Hall v. Continental Casualty Co.
207 F. Supp. 2d 903, 27 Employee Benefits Cas. (BNA) 2553, 2002 U.S. Dist. LEXIS 10510 (2002)
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Rule of Law:
An insurance policy's pre-existing condition exclusion applies only if the insured received treatment or advice for the diagnosed condition itself before the policy's effective date, not merely for non-specific symptoms later found consistent with the condition, or for general suspicions based on risk factors.
Facts:
- Valerie K. Hah obtained a long-term disability insurance policy from Continental Casualty Company, effective September 1, 1999, which excluded pre-existing conditions (defined as conditions for which treatment or advice was given within three months prior to the effective date).
- On July 28, 1999, Hah sought emergency medical care for chest pain and shortness of breath and was diagnosed with pneumonia, tachycardia, and asthma.
- A chest x-ray taken that day showed an abnormal spot on Hah's lung, which radiologists noted could be pneumonia, scar tissue, or a tumor, leading to a recommendation for a follow-up x-ray.
- Emergency room doctors informed Hah of the spot, stating it was likely pneumonia, and advised a follow-up x-ray with her primary physician, Dr. Benn, but did not mention cancer to her.
- On September 1, 1999 (the policy's effective date), Dr. Benn's office recommended a follow-up x-ray to Hah, mentioning the possibility of cancer for the first time in a letter received around September 2.
- Through subsequent diagnostic tests, including a biopsy on September 22, 1999, Hah was diagnosed with lung cancer.
- Hah filed a claim for long-term disability benefits with Continental Casualty Company in May 2000 due to her inability to work because of lung cancer.
- On July 13, 2000, Continental Casualty Company denied Hah's claim, contending her lung cancer was a pre-existing condition and therefore excluded from coverage.
Procedural Posture:
- Valerie K. Hah filed this action for monetary relief in the Circuit Court for Portage County, Wisconsin.
- Continental Casualty Company removed the action to the United States District Court for the Western District of Wisconsin.
- Continental Casualty Company filed a motion for summary judgment regarding Hah's breach of contract, bad faith denial, and interest claims.
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Issue:
Does an insured's lung cancer qualify as a 'pre-existing condition' under a long-term disability policy when, before the policy's effective date, the insured received diagnostic tests and medical advice for non-specific symptoms, leading to a diagnosis of pneumonia, but doctors only suspected cancer as a possibility due to risk factors and did not diagnose it?
Opinions:
Majority - Crabb, District Judge
No, Valerie K. Hah's lung cancer does not qualify as a 'pre-existing condition' under the policy because she did not receive treatment or advice for the diagnosed condition of lung cancer before the policy's effective date. The court relied on Wisconsin law, particularly Ermenc v. American Family Mutual Ins. Co., which held that an insurer must prove the claimant was 'treated for the same condition before and after the policy took effect' to trigger an exclusion. Hah's pre-effective date symptoms (chest pain, shortness of breath) were non-specific and consistent with her diagnosed pneumonia, tachycardia, and asthma. While doctors suspected cancer as a possibility due to Hah's smoking history and the x-ray finding, they did not diagnose cancer or treat her for it before September 1, 1999. The diagnostic procedures (initial x-ray, recommendation for follow-up) were standard for her initial diagnoses and to rule out various conditions, not solely cancer. The court emphasized that broad interpretations of pre-existing condition exclusions based on retrospective reinterpretation of non-specific symptoms or mere suspicion due to risk factors would render the term meaningless and discourage preventive care, which is against public policy.
Analysis:
This case clarifies the interpretation of 'treatment or advice' in pre-existing condition exclusions under Wisconsin law, particularly in situations where symptoms are non-specific and a definitive diagnosis occurs after the policy's effective date. It reinforces the principle that insurers cannot retroactively characterize general diagnostic procedures or suspicions based on risk factors as treatment for a subsequently diagnosed condition to deny coverage. The decision protects insureds by ensuring that seeking preventive or diagnostic care for non-specific ailments before policy activation does not automatically preclude coverage if a serious condition is later diagnosed. It underscores the importance of a clear diagnosis or specific treatment for the actual condition to trigger such exclusions, rather than mere symptoms or possibilities.
