter of law in a limited coverage case. See id. at 200. The court opined: In what seems to us a preponderance of American jurisdictions, the test is whether the accidental injury as contrasted with the contributing disease or bodily condition, is the proximate cause of the disability or loss. . . . Pervading such cases is the philosophy that if the accident is a more substantial contributing cause of the resultant disability or death than the disease, the latter merely being a condition thereof, recovery is allowed. Id. at 201. The court held that this result was not foreclosed by Runyon I. Although Runyon I mentioned a general rule that recovery should be barred if a preexisting disease aggravated the accident and actively contributed to the death occasioned by the accident, Mahon's review of the case law suggested that Runyon I's statement could not reflect the general rule unless active contribution was understood to mean predominant cause. Mahon, 167 A.2d at 205. The court also distinguished Runyon II on the basis that the policy in that case involved an exclusionary clause, whereas the policy in Mahon only involved a limited coverage clause. We do not rely on this distinction, however, because, as we note below, the modern trend (at least in New Jersey) is to treat both clauses the same. See infra at n. 7. The New Jersey Supreme Court evinced an intent to follow the modern liberal trend outlined in Mahon in Kievit v. Loyal Protective Life Ins. Co., 170 A.2d 22 (N.J. 1961), the court's most recent treatment of the issue at hand. The insured in Kievit was a forty-seven year old carpenter, who 14 appeared to be in perfectly good health, without any diagnosed diseases or conditions, and with no symptoms. The accident occurred when the insured was struck over the left eye by a two-by-four, after which he developed tremors and became totally disabled. Kievit, 170 A.2d at 24. Testimony at trial indicated that the insured actually had (although asymptomatic) Parkinson's Disease prior to the accident, which the accident had aggravated. See id. at 25. The trial court entered judgment for the defendant insurance company and the Supreme Court reversed. This case, the court held, was distinguishable from both Runyon opinions. In those cases: a patent, active disease was found to have contributed with the accident to the resulting death of the insured. We are here concerned with a latent, inactive condition or disease which was not accompanied by any symptoms and which was precipitated or activated by the accident into a resulting disability. Id. at 27. Although the policy held by the insured in Kievit contained an exclusionary clause, the court did notfind that Mahon was distinguishable on this basis.7 Rather, the Kievit court held that the key was the reasonable expectations of the insured. See id. at 30 ([T]he court's goal in construing an accident insurance policy is to effectuate the reasonable expectations of the average member of the public who buys it.). In what we consider the most critical passage of the opinion, the court held: When the Company issued its accident policy to Mr. Kievit it knew that, although he was then about 48 and in good health, he could and presumably would keep the policy in force until he was 65 and that in the course of time he would undoubtedly be subjected to bodily conditions and diseases incident to the aging _________________________________________________________________ 7. In the instant matter we attach little significance to the presence of the exclusionary clause in view of the primary provision limiting coverage to loss from accidental bodily injuries, directly and independently of all other causes. Kievit, 170 A.2d at 30. 15 process. If the terms of the policy were read literally, the policy would be of little value to him since disability or death resulting from accidental injury would in all probability be in some sense contributed to by the infirmities of age. . . . Such literal reading was never contemplated and it may fairly and justly be concluded that it also was never contemplated that indemnity would be unavailable where a condition or disease which was wholly dormant was activated and became disabling as the result of an accidental injury. Id. at 30 (emphasis added). The court then further clarified its position by quoting the following passage from United States Fidelity & Guarantee Co. v. Hood, 87 So. 115, 120 (Miss. Sup. Ct. 1921): It is not sufficient to defeat the policy that the accident may have made some latent disease active, which disease contributed in some degree to the death. If the disease was active and of such character and virulence as to endanger life apart from the accident, but might not have done so had the accident not happened, then that may be said to be a proximate contributing cause. Kievit, 170 A.2d at 30. Based on this rationale, the court held that the