Taylor v. Blue Cross/Blue Shield of Michigan

• Decision Date: 20 June 1994
• Docket Number: 156806,Docket Nos. 156767
• Citation: 517 N.W.2d 864,205 Mich.App. 644
• Parties: , 18 Employee Benefits Cas. 1711 Robert E. TAYLOR and Debra Taylor, Plaintiffs-Appellants, and County of Marquette, Intervening Plaintiff, v. BLUE CROSS/BLUE SHIELD OF MICHIGAN, Defendant-Appellee. Robert E. TAYLOR and Debra Taylor, Plaintiffs-Appellees, and County of Marquette, Intervening Plaintiff, v. BLUE CROSS/BLUE SHIELD OF MICHIGAN, Defendant-Appellant.
• Court: Court of Appeal of Michigan — District of US

Page 864

517 N.W.2d 864

205 Mich.App. 644, 18 Employee Benefits Cas. 1711

Robert E. TAYLOR and Debra Taylor, Plaintiffs-Appellants, and County of Marquette, Intervening Plaintiff, v. BLUE CROSS/BLUE SHIELD OF MICHIGAN, Defendant-Appellee.

Robert E. TAYLOR and Debra Taylor, Plaintiffs-Appellees, and County of Marquette, Intervening Plaintiff, v. BLUE CROSS/BLUE SHIELD OF MICHIGAN, Defendant-Appellant.

Docket Nos. 156767, 156806.

Court of Appeals of Michigan.

Submitted Oct. 13, 1993, at Marquette.

Released for Publication July 18, 1994.

Decided June 20, 1994, at 9:10 a.m.

Andrews, Fosmire, Solka & Stenton, P.C. by M. Sean Fosmire, Negaunee, for Robert and Debra Taylor.

David A. Payant, Marquette, for County of Marquette.

Daniel W. McKelvey, Lansing, for Blue Cross and Blue Shield of Michigan.

Before SAWYER, P.J., and RICHARD ALLEN GRIFFIN and PAJTAS, ^* JJ.

PAJTAS, Judge.

The present action arose from defendant's refusal to cover plaintiff Debra Taylor's treatment of high dose chemotherapy with autologous bone marrow transplant for her Stage IV metastatic breast cancer. In these consolidated appeals, plaintiffs Robert and Debra Taylor appeal as of right from the trial court's September 9, 1992, order granting defendant's motion for summary disposition and dismissing their claim for damages for physical and mental injury based on breach of contract and intentional infliction of emotional distress. Plaintiffs also appeal from the trial court's denial of attorney fees, arguing that they were entitled to the fees for prevailing on their action against defendant. We affirm.

Defendant appeals as of right from the trial court's September 9, 1992, judgment in favor of plaintiffs and finding that the cancer treatment for Debra Taylor was not experimental or research in nature, and therefore not excluded from the health insurance policy. The court ordered defendant to reimburse plaintiffs for the costs of the cancer treatment, which amounted to $144,000. We affirm.

The facts of this case are not disputed. Robert Taylor is an employee of intervening plaintiff Marquette County and is covered under a medical insurance policy issued by defendant to the county. Debra Taylor was also covered for medical insurance through her husband under the same policy. In July 1987, Debra was diagnosed with breast cancer at the age of thirty-five. In August, a mastectomy was performed at a hospital affiliated with the Mayo Clinic. Most of the auxiliary lymph nodes from the removed tissue tested positive for cancer, indicating that the cancer would develop into metastatic cancer that spreads throughout the body. The breast cancer was classified as adenocarcinoma, grade 4.

In 1989, Debra's oncologist contacted the M.D. Anderson Bone Marrow Transplant Center in Houston, Texas, regarding the possibility of treating Debra with a procedure called high dose chemotherapy with autologous bone marrow transplant (HDC-ABMT). HDC-ABMT is a procedure by which bone marrow stem cells are extracted from the patient's body and frozen in storage. The patient then receives massive doses of chemotherapy to destroy the cancer. ¹ After the chemotherapy is completed, the stored bone marrow is transfused into the patient. HDC-ABMT had been a state-of-the-art treatment for leukemia and Hodgkin's disease for many years. It began to be used in the late 1980s for women who were in the late stages of breast cancer.

Upon inquiry, defendant informed the Taylors that the HDC-ABMT treatment was excluded by the policy of insurance under the following provision:

The following services are not covered by this contract:

Benefits for care, services, supplies or devices which are experimental or research in nature.

Defendant asserted that the treatment was experimental or research in nature. Because defendant refused to cover the costs, Debra did not receive the treatment at that time.

In March 1991, the doctors discovered cancer in the lumbar and thoracic areas of Debra's spine. She then applied for HDC-ABMT at the Fred Hutchinson Cancer Research Center in Seattle, Washington. The center accepted Debra as a candidate for the treatment, but informed her that it required insurance coverage or an ability to pay. The estimated cost for the treatment ranged from $144,000 to $200,000. Defendant again denied coverage. Thereafter, Marquette County issued a letter of credit up to $195,000 to pay for the procedure.

