Washington National Insurance v. Ruderman
117 So. 3d 943, 38 Fla. L. Weekly Supp. 511, 2013 WL 3333059 (2013)
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Rule of Law:
Under Florida law, when an insurance policy is susceptible to more than one reasonable interpretation, it is deemed ambiguous and must be construed strictly against the insurer and in favor of coverage, without resorting to extrinsic evidence to clarify the ambiguity.
Facts:
- Sydelle Ruderman and other Florida residents purchased limited benefit home health care insurance policies from Washington National Insurance Corporation's predecessor.
- The policies provided for a 'Home Health Care Daily Benefit,' a 'Per Occurrence Maximum Benefit,' and a 'Lifetime Maximum Benefit Amount.'
- One section of the policy, titled 'AUTOMATIC DAILY BENEFIT INCREASE,' stated that the 'Home Health Care Daily Benefit' would increase annually by a certain percentage.
- A separate 'Certificate Schedule' in each policy listed the dollar values for the daily, per occurrence, and lifetime benefits.
- This Certificate Schedule also contained a line item stating: 'AUTOMATIC BENEFIT INCREASE PERCENTAGE Benefits increase by 8% each year.'
- A dispute arose between the insureds and Washington National over whether the 8% annual increase applied only to the 'Home Health Care Daily Benefit' or also to the 'Per Occurrence Maximum Benefit' and the 'Lifetime Maximum Benefit Amount.'
Procedural Posture:
- Sydelle Ruderman and other insureds filed a class action lawsuit against Washington National Insurance Corporation in the United States District Court for the Southern District of Florida.
- The district court found the policy language to be ambiguous.
- The district court granted summary judgment in favor of the insureds.
- Washington National (appellant) appealed the decision to the United States Court of Appeals for the Eleventh Circuit.
- The Eleventh Circuit agreed the policy was ambiguous but was uncertain about the correct application of Florida law regarding the use of extrinsic evidence to resolve such ambiguities.
- The Eleventh Circuit certified a question of law to the Supreme Court of Florida for resolution.
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Issue:
Under Florida law, if an insurance policy is ambiguous, must a court construe the policy against the insurer without first considering extrinsic evidence to determine the parties' intent?
Opinions:
Majority - Labarga, J.
Yes. When an insurance policy contains an ambiguity, Florida law requires the court to construe the ambiguous language against the insurer and in favor of coverage without first resorting to extrinsic evidence. The court found the policy ambiguous because the certificate schedule's general statement that 'Benefits increase by 8% each year' could reasonably be interpreted to apply to all listed benefits—daily, per occurrence, and lifetime—not just the daily benefit mentioned in a different section. The court clarified that its prior decision in Excelsior did not require the consideration of extrinsic evidence before applying the rule of construing ambiguities against the insurer. This long-standing tenet of Florida insurance law dictates that if one reasonable interpretation provides coverage, that is the construction that must be adopted. The burden is on the insurer, as the drafter, to write clear and unambiguous policies.
Dissenting - Polston, C.J.
No. If a policy is ambiguous, a court should first examine available extrinsic evidence to determine the parties' intent before construing the policy against the insurer as a last resort. The dissent first argued the policy was not ambiguous, as the 'AUTOMATIC DAILY BENEFIT INCREASE' section explicitly names only the 'Home Health Care Daily Benefit' as subject to the increase. Second, even if an ambiguity existed, the dissent contended that the rule of construing a contract against the drafter is a rule of last resort in general contract law, which should apply to insurance policies. The court should first attempt to discern the parties' true intent using all available tools, including extrinsic evidence. The majority's holding improperly departs from precedent by creating a special pro-insured rule that skips the essential step of determining the parties' actual agreement.
Analysis:
This decision solidifies a strong, pro-insured rule of construction for insurance policies in Florida. It clarifies that construing ambiguities against the insurer (contra proferentem) is not a rule of last resort, as it is in general contract law, but a primary directive. The ruling significantly limits an insurer's ability to defend against ambiguity claims by introducing extrinsic evidence, such as marketing materials or testimony about intent, to argue for a narrower interpretation. This places a heightened burden on insurance companies to draft their policies with extreme clarity to avoid unfavorable judicial interpretations.
