Golden Rule Ins. Co. v. Atallah

• Decision Date: 08 November 1994
• Docket Number: No. 94-1613,94-1613
• Citation: 45 F.3d 512
• Parties: GOLDEN RULE INSURANCE COMPANY, Plaintiff, Appellant, v. Catherine ATALLAH, Defendant, Appellee. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 512

45 F.3d 512

GOLDEN RULE INSURANCE COMPANY, Plaintiff, Appellant, v. Catherine ATALLAH, Defendant, Appellee.

No. 94-1613.

United States Court of Appeals, First Circuit.

Heard Nov. 8, 1994.

Decided Jan. 23, 1995.

Curtis J. Dickinson with whom Dickinson & Associates, Indianapolis, IN, Wendell G. Large, Elizabeth G. Stouder, and Richardson & Troubh, Portland, ME, were on brief for appellant.

Mark G. Furey with whom Thompson, McNaboe, Ashley & Bull, Portland, ME, were on brief for appellee.

Before SELYA, CYR, and STAHL, Circuit Judges.

STAHL, Circuit Judge.

Plaintiff-appellant Golden Rule Insurance Company ("Golden Rule"), an Illinois corporation, appeals a judgment awarding defendant-appellee Catherine Atallah ("Atallah") $263,698.68 for medical expenses pursuant to an insurance contract ("the Policy") between the parties. Golden Rule contends that Atallah's illness, a meningioma, or tumor of the brain lining, was a preexisting condition excluded from coverage under the Policy and therefore the district court erred in not granting Golden Rule judgment as a matter of law. We agree that Golden Rule was entitled to judgment as a matter of law, and now vacate and remand so that judgment may be entered accordingly.

I. BACKGROUND

By late 1991, those who knew Catherine Atallah realized that something was amiss with her. Divorced about eight years previously, Atallah, then 49, of Waterville, Maine, had become increasingly reclusive over the previous several years, and she was becoming increasingly unable or unwilling to perform the ordinary tasks of everyday life. She failed to pay bills, and her utility and telephone services were cut off more than once. She fell several months behind in mortgage payments on her home, and she allowed her driver's license to lapse. When the doorbell or telephone rang, she often would refuse to answer. She bathed, changed clothes and combed her hair infrequently, and she left soiled pots and pans in her kitchen for weeks at a time.

A family friend persuaded Atallah to seek medical attention in June 1991, but a routine examination turned up no obvious clues to her condition. She also visited a social worker twice that summer, and explained that she was doing so to learn "why I am the way I am." She failed to show up for a scheduled third visit and did not arrange a further appointment.

In November 1991, Atallah's condition had deteriorated to the point that her oldest son, Peter Atallah, obtained from her a power-of-attorney permitting him to oversee her affairs. One of the first things Peter Atallah did was attempt to purchase medical insurance for his mother, who was then uninsured. This effort failed because of an apparent mix-up over the method of payment. In June 1992, Peter Atallah arranged for Dr. David Preston, an internist, to visit his mother at home. In a lengthy letter to Dr. Preston, Peter Atallah related his mother's personal and medical history, including a previous thyroid condition and hysterectomy about eight years earlier. He told Dr. Preston that he and his brothers

want our mother back. We believe she is suffering from chronic depression, but that Dr. Preston visited Atallah in her home on June 24, 1992. The ensuing physical exam yielded no remarkable findings other than that she had lost fifteen pounds during the previous six months and had suffered a gradual decrease in vision over the previous few years. Dr. Preston noted that Atallah's thyroid condition should be rechecked and the cause of her weight loss determined. He also noted that he believed she was "a danger to herself though in a sort of low grade fashion," and that he discussed with her the advisability of seeking inpatient psychiatric treatment "as she has really failed to connect" with anyone as an outpatient. In deposition testimony read into the trial record, Dr. Preston stated that Atallah did not think inpatient treatment was necessary but that she agreed to see a psychiatrist on an outpatient basis, and that he "thought that that would be a good start." Dr. Preston did not specifically recommend that Atallah receive an EEG or CT scan. He recalled, however, that Atallah was reluctant to undergo expensive tests or hospitalization because of concerns about her lack of insurance coverage. At Dr. Preston's direction, Atallah went to the hospital later that day for blood tests and a chest x-ray. These tests revealed no findings significant to her condition.

there are chemical imbalances (thyroid, estrogen) that are making a bad situation much worse. We cannot rule out the need for mental therapy, but we have not been able to get a handle on the whole problem.

