Philadelphia American Life Ins. v. Charles Buckles , 350 F. App'x 376 ( 2009 )

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________ FILED
U.S. COURT OF APPEALS
No. 09-12533 ELEVENTH CIRCUIT
Oct. 23, 2009
Non-Argument Calendar
THOMAS K. KAHN
________________________
CLERK
D.C. Docket No. 07-01743-CV-ORL-22DAB
PHILADELPHIA AMERICAN LIFE INSURANCE COMPANY,
Plaintiff-Counter Defendant-
Appellee,
versus
CHARLES BUCKLES,
Plaintiff-Counter-Claimant-
Third-Party Plaintiff-Appellant,
versus
CENTRAL STATES HEALTH & LIFE COMPANY OF OMAHA,
Third- Party Defendant-Appellee.
________________________
Appeal from the United States District Court
for the Middle District of Florida
________________________
(October 23, 2009)
Before BIRCH, HULL and COX, Circuit Judges.
PER CURIAM:
This case involves the interpretation of a provision in a supplemental cancer
and specified disease insurance policy. Charles Buckles (“Buckles”) contends that
the district court erred in finding that the term “actual charges incurred” is
unambiguous and “means the actual amount accepted by a health care provider as full
satisfaction of the insured’s obligations for treatment covered by the Policy.” (R.6-
128 at 37.) Instead, Buckles argues 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 that the health care provider will accept as
full satisfaction of the liability.
We take the following undisputed facts from the district court’s order. Buckles
purchased a Cancer and Specified Disease Policy (“Policy”) from Appellee Central
States Health & Life Co. of Omaha (“CSO”), which provides supplemental coverage
paying benefits directly to Buckles for certain treatments. The Policy pays benefits
despite the fact that Buckles’ primary health insurance provides for payment of his
medical expenses. He may retain all benefits that he receives from the supplemental
policy that exceed his medical expenses.
2
In 1999, Buckles was diagnosed with an incurable disease covered under the
Policy, myasthenia gravis. This disease required Buckles to receive intravenous
immunoglobulin (“IVIG”) treatments every three to four weeks. These treatments are
covered under the Immunotherapy provision of the Policy, which provides: “[w]e will
pay the actual charges incurred for the following treatment techniques provided they
are used for the purpose of modification or destruction of cancerous tissue.” (R.4-88,
Ex. 42 at 7.) (emphasis added).
Throughout his treatment, Buckles’ primary insurance policy discharged his
liability for his treatments in full. The primary insurer paid a reduced, negotiated
amount to the hospital which is less than the amount the hospital actually billed. The
hospital accepted the reduced amount as full payment for the treatments.
Consequently, neither Buckles nor his primary insurer are liable for the difference
between the reduced amount paid by the primary insurer and the amount actually
billed by the hospital.
In 2005, Philadelphia American Life Insurance Company (“Philadelphia”)
obtained some of CSO’s policies, which included Buckles’ policy. Philadelphia,
CSO’s transferee, brought the underlying declaratory judgment action which sought
construction of the contract term “actual charges incurred.” Buckles filed a
counterclaim against Philadelphia for declaratory judgment and a third-party
3
complaint against CSO for a declaratory judgment, fraud, and breach of contract. On
the relevant issue in this appeal, the district court granted Philadelphia’s and CSO’s
motion for summary judgment on the contract interpretation question. The district
court held that “actual charges” is the amount billed by the provider, and that “actual
charges incurred” is the reduced amount that the hospital accepts from an insurance
company as full payment.
Buckles contends that the district court erred by construing the Policy against
him. He asserts there are two reasonable interpretations of “actual charges incurred,”
and that there is overwhelming extrinsic evidence, including the course of
performance between the parties, that “actual charges incurred” is the total amount
billed by the hospital. In contrast, Philadelphia argues that the district court correctly
held that “actual charges incurred” is unambiguous and means the “actual amount
accepted by a health care provider as full satisfaction of the insured’s obligations for
treatment.” (R.6-128 at 37.) The threshold issue before this court is whether the
Policy provision, “actual charges incurred,” is ambiguous. For the following reasons,
we hold that it is not.1
1
This case is a diversity action. We are asked to interpret an insurance policy. Thus, Florida
substantive law applies. (R.1-128 at 17.)
4
If a provision in an insurance policy contract “is susceptible to more than one
reasonable interpretation, one providing coverage and another limiting coverage, the
insurance policy is considered ambiguous.” Garcia v. Federal Ins. Co., 969 So. 2d
288, 291 (Fla. 2007) (quoting Auto-Owners Ins. Co. v. Anderson, 756 So. 2d 29, 34
(Fla. 2000)). The determination of whether the relevant policy term is ambiguous is
a question of law. Team Land Dev., Inc. v. Anzac Contractors, Inc., 811 So. 2d 698,
699-700 (Fla. 3d DCA 2002); see also Jones v. Utica Mut. Ins. Co., 463 So. 2d 1153,
1157 (Fla. 1985) (noting that “[i]t is well settled that the construction of an insurance
policy is a question of law for the court.”)
