Greenspan v. Travelers Ins. Co.

• Decision Date: 02 February 1979
• Citation: 98 Misc.2d 43,412 N.Y.S.2d 1009
• Parties: Ilene GREENSPAN, etc. v. TRAVELERS INSURANCE COMPANY.
• Court: New York Supreme Court

Page 1009

412 N.Y.S.2d 1009

98 Misc.2d 43

Ilene GREENSPAN, etc. v. TRAVELERS INSURANCE COMPANY.

Supreme Court, Trial Term, Queens County, Part 7.

Feb. 2, 1979.

Kraut & Resnick, New York City, for plaintiff.

Gervais & DeCicco, Garden City, for defendant.

HAROLD HYMAN, Justice.

The novelty of this action lies in the necessity for legal interpretation of certain phraseology heretofore not legally defined or interpreted in this State. The action was submitted to this court upon an agreed statement of facts.

The action is one to recover $23,143.20 plus interest, from defendant based upon a Group Accident and Sickness Policy providing for Major Medical Expense Benefits issued by it on March 28, 1960, as amended by various riders covering the employees of the employer.

Plaintiff's decedent, Alan Greenspan, was an employee of a firm of Certified Public Accountants which had obtained the aforementioned policy from defendant covering, and for the benefit of, their employees. During his employment, and while the policy and riders were in effect, Alan Greenspan became ill; he died on September 11, 1973 in Lenox Hill Hospital; he had been admitted as a patient on May 19, 1973 in said hospital and remained there for a period of 115 days.

During his stay at the hospital he required blood, the charge for which totalled $28,929; this not only included the blood itself, but also the processing fee of the hospital therefor.

The policy and riders thereto issued by defendant, is known in present day parlance, as one for Major Medical coverage.

The basic policy was issued on March 12, 1960, effective as of February 18, 1960; it contains the following provision:

"Article II Benefits

Part EDMX Major Medical Expense Benefits Employees and Their Dependents.

If an insured employee shall necessarily Incur medical expenses, as herein defined,

(a) on account of himself * * * in connection with * * * sickness * * * and such Medical expenses incurred * * * shall exceed the Deductible Amount * * * the Company will pay to the employee * * * Eighty per centum of the amount of such Excess medical expenses incurred during such Benefit Period, * * *. The provisions of this Part apply only to Expenses incurred while the Employee * * * is covered under this Part; * * * An expense or charge shall be deemed incurred as of the date the service is rendered or the purchase is made from which the expense or charge arises. " (Emphasis supplied)

On December 31, 1963, effective as of February 18, 1964, the policy was amended by a rider adding Article IIA, which, in part, provides:

"Section B. Definitions

(3) The term "Allowable Expense " as used in this Article means any necessary, reasonable, and customary item of expense at least a portion of which is covered under at least one of the Plans covering the person with respect to whom claim is made.

When a Plan provides benefits in the form of furnishing services or supplies rather than cash payments, The reasonable cash value of each service or supply furnished shall be deemed to be both an Allowable Expense and a benefit paid. " (Emphasis supplied)

The Plan was thereafter again modified on January 19, 1966, effective as of October 1, 1965, but it did not change the provision set forth in the original policy, but rather retained same, reading:

"An expense or charge shall be deemed incurred as of the date the service is rendered or the purchase is made from which the expense or charge arises. (Part CME Major Medical Expense Benefits Complementary to Medicare Persons Eligible Under Medicare Section A)". (Emphasis supplied)

The policy was amended in other respects thereafter, time and again, but the above mentioned provisions were not changed or modified.

There is no issue raised by defendant that between May 19, 1973 and September 11, 1973, the hospital had actually supplied the blood and processing services to the then covered employee, now deceased; nor does defendant raise any issue as to the propriety or reasonableness of the amount charged therefor by said hospital.

The issue raised by the defendant emanates out of the following agreed facts, namely:

"That as of February 14, 1974 the hospital sent to plaintiff an itemized statement which included the Blood and processing fee charges ; and

that plaintiff filed a claim for payment benefits under the policy with defendant; and

that plaintiff sought Privately to have the charges for blood services paid, reimbursed or credited; and

that on April 30, 1974 the hospital advised plaintiff that full credit for blood services had been received from the Greater New York Blood Program."

