An infant Insured under a sickness hospital benefit policy (“Hart”) was entitled to benefits related to periods of hospitalization even where part of the reason for the hospitalization was to provide respite care

Hart (Guardian ad litem of) v. Combined Insurance Co. of America, [2005] N.S.J. No. 508, Nova Scotia Supreme Court

Hart was born with Aicardi Syndrome, an extremely rare constellation of congenital abnormalities involving problems with development of part of the brain. She was hospitalized for more than three months after her birth and frequently returned to the hospital after that time. When Hart was three years old, Combined Insurance issued a sickness hospital benefit policy to her. The premiums were paid by her parents. Beginning in 1992, following the one year waiting period, claims were filed with respect to Hart’s hospital stays and payments in the amount of $124,000 were made up to September 1999. Combined Insurance then denied liability for claims submitted after September 1999 and sought recovery for many of the payments made before that date, arguing that the hospital stays for Hart were for “respite care” which Combined Insurance said did not qualify for benefits because it was not a “covered sickness”. Combined Insurance noted that many of the hospitalizations were arranged primarily to benefit Hart’s parents by giving them a break from looking after her at home and should not be covered by the Policy. Hart took the position that all hospital visits were necessary to monitor her condition and to prevent deterioration in her health.

The Court reviewed extensive medical records and found that all Hart’s hospitalizations occurred because of her Aicardi Syndrome. The Court found that Hart’s state of health was precarious at all times and that her severe physical and mental impairment made her completely dependent upon others, rendering her “totally disabled” within the meaning of the Policy. The fact that some of the hospital visits provided relief to Hart’s parents from the pressures related to constantly caring for their daughter did not change the dominant and underlying reason for hospitalization, which was monitoring and treating the severe effects of Hart’s disease.

In the result, Hart and her parents were entitled to approximately $75,000 claimed as benefits for hospitalizations. Hart’s claim for punitive damages was rejected as Hart was unable to prove that Combined Insurance committed an actual wrong in addition to breach of contract or was motivated by actual malice.

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