Collier v. MD-Individual Practice Ass'n

RODOWSKY, Judge. This case comes to us from the United States Court of Appeals for the District of Columbia Circuit pursuant to the Maryland Uniform Certification of Questions of Law Act, Md.Code (1974, 1989 Repl.Vol.), §§ 12-601 through 12-609 of the Courts and Judicial Proceedings Article. The statement of relevant facts and the order of certification are reported in Washington Hosp. Center Nat’l Rehabilitation Hosp. v. Collier, 947 F.2d 1498 (D.C.Cir.1991).

Two questions are certified. One concerns the construction of the definition of “eligible Dependents” in the group policy of health insurance involved here. The second question is whether an insured under a health policy may recover counsel fees if successful in pursuing a claim for breach of contract against the insurer based on a failure to pay promised benefits. I The health insurer is MD-Individual Practice Association (MD-IPA).

The claimant is Todd Collier (Collier), whose mother maintained a health insurance policy with MD-IPA. ⁴ Collier became nineteen years of age in May 1987. In September 1987, while playing touch football, he was injured and rendered quadriplegic. The subject policy provides in relevant part that “eligible Dependents include: • Dependent, unmarried children, including step-children, legally adopted children, as well as natural children who depend upon the Subscriber for support and qualify as dependents under applicable provisions of the Internal Revenue Code and who: • are under 19 years of age and maintain legal residence with Subscriber, or • are under 23 years of age and are full-time students at a recognized college, university or trade school.” At all relevant times Collier was a student at Montgomery College, living at home, and dependent upon his mother for financial support. Collier’s status as a “full-time student” is disputed.

That term is not defined in the policy. The basic facts are these. “Beginning with the spring semester of 1987, the College placed Collier on academic probation and allowed him to register for only six credits. In September 1987 Collier, mistakenly thinking that his probation had ended, tried to register for twelve or more credits for the fall semester. He was again allowed to register for only six credits, and hence was taking that number of credits when he was injured in September 1987.” Collier, 947 F.2d at 1500.

The dispute arises because, “[a]t least for purposes of financial aid and academic honors, Montgomery College requires enrollment in twelve or more credits for a student to be classified ‘full-time.’ ” Id. (Parentheses omitted). The United States District Court for the District of Columbia granted summary judgment in favor of MD-IPA on Collier’s claim against it, “holding that the term ‘full-time student’ is unambiguous.” Id. at 1502. That Court “noted ⁵ that the term is ‘frequently employed by colleges and universities,’ and thought that ‘the contractual expectations of the parties are fairly measured by reference to the definition provided by the applicable institution.’ ” Id. at 1502-03.

On appeal to the District of Columbia Circuit, Collier argued that “full-time student” is ambiguous and is not limited to the criteria used by the relevant school. Collier argued that the term means “any student in ‘continuous attendance during the normal school year’ or ‘a person who regularly attends classes as his primary daily occupation.’ ” Id. at 1503. Against that background the federal appellate court certified the following question to us: “Does the term ‘full-time student,’ when used as a condition of coverage in a health insurance policy, unambiguously incorporate the criteria of the relevant educational institution?” Id. The certifying court observed that if this Court answered the above-quoted question affirmatively, then the certifying court would affirm the grant of summary judgment, but if this Court “holds that ‘full-time student' is ambiguous,” then the certifying court asks us to proceed to the second question, involving fees.

In Maryland insurance policies ordinarily are construed in the same manner as contracts generally. We do not follow the rule, adopted in some states, that insurance policies are to be construed most strongly against the insurer. Cheney v. Bell Nat’l Life Ins. Co., 315 Md. 761, 766-67 , 556 A.2d 1135, 1138 (1989).

It is necessary to discern the intention of the parties. “To determine the intention of the parties ... we construe the instrument as a whole.” Pacific Indemnity Co. v. Interstate Fire & Casualty Co., 302 Md. 383, 388 , 488 A.2d 486, 488 (1985). In so doing, we “examine the character of the contract, its purpose, and the facts and circumstances of the parties at the time of execution.” Id. Words are accorded their ordinary ⁶ and accepted meanings. “The test is what meaning a reasonably prudent layperson would attach to the term.” Id. Thus, “[t]he language used may be ambiguous if it is ‘general’ and may suggest two meanings to a reasonably prudent layperson.” Id. at 389 , 556 A.2d at 489 .

