Myers v. Kitsap Physicians Service

• Citation: 78 Wn.2d 286,474 P.2d 109
• Decision Date: 03 September 1970
• Docket Number: No. 41449,41449
• Parties: , 66 A.L.R.3d 1196 John MYERS, Petitioner, v. KITSAP PHYSICIANS SERVICE, a Washington corporation, Respondent.
• Court: United States State Supreme Court of Washington

Page 286

78 Wn.2d 286

474 P.2d 109, 66 A.L.R.3d 1196

John MYERS, Petitioner, v. KITSAP PHYSICIANS SERVICE, a Washington corporation, Respondent.

No. 41449.

Supreme Court of Washington, En Banc.

Sept. 3, 1970.

John A. Bishop and Gary A. Cunningham, Bremerton, for petitioner.

Wallace & Best, Bremerton, for respondent.

McGOVERN, Associate Justice.

Plaintiff appeals from a superior court order dismissing his action for compensation allegedly due from the defendant under the terms of a contract. The court of appeals affirmed the trial court and we granted a petition for review of that order.

The defendant is a health care service contractor as defined by RCW 48.44.010(3) and plaintiff, through his employer, has been a premium paying member of the defendant corporation continuously since the year 1949.

Subsequent to the time he obtained membership in the defendant corporation, plaintiff began to suffer from a chronic kidney disorder. In 1960 the color of his skin changed, he suffered from severe headaches and from uremic poisoning. January 17, 1961, he was admitted as the Defendant refused to pay for plaintiff's hospitalizatin and hemodialysis treatments, claiming that they were not included in the 1958 health care group policy under which plaintiff was covered. As required by the contract, plaintiff thereupon asked for a board of arbitration resolution of the disputed question, and on June 16, 1966, the board of arbitration ruled in favor of plaintiff. Defendant, however, still denied coverage and plaintiff filed suit in the Superior Court for Kitsap County. December 1966 that court granted a summary judgment in favor of plaintiff.

first patient of the Seattle Artificial Kidney Center and began to receive hospital hemodialysis treatments.

Thereupon, still during December 1966, defendant corporation advised plaintiff and other members that its basic health care contract would be modified effective February 1, 1967. The modification was placed into effect on that date and it excluded chronic kidney disorder treatments from coverage. Plaintiff's employer has continued to make premium payments for the plaintiff as a member of the group, but defendant has refused to provide kidney disorder treatments since February 1967.

The trial and appellate courts each held that plaintiff's group contract required the defendant to pay only for medical services actually rendered during a contract year. They also held that each group contract had a life term of one year only and that defendant had an absolute right to modify its contract at the beginning of each contract year. We reverse.

In pertinent part the contract in effect between the parties prior to the February 1, 1967 modification provided:

In consideration of the statements contained in each application for coverage hereunder and payment in advance by the Group of monthly dues as set forth in each application, Kitsap Medical agrees to provide medical, surgical hospital and other services to each member enrolled hereunder, as occasion demands, during the life of this contract. All payments and services are subject to each of the terms and conditions of this contract and any endorsement, rider, or amendment thereto.

PART THREE: BENEFITS APPLICABLE TO ALL MEMBERS

Group Health Care Service

KITSAP MEDICAL will furnish during any certificate year all necessary medical, surgical and hospital services required by any member under this contract for any illness or injury to the extent stipulated * * *

Plaintiff Myers contends that the defendant's contractual responsibility to provide medical and hospital assistance for him became fixed when his illness first necessitated medical assistance or hospitalization. Defendant, on the other hand, insists that its contractual liability is restricted only to payment of medical services rendered to the plaintiff during the period within which defendant agreed to provide those services and that after February 1, 1967 it no longer agreed to provide hemodialysis services for chronic kidney disorders.

