What Do You Mean It's Not Covered: Suing One Insurance Company, then Another

After settling with Safeco, Forbau filed a lawsuit against Aetna, alleging breach of contract and of fiduciary duty, and violations of the Texas Deceptive Trade Practices-Consumer Protection Act and the Insurance Code. Only the breach of contract claims were submitted to a jury in Lubbock, Texas. In accordance with that jury's verdict, the trial court awarded Amy $238,000 in past damages, $2.5 million in future damages, and $500,000 in attorneys' fees. Aetna appealed. The court of appeals at Amarillo reversed the trial court decision, holding that under the unambiguous terms of the policy Amy's recovery was limited to those medical expenses incurred while Aetna's policy was in effect. The appeals court nullified the trial court's award. Forbau appealed to the state supreme court. "In this case we are called upon to determine whether the insurance policy at issue created a vested right in unlimited lifetime benefits, or restricted benefits to the recovery of medical expenses incurred while the policy was in effect," the court wrote at the outset. The court had a hard time determining the case. Its original opinion, which sided with Amy, was filed in November 1992. That decision was withdrawn in May 1993 and substituted with one that favored Aetna. After a rehearing, that decision was withdrawn in January 1994 and substituted with one that still sided with Aetna, but fine-tuned some technical language that addressed the role of federal benefits laws. The Texas Supreme Court ruled that, under a group health insurance plan, expenses "incurred" and thus covered were limited to medical supplies for services furnished before policy was terminated. In other words, the insurance company could cap what a chronically injured person could receive by terminating the group policy to which that person belonged. "When construing a contract, the court's primary concern is to give effect to the written expression of the parties' intent. This court is bound to read all parts of a contract together to ascertain the agreement of the parties. The contract must be considered as a whole," the court wrote. "For example, when a contract provision makes a general statement of coverage, and another provision specifically states the time limit for such coverage, the more specific provision will control." The operative language in Amy's policy stated that Aetna would pay for "covered medical expenses incurred during a calendar year for treatment of a covered family member."