Serrano Picón v. Multinational Life Insurance Company, 2023 TSPR 118

Nancy Serrano Picón purchased a disability insurance policy (Multinational) and received monthly benefits from 2009 until 2017.
In 2017 she was federally arrested, released on bail with supervisory conditions, pled guilty in 2018, and in 2021 was sentenced to two years of probation and restitution.
Multinational suspended her disability payments citing the policy exclusion: no benefits "while the insured is in a jail, prison or otherwise under the custody of legal authorities."
The trial court granted summary judgment for the insurer; the Court of Appeals affirmed; Serrano Picón sought certiorari to the Puerto Rico Supreme Court.
The Supreme Court (majority) affirmed the lower courts: restrictions from release on bail and probation place an insured "under the custody of legal authorities" for the exclusion.
A multi-judge dissent argued the exclusion is ambiguous and must be construed narrowly in favor of the insured; bail/probation supervision is not physical custody and public-benefits analogues (e.g., Social Security) suspend benefits only upon incarceration.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether "under the custody of legal authorities" in the exclusion includes pretrial release on bail and post‑conviction probation	Serrano: she was never incarcerated or physically detained; bail and probation are supervisory, not "custody"	Multinational: bail and probation impose legal restrictions on liberty and thus constitute custody for the exclusion	Held: Yes — the majority concluded bail/probation restrictions suffice as "custody," so exclusion applies
Whether the exclusion is ambiguous and must be construed against the insurer	Serrano: phrase is vague and susceptible to multiple meanings; ambiguities resolve for insured	Multinational: language is clear and applies to penal measures restricting liberty	Held: Court (majority) found the clause clear in context and applied it; dissent argued the clause is ambiguous and should be read narrowly for the insured

Jones v. Cunningham, 371 U.S. 236 (1963) (parole/release can constitute "custody" for habeas‑corpus purposes)
Viruet v. SLG Casiano‑Reyes, 194 D.P.R. 271 (2015) (exclusion clauses are disfavored and construed restrictively but applied when clear)
Maderas Tratadas v. Sun Alliance, 185 D.P.R. 880 (2012) (insurance contracts interpreted from viewpoint of average purchaser; ambiguous clauses favor insured)
San Luis Center Apts. v. Triple‑S, 208 D.P.R. 824 (2022) (importance of insurance regulation and general interpretive principles)
Pueblo v. Vélez, 76 D.P.R. 142 (1954) (distinguishing supervision/vigilance from being put back "under custody" upon violation of probation)