In a recent decision, Morissette v. BMO Société d’assurance vie, the Superior Court reviewed the principles applicable to the interpretation of insurance policies.
Facts
In June 2003, the Plaintiff took out a health insurance policy (hereinafter “Policy”) with BMO Société d’assurance vie (hereinafter “BMO”). The Policy provides, among other things, that $150,000 will be paid to the beneficiary upon the first diagnosis of one of the critical illnesses set out in the Policy.
In June 2021, the Plaintiff was diagnosed with severe aortic stenosis, for which he eventually underwent surgery to transplant a new aortic valve. Based on this diagnosis, the Plaintiff submitted a claim to BMO under the Policy. BMO rejected the claim, alleging that the aortic valve transplant did not meet the definition of “major organ transplant” under the Policy. BMO argued that the aortic valve is not part of the heart, but rather another organ. BMO also claimed that the primary diagnosis received by the Plaintiff was not included in the list of “Covered Medical Conditions” in the Policy.
After notifying BMO and being refused again, the Plaintiff filed suit against BMO to obtain payment of the insurance benefit.
Decision
To determine whether the Plaintiff was entitled to the indemnity provided for in the Policy, the Court had to first determine whether to interpret the Policy or not. To do so, the Court noted that a policy must be interpreted only when its wording is ambiguous. In such cases, reference must be made to the general rules of contract interpretation. The contra proferentem rule should only be used as a last resort if ambiguity remains after applying the general rules.
After reading the Policy, the Court determined that it contained certain difficulties that prevented it from being “simply” applied. In particular, the Court noted that in the first paragraph of the clause in question, the Policy stated that it covers “the transplantation of any of the following organs or tissues: heart […]”. However, in the second paragraph of the same clause, BMO referred instead to the transplantation of “organs or bone marrow.”
The Court noted that there is a presumption in interpretation that the use of different terms suggests different meanings. While BMO claims that the term “tissues” in the first paragraph refers only to bone marrow, the Court noted that the term “tissues” used in the first paragraph of the clause is in plural, and as such, cannot refer only to bone marrow.
Based on the text of the clause itself, the Court held that the transplantation of the components of the organs listed in the first paragraph, including the heart, was covered by the Policy. Thus, the transplantation of the Plaintiff’s aortic valve, a component of the heart, would be covered.
The Court also noted that it “must give a broad and liberal interpretation to the provisions of an insurance policy offering coverage to the insured and, conversely, must give a restrictive interpretation to clauses excluding coverage.” Based on this principle, the Court determined that the broad and liberal interpretation of the Policy was more consistent with the position that the transplant undergone by the Plaintiff was covered by the Policy.
Once this ambiguity was resolved, the Court had to rule on whether the Plaintiff could obtain the indemnity provided for in the Policy. The Court established that the Policy sets out three (3) conditions that must be met for indemnity to be paid. After analyzing these conditions, the Court determined that the Plaintiff had met them and was therefore entitled to payment of the indemnity provided for, namely, $150,000.
Finally, the Plaintiff also claimed a refund of the premiums paid to prevent the Policy from lapsing during the proceedings. In analyzing the Policy, the Court determined that the benefit became payable thirty (30) days after the Plaintiff underwent surgery, and that it was then, in accordance with the wording of the Policy, cancelled. The Court therefore ordered that the premiums paid after the cancellation of the Policy be refunded to the Plaintiff.
Takeaway
While the principles of interpretation have remained consistent over time, it is occasionally beneficial to return to the fundamentals in order to discern the underlying intent of the policy.
