Fortune Medicare v. Amorin
Fortune Medicare, Inc. vs. Amorin, G.R. No. 195872, March 12, 2014
- Procedural (Remedial Law)
- Commercial Law
- health care contract
- indemnity
- non-life insurance
- emergency care
- non-accredited hospital
- approved standard charges
- contract interpretation
- ambiguity construed against insurer
- reimbursement
I. Facts of the Case
Fortune Medicare, Inc. (Fortune Care), engaged in providing health maintenance services, issued a Corporate Health Program Contract with the House of Representatives dated January 6, 2000 under which David Robert U. Amorin (a permanent employee and member/cardholder) was covered. In May 1999, while on vacation in Honolulu, Hawaii, Amorin underwent emergency appendectomy at St. Francis Medical Center and incurred professional and hospitalization expenses of US$7,242.35 and US$1,777.79. After returning to Manila, he sought full reimbursement but Fortune Care approved only ₱12,151.36, using an “average cost of appendectomy” net of medicare deduction if performed in an accredited hospital in Metro Manila. The dispute turned on how “approved standard charges” should be interpreted under the contract’s provision on emergency care in a non-accredited hospital in a foreign territory, and whether Fortune Care could limit payment by the Philippine standard.
January 6, 2000
Fortune Medicare, Inc. executed a Corporate Health Program Contract (Health Care Contract) with the House of Representatives, making Amorin a covered member/cardholder.
May 1999
While on vacation in Honolulu, Hawaii, U.S.A., Amorin underwent emergency surgery (appendectomy) at St. Francis Medical Center and incurred US$7,242.35 in professional expenses and US$1,777.79 in hospitalization expenses.
After returning to Manila, Amorin demanded reimbursement of the full amount of his incurred expenses, but Fortune Care approved only ₱12,151.36 based on an average cost of an appendectomy (net of medicare deduction) if the treatment were performed in an accredited hospital in Metro Manila.
Amorin received the ₱12,151.36 under protest and requested an adjustment to cover the total professional fees plus eighty percent (80%) of approved standard charges based on the “American standard.”
Fortune Care denied Amorin’s request, prompting him to file a complaint for breach of contract with damages before the Regional Trial Court (RTC) of Makati City.
May 8, 2006
The RTC of Makati City, Branch 66 dismissed Amorin’s complaint, holding that the parties intended the Philippine standard as the basis for reimbursement and treating the already paid ₱12,151.36 as equivalent to 80% of what would have been payable had the treatment been in an accredited hospital in the Philippines.
September 27, 2010
The Court of Appeals granted Amorin’s appeal, reversed the RTC, and ordered Fortune Medicare, Inc. to reimburse 80% of the total actual hospitalization expenses (US$1,777.79) and professional fee (US$7,242.35) paid abroad, in their peso equivalent at the time the amounts became due, less the ₱12,151.36 already paid.
February 24, 2011
The Court of Appeals denied Fortune Care’s motion for reconsideration.
Fortune Care filed a petition for review on certiorari under Rule 45 to challenge the CA’s Decision dated September 27, 2010 and Resolution dated February 24, 2011.
March 12, 2014
The Supreme Court denied the petition and affirmed the Court of Appeals’ ruling.
II. Issues
Whether the petition for review on certiorari under Rule 45 may prosper to overturn the Court of Appeals’ interpretation and application of the Health Care Contract’s phrase “approved standard charges.”
Whether the Court of Appeals erred in concluding that the phrase “approved standard charges” in the Health Care Contract is ambiguous/vague and not automatically equivalent to “Philippine standard.”
Whether the Court of Appeals erred in denying Fortune Care’s motion for reconsideration, which effectively affirmed the application of the American/foreign standard charges in computing Fortune Care’s 80% liability for emergency treatment in a foreign non-accredited hospital.
III. Ruling
Whether the petition for review on certiorari under Rule 45 may prosper to overturn the Court of Appeals’ interpretation and application of the Health Care Contract’s phrase “approved standard charges.”
The Supreme Court found no reversible error in the Court of Appeals’ decision and thus denied Fortune Care’s Rule 45 petition.
How the Court reasoned
- The petition was reviewed as one challenging the Court of Appeals’ decision via Rule 45.
- The Supreme Court found that the CA’s interpretation of the contract and its application to the facts were consistent with the contract text and established rules on interpreting ambiguities in insurance-type contracts.
