Fragner v. American Community Mut. Ins. Co., 134979

• Decision Date: 03 May 1993
• Docket Number: No. 134979,134979
• Citation: 199 Mich.App. 537,502 N.W.2d 350
• Parties: Sharon FRAGNER, Plaintiff-Appellant, v. AMERICAN COMMUNITY MUTUAL INSURANCE COMPANY, Defendant-Appellee.
• Court: Court of Appeal of Michigan — District of US

Page 350

502 N.W.2d 350

199 Mich.App. 537

Sharon FRAGNER, Plaintiff-Appellant, v. AMERICAN COMMUNITY MUTUAL INSURANCE COMPANY, Defendant-Appellee.

No. 134979.

Court of Appeals of Michigan.

Submitted February 3, 1993, at Detroit.

Decided May 3, 1993, at 9:25 a.m.

Released for Publication July 30, 1993.

Lopatin, Miller, Freedman, Bluestone, Erlich, Rosen & Bartnick by Richard E. Shaw, Detroit, for plaintiff.

Cummings, McClorey, Davis & Acho, P.C. by Gail P. Massad, Livonia, for defendant.

Before NEFF, P.J., and GRIBBS and BRENNAN, JJ.

NEFF, Presiding Judge.

Plaintiff appeals as of right from an order of the circuit court granting defendant's motion for summary disposition, pursuant to MCR 2.116(C)(7) and (10), and denying plaintiff's motion for reconsideration, pursuant to MCR 2.119, in this insurance benefits action. On appeal, plaintiff asserts that defendant's insurance policy was ambiguous regarding the type of organ transplants included within its coverage and that defendant wrongfully refused to provide insurance coverage for expenses related to her liver transplant. We agree, and reverse.

I

Defendant issued a health insurance policy to plaintiff. Plaintiff later learned she would need a liver transplant to survive a debilitating liver disease. Initially, defendant indicated that it would not pay for the operation because it was considered an experimental procedure. Later, however, after receiving a letter from a surgeon with the University of Michigan Medical Center, defendant conceded the procedure was not experimental. Even so, on May 29, 1987, defendant indicated it would not pay for the operation because it was not covered under plaintiff's policy.

On July 6, 1987, plaintiff underwent liver transplant surgery, receiving a liver from a deceased donor. After learning that defendant would not cover the cost of the operation, plaintiff applied for Medicaid coverage. Medicaid paid all but $13,667.45 of the $140,845.12 bill, and is expected to eventually pay the remainder as well. Defendant's insurance policy contains a coordination of benefits clause, which provides that the deductible amount for covered charges is the amount provided by other coverage. Defendant claims that, even if the liver transplant was covered under the policy, because Medicaid is expected to cover the entire cost, defendant owes nothing.

II

Plaintiff first argues that the language of the insurance policy should have been interpreted to include coverage of organ transplants from a deceased donor because any ambiguities in the contract must be resolved in favor of the insured. She also claims that the language pertaining to organ transplants is language of inclusion, not exclusion, and no mention is made of excluding transplants from coverage under the exclusions section of the policy. Accordingly, she argues that the trial court's order granting summary disposition in favor of defendant must be reversed.

Defendant argues that the trial court properly granted summary disposition in its favor because the language of the policy in question is unambiguous, and it clearly states that only transplants from living donors are covered.

An insurance contract should be read and interpreted as a whole. Allstate Ins. Co. v. Tomaszewski, 180 Mich.App. 616, 619, 447 N.W.2d 849 (1989). Exclusions limit the scope of coverage provided and are to be read with the insuring agreement and independently of every other exclusion. Hawkeye-Security Ins. Co. v. Vector Construction Co., 185 Mich.App. 369, 384, 460 N.W.2d 329 (1990). If an insurer intends to exclude coverage under certain circumstances, it should clearly state those circumstances in the section of its policy entitled "Exclusions." Transamerica Ins. Corp. of America v. Buckley, 169 Mich.App. 540, 546, 426 N.W.2d 696 (1988). Exclusionary clauses are to be strictly construed against the insurer. Farm Bureau Mutual Ins. Co. of Michigan v. Stark, 437 Mich. 175, 181, 468 N.W.2d 498 (1991).

An insurance contract is clear if it fairly admits of but one interpretation. Id., p. 182, 468 N.W.2d 498. If an insurance contract's language is clear, its construction is a question of law for the court. Hafner v. DAIIE, 176 Mich.App. 151, 156, 438 N.W.2d 891 (1989). An insurance contract is ambiguous if, after reading the entire contract, its language reasonably can be understood in differing ways. Bianchi v. Automobile Club of Michigan, 437 Mich. 65, 70, 467 N.W.2d 17 (1991); Hawkeye, supra, 185 Mich.App. p. 381, 460 N.W.2d 329. Ambiguities in an insurance policy drafted by an insurer are to be construed against the insurer and in favor of the insured. Bianchi, supra; M & H Tool Co., Inc. v. Aetna Casualty & Surety Co., 185 Mich.App. 571, 574, 463 N.W.2d 124 (1990); Hagerl v. Auto Club Group Ins. Co., 157 Mich.App. 684, 689, 403 N.W.2d 197 (1987).

The pertinent policy language in this case is listed in the definition section of the policy under the heading "Covered Charge." It states:

Covered Charge means an expense of [you and any persons you listed in your application whom we accepted] due to Sickness or Injury which:

* * * * * *

6. Is due to one or more of the following, subject to the expressed limitations:

* * * * * *

(r) The transplant of a natural organ by a living donor. We will treat the donor's charges as incurred by you or the Family Member. This includes charges directly due to the transplant and for 6 months after the transplant but does not include transportation other than local emergency ambulance service.

Defendant asserts that the language in subsection r clearly establishes that transplants from living donors are the only transplants it will cover. We disagree. The quoted language is language of inclusion, not exclusion. A close reading of the contract language reveals that the words, at the least, are ambiguous and, at most, establish only that, where living donors are...