Laboy v. Grange Indemn. Ins. Co. (Slip Opinion)
144 Ohio St. 3d 234
| Ohio | 2015Background
- Grange Mutual issued an auto policy to Philip Laboy providing up to $5,000 per person in medical-payments coverage; Heidi, Alexandrea, and Gabrielle Laboy were covered and injured in a 2006 accident.
- The Laboys submitted some medical bills both to Grange and to their health insurer, Medical Mutual; Grange paid discounted amounts under its arrangements and did not deny coverage or exhaust limits.
- Grange asserted subrogation rights after the Laboys settled with the tortfeasor; the Laboys claimed Grange overpaid providers because Medical Mutual’s negotiated rates were substantially lower.
- Section B(2) of Grange’s policy obligated Grange to pay the lesser of (1) reasonable expenses or (2) “any negotiated reduced rate accepted by a medical provider.”
- The trial court held the phrase meant rates Grange could legally pay (i.e., rates Grange had contractual access to) and granted summary judgment for Grange; the Eighth District reversed and remanded for factfinding; the Ohio Supreme Court accepted review.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether “any negotiated reduced rate accepted by a medical provider” requires Grange to pay reduced rates negotiated by the insured’s third‑party health insurer | Laboy: phrase includes rates negotiated by Medical Mutual and Grange must pay those lower rates | Grange: phrase reasonably means only rates Grange is contractually entitled to pay (its own negotiated rates or those available via its vendor) | Held: Phrase means rates Grange has contractual access to; does not require Grange to pay Medical Mutual’s negotiated rates |
Key Cases Cited
- Sharonville v. American Employers Ins. Co., 846 N.E.2d 833 (Ohio 2006) (insurance-policy interpretation is a question of law)
- Burris v. Grange Mutual Cos., 545 N.E.2d 83 (Ohio 1989) (interpret contracts to give intended effect)
- Alexander v. Buckeye Pipe Line Co., 374 N.E.2d 146 (Ohio 1978) (words given plain and ordinary meaning absent absurdity)
- King v. Nationwide Ins. Co., 519 N.E.2d 1380 (Ohio 1988) (ambiguities construed for insured)
- Westfield Ins. Co. v. Galatis, 797 N.E.2d 1256 (Ohio 2003) (rule favoring insureds not applied to yield unreasonable interpretations)
- Cincinnati Ins. Co. v. CPS Holdings, Inc., 875 N.E.2d 31 (Ohio 2007) (courts avoid unreasonable contract constructions)
- King v. ProMedica Health Sys., Inc., 955 N.E.2d 348 (Ohio 2011) (provider may bill entities other than the health insurer; insured’s contract rights limited)