Faruque v. Provident Life & Acc. Ins. Co., 86-1359

• Decision Date: 03 June 1987
• Docket Number: No. 86-1359,86-1359
• Citation: 31 Ohio St.3d 34,31 OBR 83,508 N.E.2d 949
• Parties: , 31 O.B.R. 83 FARUQUE et al., Appellants, v. PROVIDENT LIFE & ACCIDENT INSURANCE COMPANY et al., Appellees.
• Court: Ohio Supreme Court

Page 34

31 Ohio St.3d 34

508 N.E.2d 949, 31 O.B.R. 83

FARUQUE et al., Appellants, v. PROVIDENT LIFE & ACCIDENT INSURANCE COMPANY et al., Appellees.

No. 86-1359.

Supreme Court of Ohio.

June 3, 1987.

Syllabus by the Court

Language in a contract of insurance reasonably susceptible of more than one meaning will be construed liberally in favor of the insured and strictly against the insurer. (Buckeye Union Ins. Co. v. Price [1974], 39 Ohio St.2d 95, 68 O.O.2d 56, 313 N.E.2d 844, approved and followed.)

In 1972, plaintiffs-appellants, Abu Ahmed Faruque, a medical doctor, and his wife, Mary Ann, purchased an excess major medical insurance group plan. This plan was sponsored by the American Medical Association, underwritten by Provident Life & Accident Insurance Company and administered by Marsh & McLennan Group Associates (defendants-appellees herein). At the time plaintiffs purchased their excess policy, it provided for unlimited nursing benefits up to one million dollars.

In 1974, it was discovered that Dr. Faruque had a brain tumor. This tumor was so severe and debilitating that it left him totally and permanently incapacitated, and requires him to receive continuous nursing care for the remainder of his life. Between 1974 and 1984, defendant insurance company paid all the nursing expenses incurred on behalf of Dr. Faruque after the deductible for the particular "benefit period" was paid by plaintiffs. The plaintiffs have paid premiums for the excess policy at all times since 1972.

In 1984, defendants decided to limit and modify the nursing care benefits of the group plan to which plaintiffs subscribed. This modification was applied to plaintiffs without their consent when their policy was renewed effective August 1, 1985.

Plaintiffs commenced this action against defendants in the court of common pleas for damages incurred by the application of the modification, and for injunctive relief to stop application of modifications in the future. Subsequently, plaintiffs amended their complaint to include a request grounded in quantum meruit, for the reasonable value of the nursing services provided by the plaintiff-wife. Plaintiffs alleged that defendants were unjustly enriched by the wife's nursing services undertaken without reimbursement from defendants. Thereafter, both parties filed motions for summary judgment. In two separate orders, the trial court granted summary judgment in favor of defendants while overruling the motion of plaintiffs. The trial court held that the policy in issue " * * * is a medical expense insurance policy susceptible to modification at the end of the policy period."

Upon appeal, the court of appeals affirmed. The appellate court held the express terms of the policy " * * * clearly guarantee that once an illness begins, the insured will be covered pursuant to the terms of the policy for that particular benefit period. Nothing in this provision guarantees coverage beyond the benefit period in which the illness arises."

The "Benefit Provision" of the excess policy relied on by the court of appeals provides in pertinent part:

"If an Insured Member necessarily incurs Covered Expenses for himself * * * for treatment of Injury or Illness while insurance under the Group Policy * * * is in effect, the Company will pay the Insured Member, subject to all the terms, conditions and limitations of the Group Policy, benefits for Covered Expenses incurred during a Benefit Period in excess of the Deductible Amount as follows:

"(a) For any treatment other than treatment for Mental or Nervous Conditions, Alcoholism or Drug Addiction-Benefits equal to 100% of the charges incurred for Covered Expenses for such treatment, but in no event to exceed for each covered person the Maximum Benefit; * * * " (Emphasis added.)

Consequently, the appellate court specifically rejected plaintiffs' argument that unlimited nursing care benefits vested in their favor at the outset of Dr. Faruque's disability, up to one million dollars in coverage. Thus, the court held that defendants had the right to unilaterally modify benefits upon renewal of plaintiffs' policy. The court of appeals further held that plaintiffs' quantum meruit claim was without merit because of a provision in the subject excess policy that specifically excludes payment for services rendered by a member of the insured's immediate family.

The cause is now before this court upon the allowance of a motion to certify the record.

Nukes & Perantinides Co., L.P.A., and Paul G. Perantinides, Akron, for appellants.

Roderick, Myers & Linton and Kurt R. Weitendorf, Akron, for appellees.

SWEENEY, Justice.

The first issue presented for our determination is whether the express terms of the excess major medical insurance policy permit a modification of the allowable benefits payable; or whether plaintiffs' rights to unlimited nursing care benefits vested, thus entitling them to such benefits under the original terms of the excess policy.

Defendants-appellees argue that the operative provision relied on by the court of appeals below (i.e., the "Benefit Provision") guarantees benefits solely for expenses incurred within a benefit period. It is the defendants' contention that the policy in issue is a "medical expense" policy and not a "health-accident" policy; and that, therefore, no rights were vested upon the occurrence of Dr. Faruque's illness and the policy was subject to modification at the end of the benefit period. Defendants assert that while a "health-accident" policy will vest the insured's right to benefits when an illness or injury occurs, a "medical expense" policy will vest the insured's rights to benefits only when expenses are incurred, and then only for the duration of the benefit period. Defendants submit that the title of the subject policy is "Group Excess Major Medical Expense Insurance," thus indicating that this policy is a "medical expense" policy.

The plaintiffs-appellants contend that there is nothing in the policy which provides for the modification of benefits at any time during the life of the contract that they entered into with defendants. Plaintiffs also argue that the only provision in the policy that even mentions modification concerns a change in the renewal premiums. The plaintiffs submit that the provision in the policy that most closely refers to their situation (i.e., long-term illness or total disability) is that found in the third paragraph of the "Benefit Provision" which states in relevant part:

"If an Insured Member * * * is totally disabled by an * * * Illness for which Covered Expenses are being incurred on the date the insurance under the Group Policy with respect to the Insured Member * * * is terminated, benefits will be payable as provided above for Covered Expenses incurred for the treatment of that Illness * * * during the continuation of such disability but not beyond the end of the Benefit Period during which the insurance was terminated."

Plaintiffs assert that under this provision, benefits are payable during the continuation of a total disability and end only when the insurance is terminated. ¹ It is undisputed that the instant policy has not been terminated. In any event, plaintiffs contend that even if this court finds that the above provision does not entirely resolve the issue of whether defendants may modify the contract as to plaintiffs' interest, this court should at least find that the insurance contract is ambiguous and that...