United States District Court, N.D. Illinois, Eastern Division
November 22, 2004.
MOIRAV SHALTIEL, Plaintiff,
FORTIS INSURANCE COMPANY, Defendant.
The opinion of the court was delivered by: MILTON SHADUR, Senior District Judge
MEMORANDUM OPINION AND ORDER
Moirav Shaltiel ("Shaltiel"), invoking federal jurisdiction on
diversity of citizenship grounds, has sued Fortis Insurance
Company ("Fortis") under the Declaratory Judgment Act,
28 U.S.C. § 2201. Shaltiel seeks a ruling that under the terms of a medical
insurance Master Group Policy ("Policy") issued by Fortis, it is
obligated to provide benefits covering gastric bypass surgery
that she ultimately underwent on March 8, 2004.
Shaltiel and Fortis have filed cross-motions under Fed.R. Civ.
P. ("Rule") 56 for summary judgment as to Fortis' liability or
nonliability under the Policy.*fn1 For the reasons stated in
this memorandum opinion and order, Shaltiel's motion is granted,
while Fortis' motion is naturally denied. Rule 56 Standards
Every Rule 56 movant bears the burden of establishing the
absence of any genuine issue of material fact (Celotex Corp. v.
Catrett, 477 U.S. 317, 322-23 (1986)). For that purpose courts
consider the evidentiary record in the light most favorable to
nonmovants and draw all reasonable inferences in their favor
(Lesch v. Crown Cork & Seal Co., 282 F.3d 467, 471 (7th Cir.
2002)). Where as here cross-motions for summary judgment are
involved, these principles require the court to take a dual
perspective one that this Court has frequently described as
Janus-like. Here that problem does not exist, for the underlying
facts are not in dispute instead the parties are at odds only
about the meaning of an exclusionary provision in the Policy.
Thus the issue is one of contract interpretation and is ripe for
disposition at the summary judgment stage (Bechtold v.
Physicians Health Plan of N. Ind., Inc., 19 F.3d 322, 325 (7th
On September 1, 1996 Fortis issued Shaltiel a medical insurance
certificate reflecting her coverage under the Policy (J. St. ¶
10). Shaltiel retained the certificate and duly paid all premiums
for the coverage afforded by the Policy (J. St. ¶ 12). As
reflected in the Policy's benefits schedule, benefits were to be
paid for "Covered Charges" (a defined term) incurred by Shaltiel
while coverage was in force (J. Ex. 1). In relevant part Covered Charges were defined as those charges for treatment
determined by Fortis to be (1) medically necessary and (2) not
listed in the stated "Exclusions" from benefits (id.).
On May 2, 2003*fn2 Dr. John C. Alverdy of the University
of Chicago's Center for Surgical Treatment of Obesity sent a fax
to Fortis seeking pre-authorization of benefits on behalf of
Shaltiel "for a gastric restrictive procedure with gastric bypass
for morbid obesity" (J. St. ¶ 14; J. Ex. 2). Dr. Alverdy's letter
further specified that the medical co-morbidities associated with
her morbid obesity included hypertension and obstructive sleep
apnea (J. Ex. 2). Fortis' swift May 6 letter response declined
benefits for the proposed surgery on the basis of a specific
Exclusion from Policy coverage (J. Ex. 1):
We will not pay benefits for any of the following:
* * *
Treatment of "quality of life" or "lifestyle"
concerns including but not limited to: smoking
cessation; obesity; hair loss; sexual function,
dysfunction, inadequacy or desire; or cognitive
That May 6 letter further advised Shaltiel of her right to
appeal the benefit determination.
Shaltiel appealed the initial determination through her
attorney Gerald Mullin ("Mullin") in a May 14 letter (J. St. ¶
16) that explained the proposed surgery was "neither primarily a
lifestyle or cosmetic undertaking [but] rather an attempt to cure
severe morbid obesity that is potentially life threatening" (J.
Ex. 4). Fortis' June 2 letter response to Mullin repeated its
denial of benefits based on the above-quoted Policy language and
advised him of Shaltiel's right to file a first level grievance
as to the adverse determination (J. St. ¶ 18).
Shaltiel did so through Mullin on July 22 (J. St. ¶ 19) with a
written grievance that included the previous correspondence
between the parties, a medical report from Dr. Alverdy reflecting
his determination that Shaltiel was an appropriate candidate for
the procedure and two medical journal articles regarding the
proposed treatment (J. Ex. 6). On August 19 Fortis sent Mullin a
letter stating that it had reviewed the information he sent but
that it was unable to reverse its original decision that benefits
were not available for Shaltiel's proposed gastrointestinal
surgery (J. St. ¶ 20).
On October 13 Shaltiel (through Mullin) filed a second level
grievance that included a letter from Dr. Ronald A. Feingold
stating that Shaltiel was suffering from "marked exogenous
obesity, hypertension and sleep apnea" and that she had been
"advised for medical reasons to undergo gastric bypass surgery
for treatment of her obesity" (J. St. ¶ 22; J. Ex. 9). Fortis'
November 6 letter response stated that following a review by the Fortis Health Grievance Panel it had been determined that
benefits were not available for the proposed surgery because
"[t]he certificate specifically excludes treatment of obesity"
(J. St. ¶ 23; J. Ex. 10). Fortis' letter further said that all
avenues in Fortis' internal grievance process had now been
Shaltiel underwent gastric bypass surgery on March 8, 2004 (J.
