Examining the nature of illness and injury
Chicago Daily Law Bulletin
November 26, 2007
by MARK D. DEBOFSKY
In Rich v. Principal Life Ins.Co., 2007 Ill.LEXIS 1157 (Ill.S.Ct. Sept. 20), the plaintiff purchased a disability income policy in 1980 that provided benefits in the event of ''total disability,'' defined as ''the complete inability of the insured due to Injury or Sickness to perform any and every duty pertaining to an occupation (as defined herein) for remuneration or profit.'' The terms ''Sickness'' and ''Injury'' were defined as follows:
''INJURY means accidental bodily injury sustained by the Insured while this Policy is in force. Injury which is a direct or indirect result of physical or mental infirmity, illness or disease of any kind, or medical or surgical treatment therefor or Injury which results in Total Disability which commences more than 90 days after the date the Injury is sustained will be deemed to be Sickness.''
''SICKNESS means sickness or disease of the Insured first manifested while this policy is in force.''
Depending on whether the insured was disabled due to sickness or injury, benefits could be payable for the insured's lifetime (injury) or for a five-year duration (sickness). Rich injured his right wrist at work in January 1999 and ultimately underwent surgery in May 1999 for which he submitted a claim for disability benefits after an infection incurred during the surgery resulted in permanent disability. Principal accepted the claim but advised Rich that his benefits would be limited to five years of payments because the total disability did not occur until more than 120 days after the initial accident, and that it would have to have occurred within 90 days of the accident in order to be deemed a disability due to injury.
Rich disagreed, contending that the injury causing the total disability occurred in May 1999 when he was exposed to a contaminated operating field. Principal reevaluated the claim but came to the same conclusion. Rich then submitted a report from a physician who opined that there was a causal relationship between the initial injury and the current impairment; and that the injury resulted in permanent partial disability to the right arm. However, Principal considered the report consistent with its prior findings. Principal reiterated that there was more than a 90-day gap between the injury and surgery, and that since the disability was the result of surgical treatment it constituted a sickness.
Plaintiff then brought suit for breach of contract and Principal counterclaimed for a declaratory judgment in its favor. Both parties moved for summary judgment and the trial court ruled in plaintiff's favor. The Appellate Court reversed, finding the policy provisions clear and unambiguous. The Illinois Supreme Court affirmed the Appellate Court.
The court began its analysis by stating the general rules applicable to interpretation of insurance policies:
''When construing the language of an insurance policy, a court's primary objective is to ascertain and give effect to the intentions of the parties as expressed by the words of the policy. Hobbs v. Hartford Insurance Co. of the Midwest, 214 Ill.2d 11, 17 (2005); Central Illinois Light, 213 Ill. 2d at 153; American States Insurance Co. v. Koloms, 177 Ill.2d 473, 479 (1997). Because the court must assume that every provision was intended to serve a purpose, an insurance policy is to be construed as a whole, giving effect to every provision ( Central Illinois Light, 213 Ill. 2d at 153), and taking into account the type of insurance provided, the nature of the risks involved, and the overall purpose of the contract ( Koloms, 177 Ill.2d at 479; Outboard Marine , 154 Ill.2d at 108). 'All the provisions of the insurance contract, rather than an isolated part, should be read together to interpret it and to determine whether an ambiguity exists.' United States Fire Insurance Co. v. Schnackenberg, 88 Ill.2d 1, 5 (1981). If the words used in the policy are clear and unambiguous, they must be given their plain, ordinary, and popular meaning ( Central Illinois Light, 213 Ill.2d at 153), and the policy will be applied as written, unless it contravenes public policy ( Hobbs, 214 Ill.2d at 17).''
The court noted, though, that if policy provisions are subject to more than one meaning, they will be deemed ambiguous, and any ambiguities ''will be construed strictly against the insurer who drafted the policy.''
Turning to the parties' contentions, the court ruled that the policy's distinction between sickness and injury is not contrary to public policy (citing 10A Couch on Insurance 3d § 146:2, at 146-10 (1998); 1 J. Appleman & J. Appleman, Insurance Law & Practice § 23, at 60 (1981)). The court cited the same authorities for the proposition that it is not against public policy for a disability insurer to require that the disability must follow within a certain number of days following an accident. The court then construed the policy:
''The policy otherwise limits plaintiff to a five-year benefit period for a disability resulting