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