No. 12555
I N THE SUPREME COURT OF THE STATE O M N A A
F OTN
1973
BETTY L. IJARDLOTJ,
P l a i n t i f f and A p p e l l a n t ,
KALISPELL GENERAL HOSPITAL and
BLUE CROSS O MONTANA,
F
Defendants and Respondents.
Appeal from: D i s t r i c t Court of t h e E l e v e n t h J u d i c i a l D i s t r i c t ,
Honorable R o b e r t Sykes, Judge p r e s i d i n g .
Counsel of Record :
For Appellant :
Measure, Cumming and S a l a n s k y , Columbia F a l l s , Montana
James A . Cumming a r g u e d , Columbia F a l l s , Montana
F o r Respondents:
Korn, Warden, W a l t e r s k i r c h e n and C h r i s t i a n s e n , K a l i s p e l l ,
. Montana
Church, H a r r i s , Johnson and F?il.liams, G r e a t F a l l s ,
Montana
Donald A. LaBar a r g u e d , G r e a t F a l l s , Montana
Submitted: November 26, 1973
Decided : FE8 1 5 1974
Filed :FEB 1 5 1974
M r . J u s t i c e Gene B. Daly d e l i v e r e d t h e Opinion of t h e Court.
T h i s i s an a c t i o n wherein p l a i n t i f f B e t t y L. Wardlow s t a t e d
a c l a i m a g a i n s t d e f e n d a n t s K a l i s p e l l General H o s p i t a l and Blue
Cross of Montana f o r f a i l u r e t o pay claimed medical b e n e f i t s due
h e r a s a r e s u l t of an i l l n e s s . P l a i n t i f f a p p e a l s from a summary
judgment e n t e r e d by t h e d i s t r i c t c o u r t of F l a t h e a d County d i s -
missing defendant Blue Cross a s a d e f e n d a n t . Defendant K a l i s p e l l
General H o s p i t a l i s n o t a p a r t y i n t h i s a p p e a l .
P l a i n t i f f was employed by K a l i s p e l l General H o s p i t a l a s
a l i c e n s e d p r a c t i c a l n u r s e on December 6 , 1964. O December 31,
n
1964, she a p p l i e d and was a c c e p t e d f o r membership i n t h e h o s p i t a l ' s
h e a l t h i n s u r a n c e group, Blue Cross o f Montana. By agreement,
Mrs. Wardlow p a i d h e r premiums f o r t h e f i r s t t h r e e months and
s u b s e q u e n t l y premiums were p a i d t o Blue Cross by t h e h o s p i t a l
w i t h o u t d e d u c t i o n from M r s . ~ a r d l o w ' swages.
I n t h e l a s t week of May 1965, Mrs. Wardlow's d o c t o r informed
h e r she had c e r v i c a l c a n c e r r e q u i r i n g immediate t r e a t m e n t . On
o r about May 31, 1965, s h e informed h e r employer of t h e emergency
and i n q u i r e d about l e a v e and h e r h e a l t h i n s u r a n c e coverage. She
t e s t i f i e d by d e p o s i t i o n t h a t a t t h e time she was i n a n e m o t i o n a l l y
d i s t r e s s e d and f r i g h t e n e d s t a t e of mind. She s t a t e d she i n q u i r e d
of Eleanor Disbrow, t h e h o s p i t a l employee a d m i n i s t e r i n g t h e Blue
Cross group h e a l t h p l a n , concerning h e r premium payment due d u r i n g
h e r l e a v e o f absence f o r s i c k n e s s , which she understood had been
granted t o her. She t e s t i f i e d Mrs. Disbrow t o l d h e r "Ilon't worry
about a t h i n g , e v e r y t h i n g i s completely a l l r i g h t , your i n s u r a n c e
If
i s just fine.
The "Hospital Personnel P o l i c y " which was f u r n i s h e d t o a l l
new employees provided t h a t s i c k l e a v e w a s a v a i l a b l e o n l y a f t e r
s i x months of f u l l time employment and accumulated a t t h e r a t e of
one day p e r month up t o a t o t a l of 24 days and t h a t employees
on l e a v e of absence must pay t h e i r own Blue Cross premiums t o
c o n t i n u e membership.
Under the care of a Billings physician, Mrs. Wardlow
commenced treatment for her cancer condition on June 1, 1965.
