Sydelle Ruderman v. Washington National Insurance Corporation

• Court: Court of Appeals for the Eleventh Circuit
• Decided: February 17, 2012
• Docket: 10-14714
• Status: Published

Opinion

[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT _____________________________ FILED No. 10-14714 U.S. COURT OF APPEALS _____________________________ ELEVENTH CIRCUIT FEB 17, 2012 JOHN LEY D. C. Docket No. 1:08-cv-23401-JIC CLERK

SYDELLE RUDERMAN, by and through her Attorney-in-fact, Bonnie Schwartz, SYLVIA POWERS, by and through her Attorney- in-fact, Les Powers, individually and on behalf of all others similarly situated, et al.

Plaintiffs-Appellees,

versus

WASHINGTON NATIONAL INSURANCE CORPORATION, Successor in Interest to Pioneer Life Insurance Company,

Defendant-Appellant.

_________________________________________

Appeal from the United States District Court for the Southern District of Florida _________________________________________

(February 17, 2012) Before EDMONDSON, MARTIN and SUHRHEINRICH,* Circuit Judges.

PER CURIAM:

This case involves a dispute between Plaintiff-Appellees Sydelle

Ruderman, Sylvia Powers, and other class members (“the insureds”) and Pioneer

Life Insurance Company, which is succeeded in this action by Defendant-

Appellant Washington National Insurance Corporation (“Washington National”).

The controversy is over the proper interpretation of certain similar insurance

contracts under Florida law. Washington National appeals the District Court’s

grant of summary judgment for the insureds.

The District Court concluded that the policies in question were ambiguous

and that, under Florida law, they were then to be construed against Washington

National. We agree that the policies are ambiguous, but we conclude that Florida

law is unsettled on the proper way to resolve the ambiguity. To establish the

proper approach to take under Florida law in interpreting the ambiguity, we need

some help; so we certify a question to the Supreme Court of Florida.

* Honorable Richard F. Suhrheinrich, United States Circuit Judge for the Sixth Circuit, sitting by designation.

2 Background

The insureds each purchased a Limited Benefit Home Health Care Coverage

Policy (“Policy”) from Pioneer Life Insurance Company providing reimbursement

for certain Home Health Care expenses.1 For purposes of this appeal, the body of

each Policy contains identical language but attached to each Policy is a Certificate

Schedule (“Certificate”) that sets forth the exact coverage amounts specific to each

of the insureds and provides a level of differentiation between each Policy. The

Policy provides for reimbursement through a maximum daily benefit called the

“Home Health Care Daily Benefit” (“Daily Benefit”). The provision of the Daily

Benefit is limited by a “Per Occurrence Maximum Benefit” (“Per Occurrence

Cap”) for each illness, and a “Lifetime Maximum Benefit” (“Lifetime Cap”) for all

injuries and sicknesses over the life of the Policy.

1 Washington National Insurance Corporation is the successor to Pioneer Life Insurance Company for the purposes of this case.

3 In addition to the Daily Benefit, the Per Occurrence Cap, and the Lifetime

Cap, the Policy also provides for an “Automatic Daily Benefit Increase” which is

defined this way: “AUTOMATIC DAILY BENEFIT INCREASE: On each policy

anniversary, we will increase the Home Health Care Daily Benefit payable under

the policy by the Automatic Benefit Increase Percentage shown on the schedule

page.” On the Certificate, the words “Home Health Care Daily Benefit,” “Lifetime

Maximum Benefit Amount,” and “Per Occurrence Maximum Benefit” are each

listed on a separate line -- in chart form -- next to a corresponding monetary value.

Directly below these lines is an identically formatted line with the words

“Automatic Benefit Increase Percentage” and -- where the other lines have a

monetary value -- the words “Benefits increase by 8% each year.” 2

This controversy focuses on the application of the Policy’s “Automatic

Benefit Increase Percentage” (“Automatic Increase”) provision. The language

2 The pertinent portion of the Certificate appears this way (dollar amounts provided are illustrative only):

CERTIFICATE SCHEDULE

HOME HEALTH CARE DAILY BENEFIT $ 180 / Day

LIFETIME MAXIMUM BENEFIT AMOUNT $ 250,000

PER OCCURRENCE MAXIMUM BENEFIT $ 150,000 / Illness

AUTOMATIC BENEFIT INCREASE PERCENTAGE Benefits increase by 8% each year

4 from the body of the Policy and the language from the Certificate create a

potential ambiguity in the Policy about whether the Automatic Increase applies

only to the Daily Benefit or whether it also applies to the Lifetime Cap and Per

Occurrence Cap in addition to the Daily Benefit. The Plaintiffs represent a class

of insureds who have not yet been denied any coverage, but who are seeking to

establish the correct amount of their Lifetime Cap and Per Occurrence Cap under

the Policy. The District Court concluded that an ambiguity exists in the Policy

and granted Summary Judgment for the insureds based on the court’s

understanding that policy ambiguities should be construed against Washington

National as drafter of the Policy.

Discussion

Under the Florida law of insurance contracts “[i]f the relevant policy

language is susceptible to more than one reasonable interpretation, one providing

coverage and the [sic] another limiting coverage, the insurance policy is

considered ambiguous.” Auto-Owners Ins. Co. v. Anderson, 756 So. 2d 29, 34

(Fla. 2000). In searching for meaning in an insurance contract under Florida law

5 “courts should read each policy as a whole, endeavoring to give every provision its

full meaning and operative effect.” Id.

