Kay v. Metropolitan Life Ins. Co.

• Court: Missouri Court of Appeals
• Writing for the Court: DOWD; CLEMENS, P. J., and WEIER
• Citation: Kay v. Metropolitan Life Ins. Co., 548 S.W.2d 629 (Mo. App. 1977)
• Decision Date: 08 March 1977
• Docket Number: No. 37768,37768
• Parties: Waldemar S. KAY, Plaintiff-Respondent, v. METROPOLITAN LIFE INSURANCE COMPANY, Defendant-Appellant. . Louis District, Division One

Page 629

548 S.W.2d 629

Waldemar S. KAY, Plaintiff-Respondent, v. METROPOLITAN LIFE INSURANCE COMPANY, Defendant-Appellant.

No. 37768.

Missouri Court of Appeals, St. Louis District, Division One.

March 8, 1977.

Fordyce & Mayne, Clayton, Leo V. Garvin, Jr., P. Terence Crebs, St. Louis, for defendant-appellant.

Alfred J. Rathert, Fenton, for plaintiff-respondent.

DOWD, Judge.

Metropolitan Life Insurance Company appeals from the decisions of the trial court adjudging appellant liable for insurance benefits to respondent under the terms of a group insurance policy and awarding respondent the penalty and attorney's fees authorized in Section 375.420, RSMo Supp.1975.

The parties stipulated that appellant affords respondent and his dependents secondary insurance coverage for hospital, medical, and surgical expenses under Policy Number 15351-G. By virtue of respondent's military service, respondent and his dependents had obtained primary hospital, medical, and surgical insurance coverage under the "Champus" insurance plan. The parties dispute appellant's liability for benefits under Policy 15351-G for the hospital, medical, and surgical expenses of respondent's minor daughter in the years 1972, 1973, and 1974.

In 1972, respondent's daughter incurred hospital, medical, and surgical expenses totalling $2,086.20. The Champus plan paid $1,564.65 (75%) towards such expenses, and respondent claimed benefits under Policy 15351-G for the unpaid balance of $521.59. In 1973, respondent's daughter incurred expenses of $2,146.50, towards which the Champus plan paid $1,609.87 (75%). The respondent claimed benefits under Policy 15351-G for the unpaid balance of $536.63. Respondent's daughter incurred expenses of $1370.49 in 1974. The Champus plan paid $1,027.83 (75%) of these expenses, and respondent claimed benefits under Policy 15351-G for the unpaid balance of $342.66. Appellant denied respondent's claims on the ground that such claims were not in excess of the deductible amount of Policy 15351-G. Appellant did initially pay respondent $104.86, apparently by mistake.

Appellant's first point on appeal is that the trial court erred in not entering a judgment favorable to appellant because appellant was not liable to respondent under the terms of Policy 15351-G. "Covered Medical Expenses" under Policy 15351-G will be reimbursed only to the extent that they exceed the "Deductible Amount." Appellant contends that Policy 15351-G required payments made under the Champus plan to be subtracted from respondent's medical expenses in order to determine "Covered Medical Expenses." In addition, appellant argues that the "Deductible Amount" for respondent equalled the sum of $100.00 plus any payment made under the Champus plan. Thus, appellant argues that amounts paid under the Champus plan are twice used by Policy 15351-G to reduce benefits owed under the plan.

The provisions of Policy 15351-G pertinent to our decision may be summarized as follows: The insuring clause provides that the insurer will pay, upon proof of the claim, 80% of "Covered Medical Expenses" in excess of the "Deductible Amount." "Covered Medical Expenses" exclude those expenses of the insured for which benefits have been provided under any other medical, surgical, or hospital insurance plan. "Deductible Amount" is defined as the sum of: (i) the "Basic Deductible Amount", in this case, $100.00 and (ii) the aggregate of benefits provided under any other medical, surgical, or hospital insurance plan. Subsection (ii) also provides that the amount included in "Deductible Amount" for benefits provided under other plans shall not be less than $600 (for hospitalization) and $100 (for surgical expenses) if the insured's other insurance plan is not the employer's basic plan. ¹

We believe that the terms of Policy 15351-G are ambiguous insofar as the policy defines "Deductible Amount" and construe the policy under the general rules of construction regarding insurance contracts. Insurance policies are to be given a reasonable construction consonant with the apparent objectives and intent of the parties. Hamiltonian Federal Sav. and Loan Ass'n v. Reliance Ins. Co., 527 S.W.2d 440, 442(2) (Mo.App.1975). Plain language in an insurance policy cannot be used to create an ambiguity where none exists; but if the policy is reasonably susceptible of more than one meaning, the ambiguity will be resolved in favor of the insured. United States Fidelity and Guar. Co. v. Safeco Ins. Co. of America, 522 S.W.2d 809, 817(6, 7) (Mo.banc. 1975). Although parties to an insurance contract may, by plain language, limit the liability of the insurer to the insured, MFA Mut. Ins. Co. v. Dunlap,525 S.W.2d 766, 769(6) (Mo.App.1975), ambiguities in restrictive or exclusionary clauses are to be construed in favor of the insured. Allison v. Nat'l Ins. Underwriters, 487 S.W.2d 257, 262(2) (Mo.App.1972).

Subsection (ii) in the clause defining the "Deductible Amount" is ambiguous. The clause provides that "benefits otherwise provided under any other medical, surgical, or hospital group insurance plan" will be included in the "Deductible Amount". However, the clause fails to indicate whether "benefits otherwise provided" refers to unclaimed benefits available under the primary insurance policy or whether the quoted language refers to all benefits paid to the insured under primary coverage.

"Deductible Amount" under Policy 15351-G is susceptible to two possible meanings. One possible meaning is, as appellant argues, that "Deductible Amount" equals the sum of $100.00 plus any payments made under the Champus plan. The harsh result of Policy 15351-G given this construction, is that the same amounts excluded under Policy 15351-G are then deducted under Policy 15351-G. The insured can recover under his secondary insurance policy only in the event that benefits paid under primary insurance coverage compensate less than 50% of his medical expenses.

Another possible meaning is that "Deductible Amount" equals the sum of $100.00 plus any payments made under the Champus plan toward "Covered Medical Expenses" under Policy 15351-G. Under this later construction, payments under the Champus plan would be included in the deductible amount only if benefits under the Champus plan were applied towards expenses covered by Policy 15351-G. If the insured's medical expenses are paid under the Champus plan, and, therefore, not "Covered Medical Expenses" under Policy 15351-G, the payments under the Champus plan would not be deducted as a part of the "Deductible Amount". Payments under the primary insurance policy would be excluded or deducted, but not both excluded and deducted.

We believe that the second construction of the clause defining "Deductible Amount" is the proper construction of Policy 15351-G. First, this interpretation of the policy favors the insured, and the court is required to construe ambiguities in favor of the insured. United States Fidelity and Guar. Co....