accident was the proximate cause of the insured's disability, and that his pre-existing disease, activated by the accident into an incapacitating condition, was not a disqualifying contributing cause. Id. at 31. Thus, Kievit and Mahon can be read most plausibly to hold that the construction of limited coverage clauses in ADB policies depends upon some form of proximate causation analysis in order to fairly represent the reasonable expectations of the insured. At the very least, if the pre-existing condition is found to have beenactive (as opposed to the latent condition at issue in Kievit), these cases would appear to require a factual determination whether the condition was of such character and virulence as to endanger life apart from the accident in some relevant medical sense, or whether the accident precipitated the condition into a resulting disability. See Kievit, 170 A.2d at 27, 30. 16 This approach suggests what scholars have deemed the modern tendency of courts dealing with limited coverage clauses like these: It has thus been the tendency to hold that where the disease was not a direct, proximate, or concurring cause of the loss recovery would be allowed, regardless of the existence of such condition. . . . Other courts have taken a still broader view, consistent with that which the authors urge herein as being the better approach, that recovery may still be had where the diseased condition appeared actually to contribute to cause the death, where the accident was the prime or moving cause. This has come to be the more modern rule, irrespective of the stringencies of policy language, where injury is a proximate cause of death or disability, even though the result for which claim is made would, perhaps, not have occurred except for the preexisting condition. John Alan Appleman & Jean Appleman, Insurance Law and Practice S 393 at 81, 85-90 (1981); see also Robert E. Keeton & Alan I. Widiss, Insurance Law S 5.4(b)(2) at 502 (1988) (stating that in ADB cases, courts tend to interpret the coverage provisions and limitations so as to favor the interests of the beneficiaries when the evidence indicates the death or injury was essentially fortuitous.). For the reasons discussed infra, we believe that the New Jersey Supreme Court would follow this modern approach in the present case. C. The Appellate Division Returns to Runyon-- Tomaiuoli Shortly after Kievit was handed down, the Appellate Division revisited the Runyon approach in Tomaiuoli v. United States Fidelity & Guaranty Co., 182 A.2d 582 (N.J. Super. Ct. App. Div. 1962). In that case, the insured, a seventy-two year old man who had a history of arteriosclerotic heart disease and diabetes, was involved in a minor traffic accident, from which he suffered no bodily injuries. Shortly thereafter, while still at the accident scene, the insured collapsed on the sidewalk from a heart attack, and died before an ambulance could arrive. The plaintiff, relying upon expert medical testimony, claimed that the car 17 accident led to a chain of events that caused the insured's death. See id. at 586. The court ultimately found that the accident was the precipitating cause of exciting the decedent to a degree greater than he was able to withstand physically by reason of the underlying systemic maladies with which he was afflicted, with the consequence that he collapsed. Id. at 587. The insurance policy, as in Runyon II, provided for the payment of benefits for accidental injuries resulting in death only if the loss resulted directly and independently of all other causes. Tomaiuoli, 182 A.2d at 588. The appellate division found this case to be factually and legally indistinguishable from Runyon II, and affirmed the trial court's judgment notwithstanding a verdict in favor of the defendant. The court found that in both cases: the insured persons were, and had been, suffering from active diseases, progressive in nature, capable of producing fatality, and presenting symptoms which brought home to the victims and their respective doctors knowledge of their existence. Moreover, in both cases the treating physicians confessed inability to separate the effects of the bodily injury from the effects of the pre-existing active disease, and felt obliged to conclude that the total of such effects in combination produced the death. 