If the language is ambiguous, extrinsic evidence may be consulted. “If the extrinsic evidence presents disputed factual issues, construction of the ambiguous contract is for the jury. The court may construe an ambiguous contract if there is no factual dispute in the evidence.” Id. If, after considering extrinsic evidence, the ambiguity remains, it will ordinarily be resolved against the party who drafted the contract. Mutual Fire, Marine & Inland Ins.

Co. v. Vollmer, 306 Md. 243, 251 , 508 A.2d 130, 134 (1986). In cases involving insurance contracts of adhesion, that party is the insurer. We shall answer the first certified question in the light of these principles. Although the insurer was free, within the limits of public policy, to provide a special definition of “full-time student” in the insurance contract, see Valliere v. Allstate Ins.

Co., 324 Md. 139 , 596 A.2d 636 (1991), the insurer did not do so. Absent such a definition, the certified question obviously is not limited to whether there has been an express incorporation by reference of the criteria of the relevant educational institution. Rather, the question may be interpreted as asking whether, for this type of contract, there is a rule of Maryland law which incorporates the relevant school’s criteria, so that there would be no ambiguity. There is no such rule of Maryland law.

In the absence of a controlling legal definition, under Maryland law as reviewed above, the question becomes, “What is the customary and normal meaning of ‘full-time student’ in the context of a group health insurance policy?” One factor in determining the ordinary and accepted meaning of a contract term is the purpose of the contract. The court in Society of the New York Hosp. v. Malsky, 86 Misc.2d 221 , 382 N.Y.S.2d 433 , aff'd, 88 Misc.2d 832 , 390 ⁷ N.Y.S.2d 512 (1976) (per curiam), well expressed the purpose of the subject type of contract provision when it said: “By restricting coverage to those students who attend school full time, who are financially dependent on the [subscriber], who have the same residence as the [subscriber] and who are unmarried, it is evident that the purpose is to provide coverage for the student who would not be expected to have access to group health insurance coverage of his own. The medical expenses of such a student normally can be expected to be an obligation of the [subscriber].” 382 N.Y.S.2d at 437. Further, applying the reasonable person standard to determine normal meaning in the context dictates against a construction that would have otherwise eligible dependents moving in or out of a covered person status because of fluctuations from time to time in course scheduling.

Absent an express definition, and in light of the foregoing, “full-time student” is ambiguous, in that it suggests two or more meanings to reasonable laypersons. The term may connote the minimum requirements of the institution for recognition for honors, or for student aid grants, or, at a public institution, for use in an aid-to-education formula of state or local government. But, a subscriber’s dependent children of college age may fall below some minimum criterion because of temporary health problems or because of academic difficulties. A student may be carrying the maximum number of credit hours that the institution permits the particular student to carry, or that the student’s physician permits the student to carry during a period of recuperation.

Because of the demands of extracurricular school activities, such as athletics, or dramatics, or work on a daily school newspaper, a student may decide to carry a lighter course load during the fall and spring semesters, but make up the difference, in relation to the institution’s criteria, by taking summer courses. Depending on all of the circumstances in an actual case, lay persons could reasonably conclude that students whose claims fall within ⁸ the framework of these hypothetical are full time because their “primary daily occupation was that of student.” Massey v. Board of Trustees, State Employees Group Benefits Program, 500 So.2d 864, 866 (La.App.1986), cert. denied, 501 So.2d 775 (La.1987). The insurer in Massey made the very argument submitted by MD-IPA here. The student in Massey was carrying nine credit hours at the relevant time, whereas the educational institution considered one enrolled in less than twelve hours per semester to be a part-time student.

