Ponder v. Blue Cross of Southern California

• Decision Date: 04 August 1983
• Citation: 145 Cal.App.3d 709,193 Cal.Rptr. 632
• Parties: Marlene PONDER and Tommie Ponder, Plaintiffs and Appellants, v. BLUE CROSS OF SOUTHERN CALIFORNIA, Defendant and Respondent. Civ. 66903.
• Court: California Court of Appeals Court of Appeals

Page 632

193 Cal.Rptr. 632

145 Cal.App.3d 709

Marlene PONDER and Tommie Ponder, Plaintiffs and Appellants, v. BLUE CROSS OF SOUTHERN CALIFORNIA, Defendant and Respondent.

Civ. 66903.

Court of Appeal, Second District, Division 7, California.

Aug. 4, 1983.

As Modified on Denial of Reconsideration Aug. 31, 1983.

Hearing Denied Sept. 29, 1983.

[145 Cal.App.3d 713] Jeffrey B. Harrison, Los Angeles, for plaintiffs and appellants.

Munger, Tolles & Rickershauser and Daniel P. Garcia and Lucy T. Eisenberg, Los Angeles, for defendant and respondent.

JOHNSON, Associate Justice.

This appeal is from a summary judgment in favor of the defendant insurance company, Blue Cross of Southern California (Blue Cross). The plaintiffs, Marlene and Tommie Ponder, are policyholders denied coverage for treatment of a condition suffered by Mrs. Ponder. In response to this refusal, the Ponders filed a complaint seeking declaratory relief as well as damages for breach of contract and tortious breach of implied covenant of good faith and fair dealing. The court granted summary judgment on grounds a provision in the insurance contract effectively excluded Mrs. Ponder's condition from coverage, hence no triable issues remained.

The central issue on appeal is whether a form insurance contract effectively excludes coverage through a clause couched in undefined technical language not highlighted by location, typesize or otherwise. Under the circumstances of this case, we hold that it does not.

I. FACTS AND PROCEEDINGS BELOW

In early May 1979, Mrs. Tommie Ponder was suffering earaches, throat pains, coughing and headaches. She sought treatment from Harvey S. Kulber, M.D. He initially diagnosed the problem as upper respiratory infection and blocked Eustachian tubes. By her next visit on May 13, the infection had subsided but the earaches remained. Dr. Kulber's examination including X-rays revealed "severe temporomandibular joint disease, especially on the left side."

A few months later, Mrs. Ponder was experiencing severe headaches with the pain radiating into the ears. Dr. Kulber and his associate, Dr. Seltzer, also a physician diagnosed the cause as "temporomandibular joint syndrome and etiology of the pain coming from that syndrome." They referred Mrs. Ponder to a clinic at White Memorial Hospital which specialized exclusively in the treatment of temporomandibular joint disease.

During this period, Blue Cross honored payment of the bills for the services of Drs. Kulber and Seltzer including those which indicated the condition treated was temporomandibular joint disease.

The White Memorial Hospital TMJ Clinic is staffed by medical doctors and oral surgeons. Mrs. Ponder was assigned to one of the oral surgeons, Douglas H. Morgan, D.D.S., for screening. He diagnosed her condition as "osteo-arthritic condition of the right and left temporomandibular joints, as well as dysfunction of the left meniscus." According to Dr. Morgan's declaration, this condition is treated by medical doctors or oral surgeons, or both. Moreover, when he performs the surgery often required to cure temporomandibular joint disease, he is assisted by a medical doctor.

Dr. Morgan began treating Mrs. Ponder for this condition by non-surgical methods which also are helpful should surgery become necessary. From July 17, 1979, through March 13, 1980, Dr. Morgan submitted 23 claims to Blue Cross for these treatments.

These 23 disputed claims were filed under a non-group insurance contract the Ponders have held since July 1, 1976. This contract is called the "High Option Performance Plus Plan." The terms of the contract are spelled out in a "certificate" which Blue Cross issues to "subscribers." When Blue Cross chooses to modify coverage, its computer merely sends out a new certificate to replace the superseded version.

During the period Mrs. Ponder was receiving the disputed treatments, the Ponders were covered by two successive certificates. From January 1, 1979-January 1, 1980, the Ponders claimed reimbursement under certificate "Non-group series G 2863." This three page, eleven part, 5,750 word contract contained two provisions of special relevance to this case. Under "General Provisions" Part V, section E on page one of the certificate appears the following:

"E. Other Providers of Care: If the Member receives the services of a chiropractor, ... or dentist performed within the scope of their licenses and payment for such services would have been provided under this Agreement if performed by a licensed physician, those services shall be treated as though they had been performed by a physician for the purpose of determining eligible benefits under this Agreement."

