Court Opinion

ID: 9681479
Source: CourtListenerOpinion
Date Created: 2023-08-24 07:51:16.575165+00
Date Added: 2024-06-11T18:17:34.169669
License: Public Domain

WELLIVER, Judge,
dissenting.
I respectfully dissent for the reason that the Court of Appeals, Eastern District, properly construed the contract while the majority herein would rewrite the contract. I adopt the Court of Appeals opinion as my dissent and quote the same in its entirety.
“Defendants appeal from the entry of summary judgment in favor of plaintiffs on Count I of their petition based on breach of contract.
“The facts, established through pleadings, affidavits and exhibits are not in dispute. In May, 1981, plaintiffs Dennis B. and Judith Lutsky became members of the Missouri Farm Bureau Federation, St. Louis County Farm Bureau Chapter. Defendants, Blue Cross Hospital Service, Inc. of Missouri and Missouri Medical Service (Blue Shield) provided health group benefits for the Federation members who purchased their health care plan. The group health care plan (Com-Pac) covered basic and major medical expenses up to the lifetime maximum of $1,000,000.00 per person. Plaintiffs applied for membership in the *878Com-Pac program and were issued certificates insuring themselves and their minor son, Loren.
“On October 8,1981, Loren was admitted to the Menninger Foundation Children’s Hospital in Topeka, Kansas for treatment of a mental illness. He has remained a patient there continuously since that date. Through November, 1982, under the Com-Pac agreement, defendants paid for treatment of plaintiffs’ son.
“During 1982, the Federation and defendants entered into negotiations resulting in the offer to Federation members of a new program of health care insurance. The new plan, the “Comprehensive Program” replaced the “Com-Pac” agreement and drastically reduced the coverage for mental illness. Specifically, the maximum benefit allowed under this plan was 30 days per calendar year and a maximum lifetime benefit of $25,000.00. The bills for Loren’s treatment are in excess of both the calendar benefit and the lifetime benefit for mental illness. The new program became effective on December 1, 1982 and defendants have refused to pay plaintiffs for treatment of their son since that date.
“Plaintiffs brought this action for declaratory judgment and damages. They claimed defendants were obligated to pay for their son’s hospitalization and physician’s care pursuant to the discontinued Com-Pac program in effect when their son became hospitalized. Defendants maintain the Com-Pac program had terminated when the comprehensive plan became effective and their obligations under the former ended. The disagreement between the parties is clearly stated in two paragraphs of plaintiffs’ petition:
15. That on or about the 1st day of December, 1982, Defendants and the said Missouri Farm Bureau Federation negotiated a new Group Comprehensive Program of coverage and adopted another plan of coverage, and thereupon Defendants refused and denied any further coverage to said Loren Lutsky for the medical expense, including basic medical expense and major medical expense, and other such medical and hospital and surgical care being provided to him for the medical condition of Loren Lutsky for which he was admitted to said herein-above referred to hospital on October 8, 1981, as agreed to be rendered under Exhibits “A” thru “E”; that said acts of Defendant were done without the consent or waiver by Plaintiffs of Plaintiffs’ vested rights to the continuance of payments under said certificates.
16. That Defendants have contended that they are not liable for said care rendered to Loren Lutsky pursuant to Exhibits “A” thru “E” for such care rendered after the 1st day of December, 1982 by reason of that provision set forth in Exhibit “A”, Section VII, subpara-graph G, at page 14 thereof, which states as follows:
If the Group Sponsor terminates its enrollment agreement with BCHS, or makes available to the group another group hospital care program, or indemnity thereof, this Certificate shall terminate with the termination of the enrollment agreement or on the effective date of such other program, without regular conversion privileges.
The trial court granted plaintiffs’ motion for summary judgment awarding $84,-219.34 in damages and ordering defendants to pay additional necessary and required expenses up to the limit and extent of the original Com-Pac agreement. We reverse.
“From the allegations of plaintiffs’ petition it is evident that plaintiffs do not dispute the fact that the Missouri Farm Bureau Federation, the group sponsor, has made available another group hospital care program and that this is a contingency which triggers termination of the Com-Pac contract. Rather, plaintiffs’ posit their claim to continued benefits under the original contract on their contention that their rights thereunder became vested prior to termination and therefore may not be *879changed, modified or eliminated without their consent.