In May 1991, Debra Taylor arrived at the center for HDC-ABMT. A bone marrow biopsy revealed that over forty percent of her bone marrow was cancerous. Because the cancer level was considered too high for harvesting and reinfusion, the doctors decided to harvest peripheral blood stem cells, which are contained in the bone marrow and the blood. These cells repopulate the bone marrow and produce red and white blood cells and platelets. In September 1991, Debra returned to the center for intensive chemotherapy and reinfusion of peripheral blood stem cells.

On April 21, 1991, the Taylors filed an action against defendant, seeking a declaratory judgment that the treatment was covered under the insurance policy. Under counts II and III, they requested money damages for pain, suffering, and emotional distress as a result of defendant's actions in denying coverage. The Taylors subsequently agreed to subrogate their claim under count I against defendant to the county, which then intervened in the action.

Hearings regarding count I were held on October 9 and November 1 of 1991. At the hearing, Dr. William Vaughn testified on behalf of plaintiffs, and Dr. John Burrows testified on behalf of defendants. The majority of testimony was admitted through the depositions of Debra Taylor and several doctors.

I. Docket No. 156806

A

Defendant contends that the trial court clearly erred in finding that the exclusion was ambiguous and that HDC-ABMT was not experimental or research in nature, and therefore not excluded by the policy. We disagree.

This Court's review of a declaratory judgment is conducted de novo. De Bruyn Produce Co. v. Romero, 202 Mich.App. 92, 98, 508 N.W.2d 150 (1993); Englund v. State Farm Mutual Automobile Ins. Co., 190 Mich.App. 120, 121, 475 N.W.2d 369 (1991). However, we will not reverse a trial court's factual findings unless they are clearly erroneous. De Bruyn, supra.

In determining whether an insurance policy applies, this Court must first determine whether the policy is clear and unambiguous on its face. In doing so, the insurance contract should be read and interpreted as a whole. Fragner v. American Community Mutual Ins. Co., 199 Mich.App. 537, 540, 502 N.W.2d 350 (1993). Exclusions are to be read with the insuring agreement and independent of other exclusions. Id. Exclusionary clauses are to be strictly construed against the insurer. Id.; Farm Bureau Mutual Ins. Co. of Michigan v. Stark, 437 Mich. 175, 181, 468 N.W.2d 498 (1991).

An insurance contract is clear if it fairly admits of but one interpretation. Id.; Fragner, supra. If an insurance contract's language is clear, its construction is a question of law for the court. Id. An insurance contract is ambiguous if, after reading the entire contract, its language reasonably can be understood in differing ways. Id. Furthermore, ambiguities in an insurance policy drafted by an insurer are to be construed against the insurer and in favor of the insured. Id.

In support of its claim that the insurance policy was not ambiguous and that the HDC-ABMT treatment is clearly experimental or research in nature, defendant relies solely upon Dahl-Eimers v. Mutual of Omaha Life Ins. Co., 812 F.Supp. 1193 (N.D.Fla.1992). In Dahl-Eimers, the policy covered medically necessary services, and a medically necessary service was defined in the policy as one that

(a) is appropriate and consistent with the diagnosis in accord with accepted standards of community practice; (b) is not considered experimental; and (c) could not have been omitted without adversely affecting the insured person's condition or the quality of medical care. [Id., at p. 1195. Emphasis added.]

The district court held that the term "experimental" was not ambiguous and that HDC-ABMT treatments were experimental. Id., at pp. 1197-1198.

The district court's decision, however, was reversed by the Eleventh Circuit Court of Appeals in Dahl-Eimers v. Mutual of Omaha Life Ins. Co., 986 F.2d 1379 (CA 11, 1993). In holding that the policy was ambiguous, the Eleventh Circuit Court stated:

The policy does not define the term "experimental." The plain language of subparagraph (b) ... does not indicate who will determine whether a proposed treatment is considered experimental. Further, it also omits standards for how that determination will be made. Thus, the contract phrase "considered experimental," without more, gives rise to a genuine uncertainty about who will determine whether a particular treatment is experimental and how that determination will be made. Indeed, even Mutual of Omaha concedes that there could be more than one source of such a determination. Ambiguity in the contract terms arises from the contract's silence on definitions.

The absence of a definition does not create ambiguity per se, as noted above. Nonetheless, the insurance company cannot then claim the narrow and favorable interpretation that its determination, alone, is controlling. In this case, Mutual of Omaha took upon itself the determination of whether the proposed treatment is considered experimental. While that is a reasonable interpretation of the policy language, it is not the only reasonable interpretation. It would also be reasonable to allow the determination of what is considered experimental to be made, for example, by the relevant medical specialists, according to generally accepted standards of community practice, or by a national association. [Id., at p. 1382.]

Other federal courts have found that the term "experimental" was ambiguous. Pirozzi v. Blue...