182 A.2d at 588. In this light, the court held that: Where, as here, his medical proofs establish affirmatively that the active disease with which he was afflicted, and for which he was being treated, not only was competent to contribute to his death, but in the opinion of his own physician, did in fact operate in conjunction with an accidental injury to produce his demise, the court has no alternative but to take the case from the jury. Id. at 590. Thus, in the view of the Tomaiuoli court, Runyon I and Runyon II do not permit recovery when the pre-existing condition is an [a]ctive, patent progressive disease which in its very nature is competent to contribute to death. Id. 18 While the court recognized that Kievit and Mahon stand strongly for liberality of construction, it found that those cases only compelled a departure from the Runyon approach when the pre-existing condition was [l]atent or [d]ormant, [a] symptom-free condition, possibly aggravated or exacerbated by bodily injury. Id. D. Application to the Present Case Not surprisingly, defendants contend that our disposition of this case should be controlled by Runyon II and Tomaiuoli. They submit that the New Jersey Supreme Court would follow Tomaiuoli's reading of the Runyon cases, Kievit, and Mahon and hold that, if a known and active preexisting condition, capable in itself of producing fatality, actively contributes to the insured's death, recovery under the applicable ADB policies would not be permitted. Accordingly, they would have us affirm the district court's determination that the fact finder must determine as a threshold matter whether the pre-existing disease falls into one of two categories: either the disease is (1) an active, patent, progressive disease that by its very nature is competent to contribute to death; or it is (2) latent or dormant and symptom free. Under this test, if the condition falls within category (1), there can be no liability. According to the defendants, the facts of the present case, unlike Kievit, could not fall within category (2). To the contrary, they contend that this case is factually indistinguishable from Runyon II and Tomaiuoli, placing it squarely within category (1). Although Tomaiuoli clearly suggests that we should construe Runyon broadly and find no recovery any time the pre-existing condition is active and symptomatic, see 182 A.2d at 588-89, we predict that the New Jersey Supreme Court would reject this view in light of Kievit's emphasis on the reasonable expectations of the insureds. Tomaiuoli, to be sure, recognizes the reasonable expectations doctrine, and the liberality of construction for which Kievit and Mahon stand. See Tomaiuoli, 182 A.2d at 590. We believe, however, that Tomaiuoli unduly limits the reach of both of these principles. Accordingly, we predict that the New Jersey Supreme Court, if faced with the present facts, would not adopt Tomaiuoli. See generally Nationwide 19 Mutual Fire Ins. Co. v. Pipher, ___ F.3d ___, 1998 WL 113933 (3d Cir. 1998) (predicting that Pennsylvania Supreme Court would not extend holding of its earlier decision as suggested by intervening decisions of other courts). We observe first that Kievit clearly rejected the proposition that there can be no liability if any known pre existing condition at all contributed to the insured's death. If that was the case, then an insured could only recover if he or she was in perfect health at the time of the accident. As another court, interpreting Kievit and other similar cases, has eloquently stated: If the phrase is given literal effect, only the healthiest of individuals would be given the protection of their policies. Those suffering from even the slightest preexisting medical condition would be precluded from benefits--the purchased coverage would be illusory. The court will not construe the contract to defeat, rather than promote, the purpose of accident insurance. The court therefore concludes that literal application of the phrase direct result, independent of all other causes defeats the reasonable expectations of insureds. Henry v. Home Ins. Co., 907 F. Supp. 1392, 1397 (C.D. Cal. 1995). Such a result could not be consistent with the reasonable expectations of the insured. See Kievit, 170 A.2d at 26, 30; see also Sparks v. St. Paul Ins. Co., 495 A.2d 406, 414 (N.J. 1985) (The interpretation of insurance contracts to accord with the reasonable expectations of the insured, regardless of the existence of any ambiguity in the policy, constitutes judicial recognition of the unique nature of contracts of insurance.). We recognize that this observation may be in tension with a literal reading of the Runyon decisions. However, those cases were based upon a strict construction approach to limited coverage and exclusionary clauses which we do not believe is tenable after Kievit specifically applied the reasonable expectations doctrine to this area of New Jersey insurance law. See, e.g., Werner Industries, Inc. v. First State Ins. Co., 548 A.2d 188, 191 (N.J. 1988) (At times, 20 even an unambiguous contract has been interpreted contrary to its plain meaning so as to fulfill the reasonable expectations of the insured.); Kievit, 170 A.2d at 30 (rejecting literal interpretation of limited coverage clause).8 Accordingly, we predict that the Supreme Court of New Jersey would not apply a literal reading of the Runyon opinions to this case. The question remains, however, whether that court would agree with Tomaiuoli that recovery