Healthwise of Kentucky, Ltd. v. Anglin

• Decision Date: 20 November 1997
• Docket Number: No. 96-SC-272-DG,96-SC-272-DG
• Citation: 956 S.W.2d 213
• Parties: HEALTHWISE OF KENTUCKY, LTD., A Kentucky Limited Partnership, Appellant, v. David ANGLIN, Appellee.
• Court: Supreme Court of Kentucky

Page 213

956 S.W.2d 213

HEALTHWISE OF KENTUCKY, LTD., A Kentucky Limited Partnership, Appellant, v.David ANGLIN, Appellee.

No. 96-SC-272-DG.

Supreme Court of Kentucky.

Nov. 20, 1997.

J. Randall Reinhardt, J. Robert Cowan, Reinhardt, Morgan & Arnold, Lexington, for Appellant.

H. Edward O'Daniel, Jr., O'Daniel & Nally-Martin, Springfield, James Dean Liebman, Frankfort, for Appellee.

JOHNSTONE, Justice.

The trial court in this case granted summary judgment to the Appellee, David Anglin, as a matter of law.The Court of Appeals affirmed the trial court's ruling.Healthwise of Kentucky, Ltd., appeals from the Court of Appeals' decision.We affirm.

The facts in this case are not in dispute.On May 7, 1991, Anglin was seriously injured in an automobile accident.Apparently, Anglin was racing another vehicle at a high rate of speed.Witnesses estimated that he was travelling at about 70 miles per hour in a 35 mile per hour zone and driving on the wrong side of the road.A collision between the two vehicles most likely caused the accident.The driver of the other vehicle was not seriously injured and was charged with driving under the influence.Anglin was never charged with any offense; however, pursuant to treatment for his injuries, Anglin's blood alcohol level was determined to be .21 percent.

Healthwise raises a number of issues on appeal which we address below.

JURISDICTION

Healthwise first argues that the summary judgment entered by the trial court was not a final and appealable order, and, therefore, not reviewable by an appellate court.We disagree.

Healthwise filed a motion for summary judgment on May 5, 1993, in which it stated, "There are no genuine issues of material fact with respect to any issue raised by the Plaintiff's Complaint, all of which may be resolved by the Court as a matter of contract law."(Emphasis added).In its memorandum in support of the motion for summary judgment, Healthwise argued that, "Whether Healthwise is obligated to pay for the Plaintiff's medical expenses incurred as a result of his May 7, 1991 automobile wreck, is purely a matter of interpreting the relevant provisions of the contract."The trial court properly held Healthwise's feet to the fire by binding Healthwise to its stated position that Anglin's complaint raised no genuine issues of material fact and that its obligation to provide coverage depended only upon the trial court's ruling.SeeBTC Leasing, Inc. v. Martin, Ky.App., 685 S.W.2d 191, 195(1984).

EXCLUSIONS

At the time of the accident, Anglin was eligible to receive health and medical benefits from Healthwise pursuant to an agreement between Healthwise and Anglin's employer, the Franklin County Fire Department.On May 24, 1991, Healthwise informed Anglin in writing that it would not cover any medical expenses associated with the accident because he had committed the crime of drag racing.Anglin then appealed this decision under the Complaint Resolution Procedure set forth in Healthwise's Master Group Contract.On December 16, 1991, Healthwise again denied Anglin coverage adding Anglin's intoxication as an additional reason for the exclusion.

The two relevant coverage exclusions are:

# 3 Losses suffered as a result of participating in a riot, civil disturbance, or while committing or attempting to commit a crime.

and

# 38 Treatment for injuries sustained as a result of being under the influence of alcohol (legal intoxication as defined by Kentucky law) or the illegal use of drugs.

The trial court found that ambiguities in these two exclusions rendered them vague and unenforceable.The Court of Appeals likewise found that the exclusions were ambiguous.Further, the Court of Appeals found that exclusion # 3 was not applicable to the facts of this case because "[t]he average person does not view traffic offenses as crimes."Thus, the Court of Appeals based its decision on the doctrine of reasonable expectations.SeeWoodson v. Manhattan Life Insurance Company of New York, Ky., 743 S.W.2d 835, 839(1987).The Court of Appeals found that exclusion # 38, as applied to a group health plan, was void as against public policy.In the alternative, the Court of Appeals found that exclusion # 38 was not applicable because Anglin had not been adjudicated legally intoxicated.

We agree that the exclusions are ambiguous and that the exclusions do not bar Anglin's recovery from Healthwise.However, our reasoning differs somewhat from that of the Court of Appeals.

