Joseph Lawson, et al. v. Fortis Insurance Company

Minor child Elena Lawson ("Elena") was covered under a

health insurance policy that her father bought from

Defendant, Fortis Insurance Company. Two days prior to

the effective date of the policy, Elena went to the emergency

room for treatment of what was initially diagnosed as a

respiratory tract infection, but which was discovered to be

leukemia one week later, after the effective date of the

policy. Fortis denied coverage of medical expenses relating
to the leukemia on the ground that it was a pre-existing

condition for which Elena had received treatment prior to

the effective date of the policy. Elena’s parents ("Plaintiffs"),

acting on her behalf, sued for breach of contract, and the

District Court granted their motion for summary judgment.

In this appeal, Fortis argues that the pre-existing

condition language of the insurance policy does not require

accurate diagnosis of the condition, but merely receipt of

treatment or advice for the symptoms of it. Fortis claims

that because Elena was treated for symptoms of leukemia

before the effective date of the insurance policy, the

leukemia was a pre-existing condition. Plaintiffs respond

that the leukemia was not pre-existing because one cannot

receive treatment "for" a condition without knowledge of

what the condition is. 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. Therefore, we affirm the District

Court’s grant of summary judgment for Plaintiffs on their

claim for benefits under the policy. We also affirm the

District Court’s grant of summary judgment for Fortis on

the Plaintiffs’ bad faith claim.

I.

A.

On October 7, 1998, Joseph Lawson ("Lawson")

purchased the Fortis short-term medical insurance policy

to cover himself and his daughter, Elena Lawson. The

policy became effective two days later, on October 9. On

October 7, the same day Lawson applied for the insurance

policy, Elena’s mother, Tammy Malatak, took Elena to the

emergency room at Palmerton Hospital in Palmerton,

Pennsylvania. Elena had a dry, hacking cough, a fever, an

elevated pulse rate, and a swollen right eye. The emergency

room physician, Dr. Shailesh Parikh, diagnosed Elena with

an upper respiratory tract infection and prescribed an

antibiotic and anti-allergy medication. Dr. Parikh further

advised Ms. Malatak to take Elena for a follow-up visit to

her family physician or to bring her back to the emergency

room if the symptoms did not improve in a few days.

Because the symptoms persisted, on October 13, Ms.

Malatak took Elena to the family physician, Dr. Narendra

Ambani.

The insurance policy at issue expressly excludes coverage

for a pre-existing condition, which is defined as 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 (5)

year period preceding that Covered Person’s Effective Date

of Coverage." The policy defines "sickness" as an "illness,

disease or condition which is diagnosed or treated while
this policy is in force." There is no dispute that the relevant

sickness here is leukemia.

Lawson and Malatak, on behalf of Elena, filed a claim for

payment of the CHOP medical bills under the Fortis policy.

Dr. Raymond Brumblay, Fortis’s Medical Director,

investigated Elena’s course of treatment and concluded that

"[w]hile the evaluation [at the Palmerton Emergency

Department] failed to diagnose leukemia, advice and

treatment for those symptoms were received from a

physician. This meets the policy definition of a pre-existing

condition." App. at 96. Dr. Brumblay determined that Elena

had a two-and-a-half week history of fever preceding her

diagnosis of leukemia, and he therefore concluded that the

symptoms for which she was evaluated and treated on

October 7, 1998, were those of leukemia. Fortis thus denied

Plaintiffs’ claim pursuant to the policy’s pre-existing

condition exclusion.

Plaintiffs appealed the denial to Fortis’s Appeal Review

Committee, which concluded that the definition of a pre-

existing condition does not require a correct diagnosis of

the condition at the time that it is treated. Fortis thus

denied Plaintiffs’ appeal.

C.

Plaintiffs brought a breach of contract and bad faith

action against Fortis for its denial of coverage. Plaintiffs

moved for summary judgment on the breach of contract

claim, and Fortis filed a cross-motion for summary

judgment on both claims. The District Court heard oral

argument on the motions for summary judgment. The

Court granted Plaintiffs’ motion on the breach of contract

claim, and granted Fortis’s motion on the bad faith claim.

Lawson v. Fortis Insurance Co., 146 F. Supp. 2d 737 (E.D.

Pa. 2001).

The District Court found that the definition of a pre-

existing condition under the policy is ambiguous. According

to the District Court, the language could be read as

providing either a subjective standard requiring an accurate

diagnosis of the condition at the time of treatment or an

objective standard requiring only general treatment or
advice, independent of an accurate diagnosis. Construing

ambiguity against the drafter and choosing the contract

interpretation most favorable to Plaintiffs, the District Court

concluded that "in order to be treated for leukemia, there

must have been some awareness that the disease existed at

the time treatment or advice was rendered." Id. at 745.

