In Fortune Medicare, Inc. v. Amorin, the Supreme Court clarified how to interpret the phrase “approved standard charges” in health care contracts, especially when emergency medical treatment occurs abroad. The Court ruled that ambiguities in such contracts must be interpreted against the health care provider, ensuring that members receive the coverage they reasonably expect. This decision reinforces the principle that health care agreements, like insurance policies, are contracts of adhesion, requiring strict construction against the drafting party to protect the insured.

When Health Coverage Crosses Borders: Whose Standard Applies?

David Amorin, a Fortune Care member, sought reimbursement for emergency appendectomy surgery he underwent in Honolulu, Hawaii. Fortune Care approved only a fraction of his expenses, using Philippine rates as the basis. Amorin argued that the Health Care Contract entitled him to 80% of the actual expenses under the “American standard.” The core legal question revolved around interpreting the phrase “approved standard charges” in the contract, specifically concerning emergency treatments in foreign territories.

The Regional Trial Court (RTC) initially sided with Fortune Care, interpreting the contract to mean that Philippine standards should apply even for foreign treatments. The RTC leaned on a clause providing reimbursement based on what would have been paid to an affiliated physician in the Philippines. However, the Court of Appeals (CA) reversed this decision, emphasizing that health care agreements are akin to insurance contracts and should be construed liberally in favor of the subscriber. The CA found no explicit provision in the contract limiting the standard of charges to Philippine rates for emergency confinement in a foreign territory.

The Supreme Court agreed with the Court of Appeals. It reiterated the principle that health care agreements are contracts of indemnity, where the provider must cover expenses to the extent agreed upon in the contract. Building on this principle, the Court emphasized the guidelines established in Philamcare Health Systems v. CA, which state that limitations on liability should be construed against the insurer. The Court underscored the necessity of interpreting ambiguities liberally in favor of the insured, especially to avoid forfeiture of benefits. This principle is crucial because it addresses the inherent power imbalance between the insurer, who drafts the contract, and the insured, who accepts it.

The Court referenced Blue Cross Health Care, Inc. v. Spouses Olivares, reinforcing the need for limitations of liability to be scrutinized with “extreme jealousy” and “care.” This heightened scrutiny is designed to prevent insurers from evading their obligations through cleverly worded clauses. The Court turned to the specifics of Section 3(B), Article V of the Health Care Contract, which addresses emergency care in non-accredited hospitals. The critical portion states that for emergency confinement in a foreign territory, Fortune Care would reimburse 80% of the approved standard charges covering hospitalization costs and professional fees.

The ambiguity of the word “standard” became the focal point. The Court found that the term “standard charges” could reasonably be interpreted as the actual hospitalization costs and professional fees incurred, especially since the contract recognized Fortune Care’s liability for emergency treatments in foreign territories. It emphasized that the contract did not explicitly state that these “standard charges” referred to Philippine standards. This absence of a clear limitation was fatal to Fortune Care’s argument.

The Court contrasted Section 3(B) with Section 3(A), which covered emergency care in accredited hospitals. The latter explicitly referred to payments based on Philippine rates for services by affiliated physicians. The distinction between these two sections highlighted that the parties clearly differentiated between care in accredited hospitals and non-accredited hospitals. The absence of a similar limitation in Section 3(B) indicated that for non-accredited hospital care, particularly in foreign territories, the actual charges should be the basis, subject only to the 80% reimbursement rate.

Moreover, the Court noted that the proper interpretation of “standard charges” could be reasonably inferred from the provisions of Section 3(B) itself. For emergency care in non-accredited hospitals within the Philippines, the contract provided for full reimbursement of the total hospitalization cost, including professional fees, based on the total approved charges. This clause declared the standard for determining the amount to be paid, regardless of the rates that would have been payable in an affiliated hospital. Therefore, for foreign treatments, the Court concluded that the only qualification was the 80% reimbursement rate.

The Supreme Court reasoned that if Fortune Care intended to limit its liability to costs applicable in the Philippines, it should have explicitly specified this limitation in the contract. To do otherwise would clearly disadvantage its members. The Court also pointed out that in their 2006 agreement with the House of Representatives, Fortune Care had modified the provision on emergency care in non-accredited hospitals to explicitly state that reimbursement would be based on approved Philippine standards. This subsequent modification further underscored the ambiguity in the original contract and the need for clear, unambiguous language.

The Court emphasized the settled rule that ambiguities in a contract are interpreted against the party that caused the ambiguity. Since Fortune Care drafted the contract, any vagueness in the terms was to be construed against them. This principle ensured that the insured, Amorin, received the benefit of the doubt and was reimbursed based on the actual expenses incurred during his emergency treatment in Hawaii.

FAQs

What was the key issue in this case?	The central issue was how to interpret the phrase “approved standard charges” in a health care contract when a member receives emergency treatment in a foreign, non-accredited hospital. The court had to determine whether the charges should be based on Philippine standards or the actual expenses incurred.
What did the Supreme Court decide?	The Supreme Court ruled that the phrase should be interpreted against the health care provider, meaning that the reimbursement should be based on the actual expenses incurred, subject to the contract’s 80% reimbursement rate. The Court emphasized that ambiguities in health care contracts must be construed in favor of the member.
Why are health care agreements interpreted like insurance contracts?	Health care agreements are considered similar to insurance contracts because they are contracts of indemnity, where the provider agrees to cover expenses arising from sickness, injury, or other stipulated contingencies. This classification subjects them to the same rules of interpretation, favoring the insured party.
What does it mean for a contract to be a contract of adhesion?	A contract of adhesion is one where one party (usually the insurer or health care provider) drafts the contract, and the other party (the insured or member) simply adheres to the terms. Due to the unequal bargaining positions, courts interpret these contracts strictly against the drafting party.
What is the significance of the “contra proferentem” rule?	The “contra proferentem” rule states that any ambiguity in a contract should be interpreted against the party who drafted the contract. In this case, since Fortune Care drafted the health care contract, any vagueness in the term “approved standard charges” was construed against them.
How did the court view the contract’s reference to “standard charges”?	The court found the term “standard” to be vague and ambiguous, as it could be susceptible to different meanings. Since the contract did not explicitly define it or link it to Philippine standards, the court interpreted it to mean the actual hospitalization costs and professional fees incurred.
What could Fortune Care have done differently to protect its interests?	Fortune Care could have included a clear and unambiguous clause in the contract explicitly stating that reimbursement for emergency care in foreign, non-accredited hospitals would be based on Philippine standards. The absence of such a clause led to the court’s interpretation against them.
Does this ruling apply to all health care contracts in the Philippines?	Yes, this ruling reinforces the general principles of interpreting health care contracts in the Philippines. Courts will typically construe ambiguities in favor of the member, especially when limitations on liability are involved.

This case highlights the importance of clear and precise language in health care contracts. It serves as a reminder to health care providers to explicitly define the terms of coverage, especially when dealing with scenarios like emergency treatments abroad. For members, it reinforces their right to expect coverage as reasonably understood from the contract’s language.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Fortune Medicare, Inc. v. David Robert U. Amorin, G.R. No. 195872, March 12, 2014