CRIME EXCLUSION

We believe that the average person would view Anglin's behavior in this case as criminal.Anglin, while seriously intoxicated, purposefully drove a motor vehicle at twice the posted speed limit.Further, he was driving on the wrong side of the road while racing another vehicle.Under a different outcome, this same behavior could have led to a conviction of manslaughter or wanton murder.Anglin's dumb luck in only injuring himself and not injuring or killing someone else does not excuse or lessen the severity of his actions.However, we do not believe that the word "crime," as contained in exclusion # 3, should be defined as the ordinary person would use the word.People often use the words "crime" and "criminal" to describe actions which, though perhaps reprehensible, are neither illegal nor unlawful.Using a subjective definition of "crime" would lead to an overly broad reading of the exclusion and inconsistent applications of it.Healthwise finds its definition of "crime" in Black's Law Dictionary.Anglin finds his definition of "crime" in the Kentucky Penal Code(the Code).

When an exclusion is susceptible to two reasonable interpretations, the interpretation favorable to the insured is adopted.St. Paul Fire & Marine Insurance Company v. Powell-Walton-Milward, Inc., Ky., 870 S.W.2d 223, 226(1994).We find additional support for Anglin's definition in exclusion # 38, in which intoxication is defined as "legal intoxication under Kentucky law."Obviously, Healthwise considers the Kentucky Revised Statutes appropriate for defining relevant terms in this contract.We therefore adopt Anglin's definition of "crime" as the correct definition.

The Code defines "crime" as "a misdemeanor or a felony."KRS 500.080(2).The Code defines "misdemeanor" as "an offense, other than a traffic infraction, for which a sentence to a term of imprisonment of not more than twelve (12) months can be imposed."KRS 500.080(10).In its memorandum in support of its summary judgment motion, Healthwise stated that exclusion # 3 applied because Anglin had been drag racing in violation of KRS 189.505.Drag racing is a traffic offense.The penalty for drag racing in violation of KRS 189.505 consists of a fine between $60 and $200 and/or a term of imprisonment of not more than 30 days.Thus, drag racing is a traffic infraction rather than a misdemeanor and is not a "crime" as defined in the Code.Cf.Commonwealth v. Schindler, Ky., 685 S.W.2d 544(1984).

In its response to Anglin's motion for summary judgment, Healthwise cited additional statutes as crimes committed by Anglin that precluded coverage under exclusion # 3.Without addressing the issue of whether Healthwise may cite grounds for exclusion at trial that it did not give Anglin as grounds for exclusion when it originally denied coverage, we note that the analysis above applies to these statutes.These statutes likewise are located in the traffic regulation Chapters of 189 and 189A of the Kentucky Revised Statutes, and, at the time of the accident, the maximum penalty for violating these statutes did not exceed 12 months of imprisonment.Thus, they are not "crimes" as defined by the Code.On appeal, Healthwise argues that a jury could find that Anglin had committed the crime of wanton endangerment.As this argument was not before the trial court, we will not entertain it here.Kennedy v. Commonwealth, Ky., 544 S.W.2d 219, 222(1976);see also, Capital Holding Corporation v. Bailey, Ky., 873 S.W.2d 187, 189(1994).

INTOXICATION EXCLUSION

The Court of Appeals drew a distinction between individual health insurance contracts and group health insurance plans on the basis that health insurance contracts can be bargained for and group policies are offered on a take it or leave it basis.Further, the Court of Appeals found persuasive that the Legislature, under Subtitle 17 (Health Insurance Contracts) of the Insurance Code, specifically authorized exclusions for intoxication in health insurance contracts, KRS 304.17-290, and that the Legislature made no similar provision in either Subtitle 18 (Group and Blanket Health Insurance) or Subtitle 38 (Health Maintenance Organizations).These factors led the Court of Appeals to conclude that exclusion # 38 was violative of public policy when included in a group health plan.

While the Court of Appeals' analysis applies only to exclusion # 38 as it is written in Healthwise's contract, the Court of Appeals' holding could be misinterpreted as stating that any intoxication exclusion included in a group health plan is void as against public policy.Because the public policy issue is not squarely before us, and because we agree with the Court of Appeals' alternative analysis of the exclusion, our holding on this issue is narrower than that of the Court of Appeals.

The ambiguity contained in exclusion # 38 springs from the fact that there are several definitions of legal intoxication that could apply.Ambiguities in insurance contracts should be liberally construed so as to afford coverage.Wolford v. Wolford, Ky., 662 S.W.2d 835, 838(1984).The Court of Appeals adopted KRS 222.202(1) as the definition of intoxication most favorable to Anglin:

A person is guilty of alcohol intoxication when he appears in a public place manifestly under the influence of alcohol to the degree that he may endanger himself or other persons or property, or unreasonably annoy persons in his vicinity.

Further, the Court of Appeals found that...