Finding that nobody even suspected leukemia at the time of

Elena’s treatment on October 7, 1998, the District Court

granted summary judgment for Plaintiffs on the breach of

contract claim. The District Court then directed the parties

to stipulate as to Plaintiffs’ medical expenses, and on July

27, 2001, the District Court entered judgment against

Fortis in the amount of $713,901.12 plus prejudgment

interest. Fortis appeals from this judgment. The District

Court also granted summary judgment for Fortis on

Plaintiffs’ bad faith claim, and Plaintiffs cross-appeal from

this judgment.

II.

Fortis argues that the insurance policy’s exclusion of pre-

existing conditions contains no requirement that the

condition be accurately diagnosed or appropriately treated

before the effective date of the policy. Fortis claims that the

pre-existing condition exclusion applies when a claimant

receives medical treatment for the symptoms of a condition

that later proves to be one for which coverage is sought

under the policy. Thus, Fortis asserts that the District

Court’s decision contravened the plain meaning of the

policy, principles of contract construction, and clear legal

precedent. We disagree.

A.

Straightforward language in an insurance policy should

be given its natural meaning. In keeping with the rule of

contra proferentem, however, ambiguous terms should be
strictly construed against the insurer. Medical Protective Co.

v. Watkins, 198 F.3d 100, 105 (3d Cir. 1999). The District

Court reasoned that the contract was ambiguous as to

whether the pre-existing condition exclusion required a

diagnosis of the condition, and it therefore construed the

policy in favor of Plaintiffs. The central issue in this case is

whether receiving treatment for the symptoms of an

unsuspected or misdiagnosed condition prior to the

effective date of coverage makes the condition a pre-existing

one under the terms of the insurance policy. In other

words, we must determine whether it is possible to receive

treatment "for" a condition without knowing what the
We review de novo the District Court’s conclusion that

the definition of a pre-existing condition in the contract is

ambiguous. Kroblin Refrigerated Xpress, Inc. v. Pitterich,

805 F.2d 96, 101 (3d Cir. 1986). "A contract is ambiguous

if it: (1) is reasonably susceptible to different constructions,

(2) is obscure in meaning through indefiniteness of

expression, or (3) has a double meaning." Cury v. Colonial

Life Insurance Company of America, 737 F. Supp. 847, 853

(E.D. Pa. 1990).

B.

Both state and federal courts have interpreted pre-

existing condition language in health insurance contracts

differently. The District Court relied most heavily on

Hughes v. Boston Mutual Life Insurance Co., 26 F.3d 264

(1st Cir. 1994). 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 First Circuit found both the insurance

company’s and the claimant’s interpretations of the policy

to be reasonable, and it therefore concluded that the pre-

existing condition exclusion was ambiguous. Id. at 269-70.

In particular, the ambiguity was due to the lack of clarity

regarding what constitutes treatment "for" a condition. Id.

at 269.

Hughes notwithstanding, some courts have interpreted
language similar to the pre-existing condition provision at

issue in this case not to require a diagnosis of the

condition. See, e.g., Bullwinkel v. New England Mutual Life

Insurance Co., 18 F.3d 429 (7th Cir. 1994) (holding that

discovery of a breast lump before the defendant’s insurance

coverage began triggered the pre-existing condition

exclusion although the lump was not definitively diagnosed

as cancer until after coverage began);2 Marshall v. UNUM

Life Insurance Co., 13 F.3d 282 (8th Cir. 1994) (finding a

pre-existing condition where the claimant was treated for

muscle pain, which was later diagnosed as chronic fatigue

syndrome); McWilliams v. Capital Telecommunications Inc.,

986 F. Supp. 920 (M.D. Pa. 1997) (disagreeing with Hughes,

following Bullwinkel and Cury, and concluding that the

insurance policy language did not limit pre-existing

conditions to those that were diagnosed before the effective

date of the plan); Cury v. Colonial Life Insurance Company

of America, 737 F. Supp. 847, 854 (E.D. Pa. 1990) (holding

that treatment for symptoms of undiagnosed multiple

sclerosis activated the pre-existing condition exclusion and

stating that "[t]here is no requirement that a diagnosis,

definite or otherwise, of the pre-existing condition must be

made during the pre-existing condition period"); see also

Mutual Life Insurance Company of New York v. Bohannon,

488 S.W.2d 476 (Tex. Civ. App. 1972) (finding pre-effective
coverage date treatment for anemia, which was a

misdiagnosis of the underlying condition of blind loop

syndrome, to constitute treatment for a pre-existing

condition); Dowdall v. Commercial Travelers Mutual Accident

Association of America, 181 N.E.2d 594, 596 (Mass. 1962)

(concluding that a definitive diagnosis of multiple sclerosis

was not required for treatment of symptoms to qualify as

treatment of a pre-existing condition). The Seventh Circuit

in Bullwinkel reasoned that "even though[the claimant] did

not know the lump was cancerous in July [before the

effective date of her insurance policy], her visit with the
doctor in that month concerning the lump actually

concerned cancer. It follows that [the claimant] was ‘seen’

and ‘treated’ and incurred medical expenses for her cancer

in July." Therefore, the court concluded, "any post-policy

treatment concerning the same condition is not covered."

