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Sometimes a three-letter word is worth a million bucks. 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. At issue in the case was whether the child suffered from a “pre-existing condition” because she was treated two days before the policy started by a doctor who failed to make the leukemia diagnosis. 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 concluded that the key question in the case was whether Elena Lawson had received treatment “for” the leukemia before the policy took effect. Since both sides offered reasonable interpretations, Katz said, the policy must be deemed ambiguous. “If a contract is reasonably susceptible to more than one interpretation, it is ambiguous,” Katz wrote. 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.” Now the 3rd Circuit has upheld that decision. In doing so, the court rejected Fortis’ argument that the wording of its pre-existing condition exclusion does not require accurate diagnosis of the condition, but merely receipt of treatment or advice for the symptoms of it. Fortis’ lawyer, Andrew F. Susko of Philadelphia’s White and Williams, argued that because Elena Lawson was treated for symptoms of leukemia before the effective date of the insurance policy, the leukemia was a pre-existing condition. But plaintiff’s attorney Michael J. Salmanson argued that under the language of the policy, the leukemia was not pre-existing because one cannot receive treatment “for” a condition without knowledge of what the condition is. Writing for a unanimous court, 3rd Circuit Judge Samuel A. Alito agreed, 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.” But Fortis nonetheless won a significant victory in the appeal because the court also upheld Katz’s decision to dismiss the plaintiffs’ bad-faith claim. Since federal courts around the country have split on their interpretations of similar or even identical policy language, the 3rd Circuit found that Fortis did not act unreasonably in relying on the decisions that upheld its position and enforced the policy exclusions. According to court papers, Joseph Lawson purchased the Fortis short-term medical insurance policy to cover himself and his daughter, Elena, on Oct. 7, 1998. The policy became effective two days later. On the same day Lawson applied for the policy, Elena’s mother, Tammy Malatak, took Elena 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. When the symptoms persisted, Malatak took Elena to the family physician on Oct. 13. The next day, Elena’s grandmother, a registered nurse, took Elena to a pediatrician who ordered Elena to undergo more tests and diagnosed her with leukemia. On Oct. 15, 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. When Fortis denied coverage, Lawson and Malatak filed suit. Ruling in favor of the plaintiffs on the coverage issue, Katz relied heavily on the 1994 decision by the 1st Circuit Court of Appeals in Hughes v. Boston Mutual Life Insurance Co. In Hughes, the insured claimant suffered from and was treated for non-specific symptoms of multiple sclerosis prior to the effective date of his disability policy, but the condition was not diagnosed until after the policy took effect. The 1st Circuit found both the insurance company’s and the claimant’s interpretations of the policy to be reasonable, and therefore concluded that the pre-existing condition exclusion was ambiguous. The ambiguity, the Hughes court said, was due to the lack of clarity regarding what constitutes treatment “for” a condition. The 3rd Circuit found that federal appellate courts have split on their interpretations of similar policy language, with one circuit — the 7th — handing down conflicting decisions. Alito, in an opinion joined by 3rd Circuit Judges Anthony J. Scirica and Julio M. Fuentes, adopted the logic of the 1st Circuit, noting that it has been followed by the 5th and 7th circuits, as well as the Western District of New York, the Wisconsin Court of Appeals and the New York Supreme Court’s Appellate Division. “All of these courts have reasoned that it is not logical to permit non-specific symptoms, which could be caused by a number of different sicknesses, to be used later as a retroactive trigger for exclusion as a pre-existing condition,” Alito wrote. “These courts reached the conclusion that the pre-existing condition clauses in insurance policies are ‘susceptible to reasonable but differing interpretations’ and are therefore ambiguous,” Alito wrote. But Alito went further, saying he found that the plaintiffs’ interpretation of the policy was correct. 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.” Since there was no doubt that the “sickness” Elena suffered from was leukemia, Alito found that the key word in policy exclusion was “for.” “Elena received treatment ‘for’ what were initially diagnosed as symptoms of a respiratory tract infection. Therefore, the treatment she received was not ‘for’ leukemia, but ‘for’ a respiratory tract infection,” Alito wrote. Turning to the dictionary, Alito found that the word “for” carries a definition that “connotes intent.” And Black’s Law Dictionary, he said, “similarly states that the word ‘connotes the end with reference to which anything is, acts, serves, or is done. In consideration of which, in view of which, or with reference to which, anything is done or takes place.’” Applying the definition, Alito found that neither Elena’s parents, nor the first doctors who examined her “intended or even thought” that Elena was receiving medical advice or treatment “for” leukemia. “In short, it is hard to see how a doctor can provide treatment ‘for’ a condition without knowing what that condition is or that it even exists. Thus, in our view, the best reading of the contract language in this case is for coverage of Elena’s leukemia treatment. At worst, the language is ambiguous and must therefore be read in favor of the insureds,” Alito wrote. Although the court relied on the ambiguity of the policy to decide the case, Alito suggested that any decision that went the other way could result in bad public policy. “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. Salmanson said the amount in controversy in the case was about $700,000, and that, with interest, the judgment is likely to be close to $1 million.

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