PHILIP LABOY, ET AL. v. GRANGE INDEMNITY INSURANCE CO., ET AL.
No. 100116
Court of Appeals of Ohio, EIGHTH APPELLATE DISTRICT, COUNTY OF CUYAHOGA
April 10, 2014
2014-Ohio-1516
BEFORE: Stewart, J., S. Gallagher, P.J., and E.A. Gallagher, J.
Civil Appeal from the Cuyahoga County Court of Common Pleas, Case No. CV-12-773808. RELEASED AND JOURNALIZED: April 10, 2014
Thomas J. Connick
Dubyak Connick Sammon & Bloom, L.L.C.
3401 Enterprise Parkway, Suite 205
Cleveland, OH 44122
Edward W. Cochran
Cochran & Cochran
20030 Marchmont Road
Shaker Heights, OH 44122
ATTORNEYS FOR APPELLEE
Michael K. Farrell
David A. Carney
Baker & Hostetler, L.L.P.
PNC Center
1900 East Ninth Street, Suite 3200
Cleveland, OH 44114
Mark A. Johnson
Rand L. McClelland
Baker & Hostetler, L.L.P.
65 East State Street, Suite 2100
Columbus, OH 43215
{¶1} Plaintiffs-appellants Philip and Heidi Laboy carried automobile insurance issued by defendant-appellee Grange Mutual Casualty Company (“Grange“). The policy contained a medical payments clause that said Grange would pay the lesser of reasonable medical expenses or “any negotiated reduced rate accepted by a medical provider.” When the Laboys were injured in an automobile accident, they submitted their medical bills not only to Grange, but to their health insurance company, Medical Mutual of Ohio. Medical Mutual reimbursed the Laboys’ health care providers at negotiated rates; Grange reimbursed those same health care providers at higher rates. After all the bills were paid, Grange exercised its contractual right of subrogation against the Laboys for the medical payments it made on their behalf. The Laboys complained that Grange violated the terms of the policy by paying a higher rate than that negotiated by Medical Mutual for the same bills. They claimed that Grange‘s higher rate of reimbursement ($891.99) meant that Grange could seek a higher amount in subrogation, which would lead to a corresponding reduction in the net proceeds they received from their settlement with the tortfeasor.
{¶2} The court rejected the Laboys’ arguments. It found that the Laboys’ interpretation of the medical payments clause would lead to the absurd result that the obligation to reimburse medical expenses at a negotiated reduced rate accepted by “a medical provider” would result in Grange having to reimburse medical expenses at a rate negotiated by any medical provider, anywhere, regardless of whether the Laboys had a
{¶3} The language at issue appears in a “limit of liability” section of the policy. It states:
B. We will pay under Part B - Medical Payments Coverage, the lesser of:
1. reasonable expenses incurred by the insured for necessary medical and funeral services because of bodily injury; or
2. any negotiated reduced rate accepted by a medical provider.
{¶4} When reviewing language used in an insurance policy, we give words their plain and ordinary meaning unless another meaning is clearly apparent from the contents of the policy. Alexander v. Buckeye Pipe Line Co., 53 Ohio St.2d 241, 374 N.E.2d 146 (1978), paragraph two of the syllabus.
{¶5} The parties give different interpretations of the policy. Grange maintains that Section (B)(2) should mean any reduced rate negotiated by Grange that is accepted
{¶6} Section (B)(2) requires Grange to pay any negotiated reduced rate accepted by a health care provider. Taken literally, this section clearly indicates that Grange‘s duty to pay a negotiated reduced rate is without qualification and applies regardless of geographic proximity or even privity of contract. It would apply to rates negotiated on the other side of the globe or to the rate negotiated by someone who perhaps persuades a medical provider to accept less than that provider‘s normal rate for services. The words are plain. There is no ambiguity.
{¶7} The difficulty with Section (B)(2) is that it is so all-encompassing, it would be impossible for Grange to comply. This brings into application the rule that “[e]ven an apparently unambiguous contract may be rendered ambiguous and open to construction if its words, taken literally, lead to absurdity or illegality when applied to the facts.” Clappenback v. New York Life Ins., Co., 136 Wis. 626, 630, 118 N.W. 245 (1908); United Refining Co. v. Jenkins, 410 Pa. 126, 138, 189 A.2d 574 (1963); Sanders v. Gen. Motors Acceptance Corp., 180 S.C. 138, 185 S.E. 180 (1936). When this kind of absurdity
{¶8} The trial court ruled that Grange‘s interpretation of the policy, that Section (B)(2) applies only to reduced rates negotiated by Grange and accepted by medical providers in their network, was “the only reasonable interpretation” of the policy, but it did so on the mistaken basis that the Laboys were arguing that Section (B)(2) should be applied as written and be found to mean any negotiated rate regardless of geography. The Laboys’ brief in opposition to Grange‘s motion for summary judgment made it clear that “Grange does, in fact, have access to a lesser negotiated rate via medical providers who have agreed with [sic] Laboys’ medical insurer to provide a discounted rate.” Brief In Opposition to Motion for Summary Judgment at 12. Furthermore, the court did not consider the merits of the Laboys’ argument when deciding how to interpret the policy and did not engage in fact-finding to ensure the most sensible and reasonable interpretation of the policy. This error was doubly prejudicial because the Laboys, as the insureds, were entitled to have any ambiguity in the policy construed most favorably to them. Fed. Ins. Co. v. Executive Coach Luxury Travel, Inc., 128 Ohio St.3d 331, 2010-Ohio-6300, 944 N.E.2d 215, ¶ 8.
{¶9} We agree that interpreting Section (B)(2) to mean any negotiated reduced rate anywhere in the world would be an absurd interpretation. However, without the benefit of fact-finding, we are not convinced that interpreting the policy as Grange asserts is the
{¶10} This cause is reversed and remanded to the trial court for further proceedings consistent with this opinion.
It is ordered that appellants recover of appellee their costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate issue out of this court directing the Cuyahoga County Court of Common Pleas to carry this judgment into execution.
A certified copy of this entry shall constitute the mandate pursuant to
MELODY J. STEWART, JUDGE
EILEEN A. GALLAGHER, J., CONCURS WITH SEPARATE OPINION;
SEAN C. GALLAGHER, P.J., CONCURS IN JUDGMENT ONLY
EILEEN A. GALLAGHER, J., CONCURRING:
{¶11} I concur with the majority but write separately to express my concerns regarding the initiation of this case.
{¶12} The Cuyahoga County Court of Common Pleas case designation sheet in this case, completed by plaintiff‘s counsel, identifies this case as a “Commercial Docket” case.
{¶13} This matter, however, is not a case appropriate for a commercial docket pursuant to the parameters set out by the Ohio Supreme Court.
{¶14} The commercial dockets were established to focus on litigation between business entities or a business entity and an owner, sole proprietor, shareholder, partner or member of a business entity.
{¶15} A class action lawsuit is eligible for the commercial docket if it qualifies under one of the several provisions under
{¶16} In order to maintain the integrity of commercial dockets as envisioned, I suggest that plaintiffs, as well as commercial docket judges, be cautious in their identification of commercial docket cases and the maintenance of a case that is inappropriate on a commercial docket.