HARDY, Judge.
This is an action by plaintiff for the recovery of certain hospitalization and surgical benefits under the terms of a policy issued by defendant insurance company, together with penalties and attorney's fees under the provisions of LSA-R.S. 22:657. From a judgment in favor of plaintiff in the principal sum of $318.25 both parties have perfected suspensive and devolutive appeals to this court.
The uncontroverted facts are that the policy sued upon was issued to plaintiff by the defendant on September 10, 1953. On March 11, 1954 plaintiff was hospitalized in the Schumpert Memorial Sanitarium in Shreveport and on the following day, March 12th, Dr. S. W. Boyce performed a cholecystectomy, the removal of the gall bladder by operative procedure, which disclosed the presence of numerous gallstones, estimated by the operating surgeon as probably being fifteen in number and varying in size "from a match head up to a lentil"; proofs of loss were promptly filled out and mailed to the defendant insurer; by letter of May 11, 1954 defendant refused payment of plaintiff's claim and tendered a refund voucher in the amount of $38.75, representing policy premiums paid by plaintiff, which voucher was not negotiated by plaintiff and was filed in evidence upon trial of this case.
Defendant resists plaintiff's demands on two grounds, both predicated upon its interpretation of policy provisions; first, that hospital confinement must result from an illness which has been contracted and which commenced more than fifteen days following the effective date of the policy in order to entitle the insured to indemnity; and, second, that indemnification for a surgical operation is payable only in instances when the sickness or disease necessitating such operation has been contracted or has commenced more than 90 days after the effective date of the policy.
In support of the above contentions defendant relies upon two provisions of the policy contract, the first of which is found in the insuring clause reading as follows:
The second policy provision which is material to the defense reads as follows:
The defenses above noted involve the determination of questions of fact which must be resolved in the light of what we regard as the plain and unambiguous provisions of the policy as above noted. With respect to defendant's first contention we find nothing in the record which would even indicate that plaintiff-insured contracted any sickness or disease within the periods fixed. It is somewhat strenuously urged by counsel for defendant that the presence of gallstones in plaintiff's bladder, which fact was discovered after the removal of that organ by operative procedure, is proof of a preexisting sickness or disease. We cannot so hold for the testimony of all the medical experts reflects the opinion that the mere presence of gallstones within the gall bladder does not constitute a sickness or disease, and there is no evidence in the record before us which would serve to establish the existence of any sickness or disease resulting from the presence of gallstones.
We think the argument that indemnity is not payable under the policy because the operation resulted wholly or partly from gallstones or gall bladder affection which developed before the expiration of the six month period specified in the policy is even more unfounded, if possible, than the first ground of defense. Reference to the clause is convincing on the point that the exclusion from payment of indemnity is effective only if the loss arose before the policy had been maintained in continuous force for the six preceding months. The uncontradicted facts of the instant case speak for themselves. The loss sustained by plaintiff occurred when she was hospitalized on March 11th preceding her operation on March 12th. The fact that March 11th was only one day beyond the six month period is entirely irrelevant for it matters not whether the loss occurred five minutes or five years after the policy had been maintained in effect for a continuous period of six months.
In our opinion the only serious question presented in the instant case relates to plaintiff's demands for statutory penalties and attorney's fees which were refused by judgment of the district court. Plaintiff's appeal was obviously designed to protect her right to insist upon the amendment of the judgment in this respect.
The demands for penalties and attorney's fees are zealously opposed on the premise that defendant had just and reasonable grounds for refusing payment of plaintiff's demands. Parenthetically we observe that there is no question as to the prompt filing of plaintiff's claims, nor is there any opposition interposed by defendant as to the form thereof.
Counsel for defendant cites well recognized and established authorities in support of the proposition that a penalty under LSA-R.S. 22:657 will not be inflicted where just and reasonable grounds exist in support of a refusal to pay. This proposition does not admit of argument since it is predicated upon the wording of the act itself, which provides that all claims shall be paid not more than thirty days from the date upon which written notice and proof of claim are furnished to the insurer "unless just and reasonable grounds, such as would put a reasonable and prudent business man on his guard, exist."
