Halper v. Aetna Life Ins. Co. of Hartford, Conn.

• Decision Date: 02 March 1964
• Citation: 42 Misc.2d 184,247 N.Y.S.2d 400
• Parties: Burton Howard HALPER, Plaintiff, v. AETNA LIFE INSURANCE COMPANY OF HARTFORD, CONNECTICUT, Defendant.
• Court: New York City Court

Page 400

247 N.Y.S.2d 400

42 Misc.2d 184

Burton Howard HALPER, Plaintiff, v. AETNA LIFE INSURANCE COMPANY OF HARTFORD, CONNECTICUT, Defendant.

Civil Court of City of New York, Trial Term, New York County, Part VII.

March 2, 1964.

Leon Wasserman, New York City, for plaintiff.

Allen M. Taylor, New York City, for defendant.

SPIEGEL, Judge.

Plaintiff sues to recover from defendant insurance carrier the sum of $8,515.82 as indemnification for hospital expenses pursuant to a group accident and health policy. Plaintiff advanced the sum of $9,144.78 in connection with institutional care provided at Ferncliff Manor for his mentally defective son. Pursuant to the terms of the policy, defendant agreed to reimburse its assured for 80% of hospital expenses incurred (less $50 deductible) by plaintiff or members of his family.

Defendant resists payment on the ground that the institution whereat plaintiff's son is and continues to be confined is, according to the terms of the policy, not truly a hospital, while plaintiff urges that 'Ferncliff' is, in actual fact, a hospital.

Plaintiff's contention is predicated on the fact that 'Ferncliff' is a hospital by virtue of a general dictionary definition, and the further fact that it is licensed by the New York State Department of Mental Hygiene. Plaintiff also contends that mental institutions are not classified among the institutions specifically and expressly excluded by the policy and that 'Ferncliff' substantially complies with the policy's definition of a hospital.

The institution contains 96 beds, has three registered nurses, six practical nurses and fourteen attendants in continual attendance . Although the institution has no resident physician, an 'off-premises' doctor is available upon a few moment's notice. The institutional lacks an operating room, x-ray room and pharmaceutical facilities.

In connection with an Article 78, Civil Practice Act proceeding involving the issuance of a building permit to 'Ferncliff,' the Court, upon the occasion of such proceeding, held that for the purposes of qualifying for the permit in question Ferncliff Manor was 'a hospital or sanitarium' (Matter of Saich v. Balint, 9 Misc.2d 11, 167 N.Y.S.2d 545). Plaintiff urges that the finding of the Court in the aforementioned Article 78 proceeding be adopted by this Court.

The group policy sets forth three requirements for a 'hospital' which must be fully satisfied. They are: (A) The institution be 'primarily engaged in providing--for compensation from its patients and on an inpatient basis--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.' (B) 'It continuously provides twenty-four hour a day nursing service by registered graduate nurses.' (C) 'It is not, other than incidentally, a place for rest, a place for the aged, a place for drug addicts, a place for alcoholics, or a nursing home.'

In the case of Shneiderman v. Metropolitan Casualty Co., 14 A.D.2d 284, 220 N.Y.S.2d 947, the Court held that the rule which dictates construction of any ambiguity against the insurer has particular application where exclusions are involved.

Any doubt in the construction to be adopted must be resolved against the insurer (Sperling v. Great Am. Indem. Co., 7 N.Y.2d 442, 199 N.Y.S.2d 465, 166 N.E.2d 482; Taylor v. United States Casualty Co., 269 N.Y. 360, 199 N.E. 620, 115 A.L.R. 822; Aetna Casualty & Surety Co. v. General Casualty Co. of America, 285 App.Div. 767, 140 N.Y.S.2d 670; Janneck v. Metropolitan Life Ins. Co., 162 N.Y. 574, 57 N.E. 182; Birnbaum v. Jamestown Mut. Ins. Co., 298 N.Y. 305, 83 N .E.2d 128).

A Court will construe the insurance contract strictly against the insurer and most favorably to the insured only when there is an unexplained ambiguity in the language of the policy (Handley v. Oakley, 10 Wash.2d 396, 116 P.2d 833; Employers Casualty Co. v. Givens, 190 S.W.2d 155 (Tex.Civ.App.); Griffey v. New York Central Ins. Co. 100 N.Y. 417, 3 N.E. 309; Darrow v. Family Fund Society, 116 N.Y. 537, 22 N.E. 1093, 6 L.R.A. 495; Matthews v. American Central Ins. Co., 154 N.Y. 449, 48 N.E. 751, 39 L.R.A. 433; Janneck v. Metropolitan Life Ins. Co., 162 N.Y. 574, 57 N.E. 182).

However, in the absence of evidence to the contrary, parties to a contract of insurance will be presumed to have intended the terms of the contract as they are ordinarily understood by the average man (Lewis v. Ocean Acc. & Guarantee Corp., Limited, of London, England, 224 N.Y. 18, 120 N.E. 56, 7 A.L.R. 1129; Silverstein v. Metropolitan Life Ins. Co., 254 N.Y. 81, 171 N.E. 914). A policy of insurance is a contract, and its language, like that of any other contract, must be given its usual and ordinary meaning (Richards v. Metropolitan Life Ins. Co., 184 Wash. 595, 55 P .2d 1067-1069; Drilling v. New York Life Ins. Co., 234 N.Y. 234, 241, 137 N.E. 314, 316).

