Washington National Insurance Corporation v. Ruderman

Facts

Ruderman and others (Ps) filed a class action against Washington (D) concerning insurance policies that provide for reimbursement of certain home health care expenses. The dispute was whether the 'Automatic Benefit Increase Percentage' provision contained in the policies applies only to the daily benefit amount or also applies to the per occurrence maximum benefit amount and the lifetime maximum benefit amount. The policies provide coverage through a maximum daily benefit, called the 'Home Health Care Daily Benefit.' The policy coverage is limited by a 'Per Occurrence Maximum Benefit' for each illness and a 'Lifetime Maximum Benefit' for all injuries and sicknesses during the life of the Policy. On each policy anniversary, D increased the Home Health Care Daily Benefit payable under the policy by the Automatic Benefit Increase Percentage shown on a schedule page.

The certificate schedule which is contained in each policy states the following:

  CERTIFICATE SCHEDULE

  HOME HEALTH CARE DAILY BENEFIT $180 / Day

  LIFETIME MAXIMUM BENEFIT AMOUNT $250,000

  PER OCCURRENCE MAXIMUM BENEFIT $150,000 / Illness

  AUTOMATIC BENEFIT

  INCREASE PERCENTAGE Benefits increase by 8% each year

D offered in the District Court extensive extrinsic evidence to explain the marketing of the Policy and to show the understanding of various of the insureds-both when the Policy was purchased and during the life of the Policy-about what benefits in the Policy increased annually. The district court held that there was an ambiguity concerning whether the automatic increase applied only to the daily benefit or also applied to the lifetime maximum benefit amount and the per occurrence maximum benefit amount. It granted summary judgment for Ps based on the court's understanding that Florida law requires that an ambiguous policy must be construed against the insurer and in favor of coverage. D appealed. The Eleventh Circuit agreed there was an ambiguity but concluded that 'the correct approach under Florida law in resolving the ambiguity in the Policy is unclear.' The court was concerned that the Excelsior 'qualified the longstanding rule of construing an ambiguity against the drafter, by stating that 'only when a genuine inconsistency, uncertainty, or ambiguity in meaning remains after resort to the ordinary rules of construction is the rule apposite.'' The Circuit was uncertain whether this language would require that the court consider extrinsic evidence concerning the terms of the policy before finally concluding that the policy provisions were ambiguous and subject to being construed in favor of coverage and against the insurer. It certified these questions: 

A. Does an ambiguity exist about whether the Policy's 'Automatic Benefit Increase Percentage' applies only to the 'Home Health Care Daily Benefit' or whether it also applies to the 'Lifetime Maximum Benefit Amount' and the 'Per Occurrence Maximum Benefit'?

B. If an ambiguity exists in this insurance policy-as we understand that it does-should courts first attempt to resolve the ambiguity by examining available extrinsic evidence?

C. Applying the Florida law principles of policy construction, does the Policy's 'Automatic Benefit Increase Percentage' apply to the 'Lifetime Maximum Benefit Amount' and to the 'Per Occurrence Maximum Benefit' or does it apply only to the 'Home Health Care Daily Benefit'?

Issues

Rule of Law

Holding and Decision

Legal Analysis

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