Good advice with related links in this newspaper article published in the Orlando Sentinel, February 22, 2008, by Greg Groeller, "Review Insurance Policies Now". Every Policyholder and their Agents and Brokers holding every kind of Insurance Policy can benefit from following the good advice published by this linked newspaper article.
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Three Months Later --This is an update of a post here on September 26, 2007.
The Florida Legislature and the Florida Governor, Charlie Crist, will soon be hearing from Mr. Donald Trump and a group based in New York that advocates Insurance Coverage for Autistic Children called Autism Speaks. Both want Florida to mandate that Insurance Policies remove an Exclusion that is directed to Autism treatments, which can cost the children's parents upwards of $50,000.00 a year without Insurance Coverage.
It is reported by the South Florida Sun-Sentinel.com that 17 States mandate some form or another of Insurance Coverage for autism treatment. Mr. Trump, the Billionaire and Bankruptcy survivor who will deserve praise for this good deed if as now appears it will bring him no personal gain, and Autism Speaks, plan to lobby officials in three high-profile States with large numbers of autistic children and their parents -- Florida, California and Michigan -- in an effort to provide Coverage for such autism treatments as speech therapy.
It is also reported that unnamed Insurance Companies oppose mandated Insurance Coverage for autism treatments on the ground that all of their Policyholders would pay higher Premiums if that happened.
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Jacob Micheletti was 3 years old when he was diagnosed with autism. His father, Joseph Micheletti, an employee of the State of New Jersey, belonged to the State Health Benefits Program. As the intermediate appellate court in New Jersey would later declare: "All authorities agree that treatment [of autism] should commence as early as possible." Following the diagnosis of Jacob's autism, Joseph Micheletti filed a claim for speech therapy and for occupational therapy for Jacob. New Jersey law makes the Program the equivalent of private Health Insurance for the same Coverage.
The State drafted two Exclusions, however, which it put in its Members Handbook, excluding (1) "[t]raining in the activities of daily living," and (2) services or supplies "[t]o promote development beyond any level of function previously demonstrated." The Program Administrator initially determined that speech therapy was covered for Jacob, but that occupational therapy was not covered. Ultimately, the New Jersey State Health Benefits Commission ("SHBC") reviewed all Coverage determinations and decided that both speech therapy and occupational therapy were excluded from Coverage under the Program because these therapies as applied to Jacob Micheletti would promote development of this autistic child beyond any level of function he had previously demonstrated.
The medical necessity of these therapies was not contested and apparently never in doubt. See In re Jacob Micheletti (Jacob Micheletti v. State Health Benefits Commission), New Jersey Superior Court, Appellate Divison, Docket No. A-4418-05T2, Opinion Filed January 17, 2007. However, the State contested Coverage.
The New Jersey Superior Court, Appellate Division, reversed. The Appellate Division's opinion includes some references to statutory interpretation, the Program in question being a creature of statute. For example, the New Jersey Legislature made it clear that it intended to treat statutory regulations of benefits for private Health Insurance Companies in the same way as Coverage would be treated for benefits claimed by State Employees under the Program. The New Jersey Department of Banking and Insurance adopted a regulation which forbade enforcement of "the nonrestorative exclusion" by private Health Insurance Companies to deny treatment to autistic children, in pertinent part. Clearly, then, reversal would be warranted by equal treatment of dependents of State Employees enrolled in the State Health Benefits Program, and dependents of Policyholders under Insurance Policies issued by private Health Insurance Companies; extending benefits to dependent autistic children in the latter case should mean that benefits must be extended to a dependent autistic child like Jacob who is the dependent of a State Employee enrolled in the Program.
However, the Appellate Division did not rest its decision exclusively on the ground of equality. The New Jersey appellate court reached out to "the reasonable expectation of [the Program's] participants." Like the reasonable expectations of Policyholders under privately issued Insurance Policies, insured public employees of the State of New Jersey would expect that speech therapy and occupational therapy would be covered, and not excluded, for dependent autistic children. The New Jersey Program "deals with the same kinds of consumers of insurance protection, who accept what is available and try to find its meaning."
Stating that "we find the exclusionary language to be ambiguous," the Appellate Division held that "the exclusions relied upon by the SHBC to deny coverage for the treatment sought for autism are void. We direct that speech and occupational therapy be instituted for Jake without delay, and that the date of coverage is retroactive to the date of the initial petition."
But there was a delay. There was NOT a delay because the State appealed the decision of the Appellate Division, for the State did NOT appeal that decision. Rather, the State simply did not pay for therapy for Jacob Micheletti, at least until the matter reached the Supreme Court of New Jersey. The story is reported by Larry Abramson, "Children's Health/Family Wins Suit For Autistic Son's Health Care" (broadcast on National Public Radio on Wednesday, September 26, 2007 and found online at npr.org). The report includes information on other therapies potentially available to autistic children, and on laws passed or pending in other States that may require Insurance Companies to provide Insurance Coverage for autism therapy, such as in Pennsylvania, South Carolina, and Texas.
