Court Opinion

ID: 9633378
Source: CourtListenerOpinion
Date Created: 2023-08-22 11:45:03.910028+00
Date Added: 2024-06-11T18:08:33.761452
License: Public Domain

Neill, J.
(concurring) — Plaintiff is an enrolled member in his employer’s group prepaid medical plan. This 1958 health care service contract was for 1 year, automatically *291renewable for succeeding years, but subject to cancellation at the end of any year by either the employer or the contractor.2
Commencing in 1960, a kidney ailment was manifested that required plaintiff to receive semi-weekly hemodialysis treatments on an artificial kidney machine. Current prospects are that he will require continuation of this treatment for life.
In 1966, contractual arbitration proceedings resulted in a finding that defendant was required to indemnify plaintiff for the costs of medical services for treatment of the kidney disorder.
Defendant changed the contract in a number of respects effective February, 1967. One such change was the addition of chronic hemodialysis to the list of exclusions of medical services payable or indemnifiable under the contract. This action followed.
The majority opinion finds an analogy in accident and health insurance policies under which the contingent event or the “covered risk” is the occurrence of an accident or the manifestation of an illness. It is noteworthy that the source from which the majority obtains its support (75 A.L.R.2d 876 (1961)) expressly states that it is “strictly limited to the consideration of the insurer’s liability under an accident policy”.
But whatever the contingent event protected by this contract, the crucial determination on this appeal pertains not to the event eliciting performance by Kitsap Medical but to the nature and extent of the performance due. The majority assumes that, because it construes the contingent event *292to be like that in an ordinary insurance policy, the performance due is that of an ordinary insurer. I disagree. The nature and extent of the performance due does not flow, a fortiori, from the type of contingent event involved but must be gleaned, like the contingent event itself, from the terms of the contract.
This contract is a type of insurance. Randa v. Bear, 50 Wn.2d 415, 312 P.2d 640 (1957). However, the language thereof, like that of any contract, is to be given its usual and ordinary meaning, unless it is apparent that a special meaning is intended, or is necessary to avoid an unreasonable or absurd result. Rew v. Beneficial Standard Life Ins. Co., 41 Wn.2d 577, 250 P.2d 956, 35 A.L.R.2d 891 (1952). Health care service contracts are regulated by the state under RCW 48.44. Under the terms of this statute (RCW 48.44.020), the insurance commissioner of the state is authorized to disapprove any health care service contract which is deceptive, misleading, unreasonable or unduly restrictive. It is apparent that the commissioner has not determined that this contract is unreasonable or otherwise contrary to public policy. See RCW 48.44.110 and 48.44.120. Thus I look to the usual and ordinary meaning of the language used by the contracting parties to determine its meaning.
The duty of defendant is spelled out in the opening paragraph of the contract:
Health Care Service Contract (Sickness and Non-occupational Accidents)
Kitsap Medical agrees to provide medical, surgical hospital and other services to each member enrolled hereunder, as occasion demands, during the life of this contract. All payments and services are subject to each of the terms and conditions of this contract and any endorsement, rider, or amendment thereto.
Again, in Part Three of the contract, under the heading “Benefits Applicable to all Members . . . Group Health Care Service”, it is provided:
Kitsap Medical will furnish during any certificate year all necessary medical, surgical and hospital services re*293quired by any member under this contract for 'any illness or injury to the extent stipulated below. Also during the second and each succeeding certificate year each member is entitled to a renewal of the benefits listed in this Part. A certificate year [commences with enrollment and ends 12 months later].
An examination of these contract provisions to ascertain the event, condition or occurrence which would give rise to defendant’s duty of performance under the agreement leads to two possible constructions. First, the language can be read to mean that the medical services rendered to the plaintiff is the contingent event. Yet, the language can be understood to mean that the contingent event is the illness or injury (“as occasion demands”) and that following such event the defendant’s performance is the furnishing of medical services (either directly or by indemnity of services from a non-participating physician or hospital) to meet the consequences of the event. Having thus determined that there is an ambiguity in the terms of the agreement, I would apply the rule that this type of contract will be construed in favor of an employee for whose benefit the group contract is drawn. McCarty v. King County Medical Serv. Corp., 26 Wn.2d 660, 175 P.2d 653 (1946). See 43 Am. Jur. 2d Insurance § 277 (1969).
However, it is necessary to continue and examine the meaning of the term “life of this contract” as it affects defendant’s duty of performance. It is not now contested that prior to the 1967 modification of the contract, plaintiff was entitled to $5,000 annual indemnity for expenses incurred in the treatment of his kidney disorder. These treatments were an obligation of Kitsap Medical under either interpretation of the coverage. The issue presently before us arises from defendant’s 1967 action of excluding chronic hemodialysis from the contract.
The record supports the view that defendant did not cancel the group contract. By letters to enrolled members the company advised beneficiaries of changes in the contract, carefully calling attention to increases in certain ben*294efits, but stating nothing about the new exclusion for chronic hemodialysis.
Did the change in the contract excluding chronic hemodi-alysis fall within defendant’s contract right to “modify or adjust either the benefits or dues rates”? I think not.
The exclusion of a particular type of medical service is obviously a modification of the contract, but may exceed the contract right to modify only “benefits”. There is an ambiguity as to the parties’ intentions in using the words “modify or adjust either the benefits or dues rates”. The clause is not precise and can be read as providing only a limited right to modify benefit rates rather than a broader right to modify provisions relating to coverage. Applying the rule of construction that contract ambiguities are to be construed in favor of a contract beneficiary, the latter reading is adopted. McCarty v. King County Medical Serv. Corp., supra. Under this contract, Kitsap Medical had no power to exclude plaintiff’s hemodialysis coverage under the guise of “modification”.
Although I do not express an opinion as to the validity of the change, it is interesting to note that my view of defendant’s right to modify the contract may have been tacitly conceded by the defendant when it changed the contract in 1967 by removing the modification clause quoted above and substituted therefor a provision that the defendant may make “revisions in the monthly premiums, or in the provisions relating to coverage”. (Italics mine.) An exclusion of certain types of medical treatment is clearly a “provision relating to coverage” while such an exclusion is not clearly a modification or adjustment of “benefits or dues rates.” Accordingly, I would also reverse.
Donworth, J. Pro Tern., concurs with Neill, J.
October 28, 1970. Petition for rehearing denied.

“Part Five: General Provisions
“N. This contract shall remain in effect [for 1 year] and it shall be automatically renewed from year to year unless the Group gives to Kitsap Medical, or Kitsap Medical gives to the Group, thirty (30) days’ written notice prior to the anniversary date, of its election not to renew this contract. Kitsap Medical may, upon thirty (30) days’ written notice, modify or adjust either the benefits or dues rates provided herein. However, in such event the Group shall have the right to terminate this contract by giving fifteen (15) days’ written notice to Kitsap Medical prior to the effective date of such change.”