Dr. Preston then referred Atallah to Dr. Robert Croswell, a psychiatrist. Dr. Croswell saw Atallah first on July 2 and again on July 9. He prescribed for Atallah the drug Zoloft, an anti-depressant. At the July 9 session, according to Dr. Croswell's videotaped deposition testimony, he recommended that Atallah submit to inpatient evaluation because he was concerned that he was not getting a full and accurate view of the extent of her condition and he "thought that a good way to clarify the issue would be to get her into the hospital so we could do a more thorough evaluation...." While obtaining brain wave test results was not the primary reason Dr. Croswell suggested inpatient treatment, such treatment would have included these tests, Dr. Croswell testified, and would probably have led to the discovery of the tumor. Dr. Croswell also testified at his deposition that Atallah did not want to submit to inpatient evaluation because of insurance concerns. Later in that deposition, he stated that Atallah's refusal to submit to inpatient treatment and her concerns about insurance coverage were not necessarily causally linked, and that "it certainly was never clear that the reason she refused was purely because of insurance coverage." (emphasis added) Dr. Croswell's handwritten notes from the July 9 session do not indicate that he actually discussed inpatient treatment with Atallah on that day, or that she expressed concerns about insurance coverage. The notes do, however, contain a notation indicating that at the very least Dr. Croswell was considering the suitability of three different inpatient treatment facilities for Atallah.

Atallah did not keep her appointment with Dr. Croswell for July 23, but he did see her on July 27 and 28. On July 28, Dr. Croswell entered into a "contract" with Atallah. The contract called for Atallah to continue taking Zoloft and visiting Dr. Croswell at his office each week. If this treatment produced no improvement in three to four weeks, the Zoloft dosage would be doubled. If there was still no improvement in two months, Dr. Croswell testified, he told Atallah he would be unwilling to continue seeing her on an outpatient basis and would insist that she submit to inpatient evaluation. ¹ However, Atallah failed to show up for any further visits with Dr. Croswell.

In a letter to Maine's Department of Human Services Disability Determination Services Meanwhile, after learning that his mother was still uninsured, Peter Atallah applied for Medicare/Medicaid coverage on her behalf. Expecting a delay before the application was approved, he purchased a short-term, non-renewable medical insurance policy from Golden Rule, effective August 9, 1992. The Policy contained a clause stating that Golden Rule would not pay for medical bills attributable to preexisting conditions. The Policy defined "preexisting condition" as:

                dated August 4, Dr. Croswell wrote that Atallah "shows evidence of severe poverty of content of thinking with grossly impaired judgment at times regarding her own needs."   He wrote that it was his "impression" that Atallah suffered from a "gradually increasing disability" with the diagnosis of "major depression, severe and persistent," and "passive aggressive personality disorder."   Dr. Croswell had "[n]o diagnosis" of any physical condition
                

an illness ² or injury:

(1) for which the covered person received medical advice or treatment within the 60 months immediately preceding the Effective Date ...; or

(2) which, in the opinion of a qualified doctor,

(a) probably began prior to the Effective Date ...; and

(b) manifested symptoms which would cause an ordinarily prudent person to seek diagnosis or treatment within the 60 months immediately preceding the Effective Date....

On September 29, 1992, while talking on the telephone with her son Peter, Atallah suffered a "syncopal episode," or fainting spell. She was taken to Mid-Maine Medical Center in Portland, where a CT scan and EEG were performed. To the surprise of her treating physicians, the tests revealed a grapefruit-sized tumor growing on the lining surrounding Atallah's brain--in medical terms, a bifrontal olfactory groove meningioma. ³ Atallah underwent surgery on October 8, 1992, and doctors were able to remove about half of the tumor. The medical bills for Atallah's hospital stay, surgery and eight months of recuperative care following surgery totalled $263,698.68.

When Atallah submitted a claim to Golden Rule for payment, the company refused to pay, citing the Policy's preexisting condition clause. In denying coverage, Golden Rule relied on both definitions contained in the Policy, explaining that Atallah had received treatment and advice for her illness in the five years prior to August 9, 1992, and that it had obtained the opinion of a qualified doctor to the effect that her illness had manifested symptoms which would cause an ordinarily prudent person to seek diagnosis or treatment within the five years prior to August 9, 1992.

Golden Rule instituted a declaratory judgment action in the district court in May 1993. Atallah filed a counterclaim for breach of contract. During the two-day trial, Golden Rule's expert witnesses, Drs. Norman Oestrike and John Boothby testified that Atallah's symptoms were such that she should have...