Based upon the latter facts, defendant refers to the original policy of March 28, 1960, that is, as to the following provision:

"Article II Benefits (continued) Part EDMX Major Medical Expense Benefits (continued)

Medical Expenses Covered

The medical expenses covered under this Part shall include reasonable charges actually incurred by the Employee * * *" (page 5)

and contends that even though it agrees that the service and blood was supplied to the employee sometime during his last illness, which illness terminated upon his death on September 11, 1973, that the expense or charge therefore was not Actually incurred, because some ten months after the decedent's death the hospital credited the amount therefor against decedent's bill, because the Greater New York Blood Program having given a Blood credit therefor to the hospital. Defendant contends that since plaintiff had not actually Paid the item, to allow plaintiff to recover therefore would constitute a double recovery, an unjust enrichment, which would violate public policy.

Nowhere in any of the provisions of the original policy or the numerous riders thereafter executed is there any indication, by definition or otherwise, as to what was meant or intended by the usage of the phrase "charges actually incurred" so as to indicate any real difference in intent by the appendage of the word Actually in that isolated clause, which otherwise reads the same as heretofore set forth.

The debt is instantly incurred when the service is rendered; so states the policy itself:

"An expense or charge shall be deemed incurred as of the date the service is rendered or the purchase is made from which the expense or charge arises ". (Emphasis supplied)

Nowhere in the policy or any rider thereto is there any provision that as a condition precedent to receiving payment of the claim there must be actual payment thereof by the employee personally; nor is there any condition precedent therein that there must be payment of the charge or expense in any specific form, either monetarily or in kind; nor is there any exclusionary clause if same not be paid monetarily.

That the Incurrence of the expense or charge arises at the very instant the service is rendered by the hospital or it supplies the item, is also settled law (Rubin v. Empire Mut. Ins. Co., infra ).

Research of the law of this and other states indicates that even though the actual service not be then (at that instant of time) performed, but had been contracted for (within the time limits of the policy), that such constitutes sufficient Incurrence of the charge or expense within the purview of the policy Maryland Cas. Co. v. Thomas, 289 S.W.2d 652 (Tex.); Drobne v. Aetna Cas. & Sur. Co., 115 N.E.2d 589, 66 Ohio L.Abs. 1). This State has adopted even a more liberal construction, namely, that the word "incurred . . . must be deemed to include Any liability undertaken (within the time limitations of the policy) for reasonable medical services * * * Irrespective of the time within which such services are completed " (Whittle v. Government Employees Ins. Co., 51 Misc.2d 498, 273 N.Y.S.2d 442; Perullo v. Allstate Ins. Co., 54 Misc.2d 303, 282 N.Y.S.2d 830; Farr v. Travelers Ins. Co., 84 Misc.2d 189, 375 N.Y.S.2d 229). (Emphasis supplied)

In Rubin v. Empire Mutual Ins. Co., 25 N.Y.2d 426, 306 N.Y.S.2d 914, 255 N.E.2d 154, the court had before it virtually the identical issue factually an even stronger and more compelling circumstance existed favoring the insuror's position; therein the insured's medical expenses had been satisfied out of Workmen's Compensation payments, the premiums for which policy had been paid for by his employer. Therein, as here, the defendant also contended that if plaintiff was allowed recovery he would be procuring duplicate payments, a windfall, which should be barred.

The Court of Appeals in Rubin, supra, pgs. 429, 430, 306 N.Y.S. pg. 916, 255 N.E.2d pg. 155, disagreed with defendant's contentions, stating:

"There has been no construction of the term 'incurred', in the context of the policy provision before us, in any prior New York case. In other jurisdictions the word has been given the meaning for which appellant contends. In point, for example, is Thomas v. Universal Life Ins. Co. (201 So.2d 529 (La.App., 1967) (Feit v. St. Paul Fire & Mar. Ins. Co., 209 Cal.App.2d 825, 27 Cal.Rptr. 870); Hack v. Great Amer. Ins. Co., 175 So.2d 594 (Fla.App., 1965); American Ind. Co. v. Olesijuk, 353 S.W.2d 71 (Tex.Civ.App., 1962); Nationwide Mut. Ins. Co. v. Schilansky, 176 A.2d 786 (Mun.Ct.App., D.C.1961)) in which plaintiff recovered under the medical expense provisions, as against the defense that since those expenses had been paid by workmen's compensation, he had never incurred them, the court holding in effect that inasmuch as the expenses Could be charged against the insured, he had incurred them. Certainly, there has to be some period of time between the initial treatment and the establishment of compensation liability and, regardless of who ultimately pays or where the bills are first sent, the...