“It is well settled that a master group policy can be cancelled or modified by the group sponsor, so as to terminate the coverage of an individual member, without the latter’s consent, if such a right is given by the contract. Satz v. Prudential Insurance Company of America, 225 S.W.2d 480, 482 (Mo.App.1949). See Annot. Group Policy Coverage Termination, 68 A.L.R.2d 249, 255. However, to defeat liability on an insurance contract, the termination must be effective before any liability attaches. Kingsland v. Missouri State Life Insurance Company, 66 S.W.2d 959, 961 (Mo.App.1934), rev’d on other grounds, Schuerman v. General American Life Ins. Co., 106 S.W.2d 920 (Mo.App.1937). Thus, the issue as framed by plaintiffs’ petition is whether the original contract provided insurance for medical and hospital expenses for an injury or illness occurring during the life of the policy or for the payment of the cost of such services incurred during the policy period. The language of the certificates issued to plaintiffs clearly shows the receipt of the services and the incurring of the expenses to be the contingency insured against.
“At the outset, we note that defendants are not technically insurers, they are not-for-profit health service corporations as defined by section 354.010.4, RSMo 1978, providing pre-paid hospital care and medical services or reimbursement therefor. Notwithstanding, their contracts with subscribers are to be construed in the same manner as insurance policies issued by commercial insurers. North Kansas City Memorial Hospital v. Wiley, 385 S.W.2d 218, 223 (Mo.App.1964).
The rules of construction applicable to insurance contracts require that the language used be given its plain meaning. Madison Block Pharmacy, Inc. v. United States Fidelity & Guarantee Co., 620 S.W.2d 343, 346 (Mo. banc 1981); Moskowitz v. Equitable Life Assur. Soc. of the United States, 544 S.W.2d 13, 20 (Mo. banc 1976). If the language is unambiguous the policy must be enforced according to such language. Moskowitz, 544 S.W.2d at 20; State Farm Mutual Automobile Co. v. Thomas, 549 S.W.2d 616, 618 (Mo.App.1977). If the language is ambiguous it will be construed against the insurer. Meyer Jewelry Co. v. General Insurance Co. of America, 422 S.W.2d 617, 623 (Mo.1968). Language is ambiguous if it is reasonably open to different constructions; and language used will be viewed in light of “the meaning that would ordinarily be understood by the layman who bought and paid for the policy.” Stafford v. Travelers Ins. Co., 530 S.W.2d 23, 25 (Mo.App.1975).
Robin v. Blue Cross Hospital Service, Inc., 637 S.W.2d 695, 698 (Mo. banc 1982).
“The pertinent provisions of the three certificates which comprise the “Com-Pac” program provide:
The membership benefits shall, in any case, be the ones for which dues are being charged and remitted at the time hospital care is provided hereunder.

Cancellation or termination of this agreement for any reason will automatically terminate the rights and privileges herein specified for all participants EXCEPT ... (a conversion privilege for surviving dependents of a deceased member).

The provisions hereunder apply only to expenses incurred while the Participant is covered hereunder. An expense or charge shall be deemed incurred as of the date the service is rendered or purchase is made from which the expense or charge arises.
No other provisions of the certificates are inconsistent with those set out above. The entire tenor of the language used relates to the receipt of medical and hospital care and the incurring of expenses therefor. No mention or reference is made to the date *880upon which illness commences or injury is sustained. Plaintiffs, in their petition, accurately describe the contract as “a certain medical expense plan, ...”
“The decision of the Missouri Supreme Court in Robin v. Blue Cross Hospital Service, Inc., supra, is determinative here. In Robin, a plaintiffs accidental injuries resulted in her loss of employment and coincidental termination of her membership in a group hospital service plan. She sued for reimbursement for the cost of medical care necessitated by her accidental injury but incurred after such termination. The Supreme Court held the language of the contract “clearly provides that the right to benefits for medical services does not extend beyond the life of the contract.” 637 S.W.2d 699.
“Robin differs from the instant case in that in Robin the plaintiff of her own volition failed to keep the agreement in force by exercising her privilege of conversion to individual coverage after termination of her group coverage. Here, plaintiffs had no such opportunity as the contract expressly denies any conversion rights when the coverage is terminated by reason of replacement by a new program. The difference is irrelevant, however, as the unambiguous terms of the contract provide only for liability for expenses when incurred, not for any vesting of rights as of the inception of an illness or injury.