can only be had if the pre-existing condition was latent, dormant, and symptomfree. We predict not. Consider, for example, a situation in which an individual has been diagnosed with a slow-moving cancer that is likely to cause his death in ten or fifteen years and which is thus, by definition, not inactive. Let us further assume: (1) the disease carries with it certain symptoms, all of which are presently controlled by medication and treatment; and (2) the individual has been living a normal and productive life and is expected to do so until the cancer finally progresses to its terminal stage (i.e. in ten to fifteen years). Assume also that the individual suffers an entirely fortuitous accident and, due to serious injuries suffered in that accident, his previously controlled condition is aggravated, resulting in death. We doubt that, in light of the reasonable expectations doctrine, New Jersey would hold that his beneficiaries should be deprived of accidental death benefits just because his pre-existing disease, which acted in combination with the accidental injury to cause his untimely death, was not inactive and symptom free. What this hypothetical points out, we believe, is that the patent/latent categorization scheme suggested in Tomaiuoli is too simplistic, and yields results inconsistent with the reasonable expectations of insureds. As Appleman & Appleman, supra, have noted, while a move away from this _________________________________________________________________ 8. We have on several occasions recognized and applied New Jersey's adoption of the reasonable expectations doctrine. See, e.g., Oritani Savings & Loan Ass'n v. Fidelity & Deposit Co. of Md., 989 F.2d 635, 638 (3d Cir. 1993); Vargas v. Hudson County Bd. of Elections, 949 F.2d 665, 671-72 (3d Cir. 1991); Van Orman v. American Ins. Co., 680 F.2d 301, 308-310 (3d Cir. 1982). 21 scheme is not as satisfactory as the ability to decree a clean line of demarcation, it might be more consistent with the realities of existence. Appleman & Appleman, supra, S 391 at 52-3. And, we add, it is more consistent with the ability of modern medicine to prolong life. While Tomaiuoli was correct in recognizing that Kievit distinguished its facts from the Runyon facts along the patent-latent axis, we believe -- and predict that the Supreme Court of New Jersey would similarly believe -- that Tomaiuoli erred (an error which the district court here followed) in raising this essentially factual distinction to the level of legal categorization. It is important to note also that all of the New Jersey precedents discussed above are heavily fact-bound, relying upon the precise nature of the insured's pre-existing condition; the relationship between that condition, the type of accident, and the resulting disability; and the language of the applicable insurance policy. In none of these cases were the New Jersey courts faced with a factual scenario like the cancer hypothetical or the present case, in which the defendant suffered from arguably active diseases which the jury could find, based on medical expert testimony, were reasonably under control by virtue of the insured's then-existing medical treatments.9 While such a condition is not dormant in any technical sense of the word, it is functionally like a dormant condition in the important respect that it did not pose an immediate threat of death until triggered by the injury.10 Of course, such an _________________________________________________________________ 9. Tomaiuoli is the closest case to the present one on the facts. Mr. Tomaiuoli's heart disease and diabetes were diagnosed a few years prior to his accident and were monitored during regular checkups. His doctor noted no signification [sic] changes in his conditions during this time, and it appears that medication was prescribed at some point. See Tomaiuoli, 182 A.2d at 585-86. The court found additionally that arteriosclerosis and its attendant symptoms are the invariable consequences of the aging process and are progressive in varying degrees depending upon the arterial fortitude of the individual. Id. at 587. The court does not make note of any testimony to the effect that Mr. Tomaiuoli's conditions were under control at the time of accident, however. 