Morinelli v. Provident Life and Accident Ins. Co.

• Decision Date: 18 October 2000
• Docket Number: Docket No. 211894.
• Citation: 617 N.W.2d 777,242 Mich. App. 255
• Parties: Joseph A. MORINELLI and Perfusion Associates of Michigan, Inc., Plaintiffs-Appellants, v. PROVIDENT LIFE AND ACCIDENT INSURANCE COMPANY, Defendant-Appellee.
• Court: Court of Appeal of Michigan — District of US

617 N.W.2d 777

242 Mich. App. 255

Joseph A. MORINELLI and Perfusion Associates of Michigan, Inc., Plaintiffs-Appellants, v. PROVIDENT LIFE AND ACCIDENT INSURANCE COMPANY, Defendant-Appellee.

Docket No. 211894.

Court of Appeals of Michigan.

Submitted October 12, 1999, at Lansing.

Decided August 22, 2000, at 9:00 a.m.

Released for Publication October 18, 2000.

Hurlburt, Tsiros, Allweil & Perez, P.C. (by Lawrence A. Hurlburt), Saginaw, for the plaintiffs.

Thomas, DeGrood, Witenoff & Hoffman, P.C. (by Gary N. Felty, Jr., and Stephen L. Witenoff), Southfield, for the defendant.

Before MICHAEL J. KELLY, P.J., and MARKEY and COLLINS, JJ.

MICHAEL J. KELLY, P.J.

Plaintiff Joseph A. Morinelli appeals as of right the judgment entered following a jury trial in this action to enforce two disability insurance policies. Plaintiff Perfusion Associates of Michigan, Inc. (PAM), appeals as of right the trial court's order granting summary disposition in favor of defendant Provident Life and Accident Insurance Company. We reverse in part, affirm in part, and remand.

I

Plaintiff Morinelli is a perfusionist, which is the individual who operates the heart-lung machine, as well as other equipment, to keep a patient alive during open-heart surgery. In April 1990, Morinelli and his partners formed PAM. One year later, they purchased two policies of insurance from defendant: a disability income policy, which personally insured Morinelli in the event he suffered a loss resulting from injury or sickness, and a business buy-out expense disability policy, which insured PAM for any expenses attributable to a buy-sell agreement between the corporation and Morinelli if he ever became totally disabled.

Under the disability income policy, "total disability" is defined as follows:

Total Disability and totally disabled means that due to Injuries or Sickness, the Insured:

1. is not able to perform the substantial and material duties of his/her occupation; and

2. is receiving care by a Physician which is appropriate for the condition causing the disability. We will waive this requirement when continued care would be of no benefit to the Insured.

In July 1993, Dr. Eugene Calabrese examined Morinelli and diagnosed him as having diabetes. Dr. Calabrese prescribed Glucotrol, an oral medication designed to reduce blood sugar levels, a diet, and exercise. Over time, the Glucotrol was adjusted to the maximum recommended dosage, and, by September 1994, Morinelli needed insulin injections to control the diabetes. At the time, Morinelli was experiencing fatigue, forgetfulness, and frequent urination, all of which compromised his ability to perform as a perfusionist.

On October 24, 1994, Morinelli filed a disability claim, which was supported by Dr. Calabrese's opinion that he was totally disabled. Defendant began paying benefits under its disability income policy, but later terminated the payments, asserting (1) that Morinelli's diabetes had first manifested itself before the issuance of the insurance policies, and (2) that diabetes did not appear to impair his ability to perform the material and substantial duties of his occupation in that the claim was based on an assumption that a diabetic incident would arise and did not allege that Morinelli was unable to perform his duties absent such an incident. The plaintiffs subsequently filed this action asserting breach of contract, as well as other claims not germane to this appeal.

The trial court granted defendant's motion for summary disposition, which sought to rescind the buy-out expense disability policy because, contrary to representations in the application for insurance, no written agreement existed between PAM, or its principals, and Morinelli. The court found that PAM failed to meet a condition precedent for the payment of benefits under the terms of the policy in that there was no buy-sell agreement in place until after either of the plaintiffs had filed a claim.

At trial, defendant presented evidence concerning the quality of the treatment rendered by Dr. Calabrese. Standard of care testimony was admitted over Morinelli's objection. As specified on the verdict form, the jury found that Morinelli "suffered from a sickness, to wit: diabetes, from June 23, 1995, to the present, that has prevented him from performing the substantial and material duties of his occupation as a perfusionist." The jury did not find that Morinelli "received care by a physician that was appropriate for the condition of diabetes."