“Under Florida law, insurance contracts are construed according to their plain
meaning.” Taurus Holdings, Inc. v. U.S. Fidelity & Guar. Co., 913 So. 2d 528, 532
(Fla. 2005). The mere fact that two parties may “ascribe different meanings to the
language does not mean the language is ambiguous so as to allow the admission of
extrinsic evidence.” Kipp. v. Kipp., 844 So. 2d 691, 693 (Fla. 4th DCA 2003). In
other words, “a true ambiguity does not exist merely because a document can possibly
be interpreted in more than one manner.” Lambert v. Berkley South Condo. Ass’n,
680 So. 2d 588, 590 (Fla. 4th DCA 1996). However, when an ambiguity in a policy
provision does exist, it is interpreted against the insurance company who prepared the
policy and in favor of the policy holder. See e.g., Garcia, 969 So. 2d at 291. On the
5
other hand, when a provision is unambiguous, “the court’s task is to apply the plain
meaning of the words and phrases used to the facts before it.” Flaxman v. Gov’t
Employees Ins. Co., 993 So. 2d 597, 599 (Fla. 4th DCA 2008) (quoting Classic
Concepts, Inc. v. Poland, 570 So. 2d 311, 312 (Fla. 4th DCA 1990). “Every
insurance contract shall be construed according to the entirety of its terms and
conditions as set forth in the policy.” West’s FSA § 627-419(1).
This court’s task then is to apply these principles to the relevant Policy
provision in this case: “actual charges incurred.” We conclude that the plain meaning
of “actual charges incurred” is the “amount the provider accepts from an insurer as
full satisfaction of the policyholder’s liability.” (R.6-128 at 26.) In Reliance Mut. Life
Ins. Co. of Ill. v. Booher, 166 So. 2d 222 (Fla. 2nd DCA 1964), after consulting
Webster’s Dictionary, the district court found “incurred” to mean that “the insured
must have actually paid or must have become liable for.” Reliance, 166 So. 2d at 224;
see also Ceballo v. Citizens Prop. Ins. Corp., 967 So. 2d 811, 815 (Fla. 2007)
(finding that “to incur” an expense “means to become liable for the expense.”)
Dictionaries also provide support for our conclusion. Black’s Law Dictionary defines
“incur” as “[t]o suffer or bring on oneself (a liability or expense)”). Black’s Law
Dictionary 782 (8th ed. 2004).
6
Buckles contends that the district court’s order is inconsistent, because it
“considered industry practice to interpret ‘actual charges’ . . . but then refused to do
so when construing ‘actual charges incurred.’” (Appellant Br. at 15.) The district
court concluded that the phrase “actual charges,” standing alone, is unambiguous and
refers to the total amount billed by the hospital. That may or may not be correct. We
find it unnecessary to consider the meaning of “actual charges” standing alone; we
need only consider whether the phrase “actual charges incurred” is unambiguous.
The district court, upon finding that the “actual charges incurred” provision was
unambiguous, was prohibited from looking outside the four corners of the contract–“a
Florida court may not consider extrinsic evidence to interpret a contract which is clear
and unambiguous.” Shipner v. Eastern Air Lines, Inc., 868 F.2d 401, 405 (11th Cir.
1989) (quotations and citations omitted). In contrast, however, courts may certainly
consult dictionaries in order to determine the plain meaning of words in a contract to
determine if an ambiguity exists. See Garcia, 969 So. 2d at 291-92 (noting that
“[w]hen interpreting insurance contracts, [courts] may consult references commonly
relied upon to supply the accepted meanings of words.”); see also Beans v. Chohonis,
740 So. 2d 65, 67 (Fla. 3rd DCA 1999) (noting that “[o]ne looks to the dictionary for
the plain and ordinary meaning of words.”) This is precisely the analysis that the
district court undertook. Although not determinative for our finding, we also note
7
that our decision is in accord with the principle noted by Philadelphia, that a court
should strive to construct a contract in a reasonable manner. The Supreme Court of
Florida has written,
[t]he words of a contract will be given a reasonable construction, where
that is possible, rather than an unreasonable one, and the court will
likewise endeavor to give a construction most equitable to the parties,
and one which will not give one of them an unfair or unreasonable
advantage over the other. So that interpretation which evolves the more
reasonable and probable contract should be adopted, and a construction
leading to an absurd result should be avoided.”
James v. Gulf Life Ins. Co., 66 So. 2d 62, 63 (Fla. 1953) (quoting 17 C.J.S. Contracts,
§ 319). Construing the contract in the manner advanced by Buckles would give him
a benefit based on a fictional amount and lead to an absurd result. Although the
hospital has accepted approximately $1,600,000 as full satisfaction for its services,
Buckles has been paid approximately $4,900,000 from the Policy. Neither Buckles
nor his primary insurer are liable for the amount above the $1,600,000 figure. The
language of the contract does not compel a reading which would require payment of
the higher amount, and it is unreasonable to believe that the drafter of the insurance
contract would have intended such a result.
We find that the contractual provision at issue is clear and unambiguous. As
a result, we are precluded from considering extrinsic evidence and the course of
8
performance offered by Buckles. Shipner, 868 F.2d at 405; see also Rafael J. Roca,
P.A. v. Lytal & Reiter, Clark, Roca, Fountain & Williams, 856 So. 2d 1, 5 (Fla. 4th
DCA 2003).
For these reasons, the district court correctly held that “actual charges incurred”
is the “actual amount accepted by a health care provider as full satisfaction of the
insured’s obligations for treatment.” (R.6-128 at 37.)
AFFIRMED.
9