One Word Ambiguity Enough "For" 3rd Circuit

August 26, 2002 ( - A federal appeals court found that a single word - "for" - rendered a policy ambiguous enough to overcome a preexisting condition clause.

In Lawson v. Fortis Insurance Co., the 3rd U.S. Circuit Court of Appeals found that the word “for” in a policy exclusion clause rendered it ambiguous and upheld a decision that ordered the insurer to pay the medical bills of a child who was diagnosed with leukemia just five days after a health insurance policy took effect, according to the Legal INtelligencer.

Preexisting “Treatment”

At issue was whether the child suffered from a “pre-existing condition,” since a doctor who failed to make the leukemia diagnosis had treated her just two days before the policy took effect.

In June 2001, Senior U.S. District Judge Marvin Katz for the Eastern District of Pennsylvania found that the wording of the policy’s exclusion of coverage for pre-existing conditions was ambiguous and should therefore be construed in favor of the insured.  Katz focused on language in the policy that precluded coverage for ailments that the insured had been treated “for.”

Insurer Fortis had argued that the pre-existing condition exclusion did not require an accurate diagnosis of the condition, but rather just receiving treatment or advice for the symptoms of the condition.

However Katz ruled that, since both sides were able to make a credible case for a reasonable interpretation, the contract provision was ambiguous.  And in the insurance context, Katz said, ambiguous provisions “must be construed against the insurer and in favor of the insured; any reasonable interpretation offered by the insured, therefore, must control.”

Case History

According to the Intelligencer report, court papers indicated that Joseph Lawson purchased the Fortis short-term medical insurance policy to cover himself and his daughter, Elena, on October 7, 1998 – a policy that became effective two days later.

That same day, Elena’s mother took her to the emergency room at Palmerton Hospital because she had a dry, hacking cough, a fever, an elevated pulse rate, and a swollen right eye.  The emergency room physician diagnosed Elena with an upper respiratory tract infection and prescribed an antibiotic and anti-allergy medication.

However, when the symptoms persisted, Malatak took Elena to her family physician on October 13.  A day later Elena went to a pediatrician who ordered Elena to undergo more tests and diagnosed her with leukemia. Two days later Elena was transferred to the Children’s Hospital of Philadelphia where she underwent chemotherapy and other treatment that has since resulted in the remission of her leukemia.

Her parents filed suit when Fortis denied coverage.

Appeal Upheld

The 3rd Circuit noted that the Fortis policy excludes coverage for a “sickness, injury, disease, or physical condition for which medical advice or treatment was recommended by a physician or received from a physician within the five-year period preceding that covered person’s effective date of coverage.”  The unanimous court also held that Elena’s treatment was “for” a respiratory tract infection, not leukemia.  The court went to the dictionary, and found that “for” carries a definition that “connotes intent” – an element not present in the case before it.

Consequently, writing for the court, 3rd Circuit Judge Samuel A. Alito agreed with Katz’s ruling, saying, “we find that plaintiffs’ reading of the pre-existing condition language is reasonable and that the ambiguity in the policy should be construed against the insurance company.” 

However, Fortis did prevail on a significant issue – the dismissal of the plaintiffs’ bad-faith claim.  The 3rd Circuit found that Fortis did not act unreasonably in relying on the decisions that upheld its position and enforced the policy exclusions.

The 3rd Circuit acknowledged that federal appellate courts have split on their interpretations of similar policy language.  In fact, the 7th Circuit has reportedly handed down conflicting decisions.

However, Alito suggested that any decision that went the other way could result in bad public policy, according to the report.  “Considering treatment for symptoms of a not-yet-diagnosed condition as equivalent to treatment of the underlying condition ultimately diagnosed might open the door for insurance companies to deny coverage for any condition the symptoms of which were treated during the exclusionary period,” Alito wrote.