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LAWSON v. FORTIS INSURANCE COMPANY

June 20, 2001

JOSEPH LAWSON AND TAMMY MALATAK, ON BEHALF OF MINOR CHILD ELENA LAWSON, PLAINTIFFS,
v.
FORTIS INSURANCE COMPANY, DEFENDANT.



The opinion of the court was delivered by: Marvin Katz, Senior Judge

MEMORANDUM & ORDER

This case concerns a preexisting condition exclusion contained in a short-term medical insurance policy issued by defendant Fortis Insurance Company and purchased by plaintiff Joseph Lawson for himself and his daughter Elena Lawson. Plaintiffs bring claims for breach of contract and bad faith. Now before the court are the plaintiffs' motion for partial summary judgment and the defendant's motion for summary judgment.

I. Background

Mr. Lawson obtained the Fortis policy for himself and Elena on October 7, 1998, and the policy became effective two days later on October 9. At issue is the medical expenses incurred by Elena for the diagnosis and ultimately successful treatment of her leukemia during the time that the Fortis policy was in effect. Fortis denied coverage for these expenses on the grounds that the leukemia was a preexisting condition. The policy excludes coverage for a preexisting condition, 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.

P1. Mem. in Supp. of Partial Summ. J., Ex. 1 (Policy) at 3, 10. "Sickness" is defined by the policy as: "An illness, disease or condition which is diagnosed or treated while this policy is in force." Id. at 3. Disease and physical condition are not defined.*fn1

On October 7, 1998, Elena's mother, plaintiff Tammy Malatak, brought Elena to the emergency room at Palmerton Hospital. According to hospital records, Ms. Malatak reported that Elena "was running a temperature since yesterday, about 102 degrees F." P1. Mem. in Supp. of Partial Summ. J., Ex. 2. Other symptoms exhibited by Elena included a swollen eye, a dry hacking cough, and a scratchy throat. Id. Ms. Malatak also testified at her deposition that Elena seemed sluggish and that Tylenol had not reduced her fever. Def. Answer to P1. Mot. for Partial Summ. J., Ex. A at 29, 42-43. Dr. Shailesh Parikh, the emergency room doctor, diagnosed an upper respiratory inflection.*fn2 Id. He prescribed antibiotics and allergy medicine, told Ms. Malatak to treat Elena's fever with Tylenol or Advil, and to take Elena to her regular doctor for follow up in one or two days. Id. Def Mem. in Supp. of Summ. J., Ex. C at 24. Dr. Parikh also told Ms. Malatak to bring Elena back to emergency room if the fever continued or worsened. Id.

On October 13, 1998, after the policy was effective, Elena again sought medical treatment, this time from Dr. Narendra Ambani. According to the doctor's treatment notes, Elena's symptoms at that time included an on-and-off fever for one week, dizziness, lower back pain, coughing and vomiting five times that day. P1. Mem. in Supp. of Partial Summ. J., Ex. 3. Dr. Ambani diagnosed an upper respiratory infection, gastroenteritis, and possible bronchitis. He continued the medication prescribed by Dr. Parikh. Id. The next day, Elena visited yet another physician, Dr. Mira Slizovskaya. While noting that Elena exhibited signs of bronchitis, Dr. Slizovskaya also felt that her patient "looked sick, out of proportion to [her] physical findings" and ordered a number of tests, including a complete blood count. Def. Mem. in Supp. of Summ. J., Ex. F at 17, 25. The blood count revealed abnormalities and after additional testing, Elena was transferred to Children's Hospital of Philadelphia on October 15, with the preliminary diagnosis of pneumonia, sepsis and leukemia.

After investigation, Fortis denied Elena's application for benefits on the grounds that her leukemia was a preexisting condition within the meaning of its policy. According to Dr. Raymond Brumblay, Fortis' medical director,

The leukemia began and produced symptoms for which the patient was brought to the Palmerton Emergency Department prior to the effective date. While the evaluation there 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.

Def. Mem. in Supp. of Summ. J., Ex. E.

Dr. Brumblay conceded at his deposition that the symptoms Elena presented at the emergency room October 7 would not suggest to a reasonable physician that, at that time, Elena had leukemia. P1. Mem. in Supp. of Partial Summ. J., Ex. 7 at 16-17. According to the medical evidence of record, however, these symptoms were consistent with leukemia. See. e.g., P1. Response to Def. Mot., Ex. 1 (Dr. Beverly Lange Dep.) at 36 (stating that fever may be a sign of infection or leukemia); P1. Mem. in Supp. of Partial Summ. J., Ex. 7 (Dr. Brumblay Dep.) at 14 (stating that Elena presented symptoms of leukemia at the emergency room, including persistent fever); Def. Mem. in Supp. of Summ. J., Ex. C (Dr. Parikh Dep.) at 22, 32-33 (stating that Elena presented symptoms of a cough and cold at the emergency room, but acknowledging that those symptoms were similar to that of leukemia at an early stage); id., Ex F (Dr. Silzovskaya Dep.) at 66 (stating that Elena's initial complaints of fever and cough could be attributed to a respiratory infection or leukemia).

The Fortis policy provides a policy holder with the "right to have the denial reviewed and reconsidered" by the company's "Appeal Review Committee." Policy at 11. Mr. Lawson appealed the denial. According to Marilyn Klein, the Fortis employee who handled the appeal, Fortis classifies appeals as either inquires or grievances. P1. Mem. in Supp. of Partial Summ. J., Ex. 11 at 7. An appeal is classified as an inquiry if "the writer does not understand the basis for the for the decision that was made," while an appeal is classified as a grievance if the writer "understand[s] the basis for the decision, but . . . dispute[s] it." Id. For an inquiry appeal, Fortis' practice was to review the initial determination and if the reviewer felt the decision was correct, to send the policy holder a detailed explanation. Id. at 8. A reviewer could, in her discretion, refer an inquiry to her supervisor, who could, in turn, refer it to a director. Id. Although the record is somewhat confusing regarding the processing of a grievance, it appears to allow for consideration of additional evidence and to encompass several potential levels of review, the highest of which is conducted by Fortis' Grievance Committee. Id. at 8, 25. Ms. Klein and a coworker determined that Mr. Lawson's appeal was an inquiry because Mr. Lawson did not ...


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