We agree with the District Court’s conclusion that the Policy is ambiguous

about whether the Lifetime Cap and Per Occurrence Cap increase each year or

whether only the Daily Benefit increases each year. The way the “Benefits”

section of the Policy and the Certificate are drafted, it is reasonable to read the

Certificate language “Benefits increase by 8% each year” as applying solely to the

Daily Benefit; but it is also reasonable to read the Certificate language to mean

that all the amounts listed within the Policy’s “Benefits” section -- including the

“Per Occurrence Maximum Benefit” and the “Lifetime Maximum Benefit” --

increase annually. Under Florida law, because “the relevant policy language is

susceptible to more than one reasonable interpretation, one providing coverage

and the [sic] another limiting coverage, the insurance policy is considered

ambiguous.” Id.

For us, the correct approach under Florida law in resolving the ambiguity in

the Policy is unclear. The chief case out of the Florida Supreme Court on the

interpretation of an ambiguity in insurance contracts seems to be Auto-Owners

Ins. Co. v. Anderson, 756 So. 2d 29 (Fla. 2000). Anderson was a response to a

question certified from this Court and has been repeatedly cited by state and

6 federal courts for the principle that “[a]mbiguous policy provisions are interpreted

liberally in favor of the insured and strictly against the drafter who prepared the

policy.” Id. at 34.

While Anderson seems to support the District Court’s entry of Summary

Judgment against Washington National, another principle of Florida law supports

looking to extrinsic evidence to resolve the ambiguity before construing any

remaining ambiguity against the drafter of the policy. In Excelsior Ins. Co. v.

Pomona Park Bar & Package Store, 369 So. 2d 938 (Fla. 1979), the Florida

Supreme Court -- many years before Anderson -- qualified the longstanding rule

of construing an ambiguity against the drafter, stating that “[o]nly when a genuine

inconsistency, uncertainty, or ambiguity in meaning remains after resort to the

ordinary rules of construction is the rule apposite.” Id. at 942. This position has

been the basis for many Florida state trial and appeals courts looking to extrinsic

evidence to resolve policy ambiguities. See, e.g., Reinman, Inc. v. Preferred Mut.

Ins. Co., 513 So. 2d 788 (Fla. 3rd Dist. Ct. App. 1987).

With the Excelsior line of cases in mind, Washington National offered in

District Court extensive extrinsic evidence to explain the marketing of the Policy

and to show the understanding of various of the insureds -- both when the Policy

was purchased and during the life of the Policy -- about what benefits in the Policy

7 increased annually. There is at least a colorable position that Washington

National’s proffered extrinsic evidence would resolve any ambiguity in the Policy

about what benefits increase annually and would support Washington National’s

position that only the Daily Benefit increases annually.

While a line of cases exists in Florida supporting the use of extrinsic

evidence -- such as that provided by Washington National -- to attempt to resolve

ambiguity in insurance contracts before construing any ambiguity against the

drafter, the recent Anderson opinion -- while citing Excelsior -- says nothing about

this attempt-to-resolve position in reaching its determination that “[a]mbiguous

policy provisions are interpreted liberally in favor of the insured and strictly

against the drafter who prepared the policy.” See Anderson, 756 So. 2d at 34.

Given the state precedents, the proper approach to take in resolving an ambiguity

in an insurance contract seems to us to be an unsettled question of Florida law.

While certification of questions has immense value, it has been our practice

to show restraint in certifying questions to state courts. But for truly debatable

questions “a federal court should certify the question to the state supreme court to

avoid making unnecessary Erie3 ‘guesses’ and to offer the state court the

opportunity to interpret or change existing law.” Mosher v. Speedstar Div. of

3 Erie R.R. Co. v. Tompkins, 304 U.S. 64, 58 S. Ct. 817, 82 L. Ed. 1188 (1938).

8 AMCA Int’l, Inc., 52 F.3d 913, 916-17 (11th Cir. 1995). So, instead of attempting

to Erie “guess” how the Florida Supreme Court would resolve the ambiguity in an

insurance contract like the one in this Policy, we certify the following question to

the Florida Supreme Court, pursuant to Fla. Const. art. V, § 3(b)(6). See

Pendergast v. Sprint Nextel Corp., 592 F.3d 1119, 1143 (11th Cir. 2010).

Question Certified

I. In this case, does the Policy’s “Automatic Benefit Increase Percentage”

apply to the dollar values of the “Lifetime Maximum Benefit Amount” and

the “Per Occurrence Maximum Benefit”?

We understand answering this question might include answering the three

following sub-questions:

A. Does an ambiguity exist about whether the Policy’s “Automatic

Benefit Increase Percentage” applies only to the “Home Health Care

Daily Benefit” or whether it also applies to the “Lifetime Maximum

Benefit Amount” and the “Per Occurrence Maximum Benefit”?

9 B. If an ambiguity exists in this insurance policy -- as we understand that

it does -- should courts first attempt to resolve the ambiguity by

examining available extrinsic evidence?

C. Applying the Florida law principles of policy construction, does the

Policy’s “Automatic Benefit Increase Percentage” apply to the

“Lifetime Maximum Benefit Amount” and to the “Per Occurrence

Maximum Benefit” or does it apply only to the “Home Health Care

Daily Benefit”?

Our statement of the question is not intended to limit the inquiry of the

Florida Supreme Court in addressing the issues as it perceives them in considering

the record in this case. See Pendergast, 592 F.3d at 1144. To assist the Florida

Supreme Court, we hereby order that the entire record in this case, together with

the briefs of the parties, be transmitted to that high court.

QUESTION CERTIFIED.