St. ¶ 24). According to the report of an examination conducted by
Dr. Feingold on June 28, 2004, since the surgery Shaltiel had
lost 61 pounds, no longer had symptoms of sleep apnea and had
normal blood pressure levels (J. St. ¶ 25).
Shaltiel's Entitlement to Benefits
Because the Policy was executed and issued in Illinois, it is
construed in accordance with Illinois law (Cross v. Zurich Gen.
Accident & Liab. Ins. Co., 184 F.2d 609, 611 (7th Cir. 1950)).
For that purpose the sole question to be decided here is whether
Shaltiel's gastric bypass surgery fell within the earlier-quoted
Exclusion. In that respect Shaltiel argues that the Exclusion
language does not encompass gastric bypass surgery in her case,
while Fortis contends that it excludes all treatment that
addresses obesity, including gastric bypass surgery regardless of
Contract construction under Illinois law involves the two-step
inquiry set out in Lumpkin v. Envirodyne Indus., Inc., 933 F.2d 449, 456 (7th Cir. 1991). First the court looks to the
language of the contract. If the plain language provides an
unambiguous answer to the issue in dispute, the inquiry is over
(id.). But if the contractual language is ambiguous as to that
issue, the court must then go on to declare the contract's
meaning (id.). And where as here the extrinsic evidence is
undisputed, the interpretation of such an ambiguous contract
remains a question of law for the court to decide (id.).
As to the first step, the words of an insurance contract are
ambiguous if they are susceptible to more than one reasonable
interpretation (State Farm Fire & Cas. Co. v. Moore,
103 Ill. App.3d 250, 256, 430 N.E.2d 641, 646 (2d Dist. 1981)). And in
determining whether an ambiguity exists in an insurance contract,
"the court should consider the subject matter of the contract,
the facts surrounding its execution, the situation of the
parties, and the predominate purpose of the contract which is to
indemnify the insured" (id.).
Fortis devotes the bulk of its memoranda to the argument that
an unambiguous exclusionary provision may be applied to deny
coverage even when the treatment sought to be excluded is
medically necessary. But that argument really begs the question,
for Fortis' original memorandum devotes very little attention to
establishing that the provision at issue is in fact unambiguous.
Only in Fortis' response to Shaltiel's Rule 56 motion does it attempt to do so, urging (F.R. Mem. 4) that there was no need to
differentiate between a gastric bypass undertaken to treat
medical conditions and one undertaken for appearance-related
reasons, because gastric bypass surgery is performed "first and
foremost, to address the condition of obesity itself, which is
among the specific conditions for which benefits will not be
paid." From that premise Fortis seeks to conclude that "any
attempt to limit [the exclusion's] application or define its
scope may only serve to create an ambiguity where none presently
But that contention tellingly ignores the express language of
the relevant Exclusion (as do both Fortis' memoranda nowhere in
those submissions, perhaps understandably given the nature of the
contractual language, does Fortis recite the specific words of
the provision that it contends is unambiguous). It will be
recalled that the Exclusion is actually stated in terms of
"[t]reatment of `quality of life' or `lifestyle' concerns,"
followed by such examples as treatment for hair loss and sexual
inadequacy as well as obesity. As S.R. Mem. 6 perceptively
observes, it is surely a reasonable reading of that provision
that medically necessary surgery that deals with obesity,
undertaken not to treat the patient's "quality of life" or
"lifestyle" but rather to address serious medical co-morbidities
associated with morbid obesity, is not excluded from coverage. On the other side of the coin, it could perhaps be said that
Fortis' counter-interpretation might also be viewed as reasonable
(though it seems to turn the interpretive process on its head by
trying to read the single word "obesity" as creating an absolute
and sweeping prohibition, instead of looking at it in the context
of the "quality of life" and "lifestyle" characterizations). But
at step one of the required two-step analysis it is unnecessary
to engage in a weighing process, for the initial ambiguity
inquiry asks only whether the "quality of life" and "lifestyle"
exclusion is susceptible to more than one reasonable
interpretation. That inquiry gets an obvious and unequivocal
"yes" answer, so that the exclusion is ambiguous at a minimum and
must therefore be construed by this Court.
Ambiguous provisions in which an insurer seeks to limit its
liability are read in the familiar contra proferentem mode: They
are "construed most strongly against the insurer and in favor of
the insured" (State Farm, 103 Ill.App.3d at 255,
430 N.E.2d at 646, citing Squire v. Economy Fire & Cas. Co., 69 Ill.2d 167,
179, 370 N.E.2d 1044, 1049 (1977) to the identical effect).
Michael Nicholas, Inc. v. Royal Ins. Co., 321 Ill. App.3d 909,
914, 748 N.E.2d 786, 791 (2d Dist. 2001) identifies the two
important considerations that support such a rule:
(1) the intent of an insured in purchasing an
insurance policy is to obtain coverage, and therefore
any ambiguity jeopardizing coverage should be
construed consistent with the insured's intent; and
(2) the insurer is the drafter of the policy and could have drafted the ambiguous
provision clearly and specifically.
