In Kopp, the Supreme Court of Wisconsin held that "the unreasonable result should be avoided of so construing [a] policy as to permit the [insured] to recover for... services supplied to him by some third-party volunteer without cost or personal liability to pay therefor on the part of such [insured]."Summary of this case from C S Mfg. Corp. v. U.S. Fire Ins. Co.
December 2, 1958 —
January 2, 1959.
APPEAL from a judgment of the county court of Eau Claire county: MERRILL R. FARR, Judge. Affirmed.
For the appellant there were briefs by Byrne, Bubolz Spanagel, attorneys, and William S. Pfankuch of counsel, all of Appleton, and oral argument by Edward J. Byrne.
For the respondent there was a brief and oral argument by Frank E. Betz and William A. Adler, both of Eau Claire.
Action by the plaintiff Herman Kopp to recover upon a policy of automobile liability insurance issued by the defendant which provided a $500 medical-payments coverage.
The plaintiff was the insured under such policy, and on July 6, 1957, was injured while driving the insured vehicle. He was hospitalized for such injury in the Luther Hospital at Eau Claire and was treated for such injury by his attending physician. He was a subscriber to the Blue Cross hospital benefit plan, and paid a quarterly premium of $16.35 therefor to Associated Hospital Service, Inc. (hereinafter referred to as "Blue Cross").
The Luther Hospital is an affiliated hospital of Blue Cross. Under the hospital service contract issued to the plaintiff by Blue Cross, it agrees to provide him with certain hospital benefits free of charge in any affiliated hospital. If hospitalized in a nonaffiliated hospital meeting certain standards, Blue Cross agrees to reimburse him for such amounts as he was required to pay the hospital which fall within the scale of benefits he is entitled to receive free at an affiliated hospital. Under the contract which exists between Blue Cross and its affiliated hospitals, Blue Cross reimburses the hospital for any hospital services which it has been required to furnish free to a subscriber of the plan, such reimbursement being on the basis of the hospital's standard scale of charges to the public.
Subsequent to plaintiff's hospitalization and medical treatment, the plaintiff submitted to the defendant Insurance Company a statement in the sum of $180 from his attending physician and an itemized statement from Luther Hospital in the sum of $387.55. Such hospital bill showed on its face that the portion of the bill payable by Blue Cross was $387.55, and the portion payable by the plaintiff was nothing.
Prior to suit the defendant offered to pay the plaintiff the sum of $180 to cover the statement from his physician but refused to pay anything for hospitalization. The plaintiff then commenced the instant action to recover the sum of $500 from the defendant under the medical-payments coverage clause of defendant's policy which was in effect at the time of the accident. Thereafter, the plaintiff accepted from the defendant payment of the $180 previously offered leaving the balance still claimed by the plaintiff to be $320.
After issue was joined both parties moved for summary judgment. The plaintiff's motion was granted and the defendant's denied. Judgment was accordingly entered May 2, 1958, in favor of the plaintiff and against the defendant for $320, together with costs and disbursements. From such judgment the defendant has appealed.
The defendant Insurance Company does not base its refusal to pay the plaintiff anything to apply on the hospital bill upon the ground that the plaintiff should not recover twice for the same expense. On the contrary, it concedes that, if the hospitalization had taken place in a hospital not affiliated with Blue Cross, and the plaintiff had paid the bill and had been reimbursed by Blue Cross, he would be entitled to recover therefor from the defendant, subject to the $500 coverage limit. The defendant's defense is placed upon the very narrow ground that the plaintiff never incurred any expense for his hospitalization. This is because under the plaintiff's contract with Blue Cross, and the contract between Luther Hospital and Blue Cross, Luther Hospital was obligated to furnish such hospitalization free to the plaintiff and to look solely to Blue Cross for payment.
The pertinent provision of the defendant's policy reads as follows:
"Coverage C — Medical Payments.
"To pay all reasonable expenses incurred within one year from the date of accident for necessary medical, surgical, X-ray, and dental services, including prosthetic devices, and necessary ambulance, hospital, professional nursing, and funeral services:
"Division 1. To or for the named insured and each relative who sustains bodily injury, sickness, or disease, including death resulting therefrom, hereinafter called `bodily injury,' caused by accident, while occupying or through being struck by an automobile."
Elsewhere in the policy the amount of medical-payments coverage is expressly limited to $500 for each person.
The defendant contends that, under the above-quoted policy provisions, it is a condition precedent to the insured's right of recovery upon the policy for his hospitalization that he shall first have incurred a debt for the same. It is clear from the undisputed facts that no such debt was incurred by the plaintiff to pay for such hospitalization. However, a debt was incurred on the part of Blue Cross to pay such expense to Luther Hospital, and the plaintiff had paid quarterly premiums to Blue Cross as consideration for Blue Cross undertaking so to do. Thus expense was incurred for hospital services furnished "to or for" the plaintiff insured.
The afore-quoted policy provisions do not state who is required to incur the expense in order for the insured to recover for medical or hospital services supplied to or for him. There thus exists an ambiguity. It is a generally accepted rule of construction that ambiguities in a contract of insurance are to be resolved against the insurer who drafted the same and in favor of the insured. Northland Bottling Co. v. Farmers Mut. Automobile Ins. Co. (1958), 3 Wis.2d 326, 329, 88 N.W.2d 363. Furthermore, policies of insurance are to be given a reasonable construction, and not one that leads to an absurd result. 13 Appleman, Insurance Law and Practice, p. 38, sec. 7386, and 44 C.J.S., Insurance, pp. 1163, 1164, sec. 296.
There are two widely used methods whereby a person can purchase protection against future hospitalization costs. One is to purchase an insurance policy providing for the reimbursement to the insured for future hospital costs falling within the limits of the policy. The other is to enroll under the Blue Cross plan whereby all affiliated hospitals agree to provide such person free hospital service falling within a certain specified scale of benefits. In both cases such person pays a premium to secure such coverage. It would lead to a highly absurd and socially undesirable result to construe the medical-payments coverage clause of the defendant's policy so as to hold that recovery for the costs of hospital services provided to the insured may be recovered in the one case and not the other.
Even though the policy provision is ambiguous and must be construed against the insurer, the unreasonable result should be avoided of so construing the medical-payments clause of defendant's policy as to permit the injured person to recover for medical or hospital services supplied to him by some third-party volunteer without cost or personal liability to pay therefor on the part of such injured person. However, where the injured person (in this case the insured) pays a consideration to have the expense of such medical or hospital services paid without liability to such injured person, it is our considered judgment that the injured person should be permitted to recover such expense under the policy clause in question.
We have carefully considered the authorities cited in the defendant's brief but none are in point on the issue of resolving by construction the ambiguity in the medical-payments clause of defendant's policy. Apparently this is a case of first impression on such issue.
By the Court. — Judgment affirmed.