She was hospitalized at St. inc cent's Hospital in Billings from
June 13 to June 17, 1965, and again from June 24 to July 25, 1965,
at which time she was released as cured.
The Kalispell General Hospital notified Blue Cross on or
about July 2, 1965, that Mrs. Wardlow's employment had been
terminated. It does not appear that the hospital notified Mrs.
Wardlow. She contends she first learned of her termination in
August 1965, when she attempted to resume work.
On July 2, 1965, Blue Cross mailed a form notification
letter to Mrs. Wardlow at her home address, advising her of
nonpayment of premiums and stating that she must pay $37.05 for
the period from June 15 to September 15, 1965, to avoid a lapse in
coverage. Mrs. Wardlow contends she did not receive the notice.
Mrs. Wardlow incurred medical expenses totaling approxi-
mately $1,800. Blue Cross paid hospital expenses totaling $170.95.
Blue Cross counterclaimed for $46, contending that Mrs. wardlow's
coverage ended on June 15, 1965, and the payment made by Blue
Cross for hospitalization covered the period from June 13 through
June 17, 1965.
Plaintiff presents six issues on appeal:
1. Was plaintiff entitled to termination notice from
Blue Cross?
2. If so, did Mrs. Wardlow receive termination notice?
3. Was the treatment for the cancer condition commenced
prior to termination of her coverage?
4 If the treatment was commenced prior to termination of
.
coverage, was the entire course of treatment for the same illness
covered ?
5, Were the alleged representations made by the hospital
to Mrs. Wardlow imputable to Blue Cross?
6. Was summary judgment proper?
The i s s u e s contain mixed elements of law and f a c t and
a r e such t h a t f i n d i n g of merit i n any one of them would c o n s t i t u t e
grounds f o r r e v e r s a l of t h e summary judgment. The record does n o t
d i s c l o s e t h e l e g a l r a t i o n a l e applied by t h e d i s t r i c t c o u r t i n
g r a n t i n g summary judgment.
I n h e r t h i r d , f o u r t h and s i x t h i s s u e s on appeal, p l a i n t i f f
contends t h a t her Blue Cross coverage was i n f o r c e a t t h e time her
physician informed h e r of t h e cancerconditim and a t t h e time she
commenced treatment f o r i t . She contends t h a t occurrence and
commencement of t h e p e r i l insured a g a i n s t while t h e c o n t r a c t was
i n f o r c e o b l i g a t e s t h e i n s u r e r t o pay d i r e c t l y r e l a t e d and
continuing expenses.
P l a i n t i f f a s s e r t s no cases have been found d e a l i n g i n t h e
h o s p i t a l i z a t i o n insurance a r e a , t h e r e f o r e she c i t e s c a s e s involving
accident and d i s a b i l i t y p o l i c i e s which extend t h e i n s u r e r ' s l i a -
b i l i t y t o f u r n i s h subsequent ensuing medical expenses. Intercoast
Mutual L i f e Insurance Co. v. Andersgn, 75 Nev. 457, 345 P.2d 762,
75 ALR2d 870.
I n t e r c o a s t Mutual L i f e i s favorable i n many r e s p e c t s , b u t
d i f f e r s s u b s t a n t i a l l y i n t h e c o n t r a c t language. There, considerable
weight was given t o t h e "ambiguity, i f any" contained i n t h e
termination c l a u s e of t h e policy --- "* * * such termination s h a l l
1I
be without p r e j u d i c e t o any claim o r i g i n a t i n g p r i o r t h e r e t o .
(Emphasis o u r s ) .
Blue Cross contends t h a t i f t h i s p r i n c i p l e were applied t o
group h e a l t h coverage t h e insured would no longer have t o pay
premiums once she became s i c k , and construes p l a i n t i f f ' s argument
t o mean she i s e n t i t l e d t o membership i n Blue Cross and r e s u l t i n g
b e n e f i t s , b u t n o t r e q u i r e d t o pay premiums a f t e r she became s i c k .
Here, we do n o t view t h e problem t o be, a s Blue Cross
contends., b u t o f f e r s no supporting a u t h o r i t y , whether o r n o t
p l a i n t i f f was e n t i t l e d t o continuing membership without payment of
premiums. The i n s t a n t l i t i g a t i o n p r e s e n t s t h e problem of payment
of b e n e f i t s under t h e c o n t r a c t a f t e r termination. It does n o t con-
cern continued membership.
