Philadelphia American Life Ins. Co. v. Buckles
(United States Court of Appeals, Eleventh Circuit, October 23, 2009)
This case involved the interpretation of a provision in a supplemental cancer and specified disease insurance policy. The district court held that the term “actual charges incurred” is unambiguous and “means the actual amount accepted by a health care provider as full satisfaction of the policyholder’s obligations for treatment covered by the policy.” The policyholder contended rather that “actual charges incurred” is synonymous with “actual charges.” The amount that the health care provider bills for services, which is generally higher than the amount than the health care provider will accept as full satisfaction of the liability. Specifically, the policyholder purchased a Cancer and Specified Disease Policy which provided supplemental coverage paying benefits directly to the policyholder for certain treatments. The policy paid benefits despite the fact that the policyholder’s primary health insurance provided for payment for his medical expenses and he was able to retain all benefits that he received from the supplemental policy which exceeded his medical expenses. The circuit court held affirmed the district court’s holding that “actual charges incurred is unambiguous” and means the “amount the provider accepted from an insurer as full satisfaction of the policyholder’s liability.” This reasoning was based on the definition of “incurred” which, according to its plain meaning is the amount that “must have been actually paid” or that for which one liable. In affirming the decision, the court noted that construing the contract in the manner advanced by the policyholder would afford him an unintended benefit based on a fictional amount and would lead to an “absurd result.” As such, the district court correctly held that “actual charges incurred” is the “actual amount accepted by a health care provider as full satisfaction of the policyholder’s obligation for treatment.”
For a copy of the decision, click here
Paul Steck and Dan Gerber