Gaskins v. Blue Cross-Blue Shield of South Carolina

• Decision Date: 06 June 1978
• Docket Number: CROSS-BLUE,No. 20705,20705
• Citation: 245 S.E.2d 598,271 S.C. 101
• Court: South Carolina Supreme Court
• Parties: Oliver K. GASKINS, Respondent, v. BLUESHIELD OF SOUTH CAROLINA, Appellant.

Page 598

245 S.E.2d 598

271 S.C. 101

Oliver K. GASKINS, Respondent, v. BLUE CROSS-BLUE SHIELD OF SOUTH CAROLINA, Appellant.

No. 20705.

Supreme Court of South Carolina.

June 6, 1978.

Thomas R. Gottshall, of Boyd, Knowlton, Tate & Finlay, Columbia, for appellant.

Danny R. Smith, of Cummings & Smith, Spartanburg, for respondent.

PER CURIAM:

The Honorable Paul M. Moore, resident Judge of the Seventh Judicial Circuit, granted summary judgment in favor of the plaintiff-respondent. The defendant-appellant alleges error and asks the review of this court.

We are of the opinion that Judge Moore properly set forth and disposed of all of the issues now before us on appeal. Let his order be printed as the directive of this court.

ORDER OF JUDGE MOORE

This matter came before the Court on motions by both the plaintiff and defendant for summary judgment. Both parties have stipulated in oral argument that there are no issues for determination by a jury and the matter of coverage under an insurance contract is before the Court for construction and interpretation.

A review of the factual setting in which this controversy arises reveals that the plaintiff, a public school teacher, covered by the State employees and public school teachers Blue Cross-Blue Shield health and medical insurance family contract, placed his son Steve in Anneewakee Foundation in Douglasville, Georgia, on November 13, 1974. This placement was a court-imposed condition of the son's probation. The plaintiff submitted a claim for payment of hospitalization expenses for his son under his basic and major medical contract to the defendant which was denied. The plaintiff then filed this action. It appears that the plaintiff's alleged total expenses as of the date of the filing of the second Amended Complaint amounted to Twenty-Nine Thousand One Hundred Seventy-One and 50/100 ($29,171.50) Dollars. Payable under the plaintiff's Blue Cross-Blue Shield policy was Twenty-Four Thousand Five Hundred Ninety-seven and 20/100 ($24,597.20) Dollars. This figure represents Twenty-Three Thousand Three Hundred Thirty-Seven and 20/100 ($23,337.20) Dollars of major medical coverage and One Thousand Two Hundred Sixty ($1,260.00) Dollars of basic coverage. Counsel for both parties stipulated in oral argument that the sole issue before the Court in determining whether or not these expenses are covered under the Contract is whether or not the institution known as Anneewakee Treatment Center, of Anneewakee Foundation, Inc., hereinafter called Anneewakee, meets the definition of hospital under the unamended version of the Blue Cross-Blue Shield contract.

A copy of the entire contract in question has been supplied to the Court. The basic Blue Cross contract provides for benefits for a member admitted to a "member hospital". "Member Hospital" in Article I, paragraph 11, is defined as "any hospital which has an operating agreement in effect with any Blue Cross plan." The basic Blue Cross contract in Article I, Section 10 and the major medical contract in Article I, Section 8, gives the following definition for hospital:

" 'HOSPITAL' means an institution which, for compensation from its patients and on an inpatient basis, is primarily engaged in providing diagnostic and therapeutic facilities for the surgical and medical diagnosis, treatment and care of injured and sick persons by or under the supervision of a staff of Physicians who are duly licensed to practice medicine, and which continuously provides twenty-four (24) hour-a-day nursing service by registered graduate nurses physically present and on duty, and which is not, other than incidentally, a nursing home, or a place for: (a) rest, (b) the aged, (c) drug addicts, (d) alcoholics, or (e) the treatment of pulmonary tuberculosis or mental disorders. For purposes of this Contract, Hospital shall also mean a Hospital with which any Blue Cross Plan, approved by the American Hospital Association, has an operating agreement. Also, for purposes of this Contract, included within the definition of Hospital are the Palmetto Center in Florence, South Carolina, the Holmes View Center in Greenville, South Carolina, and Central Addictions Facility Demonstration Project in Columbia, South Carolina specifically for the treatment of alcoholism." (Emphasis supplied).

It is admitted that Anneewakee is a place primarily for the treatment of mental disorders. However, Anneewakee may still meet the definition of hospital if it has an operating agreement with any Blue Cross Plan, approved by the American Hospital Association, as set forth above. Thus, the sole question before the Court is whether or not Anneewakee had such an "operating agreement" with any Blue Cross Plan.

The defendant's position, as shown through its various affidavits and depositions, is that an "operating agreement" must be defined as a written document entitled "Participating" or "Contracting" agreement, although the term "operating agreement" is not defined within the policy in question and there are no written Blue Cross-Blue Shield contracts entitled "operating agreement" in existence. Anneewakee admittedly has no such written agreement entitled "Participating" or "Contracting" agreement with a Blue Cross Plan. The defendant contends that this interpretation of the term "operating agreement" is the only reasonable interpretation and that the plaintiff's interpretation as hereinafter discussed is "inventive."

The plaintiff submits that no written contract is necessary in order for Anneewakee's relationship with a Blue Cross Plan to be considered an operating agreement. In support thereof are various affidavits and depositions from the officials of Anneewakee along with a letter of November 12, 1974, from William L. James of Blue Cross-Blue Shield of Georgia/Atlanta.

The Court has considered all the various affidavits, depositions, and related pleadings in this matter and must be guided by the well established legal principles under South Carolina law governing the construction of insurance contracts. The terms of an insurance policy must be construed most liberally in favor of the insured, and if the policy, words and language of the policy, when considered as a whole, give rise to a patent ambiguity or are capable of two or more reasonable interpretations, at least one of which favors coverage, that construction which is most favorable to the insured must be adopted.

It appears to the Court that the plaintiff's interpretation of the term "operating agreement" is not inventive and is certainly equally as reasonable as the defendant's. An agreement need not be in writing. The term "agreement" does not necessarily import any direct or express stipulation, nor is it necessary that it should...