On page two, under Part VI, General Limitations, this certificate reads:

"Blue Cross shall not furnish benefits for:

"...

"J. Dental Care: Treatment on or to the teeth or gums or extraction of teeth except when necessitated by accident, or as otherwise specifically provided for under this Agreement; treatment of dental abscess or granuloma, treatment for or prevention of temporo-mandibular joint syndrome, treatment of gingival tissue other than for tumors, and dental examinations."

A new certificate, "Non-group series G-3823," became effective on January 1, 1980. This certificate modified the two key terms of the contract to read:

"D. Other Provider of Care

"If Benefits under this Agreement would have been provided for services performed by a physician, the same Benefits will be provided when those services performed by a licensed chiropractor, ... or dentist operating within the scope of their license.

"Blue Cross shall NOT furnish benefits for:

"J. Dental Care: Treatment on or to the teeth and gums or any tooth extraction except when it is required because of an accident occurring while the Member is covered under this Agreement. Treatment of dental abscess, granuloma, gingival tissues or dental examinations. Also, medical or surgical care for or prevention of temporo-mandibular joint syndrome or disease."

Blue Cross initially paid four of the 23 disputed claims totalling $742.48 which were filed during August 1979. Thereafter, Blue Cross paid no further claims for treating Mrs. Ponder's condition. On January 7, 1980, after issuance of the second certificate, Blue Cross sent a letter to the Ponders seeking return of the $742.48 already paid. Later that month, Mr. Ponder required emergency surgery. Blue Cross withheld $742.48 from the reimbursement it owed the Ponders for that bill for the express purpose of recouping the $742.48 it had paid out for Dr. Morgan's treatment of Mrs. Ponder's temporomandibular joint syndrome. At no time did Blue Cross seek return of payments made to the physician, Dr. Kulber, or to White Memorial Hospital for their diagnoses and treatment of Mrs. Ponder's temporomandibular joint syndrome.

At about this time, Mrs. Ponder was diagnosed as requiring surgery--a bilateral temporomandibular joint arthoplasty--and temporomandibular joint therapy. On September 17, 1980, the Ponders filed their complaint against Blue Cross seeking declaratory relief and damages. On October 20, 1981, the trial court heard defendant's motion for summary judgment and filed the following handwritten minute order:

"Motion is granted; no triable issues of fact as to exclusion; no waiver can be shown; no vagueness of the exclusion here; no contract of adhesion, moving party to prepare judgment."

The notice of appeal was filed December 10, 1981, and briefing completed March 28, 1983.

II. THIS BLUE CROSS AGREEMENT WAS AN "ADHESION CONTRACT" OR A STANDARD INSURANCE CONTRACT AIMED AT THE GENERAL PUBLIC AND THUS ANY EXCLUSIONS MUST BE "CONSPICUOUS" AND "PLAIN AND CLEAR"

In granting summary judgment, the trial court rested its decision on a finding that the language of the contract excluding coverage of "temporomandibular joint syndrome" was unambiguous. Since the court's decision was based primarily on its interpretation of the contract, rather than an appraisal of extrinsic evidence submitted by the parties, the usual deference to the trial court's findings of fact is not appropriate. "The interpretation of a written instrument, even though it involves what might properly be called questions of fact ..., is essentially a judicial function." Moreover, "[i]t is ... solely a judicial function ... unless the interpretation turns upon the credibility of extrinsic evidence." (Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861, 865, 44 Cal.Rptr. 767, 402 P.2d 839; Estate of Dodge (1971) 6 Cal.3d 311, 318, 98 Cal.Rptr. 801, 491 P.2d 385.) It is the duty of an appellate court, as well as a trial court, to perform that function. (Parsons v. Bristol Development Co., supra, 62 Cal.2d at p. 866, 44 Cal.Rptr. 767, 402 P.2d 839; Pepper Industries, Inc. v. Home Insurance Co. (1977) 67 Cal.App.3d 1012, 1018, 134 Cal.Rptr. 904.) As a consequence, we now undertake to conduct our own independent review of this contract.

The trial court apparently assumed that if the language of the exclusion is "unambiguous" in the sense of being precise, that ends the inquiry. Continuing the logic of the court's decision, temporomandibular joint syndrome is a precise term and was included in the exclusions section of the contract. The appellant was being treated for temporomandibular joint syndrome. Consequently she was not entitled to coverage.

We find it unnecessary to determine whether the phrase temporomandibular joint syndrome is indeed an "unambiguous" term. ¹ Instead we subject this exclusion to two other tests which also must be satisfied before this contract term can be enforced against an insured. Because of the nature of the contract and the contracting parties the most precise language imaginable may prove insufficient to eliminate coverage.

In order to understand why additional requirements apply to this contract, we first begin with the proposition that any contract is construed against the party...