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TAYLOR v. PHOENIX MUT. LIFE INS. CO.

May 30, 1978

STEPHEN B. TAYLOR and MOSS REHABILITATION HOSPITAL
v.
PHOENIX MUTUAL LIFE INSURANCE COMPANY



The opinion of the court was delivered by: TROUTMAN

 TROUTMAN, J.

 Plaintiff, Stephen B. Taylor, (Taylor) is an individual who was severely injured in a motorcycle accident on October 6, 1974, as the result of which he fractured his spine and is today confined to a wheelchair. He was hospitalized at Chestnut Hill Hospital from the date of accident until November 27, 1974, when he was transferred to Moss Rehabilitation Hospital (Moss), also a plaintiff herein, where bills were incurred in the amount of approximately $12,000.00 for which recovery is sought under a group insurance policy issued by the defendant, Phoenix Mutual Life Insurance Company (Phoenix) to the Trustees of Service Industry Group Service Fund, of which Taylor Exterminating Company, the employer of Stephen B. Taylor, was a member at the time of his unfortunate injury.

 Based upon a seventeen-page stipulation of facts, consisting of seventy-two paragraphs, plus certain supplemental affidavits and other exhibits, presenting all relevant and material facts to the Court, both the plaintiffs and the defendant, respectively, seek partial summary judgment.

 In construing and interpreting the policy, the insurance contract involved, certain established legal principles are applicable. Insurance contracts are contracts of adhesion, where the insurer prepares the policy for the purchaser having no bargaining power. Where a dispute arises, such contracts are construed strictly against the insurer. Hionis v. Northern Mutual Insurance Company, 230 Pa. Super. 511, 327 A. 2d 363 (1974).If a defense is based upon an exception or an exclusion in a policy, the defense is an affirmative one and the burden is on the defendant to establish it. Weissman v. Prashker, 405 Pa. 226, 175 A. 2d 63 (1961).

 Furthermore, an insurance contract will be given a reasonable interpretation in light of the particular subject-matter, situation and contemplation of the parties. Daburlos v. Commercial Insurance Company of Newark, New Jersey, 381 F. Supp. 393 (E.D. Pa. 1974), affirmed, 521 F.2d 18 (3rd Cir. 1975). Pennsylvania courts will rely on public policy in overriding explicit terms in the insurance contract, at least when the contract terms would operate to defeat the reasonable expectations of the insured. Sands v. Granite Mutual Insurance Co., 232 Pa. Super. 70, 331 A. 2d 711 (1974).

 While it is true that where a doubt exists as to the meaning of the language in an insurance contract such language is construed in favor of the insured, it is also true that where the language of the policy is clear and unambiguous, it cannot be construed to mean other than what it says. Such clear language must be given the plain and ordinary meaning of the terms. Where there is no ambiguity or lack of clarity, the law does not permit looking beyond the language of the contract. Southeastern Pennsylvania Transp. Auth. v. Transit Casualty Co., 412 F. Supp. 839 (E.D. Pa. 1976).

 The sole issue before the Court is whether Moss is a "hospital" within the definition of that term as used in the group policy issued and whether Moss is, accordingly, entitled to reimbursement for the cost of services rendered to Taylor by Moss during his stay at Moss from November 27, 1974, to March 20, 1975. In reaching its decision the Court will consider the "stipulation of facts" filed by the parties, and various affidavits, depositions and other exhibits called to the attention of the Court in full and complete memoranda submitted to the Court by counsel in support of the motions filed. Not at issue at this time are allegations that an insurance agent misrepresented to Taylor the extent of the coverage.

 
"Plaintiffs, in addition to the Stipulation of Facts attached hereto as Exhibit 'A' the affidavits of James R. Neely of the Hospital Association of Pennsylvania which indicates that Moss would be classified by HAP as a short term hospital if their average patient stay was, today, less than thirty days, a fact which has been stipulated to in paragraph 50 of the Stipulation.
 
"Stephen B. Taylor's physician at Moss was Doctor LaFontant, whose affidavit is attached hereto as Exhibit 'B'. Doctor LaFontant affirms that the treatment received by Taylor at Moss was necessary not only to resolve existing medical problems at admission, including bed sores and a bladder infection, but also was medically necessary to prevent Mr. Taylor's certain lapse into acute medical distress. The parties have, in this regard, stipulated to the improvement of Taylor's overall physical condition at Moss as the result of his treatment.
 
"In summary Taylor was severely injured in a motorcycle accident on October 6, 1974 as the result of which he fractured his spine, lost the use of his legs, and is today confined to a wheelchair. He was hospitalized at Chestnut Hill Hospital from October 6, 1974 until November 27, 1974 when he was transferred directly to Moss for further treatment until March 20, 1975.
 
"At the time of his transfer to Moss, Taylor's overall condition had stabilized though he was afflicted with bed sores, a bladder infection and phlebitis. Mr. Taylor was completely bedridden at the time of his transfer, was catheterized and incontinent. During his stay at Moss Mr. Taylor was cured of his bed sores and bladder infection - which required a cystoscopic examination at Moss. Additionally Taylor was taught to move himself into a wheelchair and to otherwise attend to his personal needs. Services including occupational therapy, physical therapy, psychological counseling and testing were provided to Taylor. Upon his admission Taylor assigned his rights under Phoenix's policy to Moss."