Involved i s a h e a l t h s e r v i c e c o n t r a c t which provides
h o s p i t a l and medical b e n e f i t s f o r i t s members. The c o n t r a c t
does n o t d i s t i n q u i s h between h e a l t h coverage and a c c i d e n t coverage.
The same l i m i t a t i o n s and c o n d i t i o n s , so f a r a s p e r t i n e n t t o t h i s
c a s e , apply t o t h e h o s p i t a l and medical coverage.
To r e s o l v e t h e i s s u e s h e r e , we look t o t h e terms o f t h e
c o n t r a c t and employ t h e r u l e s g e n e r a l l y a p p l i c a b l e t o t h e i n t e r -
p r e t a t i o n of i n s u r a n c e c o n t r a c t s . W must a l s o r e s o l v e a l l
e
a m b i g u i t i e s i n a n i n s u r a n c e c o n t r a c t i n t h e l i g h t most f a v o r a b l e
t o the insured.
The c o n t r a c t p r o v i s i o n involved h e r e which governs
e l i g i b i l i t y and b e n e f i t s s t a t e s :
"This i s t o c e r t i f y t h a t , i n c o n s i d e r a t i o n of
t h e payment of r e q u i r e d membership dues, t h e
S u b s c r i b e r whose name appears on t h e membership
c a r d , and such e l i g i b l e members of h i s o r h e r
family ( i f any) who have been accepted f o r
membership, a r e e n t i t l e d t o t h e b e n e f i t s h e r e i n -
a f t e r d e s c r i b e d s u b j e c t t o t h e terms, c o n d i t i o n s ,
and l i m i t a t i o n s s e t f o r t h i n t h i s C e r t i f i c a t e . I1
Following t h - i s p r o v i s i o n t h e b e n e f i t s , terms, c o n d i t i o n s and
l i m i t a t i o n s a r e s e t f o r t h i n A r t i c l e s I through I X . As s t a t e d
h e r e t o f o r e , t h e c o n t r a c t i s s i l e n t a s t o cause of h o s p i t a l i z a -
t i o n and merely d e a l s i n s e r v i c e s . The c o n t r a c t i s a l s o s i l e n t
a s i t p e r t a i n s t o when t h e r i g h t t o r e c e i v e b e n e f i t s w i l l v e s t .
There a r e no s p e c i f i c c o n d i t i o n s concerning t h e t e r m i n a t i o n of
b e n e f i t s , once v e s t e d under t h e c o n t r a c t . The m a t t e r of dues
and t e r m i n a t i o n o f membership i s covered i n A r t i c l e V I I :
" V I I . CHANGES I N ME14BERSHIP DUES OR PROVISIONS
OF THIS CERTIFICATE AND TEF3IINATION
II
a . P r o v i s i o n s of t h i s C e r t i f i c a t e o r
Membership dues may be changed a t any time by
t h e Board of T r u s t e e s of t h e Plan by mailing
w r i t t e n n o t i c e s t h i r t y (30) days o r more p r i o r
t o t h e d a t e of change t o t h e S u b s c r i b e r o r t h e
employer o f t h e o r g a n i z a t i o n i n which t h e Sub-
s c r i b e r p a r t i c i p a t e s i n a group. Payment of
t h e f i r s t payment due a f t e r t h e e f f e c t i v e d a t e
of t h e change s h a l l b e deemed a s c o n c l u s i v e
proof of t h e ~ u b s c r i b e r ' sagreement w i t h t h e
change .
"b. T h i s C e r t i f i c a t e i s t e r m i n a t e d immed-
i a t e l y upon non-payment of dues. I n such e v e n t ,
r e i n s t a t e m e n t o f , t h i s C e r t i f i c a t e s h a l l be a t
t h e s o l e d i s c r e t i o n o f , and under such condi-
t i o n s a s may be s p e c i f i e d by t h e Plan.
"c. T h i s C e r t i f i c a t e may b e t e r m i n a t e d
by t h e Plan by g i v i n g t h e S u b s c r i b e r a t l e a s t
t h i r t y (30) days p r i o r w r i t t e n n o t i c e , however, -
t f a Member i s - r e c e i v i n g h o s p i t a l s e r v i c e on
t h e d a t e of t e r m i n a t i o n , b e n e f i t s s h a l l be
provided under t h i s C e r t i f i c a t e u n t i l t h e d i s -
c h a r g e of t h e Member from t h e h o s p i t a l o r
u n t i l a l l days of c a r e a v a i l a b l e under t h i s
C e r t i f i c a t e a r e used---whichever s h a l l f i r s t
occur.