“Other jurisdictions have reached the same result as Robin unless the language of the contract was such as to permit the conclusion that inception of a disease rather than the incurring of medical expense was the insurable event. See Annot. Elimination of Particular Coverage, or Termination of Health, Hospitalization, or Medical Care Insurance Policy as Affecting Insurer’s Liability for Insured’s Continuing Hospitalization or Medical Expenses Relating to Previously Covered Illness, 66 A.L.R.3d 1205. The precise wording of the policy in describing the risk insured against is the determinative factor, and the reason for the termination of the coverage is irrelevant. Id. at 1208. Thus, in Blue Cross of Florida, Inc. v. Dysart, 340 So.2d 970 (Fla.App.1976), the replacement by plaintiff’s employer of medical expense coverage by a different health and accident policy was held to terminate the original insurer’s liability to the employee for subsequently incurred medical and hospital expenses caused by an injury sustained during the policy period. Accord: Tabb v. Louisiana Health Services and Indemnity Company, 352 So.2d 771 (La.App.1977), rev’d on other grounds, 361 So.2d 862 (La.1978); Wulffenstein v. Deseret Mutual Benefit Association, 611 P.2d 360 (Utah 1980); Northwestern National Life Insurance Co. v. Glenn, 568 S.W.2d 693 (Tex.App.1978); St. Paul Fire & Marine Insurance Co. v. Purdy, 129 Ga.App. 356, 199 S.E.2d 567 (Ga.App.1973); Cohen v. Northwestern National Life Insurance Co., 124 Ill.App.2d 15, 259 N.E.2d 865 (1970); Bartulis v. Metropolitan Life Insurance Co., 72 Ill.App.2d 267, 218 N.E.2d 225 (1966).
“Plaintiffs urge us to find an ambiguity in the contract because there is no provision therein “limiting benefits payable for the care of mental illness, nor any specific provision pertaining to the vesting of the right to receive benefits or the termination of benefits which have vested under the contract....” The failure to exclude or limit benefits for the care of mental illness does not create an ambiguity. Such care received during the life of the contract is covered and has been furnished by defendants. The contract provides for the vesting of the right to benefits “at the time hospital care is provided....” and to expenses "incurred while participant is covered hereunder.” An expense is incurred “as of the date the service is rendered or purchase is made.... ” We find no ambiguity in such language nor does the absence from the contract of any provision regarding the effect upon vested rights of termination of the contract create a relevant ambiguity. That liability incurred prior to termination *881cannot be extinguished without consent of the insured is written into the agreement as a matter of law and public policy. But that has no relevance here as all expenses incurred prior to termination of the contract have admittedly been paid by the defendants.
“Finally, plaintiffs contend the contract provisions are ambiguous when read in the light of the advertising brochure regarding “lifetime benefits” and the contract provision that “hospital care, subject to all other provisions of this certificate, shall continue only while the participant is under the treatment or care of his physician and shall end when such participant is discharged as a hospital patient by the attending physician.”
“The brochure is not part of the contract sued upon. The statements contained therein form the basis for Count II of plaintiffs’ petition seeking damages for false advertising in violation of the unlawful merchandising practices statute, § 407.-010, et seq., RSMo 1978. Plaintiffs have not appealed from a dismissal of this count by the trial court.
“The contractual provision regarding continued hospital care until discharge by a physician is qualified by the phrase “subject to all other provisions of this certificate.” Other provisions clearly state that termination of the contract results from the act of the group sponsor in making available another program of hospital care and that termination of the agreement for any reason automatically terminates the right to benefits.
“The gist of plaintiffs’ argument is that the combination of the advertising and the continued care provision of the contract gave them “reasonable expectations” of the vesting of their right to benefits despite the clear language of the policy. This approach was adopted in Danzig v. Dikman, 78 A.D.2d 303, 434 N.Y.S.2d 217 (App.Div.1980) and Myers v. Kitsap Physicians Service, 78 Wash.2d 286, 474 P.2d 109 (Wash, banc 1970), the cases principally relied upon by plaintiffs. However, the reasonable expectation rule of construction was expressly rejected by the Supreme Court of Missouri in cases involving group sponsorship of a health care program in Robin v. Blue Cross Hospital Service, Inc., supra. We are constrained to follow this decision.
While we recognize the apparent harshness of the result we must reach herein, we are not at liberty to rewrite the provisions of the contract the parties have entered into. The trial court, in addition to discussing an unspecified ambiguity, expressed its reliance upon equitable maxims. Although at times it may appear regrettable, our system of jurisprudence does not permit the luxury of disregarding established principles which, over the years, have demonstrated their value.
A court of equity, no more than a court of law may act upon its own conceptions of what is right in a particular case, for established rules and precedents are equally binding upon both law and equity courts; and where the rights of parties litigant are clearly defined by statutes, legal principles and precedents, those statutes and legal principles may not be unsettled or ignored. And not even a court of equity has any discretion as to what the law may be.
Milgramm v. Jiffy Equipment Co., 362 Mo. 1194, 247 S.W.2d 668, 676 (1952).
“The Rule of Law, based upon time proven principles, creates and maintains the stability essential to the orderly and tranquil regulation of all societal relationships. Such stability cannot survive judicial decisions which depart from precedent in favor of individual concepts of what is equitable.
“Accordingly, the trial court’s entry of summary judgment in favor of plaintiffs on Count I is reversed. Defendants did not appeal from the overruling of their motion to dismiss Count I of plaintiffs’ petition. Therefore, the cause is remanded to the trial court for further proceedings not inconsistent with this opinion.”