 Likewise supplementing the stipulation are the following facts also called to the Court's attention by the defendant:

 
"Taylor was hospitalized at Chestnut Hill Hospital immediately after his accident, and during his stay there he had neurosurgery performed on his spine. Taylor remained in Chestnut Hill Hospital from October 6, 1974, through November 27, 1974. Taylor was then moved to Moss because he needed, in his own words, '(rehabilitation), just to show me how to get around again'. (Stephen Taylor Depos. at 7). Taylor remained at Moss from November 27, 1974, to March 20, 1975. During his stay at Moss, Taylor received incidental medical attention; but he was in Moss primarily for rehabilitative care. At Moss, Taylor learned how to get out of bed, get dressed, to cook, and 'just more or less how to take care of myself again.' (Stephen Taylor Depos. at 8-9) Even Taylor's family realized that the bladder and phlebitis treatment he received at Moss could have been handled in Chestnut Hill Hospital and that 'the primary purpose for being transferred to Moss was (so) that he could get rehabilitative care . . .'. (Joan Taylor Depos. at 30-31) After his release from Moss on March 20, 1975, Taylor continued to incur medical expenses. In 1977 he underwent spinal fusion surgery at St. Francis Hospital in Wilmington, Delaware.
 
"Phoenix has already paid for the hospitalization charges at Chestnut Hill and at St. Francis, as well as for a great deal of other medical expenses. (Stipulation, PP64, 71, 72 and Joan Taylor Depos. at 32). Phoenix has not paid for Taylor's expenses while at Moss. Phoenix does not believe that Moss is a hospital covered by Taylor's policy; and the parties have stipulated that Moss is classified not as a short-term general hospital, but rather as a long-term specialty hospital which performs no surgery and is primarily a place for rehabilitative care. (Stipulation, PP4, 32, 35, 52, 54, and 61)."

 The definition of the term "hospital" as used in the policy is found in paragraph 70 of the stipulation of facts as follows:

 
"RELEVANT POLICY PROVISIONS
 
"COVERED EXPENSES
 
Covered expenses are the reasonable charges for such of the following services and supplies as are recommended or approved by a physician, surgeon or dentist as essential for the necessary treatment of a Covered Person's injury or sickness for which insurance is afforded hereunder, provided that a charge shall be deemed unreasonable if it exceeds the prevailing average charge (as determined by Phoenix Mutual) for the particular treatment, care, service, or supply made in the locality where the treatment, care, service or supply was received, taking into consideration the nature and severity of the injury or sickness in connection with which such charge was made:
 
"(1) Hospital Charges: Charges made by a hospital, in its own behalf, . . .
 
"DEFINITIONS . . .
 
'Hospital' means an institution which is engaged primarily in providing medical care and treatment to sick and injured persons on an in-patient basis and which fully meets all the requirements set forth in (1) or (2) below:
 
"(1) It is a short term, acute, general hospital which (a) is primarily engaged in providing by or under the continuous supervision of physicians, to in-patients, diagnostic services and therapeutic services for diagnosis, treatment, and care of injured or sick persons, (b) has organized departments of medicine and major surgery, (c) has a requirement that every patient must be under the care of a physician or dentist, (d) provides twenty-four hour nursing service by or under the supervision of a registered professional nurse (R.N.), (e) has in effect a hospital utilization review plan meeting the standards set forth in section 1861(k) of United States Public Law 89-97 (Medicare) as amended from time to time, (f) is duly licensed by the agency responsible for licensing such hospitals, and (g) is not, other than incidentally, a place for rest, a place for the aged, a place for drug addicts or alcoholics, or a place for convalescent, custodial, education or rehabilitative care.
 
"(2) It is a psychiatric hospital as defined by Medicare, qualified to participate in and eligible to receive payments under and in accordance with the provisions of Medicare . . ."

 Although we have considered the entire stipulation, particularly pertinent to our considerations are the following paragraphs thereof:

 "1. Moss Rehabilitation Hospital requires that every patient be under the continuous supervision of a physician or dentist.

 "2. Moss Rehabilitation Hospital provides twenty-four hour nursing service by or under the supervision of a registered professional nurse (R.N.).

 "3. Moss Rehabilitation Hospital has in effect a 'utilization review plan' meeting the standards set forth in Section 1861(k) of the United States Public Law 89-97 (Medicare).

 "4. Moss Rehabilitation Hospital is primarily a place for rehabilitative care. (This stipulation does not contain a definition of 'rehabilitative care'.) Moss Rehabilitation Hospital provides diagnostic and therapeutic services to patients. If a patient who is confined for rehabilitative care has or develops conditions which require diagnostic and therapeutic services, these services are either provided at Moss Rehabilitation Hospital or the patients are transferred elsewhere for treatment.

 "5. Moss Rehabilitation Hospital is not a place, except incidentally, for rest, a place for the aged, a place for convalescent care, or a place for custodial care.


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