During the semester when accidental injury occurred the student did not meet the university’s full-time criterion because a professor had recommended that the student take three less hours. Under those circumstances the court held “full-time student” to be ambiguous, applying either to the criteria of the school or “to the actual practice of the student involved.” Id. at 866 . The insurer here points to no case, and our research has not disclosed any case, in which a court has incorporated a school criterion into the policy term, “full-time student,” to the exclusion of any other construction. Cases in which courts have applied “full-time student” in a ruling of law do so in relation to the specific facts presented.

These are factual scenarios so far removed from any ordinary and accepted meaning of “full-time student” that nuances, such as that between a twelve credit workload and a six credit academic probation, become legally immaterial. Dependent children cannot be full-time students if they have withdrawn from the institution, are not attending classes, have not taken examinations, and are not enrolled for upcoming classes, even if there is evidence of an intent to re-enroll. See Bancale v. R.C.A. Serv. Co., No. 10051, 1987 WL 6240 (Ohio App. Feb. 3, 1987) (LEXIS, Ohio library, Cases file); Colonial Life Ins.

Co. v. Hazelton, 711 S.W.2d 305 (Tex.App.1986); Hoffman v. Prudential Ins. Co., 624 S.W.2d 626 (Tex.App.1981). ⁹ Blue Cross & Blue Shield v. Cassady, 496 So.2d 875 (Fla.App.1986), is similar. The dependent, after dropping out of high school, had obtained an equivalency diploma at the end of January 1984 when it was too late to enroll in junior college. Although the dependent had planned to enroll for the summer semester, he had not done so by March when he suffered accidental injuries.

Cassady concluded that the policy provision was not ambiguous. 496 So.2d at 877 . The court said that “ ‘full-time student’ ... must be given its usual interpretation. Such term envisions a person’s enrollment in an academic institution and attendance at classes on a substantial basis. Full-time ordinarily signifies the normal or standard period of time spent in a named activity.” Id.

(quoting Margie Bridals, Inc. v. Mutual Benefit Life Ins. Co., 62 Ill.App.3d 542 , 19 Ill.Dec. 547, 550 , 379 N.E.2d 62, 65 (1978)). The Florida court principally relied on the lack of any enrollment, and not school criteria, for its conclusion that there was no ambiguity. Margie Bridals, quoted by the Florida court, presents the problem in a somewhat different, but factually clear-cut, context.

The dependent had officially withdrawn from classes and obtained a leave of absence from a university in mid-October 1974, because of anorexia nervosa. An extended benefit provision in the policy continued coverage for medical expenses through the end of December 1975. It was contended that benefits continued thereafter, because the dependent, while on leave of absence, was a full-time student. The court rejected an attempted distinction between active and inactive full-time students.

Any minimum credit requirement for full-time student status of the university involved in Margie Bridals is not even mentioned in the opinion. Another decision involving an extended disability is Klein v. Empire Blue Cross & Blue Shield, 173 A.D.2d 1006 , 569 N.Y.S.2d 838 , app. denied, 78 N.Y.2d 863 , 578 N.Y.S.2d 878 , 586 N.E.2d 61 (1991). The dependent was permanently and totally disabled in January 1985. He registered for the fall ¹⁰ 1985 semester at college, taking one course as a homebound student, and he continued so to take one course per semester thereafter.

Benefits were paid through December 1986 when the policy of a new insurer replaced the earlier plan. The issue controlling coverage under the new plan was whether the dependent was a full-time student on January 1, 1987. The insurer produced the relevant college catalogue which referred to full-time students as those registered for twelve or more credits. The court, however, said that “where, as here, tendered extrinsic evidence is conclusory and cannot resolve the equivocality of the language of the contract, the issue remains a question of law for the court.” 569 N.Y.S.2d at 842 (emphasis added).

The court found it unnecessary to define precisely the meaning of “full-time student,” because it held that registration for one course was legally insufficient. See also Swint v. Protective Life Ins. Co., 779 F.Supp. 532 , 538 n. 6 (S.D.Ala.1991) (dicta that “full-time student” in employee benefit health plan is ambiguous). The ambiguity on the face of the contract permits resort to extrinsic evidence to attempt to resolve the ambiguity.

That extrinsic evidence reveals the twelve credit criterion used for some purposes at Montgomery College. Under the