Sullivan County Gas Service, Inc. v. Phoenix Mutual Life Insurance

Mikoll, J. Appeal from a resettled judgment of the Supreme Court in favor of plaintiffs, entered [543] June 21,1984 in Sullivan County, upon a decision of the court at Trial Term (Torraca, J.), without a jury. Plaintiffs seek judgment declaring that past and future hospitalization expenses incurred by and on behalf of plaintiff Louise Wagner were covered expenses under a group major medical policy issued by defendant to the employees of plaintiff Sullivan County Gas Service, Inc. (hereinafter Sullivan). Defendant denied plaintiffs’ allegations and interposed affirmative defenses that the facilities where Wagner had been hospitalized, Gaylord Hospital and New Britain Memorial Hospital, were not hospitals as defined in the policy and that Wagner was not an employee of Sullivan. Trial Term held that Wagner was an employee of Sullivan when she incurred a pelvic fracture and a subsequent cardiac arrest, causing permanent brain damage, that Wagner is in permanent need of acute semi-intensive care in a hospital with full respirator facilities, and that the treatment afforded her in both facilities was covered by the major medical group insurance policy issued by defendant to Sullivan’s employees. This appeal by defendant ensued. There should be an affirmance of the judgment. There was ample evidence in the record that Wagner was indeed employed by Sullivan on the day she was injured and was covered under the major medical group insurance contract issued by defendant to Sullivan’s employees. We also conclude that the expenses incurred for Wagner’s treatment at both Gaylord and New Britain Memorial Hospitals are covered expenses pursuant to the insurance contract. It is defendant’s contention that both of these institutions failed to meet the policy’s criteria for a covered hospital and that Trial Term improperly denominated the policy’s criteria as exclusions, thereby improperly placing on defendant the burden of proving the exclusion. Notwithstanding Trial Term’s denomination of the definition of “hospital” as an exclusion, we find that plaintiffs have proven entitlement to recovery for expenses of treatment in both institutions. We are impelled to this conclusion by the rules of interpretation relevant to contracts generally and to insurance contracts specifically. Insurance contracts are treated like any other ordinary business contract between individuals and are subject to the same principles of construction (Hartol Prods. Corp. v Prudential Ins. Co., 290 NY 44, 47). A primary rule of construction requires that the contract be construed as a whole and, whenever possible, that all parts be given effect. Where ambiguities exist in a policy, they are to be interpreted against the party who drafted it and in favor of the insured (supra, p 49; see, Thomas J. Lipton, [544] Inc. v Liberty Mut. Ins. Co., 34 NY2d 356, 361). Where a policy is not uncertain as to its meaning, the provisions are to be fairly interpreted and enforced as written (Goodrich v John Hancock Mut. Life Ins. Co., 17 AD2d 271). We concur here with plaintiffs’ contention that this contract is ambiguous in that the restrictive definition of the term “hospital” as a “short term, acute, general hospital” does not fit within the coverage scheme of the contract. The purpose of this “excess” policy was to cover “Major Medical Expense Benefits” beyond those covered by Blue Cross-Blue Shield. This leads us to conclude that the contract was not intended to solely cover short-term stays in an acute care facility, but was clearly intended to cover long-term disability or illness. The terms of the contract indicate that the insurer did not place any time limitation for which benefits would be payable. The whole concept of the contract is that of an excess coverage contract, with primary coverage provided by Blue Cross-Blue Shield. This coverage would begin 21 days from inception and continue without limitation as to period of time. It was a reasonable expectation of Sullivan that its employees would be covered for all hospital bills regardless of the length of any hospital stay. The $1,000,000 coverage also buttresses this view of the contract. In no way could major medical benefits paid for by Sullivan be of any utility to its employees if their use is restricted to short-term, acute, general hospitals. Gaylord and New Britain Memorial Hospitals are licensed by the State of Connecticut as chronic disease hospitals. Under the regulations of the Connecticut Department of Health, these facilities are considered to be “long-term hospitals” which provide diagnosis, care and treatment of chronic diseases (Conn Reg § 19-13-D1 [a]). The record indicates that they offer substantially the same services as short-term, general hospitals, but for long-term illnesses requiring acute care and hospitalization. Consequently, the fair intent and meaning of the coverage sold by defendant to plaintiffs encompasses the expenses of treatment given Wagner in these two facilities. Judgment affirmed, with costs. Mahoney, P. J., Casey, Mikoll and Harvey, JJ., concur; Levine, J., dissents and votes to reverse in the following memorandum.