10. Both Kievit and Mahon appear to attach significance to whether or not the insured was aware of his pre-existing condition prior to the time 22 analogy may or may not be appropriate on the facts of a particular case -- as noted in Kievit, just because an active or virulent pre-existing condition might not have killed the insured had the accident not happened does not mean that the condition is not a proximate contributing cause. See Kievit, 170 A.2d at 30. But this is a question of fact, not a question of law. Bearing in mind New Jersey's broad and liberal construction of insurance policies in favor of the insured, see, e.g., Dittmar v. Continental Cas. Co., 150 A.2d 666, 672 (N.J. 1959), its adoption of the doctrine of reasonable expectations, and the harshness with which the rule advanced by these insurers would operate under some factual scenarios, we do not believe that the New Jersey Supreme Court would adhere to the insurers' mechanical reading of New Jersey law. To the contrary, we believe that the court would hold that in cases such as the present one, in which there is medical evidence to a reasonable degree of certainty that the insured's relevant pre-existing conditions, even if active and symptomatic and capable of ultimately causing death, were under control at the time of the accident, and that the insured was expected to live a productive life for the foreseeable future (measured in terms of years), it is a question of fact for the jury to decide whether the pre-existing condition or the accident was the cause of the defendant's death or disability under an ADB policy. The remaining question is the standard of causation. The traditional term is proximate cause, but there appears to be some confusion in the case law and scholarly commentary as to how that term should be defined in this context. More specifically, there is some difference of opinion whether it should be defined in the same way as _________________________________________________________________ of the injury. In light of modern medicine's increasingly developed ability to detect diseases in their nascent stages, we fail to see how this distinction could continue to have much meaning. That is, we discern little difference between a disease or condition that is unknown to the patient and asymptomatic, and one that is known but that is being treated to the extent that it is considered under control. The relevant question in both instances is the same -- to what extent is the preexisting condition affecting the life (and life expectancy) of the patient? 23 that term is used in standard negligence cases, or whether it should be defined as the predominant cause. See, e.g., Appleman & Appleman, supra, S 362 at 484-85, 487 (it is necessary only that the accident stand out as a predominant factor in producing the loss) (citing cases); Carroll v. CUNA Mutual Ins. Society, 894 P.2d 746, 755 (Colo. 1995) (en banc) (Courts when using the word `proximate cause,' however, seem to intend no more that to distinguish between remote and predominant causes.). The Mahon court appears to conflate the two terms: [T]he test is whether the accidental injury, as contrasted with the contributing disease or bodily condition, is the proximate or predominant cause of the disability or loss, sometimes additionally qualified as the active, efficient, dominant, originating, or direct cause. Mahon, 167 A.2d at 201. The New Jersey Supreme Court in Kievit uses the term proximate cause without defining it, although the court does discuss Mahon's definition and seems to approve of it. See Kievit, 170 A.2d at 487-90 (noting Mahon's definition of proximate cause as the direct, efficient, and predominant cause.). In consideration of the foregoing, we predict that the New Jersey Supreme Court would define proximate cause in this setting as the direct, efficient, and predominant cause of the insured's death. We note that this was the test the district court applied in instructing the jury and ruling on defendants' motion for judgment as a matter of law. Adoption of the rule we have described would bring New Jersey in line with the modern approach taken by courts of other jurisdictions. See Appleman & Appleman, supra, at S 393; see also, e.g., Carroll v. CUNA Mutual Ins. Society, 894 P.2d 746, 755 (Colo. 1995) (holding that benefits are recoverable as long as one can show that the accident is the predominant cause of the [death].); Life Ins. Co. of North America v. Evans, 637 P.2d 806, 808-09 (Mont. 1981) (Recovery may be had even though the disease appears to have actually contributed to the cause of death as long as the accident sets in motion the chain of events leading to death, or if it is the prime or moving cause.). We believe that New Jersey would follow this course. 24 Under this standard, the evidence adduced by the plaintiff would support a verdict in her favor. Although it is undisputed that some of Mr. Murray's conditions were active and symptomatic and capable of ultimately causing his death, Dr. Scotti testified that they were under control, that Mr. Murray would have lived with them for years, that the accident caused an exacerbation of the pre-existing conditions, and that the accident was the predominant cause of death.11 If so, the death could be found by the jury to be proximately caused by an accident and independent of all other causes within the stipulated limited coverage clause of the policy as we have construed it, and the judgment as a matter of law in favor of the defendants must be vacated.