In the case of McGrail v. Equitable Life Assur. Soc. of United States, 292 N.Y. 419, 424, 55 N.E.2d 483, 486, the Court of Appeals said that such 'meaning must be given to the terms used as would be ascribed to them by the average man in applying for insurance and reading the language of the policy at the time it was written.'

Further, on page 424 of 292 N.Y., on page 486 of 55 N.E.2d, the Court continued, 'Rules for the construction of contracts of insurance do not differ from those to be applied to the construction of other contracts. When the terms used are clear and unambiguous, they are generally to be taken and understood in their plain, ordinary and proper sense. Johnson v. Travelers' Ins. Co., 269 N.Y. 401, 408, 199 N.E. 637, 640. But resort to a literal construction may not be had where the result would be to thwart the obvious and clearly expressed purpose which the parties intended to accomplish or whether such a construction would lead to an obvious absurdity (Silverstein v. Metropolitan Life Ins. Co., 254 N.Y. 81, 171 N.E. 914) or place one party at the mercy of the other. Russell et al. v . Allerton, 108 N.Y. 288, 292, 15 N.E. 391. Such meaning must be given to the terms used as would be ascribed to them by the average man in applying for insurance and reading the language of the policy at the time it was written. Lewis v. Ocean Accident & G. Corp., 224 N.Y. 18, 21, 120 N.E. 56, 57, 7 A.L.R. 1129; Silverstein v. Metropolitan Life Ins. Co., supra. Consistently followed in this State has been the rule that the policy must be construed reasonably and that it must be given a practical construction, not thereby with the result that there is a revision of the policy or an increase of the risk and thus an extension of the resulting liability, but for the purpose of determining what the parties most reasonably have intended by its terms when the policy was written by defendant and accepted by the plaintiff. Garms v. Travelers' Ins. Co., 242 App.Div. 230, 273 N.Y.S. 39; Williams v. John Hancock Mut. Life Ins. Co., 245 App.Div. 585, 283 N.Y.S. 87; Goldstein v. Connecticut General Life Ins. Co., 273 N.Y. 578, 7 N.E.2d 700; Mintz v. Equitable Life Assur. Soc. [of United States], 276 N.Y. 546, 12 N.E.2d 569; Hartol Products Corp. v. Prudential Ins. Co. [of America], 290 N.Y. 44, 47 N.E.2d 687.'

In the case at bar the language is simple, clear and certain. There is no ambiguity either in the language or the intent of the policy and thus the terms are to be taken and understood in their plain, ordinary and proper sense (Johnson v. Travelers Ins. Co., 269 N.Y. 401, 199 N.E. 637).

The case of McKinney v. American Security Life Ins. Co., La.App., 76 So.2d 630, cited by plaintiff does not apply to the case at bar. The Court on page 633 of 76 So.2d said, 'An insurance policy is a contract to which rules for construction of written instruments apply. In resolving the meaning of a policy effect must be given to every part of the insurance policy if possible, and while all ambiguities in the policy must be construed in the insured's favor and against the insurer, the policy, from terms of which the parties' intent is evident, must be given a reasonable interpretation consonant with its apparent object and the parties' plain intent. Quinones v. Life & Casualty Insurance Company of Tennessee, 1945, 209 La. 76, 24 So.2d 270; Hemel v. State Farm Mutual Auto Ins. Co., 1947, 211 La. 95, 29 So.2d 483; Stanley v. Cryer Drilling Company, 1948, 213 La. 980, 36 So.2d 9; Oil Well Supply Company v. New York Life Insurance Co., 1949, 214 La. 772, 38 So.2d 777; Moll v. Mutual Health Benefit & Accident Ass'n, 1953, 223 La. 511, 66 So.2d 320. The intention of the parties is of paramount importance and must be determined in accordance with plain, ordinary and popular sense of the language used in the agreement and by giving consideration on a practical, reasonable and fair basis to the instrument in its entirety. Beard v. Peoples Industrial Life Insurance Company of Louisiana, La.App. 1941, 5 So.2d 340. Provisions in a life, health and accident policy should be given a liberal interpretation to the end that equity be done and the underlying beneficient purposes of the contract not be rendered nugatory. Manheim v. New York Life Insurance Company, La.App. 1941, 5 So.2d 918.'

On page 634 of 76 So.2d the Court continued, 'Manifestly, McDonald Clinic meets the requirement of supervision by a licensed Doctor of Medicine. It has an operating room where major surgical operations may be performed * * *.' 'According to undisputed evidence the institution is a recognized hospital and more than twenty health and accident insurance companies have accepted claims for confinement at the Clinic without question.'

In the case at bar, there was no supervision by a licensed Doctor of Medicine; no proof that Ferncliff Manor was a recognized hospital; nor that any health and accident insurance companies had accepted any claim for hospitalization indemnity for...