The court denied Morinelli's motion for judgment notwithstanding the verdict (JNOV) on the basis of its finding that the evidence was sufficient to support the verdict in that the definition of "total disability" included a finding of "appropriate care." The court ruled that Morinelli could not claim surprise because defendant had raised the issue in its affirmative defenses,¹ in its response to interrogatories,² and in its opening statements.³ Moreover, Morinelli did not raise the issue of the meaning of the phrase "appropriate care" until after the verdict. The court also denied Morinelli's motion for a new trial on the basis of its finding that the policy language was unambiguous. The meaning of the word "appropriate" as used in the policy's medical care clause forms the crux of this appeal.

II

Morinelli (hereafter plaintiff) first argues that the defendant's allegation that the care received by plaintiff was inappropriate in that it did not meet the standard of care was not a proper contractual defense to his claim for disability benefits. Plaintiff argues that the treatment he received for his diabetes was appropriate for the condition and, therefore, met the clear language of the policy. We agree.

We review a trial court's decision with regard to a motion for JNOV de novo. Meagher v. Wayne State Univ., 222 Mich.App. 700, 721, 565 N.W.2d 401 (1997). In reviewing a decision regarding a motion for JNOV, this Court must view the testimony and all legitimate inferences that may be drawn therefrom in a light most favorable to the nonmoving party. Forge v. Smith, 458 Mich. 198, 204, 580 N.W.2d 876 (1998). If reasonable jurors could have honestly reached different conclusions, the jury verdict must stand. Severn v. Sperry Corp., 212 Mich.App. 406, 412, 538 N.W.2d 50 (1995). The interpretation of contractual language is an issue of law that is also reviewed de novo on appeal. Morley v. Automobile Club of Michigan, 458 Mich. 459, 465, 581 N.W.2d 237 (1998).

In deciding a motion for a new trial, the trial court's function is to determine whether the overwhelming weight of the evidence favors the losing party. Phinney v. Perlmutter, 222 Mich.App. 513, 525, 564 N.W.2d 532 (1997). This Court must determine whether the trial court abused its discretion in ruling with regard to a motion for a new trial. Id. Substantial deference is given to the trial court's conclusion that the verdict was not against the great weight of the evidence. Id.

The purpose underlying a policy's medical care clause is that of enabling the insurer to guard against fraudulent claims and to establish the good faith of the claimant. 10 Couch, Insurance, 3d, § 146:25, pp. 146-53. The insurer's review of the nature of the care concerns whether it is "necessary and causally related" to the alleged disability. Id., pp. 146-54. Although the medical clause in this policy is under the definition of "total disability," it is actually a requirement or a condition of coverage, and compliance with the condition is an issue distinct from that of the elements of total disability. Crosby v. Prudence Mut. Casualty Co., 252 S.C. 294, 166 S.E.2d 201 (1969).

An insurance policy is much the same as another contract; it is an agreement between the parties. Auto-Owners Ins. Co. v. Churchman, 440 Mich. 560, 566, 489 N.W.2d 431 (1992); Moore v. First Security Casualty Co., 224 Mich.App. 370, 375, 568 N.W.2d 841 (1997). Any ambiguities in insurance contracts are liberally construed in favor of the insured and against the insurer, who drafted the contract. State Farm Mut. Automobile Ins. Co. v. Enterprise Leasing Co., 452 Mich. 25, 38, 549 N.W.2d 345 (1996). This does not mean that the plain meaning of a word or phrase should be perverted, or that a word or phrase, the meaning of which is specific and well recognized, should be given some alien construction merely for the purpose of benefiting an insured. Upjohn Co. v. New Hampshire Ins. Co., 438 Mich. 197, 208, n. 8, 476 N.W.2d 392 (1991). The fact that a policy does not define a relevant term does not render the policy ambiguous. Henderson v. State Farm Fire & Casualty Co., 460 Mich. 348, 354, 596 N.W.2d 190 (1999). This Court must interpret the terms of the contract in accordance with their commonly used meanings. Group Ins. Co. of Michigan v. Czopek, 440 Mich. 590, 596, 489 N.W.2d 444 (1992).

The policy at issue in this case does not define the word "appropriate," and no Michigan case has interpreted language similar to that found in defendant's disability policy. The court may refer to dictionary definitions when appropriate when ascertaining the precise meaning of a particular term. Popma v. Auto Club Ins. Ass'n, 446 Mich. 460, 470, 521 N.W.2d 831 (1994). The word "appropriate" is defined as "particularly suitable; fitting; compatible." Random House Webster's College Dictionary (2d ed., 1997). Similarly, "appropriate" is defined as "[s]uitable for a particular person, condition, occasion, or place; proper; fitting." The American Heritage Dictionary: Second College Edition (1985).

It is this Court's opinion that the language found in the policy is not ambiguous and that "appropriate care" does not require a qualitative evaluation of the care provided. The policy does not state that to recover benefits under the policy, the insured must receive "appropriate care"; rather, the contract states that the care received must be "appropriate for the condition causing the disability." C...