18 F.3d at 432. In Cury, the District Court similarly held

that "[b]ecause a diagnosis during the pre-existing

condition period is not necessary," the only issue was

whether "plaintiff received treatment, consultation, medical

care, medical services, diagnostic test, or prescribed drugs

during the pre-existing condition period." 737 F. Supp. at

855. The reasoning underlying these decisions is that the

pre-existing condition language is clear and unambiguous

that treatment for a condition does not require accurate

diagnosis of the condition.

Other courts, however, like the First Circuit in Hughes,

have reached a different result and found that treatment for

a condition requires some awareness on the part of the

insured or the physician that the insured is receiving

treatment for the condition itself. See, e.g. , Pitcher v.

Principal Mutual Life Insurance Co., 93 F.3d 407, 412 (7th

Cir. 1996) ("[W]e hold that Pitcher did not receive a

‘treatment or service’ for breast cancer prior to September

17, 1992 because--as the district court found--she was

being monitored for the longstanding fibrocystic breast

condition and not cancer during the pre-coverage period.");3

Ross v. Western Fidelity Insurance Co., 881 F.2d 142, 144

(5th Cir. 1989) ("[T]here is at least a reasonable argument

that, under [a pre-existing condition exclusion], treatment

for a specific condition cannot be received unless the

specific condition is known."); Van Volkenburg v.

Continental Casualty Insurance Co., 971 F. Supp. 117, 122

(W.D.N.Y. 1996) (finding reasonable the plaintiff ’s

argument that to obtain advice or treatment regarding a


medical "condition," one must first have some awareness

that the "condition" exists); see also In re Estate of Monica

Ermenc v. American Family Mutual Insurance Co., 585

N.W.2d 679, 682 (Wis. Ct. App. 1998) (holding that where

the claimant’s cancer was not evident as a condition before

the coverage period began and where the symptoms before

diagnosis were non-specific, coverage should not be

excluded under the pre-existing condition clause); Mannino

v. Agway, Inc. Group Trust, 192 A.D.2d 131 (N.Y. App. Div.

1993) (finding the term "condition" to be ambiguous as to

whether it meant an actually diagnosed disease or any

symptoms of an undiagnosed disease for which coverage

was sought). 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. 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. Van Volkenburg, 971 F. Supp. at

123.

All of these cases involve insurance policies with

substantially similar pre-existing condition language and

similar factual scenarios. Of the federal courts of appeals,

the First, Fifth, and Seventh Circuits have followed the

approach taken in this case by the District Court, finding

the contract language ambiguous. The Seventh and Eighth

Circuits, however, have gone the other way and interpreted

pre-existing condition language not to require diagnosis of

the condition being treated. Thus, the relevant cases do not

dictate a clear answer here.

C.

In this case, Elena did not receive advice or treatment for

leukemia before the effective date of coverage, so Plaintiffs’

interpretation of the pre-existing condition language in the

Fortis insurance policy should prevail. At a minimum, the

contract language is ambiguous, and thus it should be

construed against Fortis.

The Fortis insurance 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 (5)
year period preceding that Covered Person’s Effective Date

of Coverage." There is no doubt that the "sickness" here is

leukemia. Therefore, the key word in the pre-existing

condition exclusion for our purposes is "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.4

The word "for" connotes intent. Webster’s Dictionary

states that "for" is "used as a function word to indicate

purpose." Webster’s Ninth New Collegiate Dictionary 481

(1986). Black’s Law Dictionary 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." Black’s Law Dictionary 579-80 (5th ed. 1979).

The word "for" therefore has an implicit intent requirement.

Applied to this case, none of Elena, her parents, and the

treating physician, Dr. Parikh, intended or even thought on

October 7, 1998, 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.

Although Fortis contends that its position is supported

by the district court’s decisions in Cury and McWilliams,

those cases are distinguishable. In both Cury and

McWilliams, there was no definite diagnosis, but either the

physician or the claimant had a specific concern regarding

the patient’s condition. In Cury, the doctor suspected

multiple sclerosis as "likely" or "most likely" before the
effective date of Cury’s insurance policy, 737 F. Supp. at

851, and in McWilliams, the claimant received an

ultrasound on her thyroid lump, which had not yet been

diagnosed as thyroid cancer, 986 F. Supp. at 924. In these

cases, because the claimants suspected a particular

condition when they saw their physicians, it might make

sense to say that the claimants had received advice or

treatment "for" their respective conditions, although they

had not been definitively diagnosed. In both instances, a

particular condition was suspected; treatment, advice, or

testing for that suspected condition was provided; and the

pre-effective date treatment, advice, or testing turned out to

be "for" the condition that was ultimately diagnosed.

