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Thornton v. American Family Life Assurance Company of Columbus

Florida Court of Appeals, First District

September 13, 2017

KARMA THORNTON and CONNIE THORNTON, Appellants,
v.
AMERICAN FAMILY LIFE ASSURANCE COMPANY OF COLUMBUS, Appellee.

         NOT FINAL UNTIL TIME EXPIRES TO FILE MOTION FOR REHEARING AND DISPOSITION THEREOF IF FILED

         An appeal from the Circuit Court for Okaloosa County. William F. Stone, Judge.

          Charles F. Beall, Jr. of Moore, Hill & Westmoreland, P.A., Pensacola, and Woodburn S. Wesley, Jr. of Woodburn S. Wesley, Jr., & Associates, Fort Walton Beach, for Appellants.

          Hinda Klein and Brian Lee Ellison of Conroy Simberg, Hollywood, for Appellee.

          BILBREY, J.

         Karma Thornton and her mother, Connie Thornton, appeal the final judgment in favor of American Family Life Assurance Company of Columbus (AFLAC). The Thorntons assert error in the trial court's finding that Karma was not a covered dependent under the Specified Health Event Insurance Policy purchased by Connie. We reverse the trial court's judgment based on the plain language of the policy and, alternatively, on the requirement that any ambiguity in the policy definition of "dependent children" must be resolved against AFLAC, the drafter, and in favor of coverage.

         Connie Thornton purchased the AFLAC policy for "Two-parent Family" coverage, effective January 1, 2008. According to the policy, "Two-parent Family" coverage provided coverage to the insured (Connie), her spouse, and Connie's dependent children. The policy defined "dependent children" in pertinent part:

E. DEPENDENT CHILDREN: your natural children, . . . who are unmarried, who are under age 25, and who qualify as legal dependents for tax exemption purposes under the United States Internal Revenue Service Tax Code.

         When her mother purchased the policy, Karma Thornton was aged 22, unmarried, and financially dependent upon and living with her parents. The covered "primary specified health events" were also defined in the policy.

         On September 11, 2008, at age 23, Karma Thornton suffered severe injuries when she fell from a motorcycle travelling at a high rate of speed. Based on conflicting evidence presented at trial, including witness testimony, medical records, and depositions, the trial court determined that her injuries constituted covered specified health events - specifically "coma" and "major third-degree burns" - as defined in the policy.[1] However, the trial court ruled that Karma did not qualify as a "dependent child" under the policy, concluded that she was not covered, and ruled that no benefits were payable by AFLAC. The Thorntons appeal, and our standard of review of the trial court's interpretation of the AFLAC policy is de novo. Allstate Fire & Cas. Ins. v. Stand-Up MRI of Tallahassee, P.A., 188 So.3d 1 (Fla. 1st DCA 2015).

         As explained by the Florida Supreme Court in Fayad v. Clarendon National Insurance Co., 899 So.2d 1082, 1086 (Fla. 2005), "[w]e begin with the guiding principle that insurance contracts are construed in accordance with 'the plain language of the polic[y] as bargained for by the parties.'" (Citations omitted). The policy here plainly and expressly requires that the covered dependent be unmarried and "under age 25." These specific qualifications are followed by the general reference to "legal dependents for tax exemption purposes under the United States Internal Revenue Service Tax Code, " without a quotation of particular language or citation to a particular section of federal statutes. At trial, counsel for the parties agreed that the phrase "qualify as legal dependents for tax exemption purposes under the United States Internal Revenue Service Tax Code" was a reference to Internal Revenue Code (I.R.C.) section 152.[2]

         AFLAC's position at trial and on appeal is that the policy's definition, including the phrase "under age 25, " is further limited by the policy's general reference to the "Tax Code, " which cuts off eligibility for "dependents for tax exemption purposes" at age 19, unless the person is a student under age 24 or is disabled. At the time she fell off the motorcycle, Karma Thornton was not a student, was not disabled, and was over age 19. However, it is well-settled that "[s]pecific provisions of a contract control over general conditions" and "[t]his is equally true with regard to insurance contracts." State Farm Fla. Ins. Co. v. Phillips, 134 So.3d 505, 508 (Fla. 5th DCA 2014). In addition, "courts should read each policy as a whole, endeavoring to give every provision its full meaning and operative effect." Auto-Owners Ins. Co. v. Anderson, 756 So.2d 29, 34 (Fla. 2000). An insurance contract "will not be interpreted in such a way as to render a provision meaningless when there is a reasonable interpretation that does not do so." Universal Prop. & Cas. Ins. Co. v. Johnson, 114 So.3d 1031, 1036 (Fla. 1st DCA 2013).

         We read the specific policy provision "under age 25" to expand the class of persons who would otherwise qualify as legal dependents under the I.R.C. Under the plain language of the policy, and giving full meaning and operative effect to both the age limit in the policy and the policy's reference to the Tax Code addressing "legal dependents for tax exemption purposes, " the specific age limit stated in the policy prevails over any contrary, more restrictive age limit in the generally referenced Tax Code. The policy's reference to the Tax Code retains the I.R.C.'s meaning and operative effect for the relationship, residency, and economic details which do not conflict with the policy's age provision.

         To curtail AFLAC's specific age provision in its definition of "dependent children" by applying a more restrictive and complex age provision within the I.R.C., which is only generally referenced in the policy, "amounts to a sleight-of-hand withdrawal of coverage following explicit provisions allowing coverage." Mathews v. Ranger Ins. Co., 281 So.2d 345, 349 (Fla. 1973). A plain reading of the policy leads the average purchaser to believe that unmarried, financially dependent offspring under the age of 25 are covered. We find that AFLAC is bound by its own specific statement of the policy age limit, "under age 25, " and that the general reference to the Tax Code for other factors of dependence does not replace the policy's specific age requirement. See Washington Nat'l Ins. Corp. v. Ruderman, 117 So.3d 943, 951 (Fla. 2013) (explaining insurance company has duty to limit liability under policy "clearly and unambiguously"). "To hold otherwise would encourage the proliferation of insurance ...


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