Indeed, the very cases that Fortis advances in support of its
position here actually cut against it, for they show how readily
Fortis could have drafted a provision that would clearly
exclude payment of benefits for gastric bypass surgery regardless
of its purpose (as it did not in the Policy).
Thus the provision at issue in Carr v. Gates Health Care
Plan, 195 F.3d 292, 296 (7th Cir. 1999) specifically excluded
these two categories of medical services:
2. Cosmetic or surgical procedures [such as] any
services performed in connection with the
enlargement, reduction, implantation, or change in
appearance of a portion of the body. . . .
19. Gastric stapling or diversion from weight loss.
And in the recently decided Manny v. Central States, S.E. & S.W.
Areas Health & Welfare Pension Funds, Dkt. No. 04-1797, 2004 WL
2382140 (7th Cir. Oct. 26), the policy at issue expressly
excluded coverage for "[a]ny surgery primarily for obesity,
including gastric bypass, gastric stapling, intestinal
bypass. . . ." Those provisions in Carr and Manny thus exhibited
flat-out prohibitions of gastric stapling surgery (in Manny
such surgery was "primarily for obesity," which might have posed
a factual issue but for the sharply different standard referred
to in the next paragraph of this opinion), wholly unlike the
present "quality of life" or "lifestyle" exclusion followed by
such examples as treatment for obesity.
Moreover, besides the very different specificity of the
exclusions involved in Carr and Manny, each was an ERISA case
in which the court upheld a plan administrator's denial of
coverage under the deferential "arbitrary and capricious"
standard. In fact, integral to the decision in Manny is the
court's statement of its limited role in that respect (2004 WL
2382140, at *3):
When different clauses of a contract clash, creating
an ambiguity, we have an interpretive task confided
in this instance to the teamster plan's trustees. We
cannot say that their interpretation is unreasonable.
Hence the court concluded its opinion by stating (id. at *5):
But we are wandering from the issue, which is simply
the reasonableness of the trustees' interpretation of
the plan; it was reasonable, so our hands are tied.
By sharp contrast, Fortis' interpretation of the Policy is
entitled to no such deference. Indeed, precisely the opposite is
true: Because the provision is ambiguous, Illinois caselaw
uniformly teaches that it is to be construed (by this Court, not
by Fortis itself) most strongly against Fortis.
What has been said to this point dooms Fortis' rejection of
coverage in this case. But oddly enough, Fortis itself supplies
still another nail to drive into its own coffin by submitting the
opinion in a South Dakota trial court case, Cain v. Fortis Ins.
Co., as Exhibit C in supposed support of its motion for summary
judgment. In that respect F. Mem. 9 misleadingly characterizes
that case, in which it obtained a judgment in its favor as to its rejection of a claim for coverage of gastric bypass surgery, as
"virtually indistinguishable from the case at bar."
To the contrary, the decision in Cain leads the reader to
wonder why Fortis' counsel cited it at all. Here is the language
of the relevant policy exclusions in that case exclusions set
out in a very different policy that was also drafted by Fortis
itself (F. Ex. C):
Weight Control. You are not covered for any treatment
or regimen, medical or surgical, for the purpose of
controlling your weight or for the treatment of
* * *
Weight Reduction Programs. You are not covered for
weight reduction programs and supplies (including
dietary supplements, foods, equipment, laboratory
testing, examinations, and prescription drugs)
whether or not weight reduction is medically
Those exclusions clearly exclude benefits for gastric bypass
surgery regardless of other effects that it may have. Fortis' use
of such flat-out exclusions in another of its own policies,
coupled with its failure to incorporate them into Shaltiel's
Policy, provide added (and highly persuasive) evidence that an
interpretation favoring coverage in Shaltiel's case should be
In short, the cases that Fortis cites support the proposition
that an unambiguous provision that excludes coverage for
medical or surgical treatment of obesity as such can properly be
applied to exclude payment of benefits for gastric bypass surgery, even where there is evidence that the surgery is also
called for to address other health concerns. But the Policy
Exclusion in this case is not unambiguous. Instead, because that
Exclusion can reasonably be read (really an understatement) in
the manner asserted by Shaltiel as not barring payment of
benefits for a gastric bypass surgery whose purpose is to address
morbid obesity and the major medical co-morbidities associated
with that condition Illinois law demands that this Court adopt
As a result of the parties' joint factual statement, there is
no genuine issue of material fact. And because the Policy
Exclusion at issue here is ambiguous (at a minimum) as applied to
gastric bypass surgery, and because Illinois law demands that the
ambiguity be construed most strongly in Shaltiel's favor, she is
entitled to a declaratory judgment that Fortis is required by its
Policy to pay benefits for her gastric bypass surgery. This Court
so declares. And because neither party's submissions have
addressed Shaltiel's added prayer for a recovery under
215 ILCS 5/155(1), this action is set for a next status hearing at 8:45
a.m. November 29, 2004 to discuss that remaining issue.