Opinion
Nos. 89-1323 and 89-1324
Submitted September 26, 1990 —
Decided June 12, 1991.
Insurance — Sickness and accident insurance — Within two years of issuance of policy, an exclusionary clause for preexisting conditions may be applied to exclude a preexisting condition which is also a chronic condition — R.C. 3923.04(B), construed.
O.Jur 3d Insurance §§ 759, 782.
Two years after a policy of sickness and accident insurance is issued, an exclusionary clause for preexisting conditions may be applied to exclude a preexisting condition which is also a chronic condition or disease, even though the chronic condition or disease is not named or specifically described. (R.C. 3923.04[B], construed.)
APPEAL from and CERTIFIED by the Court of Appeals for Hancock County, No. 5-88-3.
Appellant, Elaine Fisher, was an insured under a policy of insurance providing coverage for hospitalization expenses, laboratory tests and doctors' services. The policy was issued by the appellee, Golden Rule Insurance Company ("Golden Rule"), with an effective date of July 5, 1984.
On or about September 11, 1984, Fisher began to incur medical expenses for the purpose of treating bulimia and laxative abuse. She filed a notice of claim with Golden Rule with respect to these expenses on or about October 21, 1984. The claimed expenses totalled $11,826.02. Golden Rule rejected the claim on or about December 6, 1984, contending that the expenses were not compensable under the insurance policy for the reason that the loss arose from a condition which existed before the effective date of the policy. In the application which Fisher had signed for the coverage involved, there appeared the following:
"I have read this application and represent that the information shown on it is true and complete. I understand that: (a) the insurance will become effective on the later of (i) the requested policy date shown on this application or (ii) the date this application and payment of the total premium for the policy is received by Golden Rule at its home office; and (b) no benefits will be paid for a health condition that exists prior to the date insurance takes effect. I also understand that each person named in answer to question 2 on this application is to be excluded from coverage."
Eventually, on September 23, 1985, Fisher filed a complaint in the Common Pleas Court of Hancock County. Her complaint sought damages from Golden Rule for the denial of insurance policy benefits for hospitalization expenses, doctors' professional services, and laboratory tests.
Golden Rule answered the complaint, denying policy coverage. After a period of discovery, Fisher filed her motion for summary judgment. Fisher admitted in her motion that, as the result of discovery, it was clearly established that she had suffered from anorexia, bulimia, and depression for a considerable period of time prior to the effective date of the policy in question and, further, admitted that her hospitalization and the expenses which were at issue in the case were for the purpose of treating her anorexia, bulimia and depression. The motion further pointed out that Dr. Edwin S. Watts, an expert medical witness, in his deposition had testified that:
"There is no doubt whatsoever in my mind that her illness is definitely chronic in every medical situation."
Fisher based her motion on that part of R.C. 3923.04(B)(2) which reads as follows:
"No chronic disease or chronic physical condition may be excluded from the coverage of a policy of sickness insurance or from the sickness insurance coverage of a policy of sickness and accident insurance except by name or specific description."
Golden Rule also moved for summary judgment. The trial court denied Golden Rule's motion and sustained Fisher's motion.
The court of appeals reversed the trial court and entered judgment for Golden Rule. The court of appeals ruled that the restriction in R.C. 3923.04(B)(2) argued by Fisher relates only to a time frame beginning two years after the date of the issuance of a policy and had no application to the facts as established in the case.
The cause is now before this court upon the allowance of a motion to certify the record, and upon the court of appeals' certification of a conflict between its judgment and that in Amurgis v. Ell (1984), 19 Ohio App.3d 169, 19 OBR 276, 482 N.E.2d 1263.
Brimley, Kostyo Elliott and Howard A. Elliott, for appellant.
Price Shula, Henry J. Price, Jerry Garau, Friedman, Adler, Goldberg, Gottlieb, Korn Osnowitz and Arnold N. Gottlieb, for appellee.
R.C. 3923.04(B)(2) requires every policy of sickness and accident insurance to include the following provision:
"(2) No claim for loss incurred or disability (as defined in this policy) commencing after two years from the date of issue of this policy shall be reduced or denied on the ground that a disease or physical condition not excluded from coverage by name or specific description effective on the date of loss had existed prior to the effective date of coverage of this policy."
The foregoing paragraph needs no interpretation. Very specifically, no claim arising after two years from the date of issuance of the policy could be reduced or denied on the ground that the disease or physical condition reported as the basis for such claim existed prior to the effective date of the policy unless that disease or physical condition had been specifically described and excluded from coverage on the effective date of the issuance of the policy.
There is a second paragraph to R.C. 3923.04(B)(2), which reads as follows:
"No chronic disease or chronic physical condition may be excluded from the coverage of a policy of sickness insurance or from the sickness insurance coverage of a policy of sickness and accident insurance except by name or specific description."
This second paragraph is directly related to the first paragraph. In other words, the phrase "chronic disease or chronic physical condition" does not meet the requirement of exclusion by name or specific description set forth in the first paragraph. Rather than simply designating "chronic disease or chronic physical condition," the exclusion must set forth the name of the chronic disease or chronic physical condition or contain a specific description of the chronic disease or chronic physical condition in order to qualify for the exclusion commencing after two years from the date of issuance of the policy.
Therefore, we hold that two years after a policy of sickness and accident insurance is issued, an exclusionary clause for preexisting conditions may be applied to exclude a preexisting condition which is also a chronic condition or disease, even though the chronic condition or disease is not named or specifically described.
The judgment of the court of appeals is affirmed.
Judgment affirmed.
SWEENEY, Acting C.J., HOLMES, DOUGLAS, WRIGHT, H. BROWN and RESNICK, JJ., concur.
JOSEPH O'NEILL, J., of the Seventh Appellate District, sitting for MOYER, C.J.