Lawson v. Fortis Ins. Co.

Lawson v. Fortis Ins. Co.
No. 00-6538 (E.D.Pa. June 20, 2001)

A decedent child’s parents sued on breach of contract and bad faith theories
against an insurance company. The insurance company, citing the pre-existing
clause of the policy, denied coverage for the child’s leukemia treatment. Both
the parents and the insurance company filed countermotions for summary judgment.
The United States District Court for the Eastern District of Pennsylvania ruled
in favor of the parents on the breach of contract issue, but ruled in favor
of the insurer on the bad faith claim.

The court ruled that when an insurance policy is ambiguous, the ambiguity must
be resolved against the insurer. According to the district court, the interpretation
of the pre-exiting condition clause of the policy set forth by both the parents
and the insurer was reasonable. The parents argued that because the child was
not diagnosed with leukemia, the illness was not a pre-existing condition. Conversely,
the insurance company argued that because the child was treated for symptoms
of leukemia, the child had a pre-existing condition. Because of this ambiguity,
the district court ruled in favor of the parents. The district court also dismissed
the bad faith claim charged against the insurer, ruling that, because there
were two reasonable interpretations of the pre-existing condition, the insurer
had not acted in bad faith by denying payment for leukemia treatment.