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Adventist Health System Corp. v. American Medical Security Life Insurance Co.

March 20, 2008

ADVENTIST HEALTH SYSTEM CORPORATION D/B/A ADVENTIST MIDWEST HEALTH, PLAINTIFF,
v.
AMERICAN MEDICAL SECURITY LIFE INSURANCE COMPANY, INC., SUED IN THIS LITIGATION AS AMERICAN MEDICAL SECURITY GROUP, INC., DEFENDANT.



The opinion of the court was delivered by: Charles P. Kocoras, District Judge

MEMORANDUM OPINION

This matter comes before the court on Plaintiff Adventist Health System ("Adventist") and Defendant American Medical Security Group, Inc. ("AMS")'s cross-motions for summary judgment pursuant to Fed. R. Civ. P. 56(c). For the reasons set forth below, Adventist's motion is denied and AMS's motion is granted.

BACKGROUND

Adventist is a not-for-profit corporation that is domiciled in Florida. Adventist operates three hospitals (LaGrange Memorial Hospital, Hinsdale Hospital, and GlenOaks Hospital) located in the western suburbs of Chicago ("Adventist's Hospitals"). In 2005, 31 patients ("Insureds") assigned their individual insurance benefits to Adventist prior to receiving treatment at Adventist's Hospitals. AMS, a Wisconsin corporation, acted as the third-party health insurance administrator for the Insureds.

The Insureds' insurance contracts with AMS ("Insurance Contracts") contained specific definitions for the terms "covered expense" and "maximum allowable charge" that effectively limited the potential amount Insureds could collect from AMS on any of their future insurance claims. Each of the Insurance Contracts contained one of the following definitions of "covered expense" and "maximum allowable charge"*fn1 COVERED EXPENSE means an expense, fee or charge incurred by or on behalf of an Insured Person...for which the Insured Person is obligated to pay...[and which] will not exceed the Maximum Allowable Charge...and does not exceed the maximum amount payable. Covered Expense means a Medical Service that is:

1. Incurred while You...are insured by the Plan;

2. prescribed, ordered, recommended or approved by an authorized Health Care Provider;

3. Medically Necessary;

4. not subject to an applicable limitation or exclusion; and

5. Allowed under all other applicable terms and conditions of the Certificate, or in a rider that is attached to the Certificate.

We will not pay for that part of a Covered Expense which:

1. is subject to a co-payment, deductible, coinsurance; or

2. exceeds an applicable benefit maximum.

MAXIMUM ALLOWABLE CHARGE

The maximum allowable charge for medical...benefits if included is the portion of any charge for services...which does not exceed an amount determined by us. You may be liable to pay the difference between the ...


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