The decision of the New Jersey Supreme Court in the Micheletti case cannot be found online at any site available to the public such as the Court's web site nor in the Rutgers University archives, at least by the undersigned person writing this post. The only report found of that September 12, 2007 decision may require a subscription: In re Micheletti (Jacob Micheletti v. State Health Benefits Commission), ___ A.2d ___, 2007 WL 2660279 (New Jersey, No Case Number Located, Opinion Filed September 12, 2007). In it, the New Jersey Supreme Court granted the Michelettis' petition for certification and Ordered that the State Health Benefits Commission "shall process and pay" all previously submitted invoices for the therapies in question within 14 days of the Court's Order and that the SHBC shall also "process and pay" all invoices submitted on and after September 12, 2007 -- the date of the Order -- no later than 30 days after their submission. Sanctions were denied, but without prejudice should the SHBC "fail to comply with the terms of this Order."
At the time that this post is written, it is unknown whether the State of New Jersey has begun to pay any invoices for the treatment of Jacob Micheletti.
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Happy New Year!
New cases illustrate the differences in applying the "Reasonable Expectations Doctrine". This important doctrine is not applied in all jurisdictions, and there is a split among the courts which apply it. In a decision so new that it is not yet accessible (to me, anyway) and is not listed on the District Court's public web site, the Federal Court in the District of Arizona explained one view of this important doctrine: "Under Arizona law, even unambiguous policy language will not be enforced against the insured if the insured had a reasonable expectation of coverage." Madsen v. Fortis Benefits Ins. Co., 2006 WL 3771803 *8 (D. Ariz. Case No. CV 04-1959-PHX-JAT, Opinion Filed December 21, 2006)(subscription required to access Westlaw version). [Emphasis added.]
Before passing on to other recent cases involving a Reasonable Expectations Doctrine, several other rulings under Arizona law were made in this important new decision. The Madsen case involved claims involving alleged First Party Bad Faith and Coverage. The Plaintiff in that case, Ms. Jacqueline Madsen, "claims she was an additional insured under a nonrenewable Short Term Medical Policy" issued by Fortis. (Id. at *1.) The Federal Judge reiterated Arizona law (id. at *9), and entered Summary Judgment for the First Party Insurance Company in that case because of the Court's ruling that the Arizona Reasonable Expectations Doctrine required a jury determination of fact which, in the Federal Judge's view, clearly supported a determination that the Defendant acted reasonably and not in Bad Faith. Further, something more was required to support Ms. Madsen's claim for Punitive Damages than even a showing of First Party Bad Faith. "The something more that must be shown is evidence that Fortis was aware of and consciously disregarded a substantial and unjustified risk that significant harm would occur." (Id. at *10.) "Accordingly," said the Federal Judge, the ruling that the Plaintiff's First Party Bad Faith Claim in that case "fails as a matter of law" means that Summary Judgment is also granted in favor of Fortis in that case "on the punitive damages claim."
In other jurisdictions that recognize a Reasonable Expectations of the Policyholder Doctrine, the doctrine is a rule of Insurance Contract Interpretation that applies only when there is an ambiguity. The Supreme Court of Kentucky reviewed this doctrine in a famous Third Party or Liability Insurance Case involving a claim to Coverage under "a commercial automobile liability insurance policy, for example, in Brown v. Indiana Insurance Co., 184 S.W.3d 528, 531 (Supreme Court of Kentucky Case No. 2004-SC-0065-DG, et al., Opinion Filed December 22, 2005)(subscription required to access via Westlaw, Supreme Court of Kentucky public web site too difficult to access in time for this post). The Doctrine of Reasonable Expectations, held the Supreme Court of Kentucky in that case, is a "principle [that] pertains to alleged ambiguities within the policy." The Supreme Court held that there is no ambiguity in the Worker's Compensation Exclusions in the Commercial Auto Liability Insurance Policy before it in that case. "Accordingly, the opinion of the Court of Appeals [reversing the Trial Court with directions to enter Judgment in favor of the Insurance Company] is affirmed." Id. at 540. Recently, an alternative way of expressing the Reasonable Expectations Doctrine was addressed by a Federal Judge in another Liability Insurance Case in Download Travelers_Indem. Co. v. Bowling Green Professional Assoc's, PLC (W.D. Ky. Case No. 1.05CV171, Opinion Filed July 21, 2006).pdf. This case is also reported at 440 F. Supp. 2d 652. As applied in that case to "a Professional Liability Insurance for Specified Medical Professions Policy" (Slipsheet Opinion at 10), the Reasonable Expectations Doctrine will be defeated only where the Insurance Policy at issue unequivocally, conspicuously, plainly, and clearly manifests an Exclusion. (Slipsheet at 12.) In that Federal Case, "[t]he Court finds that there is no ambiguity in the ... Policy." As a result, "the Court finds that [the Liability Insurance Company] owes no duty to defend or indemnify" its Policyholder in an underlying liability case and enters Summary Judgment in favor of the Liability Insurance Company which issued the Policy. (Slipsheet Opinion at 13.)
The clear lesson of these new decisions is an old lesson of caution: Care must be taken to understand the Insurance Law of the place where the Insurance Policy is at issue and will be interpreted.
REMINDER: THE CONTENTS OF THIS BLOG DO NOT MAKE AN ATTORNEY-CLIENT RELATIONSHIP. ALWAYS CONSULT THE CASES AND LAWS OF EACH PARTICULAR JURISDICTION AND AN ATTORNEY FAMILIAR WITH THE PARTICULAR INSURANCE ISSUE IN THAT JURISDICTION, WHENEVER YOU TRY TO ADDRESS OR RESOLVE ANY LEGAL QUESTION.