"d. T h i s C e r t i f i c a t e may be t e r m i n a t e d
by t h e S u b s c r i b e r by g i v i n g t h e Plan a t l e a s t
t h i r t y (30) days p r i o r w r i t t e n n o t i c e . Dues, i f-
any, p a i d by t h e s u b s c r i b e r beyond t h e d a t e
of t e r m i n a t i o n w i l l be refunded by t h e Plan."
(Emphasis o u r s ) .
The o n l y r e f e r e n c e t o b e n e f i t s i s t h e r e f e r e n c e c o n t a i n e d
i n subsection If
c 11 , which c o n t i n u e s b e n e f i t s when c a n c e l l a t i o n i s
a t t h e hand of Blue C r o s s , however t h e r e i s no e x c l u s i o n a r y
Language i n t h e s e c t i o n concerned w i t h v o l u n t a r y t e r m i n a t i o n
( s u b s e c t i o n "d"), o r t e r m i n a t i o n f o r nonpayment of dues (subsec-
t i o n "bff) . TO t h e c o n t r a r y s u b s e c t i o n "b" seems t o be s u b j e c t
t o r e i n s t a t e m e n t a t t h e d i s c r e t i o n of Blue Cross. Testing t h i s
c o n t r a c t by any r u l e , we have t o conclude t h a t t h e m a t t e r s and
d i s t i n c t i o n s urged by Blue Cross a r e e i t h e r n o t covered by t h e
c o n t r a c t o r a t b e s t a r e ambiguous.
The problem h e r e i s t r e a t e d from two p o i n t s of view i n
a m a j o r i t y o p i n i o n and a c o n c u r r i n g o p i n i o n i n a 1970 Washington
c a s e , Myers v. K i t s a p P h y s i c i a n s S e r v i c e , 78 W.2d 286, 474 P.2d 109.
There t h e m a j o r i t y o p i n i o n h o l d s t h e c o n t r a c t open t o more t h a n
one r e a s o n a b l e i n t e r p r e t a t i o n and because of t h e ambiguity i t
was r e s o l v e d i n f a v o r of t h e i n s u r e d , f o l l o w i n g a c o n t i n g e n t e v e n t
vested r i g h t theory. The m a j o r i t y o p i n i o n c i t e s 75 ALR2d 876(1961)
a s a reasonable application t o a h e a l t h service contract. This
i s a c i t a t i o n o b j e c t e d t o i n t h e i n s t a n t c a s e by Blue Cross a s
p e r t a i n i n g o n l y t o " a c c i d e n t " coverage and n o t a p p l i c a b l e .
The c o n c u r r i n g o p i n i o n i n Myers r e c o g n i z e s t h i s p o s i t i o n
b u t because of t h e ambiguous language c o n s t r u e s t h e c o n t r a c t i n
f a v o r of t h e employee f o r whose b e n e f i t t h e group c o n t r a c t i s drawn.
For the purpose of our consideration of the contract
involved here both views are reasonable under the circumstances
and we so hold.
The factual issue---whether the expenses were incurred in
the continuing course of treatment of an illness contracted during
the period the coverage was in force and effect---is a disputed
material fact. Accordingly, we find the district court erred in
granting summary judgment dismissing Blue Cross as a defendant.
We need not discuss the remaining issues raised by
plaintiff, except to state that under the express terms of the
contract existing between the litigants, we find them to be
without merit.
The order granting summary judgment is reversed and the
cause remanded to the district proceedings.
Justice
We Concur:
-----------l----&---------
Chief Justice
1 r Justice Wesley Castles dissenting:
4.
I dissent.
The facts reveal that Wardlow read the hospital's
personnel policy which stated clearly that an employee was
not entitled to sick leave until six months of service as a
full time employee. She did not qualify. Neither, under the
personnel policy, did she establish a leave of absence and at
no time did she attempt to pay a premium for the period involved.
Appellant Wardlow made various allegations against the hospital,
which, if proven, may have merit against the hospital, but these
allegations cannot support a claim against respondent Blue Cross.
In my view, summary judgment in favor of Blue Cross was
proper, and I would affirm.
I
Justice