Opinion
No. 74-465
Decided December 11, 1975. (Rehearing granted and opinion announced October 9, 1975, withdrawn) Rehearing denied January 8, 1976. Certiorari granted March 8, 1976.
In action by state to recover hospitalization expenses of defendant's minor child, trial court ruled that state hospital's determination as to the defendants' ability to pay those expenses was invalid, and hospital appealed.
Reversed
1. INSURANCE — Hospitalization — State Mental Hospital — Recovery of Expenses — Parents of Patient — Insurance Benefits — "Payable" — Within Statutory Meaning — Available — Payment of Costs. Where insurance policy of mother of minor child patient included coverage for "charges" made for the actual cost of the child's care "incurred" while the patient was hospitalized, and where an exclusionary clause, construed in the manner most favorable to the insured, did not defeat the coverage, the policy was "payable" within the meaning of statutes providing for the recovery of hospitalization expenses from the family of the patient; thus, the hospital properly determined that the insurance moneys were available for the payment of the actual costs of the hospitalization.
Appeal from the District Court of Larimer County, Honorable J. Robert Miller, Judge.
J. D. MacFarlane, Attorney General, Jean E. Dubofsky, Deputy Attorney General, Edward G. Donovan, Solicitor General, Joe T. Ulibarri, Regional Assistant Attorney General, for plaintiffs-appellants.
Davis, Graham Stubbs, Arthur E. Otten, Jr., Richard W. Daily, for defendants-appellees.
Division I.
The petitions for rehearing by both parties are granted and we withdraw our prior opinion of October 9, 1975, and substitute this opinion in its stead.
This action was instituted by the State of Colorado, the Colorado State Hospital, and the superintendent thereof, to require the payment of certain amounts alleged to be due and owing by the defendants, Marvin and Margaret Schleiger, pursuant to § 27-12-101 et seq., C.R.S. 1973, as a result of the hospitalization of the defendants' minor child at the Colorado State Hospital.
The case was submitted to the trial court on the following stipulated facts: Marvin and Margaret Schleiger are the parents of Pamela Jean Schleiger, a minor. From October 24, 1969, to July 2, 1970, Pamela was hospitalized for mental illness at the Colorado State Hospital. During the period of Pamela's hospitalization, her mother was insured under a group insurance plan purchased by her employer which provided for reimbursement of certain medical expenses incurred by her on behalf of her dependent children. Shortly after Pamela was admitted to the hospital, the defendants submitted to the hospital at its request a financial questionnaire and group hospital insurance form. Upon receiving the questionnaire, an employee of the State Hospital filled out a form denominated "Notice of Ability to Pay Determination." The form, dated November 12, 1969, to Marvin Schleiger, states that "based on the financial information furnished, the charge to you will be $752 per month. based [sic] on income and insurance. . . . This charge is effective 10-24-69 and remains in effect until a redetermination is made." (emphasis added) The State Hospital sent bills to the defendants on the basis of its average per-patient cost for the period of Pamela's hospitalization which bills totalled $5,240.86. The claim of the State was reduced to $4,729.70 "as a result of other limitations in defendants' hospitalization insurance which are not involved in the issues to be determined herein."
The trial court held that the hospital's determination that the defendants had an ability to pay $4,729.70 was "erroneous and invalid and arbitrary" because there had not been a proper determination made under § 27-12-104(2) through (7), C.R.S. 1973, of the defendants' ability to pay and an assessment based thereon. The trial court accordingly entered judgment for the defendants and dismissed the State's complaint, and this appeal followed. We reverse.
The statutory scheme relative to the liability of parents for the care of their children in a state institution is set out in § 27-12-101 et seq., C.R.S. 1973. By § 27-12-101, C.R.S. 1973, the person committed to the institution, his spouse, and his parents are made liable "for the costs" of such care. By § 27-12-102(1), C.R.S. 1973, the department of institutions is directed to determine the "actual cost for each patient" of such care. By § 27-12-103, C.R.S. 1973, "all or such part of the cost [of such care] as [liable parties] are respectively able to pay" may be assessed against them. And by § 27-12-104(1), C.R.S. 1973, it is directed that "all insurance and other benefits payable . . . shall be considered available for payment of the cost determined under section 27-12-102."
