Appeal from the Judgment of the Court of common Pleas, Civil Division, of McKean County, 1982, No. 794.
William J. Kubiak, Bradford, for appellant.
John H. Yoder, Smethport, for appellee.
Spaeth, President Judge, and Rowley and Wieand, JJ.
[ 350 Pa. Super. Page 248]
Appellee instituted an assumpsit action seeking payment under a group health plan insurance policy issued by appellant. Appellant denied liability, relying upon a custodial care limitation contained in its policy. The case was tried non-jury on January 17, 1984 and on January 30, 1984 the trial judge entered a general finding in favor of appellee and against appellant. Appellant filed exceptions to the finding; however, before they could be ruled upon, the trial judge died. The exceptions were subsequently argued before
[ 350 Pa. Super. Page 249]
the Honorable Paul B. Greiner, P.J., Specially Presiding, and were disposed of by Order of court on the basis of the transcribed record, briefs and oral argument. The Order was accompanied by a Memorandum Opinion. Judgment was entered in favor of appellee and appellant filed this appeal. We affirm.
Appellee was an employee of Quaker State Oil Refining Corporation for twenty-five years. As such, she was insured under a group health plan policy issued by appellant. In 1970 or 1971, appellee was diagnosed as suffering from presenile dementia (Alzheimer's disease). As a result of the disease, she was given a disability termination from Quaker State in 1971; subsequently, her condition worsened. By 1975 appellee was suffering from seizures, hallucinations and was unable to feed, bathe or clothe herself. In February of 1978 appellee was involuntarily committed to the Warren State Hospital where she still resided at the time of trial.
Appellant paid appellee's hospital bills until it sent a denial of claim letter to appellee on November 24, 1980. In its letter, appellant denied liability for expenses incurred since January 1, 1980, based on a custodial care limitation contained in the policy. No further payments were made by appellant.
During appellee's stay at Warren State Hospital, her mental condition worsened. She could not communicate meaningfully and was in need of constant care to aid her in bathing, eating and dressing. During her stay at the hospital, appellee was placed in various types of therapeutic programs.
The trial court found that appellee was being treated for the stated purpose of controlling her epileptic, psychotic and violent behavior to the point where she would be suitable for eventual transfer to a custodial care facility. The court also found that appellee was being aided in achieving this goal by highly trained medical specialists.
[ 350 Pa. Super. Page 250]
In denying appellant's exceptions, the court held that the definition of custodial care contained in appellant's policy was ambiguous, contradictory, and against "the stated public policy of this Commonwealth." Memorandum Opinion at 3-4; See 31 Pa.Code § 89.94. To resolve the ambiguity, the court applied an interpretation utilized by the federal courts in construing the phrase "custodial care" as it appears in the Social Security Act. The court looked to Samuels v. Weinberger, 379 F.Supp. 120 (S.D.Ohio 1973), to define custodial care as, "care that could be administered by a layman without any possible harm to the health of the one in custody and refers to guardianship for convenience that has no significant relationship to medical care of any type." Memorandum Opinion at 2. Application of the federal interpretation to the facts in the present case led the court to conclude that the treatment received by appellee did not constitute custodial care within the limitation set forth in the policy.
In addition, the court held that appellant's payment of benefits to appellee from March, 1978 until January, 1980 constituted a waiver of the custodial care limitation because appellant failed to assert the limitation at the earliest possible time. Finally, the court held that appellant was estopped from relying upon the limitation contained in the policy by its failure to make a final decision on appellee's request for review of its decision to terminate payments within 120 days of receipt of appellee's request for review, as required by the terms of the policy.
Appellant's principal argument on appeal is that there is no evidence in the record to support the conclusion that the policy language is ambiguous. Furthermore, appellant contends that the court erred when it applied the definition of custodial care that was developed to interpret and administer federal legislation. It claims that the policy language in question is more specific than the federal definition and therefore is more restrictive than the more general federal definition. Additionally, appellant ...