The 3d U.S. Circuit Court of Appeals recently confronted the question of whether a “preexisting” condition really was preexisting and thus precluded insurance coverage. McLeod v. Hartford Life and Accident Insurance Co., 2004 U.S.App.LEXIS 12253 (3d Cir., June 22).

Plaintiff Shirley McLeod, who had been receiving treatment for a variety of illnesses beginning in 1997, was subsequently diagnosed with and became disabled by multiple sclerosis.

Because the plaintiff was neither diagnosed nor treated specifically for MS until after her insurance became effective in 1999, the court ruled that “despite language in the benefit plan aimed to cast a broad net as to what constitutes receiving medical care for a ‘preexisting condition,’ McLeod did not receive treatment ‘for’ such a preexisting condition prior to her effective date of coverage because neither she nor her physicians either knew or suspected that the symptoms she was experiencing were in any way connected with MS.”

Although the plaintiff had complained of numbness in her arm during the “look-back period,” because she had been treated for bulging cervical discs and other conditions unrelated to MS, the court determined that the preexisting condition exclusion did not apply.

While the policy gave defendant Hartford Life and Accident Insurance Co. discretion and authority to determine eligibility for benefits and to construe the policy, the court ruled that because Hartford both funds the benefit program and administers the benefits, the conflict heightens the arbitrary and capricious standard of review. Applying that standard, the appeals court held that the district judge erred in granting judgment to the insurer. The court framed the issue as follows:

“The question before us is whether the District Court erred when it concluded that a diagnosis of MS that post-dated McLeod’s consultation with a physician during the look-back period for numbness in her arm established a preexisting condition such that Hartford’s decision to deny LTD benefits to McLeod was justified. More specifically, could Hartford ‘read back’ a preexisting condition for purposes of excluding coverage when the condition itself was not diagnosed in the look-back period, especially in a situation such as this where other diagnoses were made as to the very symptoms that are now being attributed to the (alleged) preexisting condition.

“Hartford would have us hold that receiving medical care ‘for symptoms’ of a preexisting condition encompasses receiving care for symptoms that no one even suspected were connected with the later diagnosed ailment but which were later deemed not inconsistent with it, but a heightened standard of review will not countenance such a strained interpretation.

“In a case of heightened review, where the plan administrator is not afforded complete, freewheeling discretion, we must be especially mindful to ensure that the administrator’s interpretation of policy language does not unfairly disadvantage the policy holder. ERISA was enacted ‘”to promote the interests of employees and their beneficiaries in employee benefit plans” and to “protect contractually defined benefits.”‘ Firestone, 489 U.S. at 113 (quoting Shaw v. Delta Airlines Inc., 463 U.S. 85, 90, 77 L.Ed.2d 490 (1983); Massachusetts Mutual Life Insurance Co. v. Russell, 473 U.S. 134, 148, 87 L.Ed.2d 96 (1985)).

“Were the plan’s language the subject of non-heightened discretionary review, and had Hartford provided a plausible reason for its interpretation, then perhaps the result would be different. But, given Hartford’s concession, heightened review applies and Hartford’s suggested reading of the terms ‘for’ and ‘symptom’ cannot withstand that scrutiny.” *14-*15.

The court explained that Hartford’s interpretation gives the insurer too much leeway since any symptom could be the basis of the exclusion. Following Lawson v. Fortis, 301 F.3d 159 (3d Cir. 2002), treatment “for” the symptoms of an unsuspected or undiagnosed condition is impossible without knowing what the condition is. There has to be an intention to treat or suspect a particular condition.

However, this policy included as a preexisting condition “medical care received for any ‘manifestations, symptoms, findings or aggravations related to or resulting from such accidental bodily injury, sickness, mental illness, pregnancy or substance abuse.” *20 (emphasis added). The policy did not, though, define the term “symptom.” By consulting the dictionary, the court explained that for the term “symptom” to be meaningful, it has to relate to something else. *23.

Thus, the court reasoned, “It appears to us from this definition that a ‘symptom’ is a meaningful term only because it is a ‘symptom’ in relation to something else. McLeod’s symptom of numbness became relevant as one the plan used to exclude her from coverage based on a preexisting condition only once it was deemed a ‘symptom of MS.’ If it were just a random ‘symptom’ of some undiagnosed ailment, then Hartford would not be concerned with it. Given that the symptom becomes a factor in the exclusion process only once it is tied to the diagnosis of the sickness, in this case MS, we do not see on what basis Hartford can successfully argue that there exists a significant difference between the language of the Hartford plan and the language of the insurance policy in Lawson. Indeed, the Hartford plan still bases the exclusion on ‘symptoms … for which you received medical care.’ (Emphasis added.) This construction simply raises the obvious question: symptoms of what? Hartford offers no satisfactory answer to this question.” *23-*24.

Therefore, to avoid an ex post facto application of the preexisting condition exclusion, the court ruled:

“We hold that the phrase ‘symptoms … for which you received medical care’ in the Hartford policy necessarily connotes an intent to treat or uncover the particular ailment which causes that symptom (even absent a timely diagnosis), rather than some nebulous or unspecified medical problem. To hold otherwise would vitiate any meaningful distinction between symptoms which are legitimately moored to an ‘accidental bodily injury, sickness, mental illness, pregnancy or episode of substance abuse,’ and those which are not. It is simply not meaningful to talk about symptoms in the abstract: Seeking medical care for a symptom of a preexisting condition can only serve as the basis for exclusion from receiving benefits in a situation where there is some intention on the part of the physician or of the patient to treat or uncover the underlying condition which is causing the symptom.” *25-*26.

The court was careful, though, to explain that the “correct” diagnosis need not be made before the effective date of the policy since the exclusion could properly be invoked to avoid coverage for a suspected condition. Here, despite many consultations, neither the plaintiff nor her doctors suspected MS until after the policy went into effect. Accordingly, the court concluded that the insurer inappropriately invoked the policy’s preexisting condition exclusion.

Also see, Sanders v. CNA Group Life Assurance Co., 2004 U.S. Dist. LEXIS 11348 (D. Ore., May 5) (although plaintiff had been examined for suspicion of ALS during preexisting condition period, because the diagnosis had not been made, the claim did not fall under CNA’s preexisting condition exclusion based on the manner in which CNA defined “preexisting condition”).

This article was initially published in the Chicago Daily Law Bulletin.

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