We find the statutory scheme clear and unambiguous. Section 101 imposes liability upon admission to the institution on the persons named for the actual cost (as determined in section 102) of their treatment. See People v. Bozaich, 29 Colo. App. 468, 487 P.2d 597. See also Department of Public Welfare v. A'Hern, 14 Ill. 2d 575, 153 N.E.2d 22; Graham v. Reserve Life Insurance Co., 274 N.C. 115, 161 S.E.2d 485; State Department of Public Welfare v. Central Standard Life Insurance Co., 19 Wis.2d 426, 120 N.W.2d 687. Of course, this liability may not exceed the actual cost. Reserve Life Insurance Co. v. Coke, 254 Miss. 936, 183 So.2d 490.
Under this statutory scheme, the determination of ability to pay made pursuant to § 27-12-104 and the assessment made thereon pursuant to § 27-12-103 are conditions precedent to collection. Estate of Randall v. Colorado State Hospital, 166 Colo. 1, 441 P.2d 153; State ex rel. Fort Logan Mental Health Center v. Harwood, 34 Colo. App. 213, 524 P.2d 614. In those instances where there is no insurance, the State may collect only that portion of the person's liability for the actual cost as the patient, spouse, or parent's are able to pay. The ability to pay determination is in the nature of a remission or allowance granted by the State to persons of limited resources. Graham v. Reserve Life Insurance Co., supra. That is, the initial liability is for the actual cost of the care provided, but the State may collect, when there is no insurance, only that amount which the patient is able to pay.
Here, however, the parent has insurance. Nevertheless, defendants urge that their policy does not cover the hospitalization expenses here. First, they contend that their policy is not "payable" at this time, and thus may not be considered in determining their ability to pay.
The parties stipulated that the policy provides for "reimbursement to Margaret Schleiger for certain expenses incurred by her on behalf of her dependent children for the care and treatment of mental illness."
The plain and obvious purpose of § 27-12-104(1), C.R.S. 1973, is to provide that where insurance coverage exists it shall be used to reimburse the State for the actual cost of the care, support, maintenance, and treatment of the patient. That subsection of the statute makes the consideration of insurance mandatory by the use of the word "shall." See Sperry Rand Corp. v. Board of County Commissioners, 31 Colo. App. 444, 503 P.2d 356.
Furthermore, when § 27-12-104(1) was adopted in its present form, the legislature amended the statute to include the emphasized phrase in the following portion of § 27-12-104(2); "The department of institutions shall determine the ability of a patient and his spouse to pay the balance of such cost. . . ." This added phrase, in addition to buttressing our interpretation that there is an initial liability for the entire cost, also indicates that insurance is not to be considered a factor in determining the patient's ability to pay. Thus, insurance is to be considered available for payment of the entire cost before any allowance or remission based on the patient's ability to pay is permitted.
Hence, in the case at bar, if the insurance is in fact "payable" and coverage is not excluded by the clause discussed below, the determination of ability to pay and assessment made thereon were proper.
Although in this case the State reduced the amount determined to be owing due to limitations in the policy, presumably to bring the issue presented into sharper focus, we note that the State could have determined the patient's ability to pay the balance at the same time. In fact, the statute contemplates that these determinations be made together as part of the same process. See § 27-13-109, C.R.S. 1973; Harwood, supra. When the State does not determine the patient's ability to pay the balance, the doctrine of res judicata will bar collection of any balance. Here, by virtue of the reduction by the State, there is in effect no balance. Thus, if the insurance is available, the determination made here is based solely on § 27-12-104(1), C.R.S. 1973, since other subsections of that statute never came into play.
Mrs. Schleiger's insurance policy, as pertinent to the issues herein, provides:
"If . . . a Dependent . . . incurs Covered Expenses as a result from an injury or a sickness, the Insurance Company . . . will pay the Employee an amount determined as follows: 80% of . . . Covered Expenses incurred. . . ."
The policy defines "covered expenses" as:
"Expenses actually incurred by or on behalf of an Employee or Dependent for the charges listed below. . .
1. charges made by a Hospital. . .
2. charges made by Physician. . .
3. charges made by a Registered Graduate Nurse. . .
4. charges made for anesthesia. . .
5. charges made for professional ambulance service . . . ." (emphasis added)
The policy also provides: "An expense will be considered to be incurred at the time the service or the supply for which it is incurred is provided." (emphasis added)
An insurance policy is to be construed as a whole. Reed v. United States Fidelity Guaranty Co., 176 Colo. 568, 491 P.2d 1377; North American Accident Insurance Co. v. Cochran, 74 Colo. 515, 223 P. 28. We hold that by the plain meaning of its terms the insurance policy here at issue is "payable" within the meaning of § 27-12-104(1), C.R.S. 1973. As we have noted, the parent is liable for the actual cost of care upon admission. The "charges" are "made" and "incurred" within the meaning of the policy as each day passes while the patient is hospitalized, not when the bill is sent or the assessment made. Graham v. Reserve Life Insurance Co., supra. Thus, the "charges" referred to in the policy refer to the actual cost of care, as determined pursuant to § 27-12-102, C.R.S. 1973.