To determine the issue, we look to the terms of the contract entered into between the parties. In doing so, plaintiff argues that we must employ the rules generally applicable to the interpretation of insurance contracts. Defendant expressly states that it does not contend otherwise. We agree and, accordingly, apply the law as argued for by plaintiff. We bear in mind, therefore, that our law is clear in holding that ambiguities in an insurance contract must be interpreted in the light most favorable to the insured, (Thompson v. Ezzell, 61 Wash.2d 685, 379 P.2d 983 (1963)), and that the language of an insurance contract should in fact 'be interpreted in accordance with the way it would be understood by the average man purchasing insurance.' Ames v. Baker, 68 Wash.2d 713, 415 P.2d 74 (1966). See also, Tsapralis v. Public Employees Mut. Cas. Co., 77 Wash.Dec.2d 587, 464 P.2d 421 (1970).

Testing the policy before us in the light of those principles, we conclude that the plaintiff is entitled to service benefits ¹ for hemodialysis treatments heretofore and hereafter received in an accredited hospital notwithstanding 'Kitsap Medical agrees to provide medical, surgical hospital and other services to each member enrolled hereunder, as occasion demands, during the life of this contract' is susceptible of the reasonable interpretation that the 'life of the contract' is automatically extended to such time as may be required to medically treat and medically care for the injury or illness that occurs during the year of the contract. We find it difficult to believe that the 'average man purchasing insurance' would, or could, contemplate from a reading of this contract that the defendant's obligation terminates when the clock strikes midnight and the contract year ends, even though the insured may still be hospitalized or in need of further medical treatment for an illness incurred during the contract year.

defendant's attempted policy exclusion of February 1, 1967. Our consideration of the applicable policy provisions will admit of no other result.

We have also concluded that the defendant corporation may have contemplated a situation with facts similar to those at hand when it drafted the health care contract. It provides that 'Kitsap Medical will furnish during Any certificate year all necessary medical, surgical and hospital services required by any member under this contract for any illness or injury * * *' The use of the word 'any' in that sentence indicates to us that the defendant foresaw medical treatment for an illness or injury that would necessitate medical care for more than one contract year.

We therefore conclude that the contract before us, when considered for the purpose of granting or rejecting plaintiff's claim for hemodialysis hospitalization benefits after February 1, 1967, may reasonable be given more than one interpretation. Although the contract is a health service contract, one reasonable interpretation of its provisions would be grounded on the same legal principle applied generally in cases relating to health and accident insurance policies, I.e., that plaintiff's rights under the contract became vested when medical treatment became necessary. Those rights being vested, the subsequent termination of the policy which created the right did not terminate the It is submitted that the better view, which is supported not only by the more closely reasoned cases but which also conforms to what may be described as the general understanding as to the coverage of accident policies, is the one which extends the liability of the insurer to subsequent medical expenses.

vested right of the plaintiff to payment of services rendered and to be rendered. See, Accident Policy-Termination-Effect, Annot., 75 A.L.R.2d 876 (1961), concerning an insurer's liability under an accident policy where the policy was in force at the time of the accidental injury, but medical treatment and hospitalization were furnished in whole or in part after termination or lapse of the policy. We quote from that annotation, at page 877:

Considering the ambiguity of the contract before us, we think that the rationale of the 'better view' is as applicable here as it is in the accident insurance cases, and we so hold.

The defendant argues that the rule of consistency requires that all provisions of the 1958 group policy be made applicable if its liability for future medical coverage is grounded upon the terms of that policy. We do not agree. The 1958 group policy restrictively provided that the defendant would not be obligated to pay more than $10,000 on account of any member during such member's lifetime. Not only was that limitation removed but more liberal benefits were added to the group policy subsequent to 1958. Those changes were supported by a valuable consideration, to-wit, the policy premium rates for plaintiff's coverage rose from $21.35 per month to $28.70 per month and those increased premiums have been paid by plaintiff.

The judgment of the trial court is reversed and the cause is remanded to it for entry of an order consistent with the views expressed herein.

HUNTER, C.J., FINLEY...