In this case, however, the treatment Elena initially
received for a respiratory tract infection was not the

appropriate treatment for leukemia, and thus it does not

make sense to say that she received treatment "for"

leukemia when the actual condition was not suspected and

the treatment was in any event wrong. In short, for the

purposes of what constitutes a pre-existing condition, it

seems that a suspected condition without a confirmatory

diagnosis is different from a misdiagnosis or an

unsuspected condition manifesting non-specific symptoms,

as was the case here. When a patient seeks advice for a

sickness with a specific concern in mind (e.g. , a thyroid

lump, as in McWilliams, or a breast lump, as in Bullwinkel)

or when a physician recommends treatment with a specific

concern in mind (e.g., a "likely" case of multiple sclerosis,

as in Cury), it can be argued that an intent to seek or

provide treatment or advice "for" a particular disease has

been manifested. But when the patient exhibits only non-

specific symptoms and neither the patient nor the

physician has a particular concern in mind, or when the

patient turns out not to have a suspected disease, it is

awkward at best to suggest that the patient sought or

received treatment for the disease because there is no

connection between the treatment or advice received and

the sickness. Here, there is no evidence that the possibility

that Elena’s condition was actually leukemia ever entered

the minds of Elena’s parents or Dr. Parikh. Therefore, it

would not make sense to say that Dr. Parikh offered

medical advice or treatment for Elena’s leukemia.

In any event, to the extent that our decision here is at

odds with Cury and McWilliams, we find the analysis in

those cases unpersuasive because they focus primarily on

the absence of a diagnosis requirement rather than simply

construing the language of the policy. That is, Cury and

McWilliams focused exclusively on the absence of a

requirement for diagnosis in the insurance policies"without

seriously considering whether the language concerning

treatment ‘for’ a particular condition is ambiguous."

Hughes, 26 F.3d at 270 n.5.

Although we base our decision on the language of the

policy, we note that 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. "To permit such backward-looking

reinterpretation of symptoms to support claims denials

would so greatly expand the definition of preexisting

condition as to make that term meaningless: any prior

symptom not inconsistent with the ultimate diagnosis

would provide a basis for denial." In re Estate of Monica

Ermenc, 585 N.W.2d at 682. In Ranieli v. Mutual Life

Insurance Company of America, 413 A.2d 396 (Pa. Super.

Ct. 1979), the Pennsylvania Superior Court held that

recovery under a pre-existing condition clause was

"conditioned on the fact that prior to the stipulated date,
the sickness was not manifest, nor could it have been

diagnosed with reasonable certainty by one learned in

medicine." Id. at 401. The court found such a policy to be

"reasonable and salutary" because "[t]o deny coverage

because of an incipient disease that has not made itself

manifest . . . is to set an unconscionable trap for the

unwary insured." Id.

At a minimum, the pre-existing condition language in

Fortis’s insurance policy is susceptible to more than one

reasonable interpretation and is therefore ambiguous. See

Myrtil v. Hartford Fire Insurance Co., 510 F. Supp. 1198,

1202 (E.D. Pa. 1981) ("If reasonably intelligent people differ

as to the meaning of a policy provision, ambiguity exists.");

Cohen v. Erie Indemnity Co., 432 A.2d 596, 599 (Pa. Super.
Ct. 1981) ("The mere fact that several appellate courts have

ruled in favor of a construction denying coverage, and

several others have reached directly contrary conclusions,

viewing almost identical policy provisions, itself creates the

inescapable conclusion that the provision in issue is

susceptible to more than one interpretation."). Therefore,

we construe the insurance policy strictly against Fortis and

find that Elena’s leukemia was not a pre-existing condition

under the language of the policy.

III.

As to Plaintiffs’ bad faith claim, we affirm the District

Court’s grant of Fortis’s motion for summary judgment.

Although we do not find the cases on which Fortis relies to

be persuasive, this authority supports the District Court’s

decision on the bad faith issue. Plaintiffs claim that Fortis

failed to review all of the medical records and ignored

relevant evidence, but without more, this does not rise to

the level of frivolous, reckless disregard, or lack of

reasonable basis, especially in a situation, like this one,

that involves medical records lacking in certainty of

diagnosis. Cf. Terletsky v. Prudential Property and Casualty

Insurance Co., 649 A.2d 680, 688 (Pa. Super. Ct. 1994).

* * *

Click the case caption above for the full
text of the Court's opinion.

For the foregoing reasons, we affirm the District Court’s

judgment granting Plaintiffs’ motion for summary judgment

on the breach of contract claim and granting Fortis’s

motion for summary judgment on the bad faith claim.

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