Having determined that the policy benefits are "payable" within the meaning of the statute, we must next determine whether coverage is excluded pursuant to the provision in the policy which provides:
"No payment will be made under this policy for expenses incurred by an Employee or a Dependent
. . . .
"5. for charges which the Employee or Dependent is not legally required to pay or for charges which would not have been made if no insurance coverage had existed. . . ."
Defendants contend that the term "charges," as it is used in the policy, means the amount of the assessment made pursuant to § 27-12-103, C.R.S. 1973. We disagree. In our discussion of whether the policy is "payable," we found that "charges" as used in another clause referred to the actual cost.
Although the Director of Patient Accounting at the Colorado State Hospital stated in his deposition, which was included in the stipulated facts, that he interpreted "charges" to be synonomous with "assessment," his interpretation is not binding on this court. Long v. Dick, 87 Ariz. 25, 347 P.2d 581. The construction of statutes is a question of law.
Words are presumed to have the meaning given in plain and ordinary usage. Reed v. United States Fidelity and Guaranty Co., supra; Equitable Life Assurance Society v. Hemenover, 100 Colo. 231, 67 P.2d 80. A "charge" is "the price demanded for a thing or service," Webster's Third New International Dictionary 377 (unabridged ed. 1966); the "cost," Beaugureau v. Beaugureau, 11 Ariz. App. 234, 463 P.2d 540, "an obligation or duty; a liability," Black's Law Dictionary 294 (rev. 4th ed. 1968).
"Charges," as that term is used in the first portion of the exclusion clause above, means the actual cost of care, not that amount which is assessed. Upon admission to the hospital, the patient becomes legally obligated to pay the full cost (charge) of any care he subsequently receives. Only if insurance is not available to pay the full cost and only if he personally is unable to pay the full cost, does he get a remission or allowance from the full cost.
Furthermore, even if the insurance company intended charges to mean other than actual cost, its intent is ambiguously stated and therefore we construe the term in favor of the insured. Beeson v. State Automobile Casualty Underwriters Corp., 32 Colo. App. 62, 508 P.2d 402, aff'd 183 Colo. 284, 516 P.2d 623; Coxen v. Western Empire Life Insurance Co., 168 Colo. 444, 452 P.2d 16.
In Randall, supra, the court stated that the determination of ability to pay and assessment made thereon are necessary to "comport with the conception of due process necessary before liability can be asserted against the patients' next of kin." The fact that liability cannot be asserted until a determination of ability to pay has been made, in no way obviates the liability itself. Therefore, the first portion of the exclusion clause does not preclude coverage, since the patient is legally required to pay the charges.
Nor does the second portion of this exclusionary clause exclude coverage in this case. The charges, i.e., the actual cost of the care, are the same whether the patient has insurance or not. See § 27-12-102, C.R.S. 1973; Reserve Life Insurance Co. v. Davis, 224 Ga. 665, 164 S.E.2d 132.
The fact that the policy provides for payment to Mrs. Schleiger does not affect our holding that the insurance is "payable" within the terms of the statute. Nowhere in the policy is payment to the insured by the insurer dependent upon actual payment by the insured to the hospital or doctor. In fact, the insuring provision provides that the company will pay if the dependent incurs covered expenses. The policy provides, by its own terms, that the expenses are incurred at the time the service is provided. See Hermitage Health Life Insurance Co. v. Cagle, 57 Tenn App. 507, 420 S.W.2d 591; Graham v. Reserve Life Insurance Co., supra.
[1] Accordingly, we find that defendants' insurance policy was in fact "payable," that coverage was not excluded by the exclusionary clause relied on by defendants, and that the determination of ability to pay made by the State in this case was proper. In the pretrial order, three issues were to be determined. This opinion resolves two of those issues; the remaining issue is the exact amount of the benefits payable under defendants' insurance policy.
Therefore, the judgment must be reversed and the cause remanded to the trial court for further proceedings consistent with the views expressed herein.
JUDGE COYTE and JUDGE ENOCH concur.