- Fortune Care failed to show any cogent reason for the Supreme Court to disturb the CA findings that its liability should be based on what Amorin actually incurred abroad under the contract’s terms.
“The petition is bereft of merit.”
Rule applied
Rule 45 of the Rules of Court; contract interpretation principles on ambiguity and indemnity-type health care agreements
Whether the Court of Appeals erred in concluding that the phrase “approved standard charges” in the Health Care Contract is ambiguous/vague and not automatically equivalent to “Philippine standard.”
The Court of Appeals correctly held that “approved standard charges” under Section 3(B) for emergency care in a foreign non-accredited hospital refers to the amounts tied to the expenses actually incurred abroad and is not automatically limited to Philippine standard costs.
How the Court reasoned
- The dispute centered on the proper interpretation of the phrase “approved standard charges” as the base for the contract’s 80% benefit when emergency confinement occurs in a foreign territory in a non-accredited hospital.
- The Court found that the parties expressly contemplated emergency care in a foreign country and limited Fortune Care’s liability primarily as to the percentage (80%), not by pegging the “standard charges” to Philippine costs.
- The term “standard charges” was vague and ambiguous and could not reasonably be deduced to mean the “Philippine standard” or what would have been incurred if the treatment had occurred in an accredited Philippine hospital.
- The RTC’s reasoning that Philippine standard could be inferred from Section 3(A) (emergency care in an accredited hospital) was misplaced because Section 3(B) (emergency care in a non-accredited hospital) made a clear distinction and its foreign-territory provision contained no Philippine-standard limitation.
- Given the absence of any qualifying word clearly limiting Fortune Care’s liability to costs applicable in the Philippines, the Court held that limiting payment to Philippine costs would disadvantage the member, contrary to the proper construction of ambiguities.
“We emphasize that for purposes of determining the liability of a health care provider to its members, jurisprudence holds that a health care agreement is in the nature of non-life insurance, which is primarily a contract of indemnity.”
Rule applied
Health care agreement construed as a contract of indemnity (non-life insurance); rule on interpreting ambiguities against the drafter/insurer; contract interpretation guided by the contract’s clear distinctions and applicable stipulations
Whether the Court of Appeals erred in denying Fortune Care’s motion for reconsideration, which effectively affirmed the application of the American/foreign standard charges in computing Fortune Care’s 80% liability for emergency treatment in a foreign non-accredited hospital.
The Court of Appeals did not commit reversible error in denying Fortune Care’s motion for reconsideration, thereby sustaining the computation that applied the foreign/actual incurred basis for the contract’s 80% liability under Section 3(B).
How the Court reasoned
- The Court sustained the CA’s view that Fortune Care’s liability should be computed based on the expenses for hospital and professional fees Amorin actually incurred abroad, subject only to the contract’s 80% limitation.
- Since the contract did not clearly and distinctly state that reimbursement for foreign emergencies would be limited to Philippine-cost assumptions, Fortune Care could not impose that limitation through interpretation after the fact.
- The Court noted that Fortune Care’s later modification of the contract (in its 2006 agreement) requiring reimbursement based on “approved Philippine Standard” underscores that such a limitation was not clearly present in the earlier wording at issue.
- Accordingly, the CA’s denial of reconsideration was consistent with the proper treatment of ambiguous contractual terms.
“WHEREFORE, the petition is DENIED.”
Rule applied
Doctrine that ambiguities in a contract are construed against the party who caused the ambiguity; principles of strict construction against insurer/provider and liberal construction in favor of insured/member
Doctrines
A health care agreement is in the nature of non-life insurance and is primarily a contract of indemnity; thus, limitations on the provider’s/insurer’s liability are construed strictly against the provider/insurer and liberally in favor of the insured/subscriber.
Any ambiguity in a contract whose terms are susceptible of different interpretations must be read against the party who drafted it.
Final Disposition
WHEREFORE, the petition is DENIED. The Decision dated September 27, 2010 and Resolution dated February 24, 2011 of the Court of Appeals in CA-G.R. CV No. 87255 are AFFIRMED. SO ORDERED
Notes
Fortune Care attempted to justify limiting reimbursement by claiming that the contract’s pricing assumptions were based only on Philippine costs, but the Supreme Court treated this as inconsistent with the contract’s express provisions for emergency care in foreign territory and the absence of a clear Philippine-standard limitation in the applicable clause.