In the instant case this defense is subject to serious question because it is evident from the record that defendant's investigation of plaintiff's claim was unduly delayed. The only witness as to the alleged investigation on behalf of the insurer was its claim adjuster, Mr. Joe A. Saxon, who on direct examination testified as follows:
We have examined the transcript of the testimony of this witness in the effort to determine the character and nature of the information and investigation upon which he relied as justifying the refusal of plaintiff's claim. The witness was most unsatisfactory, vague and evasive. We quote below a pertinent extract from the testimony of the witness on cross-examination:
We think the conclusion is inescapable that defendant had made no adequate investigation of plaintiff's claim at the time it refused payment thereof by letter of May 11, 1954, which was two months to the day after plaintiff's confinement in the hospital, which resulted in the loss sustained under the terms of the policy. The only medical witness tendered by defendant, on trial, who made any examination of plaintiff was Dr. Paul D. Abramson, a distinguished surgeon of Shreveport, whose only examination of plaintiff was made on July 29, 1954, more than sixty
Defendant's negligence in pursuing an investigation and further evidence of its reliance upon an arbitrary determination of plaintiff's claim is found in the fact that its adjuster never at any time considered it necessary to talk to Dr. Boyce, the surgeon who performed the operation upon plaintiff, nor did he write him to inquire for any information.
These facts, that is, the failure of defendant's claim adjuster to disclose the details of his so-called investigation of plaintiff's claims; the fact that defendant had not pursued an investigation from a medical standpoint directly bearing upon the facts of plaintiff's case until months after the origin of the loss, clearly indicate an inexcusable delay which, in the absence of other facts of a most convincing nature, in itself serves to attach liability for penalties under the statute. This conclusion is sustained by any number of authorities.
In Campasi v. Mutual Benefit Health & Accident Ass'n, 207 La. 758, 22 So.2d 55, 57, the opinion stated:
From the opinion of Mr. Chief Justice Fournet in Bankson v. Mutual Ben. Health & Accident Ass'n, 208 La. 1008, 24 So.2d 59, 64, we quote:
To the same effect is the observation of Mr. Justice Ponder in Nomey v. Pacific Mut. Life Ins. Co., 212 La. 820, 33 So.2d 531, 534, 1 A.L.R.2d 946:
Nor do we think defendant should escape liability for the penalty because in the instant case it misinterpreted both the cause of plaintiff's illness and the legal effect of its policy provisions. A defendant insurer must take the risk of its misinterpretations of its policy. Ayres v. New York Life Ins. Co., 219 La. 945, 54 So.2d 409.
Defendant's erroneous conclusion to the effect that the mere existence of gallstones within plaintiff's bladder indicated the existence of a condition of sickness or disease over a period of months or years was one which could have been corrected upon the basis of any adequate investigation, and defendant's failure to establish any effort to make a thorough examination until long after the lapse of the thirty day period provided by the statute was a direct contravention of such statutory provision which unquestionably subjects defendant to the penalty provided.
In addition to the statutory penalty equivalent to an amount equal to the medical expenses recoverable, plaintiff prays for the allowance of the sum of $350 as attorney's fees, but this claim is not supported by any proof and it follows that the amount of the fees must be fixed by the court, which procedure is well established in our jurisprudence; Daigle v. Great American Indemnity Co., La.App., 70 So.2d 697, and authorities cited therein.
In the instant case we think an award of $250 should be considered adequate compensation for the services of plaintiff's attorneys.
For the reasons assigned the judgment appealed from is amended by increasing the principal amount thereof to the sum of $636.50, together with an additional sum of $250 as attorney's fees, and as amended the judgment is affirmed at defendant's cost.
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