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The decision of Derrick Martins Oliveira v. The Commerce Insurance Company, Appeals Court No. 17-P-757, was only handed down on October 23, 2018, but has already created waves across the insurance community. In what appears to be a landmark decision on the topic, the majority opinion of the full-panel court, written by Justice Ditkoff, found that a man who was living with his female partner, their child, and his partner’s parents, could not be considered a “household member” under the parents’ automobile insurance policy.

Mr. Oliveira was a passenger in a single-car accident on July 18, 2014, suffering serious injuries requiring four days of hospitalization, long-term disability, and costing over $40,000 in medical bills. The policy for the driver of the vehicle paid Mr. Oliveira the full $100,000 policy limit. The Court notes, in a footnote, that there seems to be no dispute (at least for summary judgment purposes), that the $100,000 was insufficient to compensate Mr. Oliveira, and hence this lawsuit.

The policy under which Mr. Oliveira seeks coverage was issued to Mr. Oliveira’s partners’ mother and stepfather, which provided $250,000 in under insured motorist (UIM) coverage. The UIM coverage included:

“1. You, while occupying your auto, while occupying an auto you do not own, or if injured as a pedestrian.

2. Any household member, while occupying your auto, while occupying an auto not owned by you, or if injured as a pedestrian. If there are two or more policies which provide coverage at the same limits, we will only pay our proportionate share. We will not pay damages to or for any household member who has a Massachusetts auto policy of his or her own or who is covered by a Massachusetts auto policy of another household member providing underinsured auto insurance with higher limits.”

The definition for “household member” in the policy “means anyone living in your household who is related to you by blood, marriage or adoption. This includes wards, step-children or foster children.”

Mr. Oliveira argued that he was a “household member” under the policy due to the fact that he had a son with his partner, and through that relation, he claimed to be related to the policy-holders “by blood.”

Justice Ditkoff observes that the words in an insurance policy are determined by the insurance commission, and are therefore “exempt from the usual construction against the drafter; rather, it is interpreted in its ordinary sense.” Kanamaru v. Holyoke Mut. Ins. Co., 72 Mass. App, Ct, 396, 399 (2008), citing Chenard v. Commerce Ins. Co., 440 Mass. 444, 445-446 (2003).

The Court begins its analysis of the policy language through the “ordinary sense” lens. In an ordinary setting, the Court reasoned, the phrase “related by blood” entails a genetic relationship between the two people (referring to the Black’s Law Dictionary definition of “blood relative” as “[o]ne who shares an ancestor with another.”) From that analysis, the Court argues that Mr. Oliveira is not a household member in relation to his partners’ parents policy, because they do not share an ancestor with each other. The Court notes that the only case on this precise issue is out of Hawaii, Holi v. AIG Haw. Ins. Co., 113 Haw. 196 (Ct. App. 2007), in which that court affirmed that UIM benefits were unavailable to a person in the same home as the policyholders, who had a child with the policyholders’ daughter. That court reasoned that since the Plaintiff lacked a common ancestor with the policyholders, they could not be “related by blood,” and he could not reap the benefits of their UIM coverage.

The Court asserts that the “common ancestor”/“ordinary sense” approach is the correct analysis here because the policy language already specifically expands the definition of “household member” to include “wards, step-children, or foster children,” indicating that if the Legislature wanted to expand household member to other non-“blood-related” relatives, it would have.

The major hurdle that the Appeals Court faces in their finding that Mr. Oliveira would not be a household member because he is not related to the policyholders “by blood” is the case of Turner v. Lewis, 434 Mass. 331 (2001). The Turner case involved a grandmother seeking an M.G.L. c. 209A abuse prevention order against the mother of her son’s child after the child’s mother attacked the grandmother when she refused to give the child to her. In that case, the Supreme Judicial Court found that the definition of “related by blood” as used in the c. 209A sense (which was designed to prevent familial domestic violence and abuse) was expansive enough to cover the relationship between the grandmother and the mother. The Appeals Court argues that the Turner court was not using the “usual and ordinary meaning” of “related by blood” because it had the discretion in that case to broaden the definition in order to carry out the Legislature’s intent behind the statute. Again using its discretion to apply Legislative intent, the SJC in Silva v. Carmel, 468 Mass. 18 (2014) declined to allow for a c. 209A order for a party who lived in a State-licensed facility for the developmentally disabled, as it was not a “household” as was originally intended.

The Court then reasons that Mr. Oliveira’s definition of “related by blood” cannot stand because it would lead to covering a much broader range of family relationships than the policy goal intended; for example, a person with a niece would a blood relative of his or her brother-in-law’s parents and grandparents. On the other hand, the Court also argues that Mr. Oliveira’s definition is overly narrow, excluding same-sex couples using an unrelated egg donor, or someone raising a child his partner adopted, allowing for coverage in only “one particular flavor of family relationship, to the exclusion of many others.”

Another important difference between Turner and the current case that the Court points out is the fact that c. 209A hearings are prompt and decided on a case-by-case basis, whereas in an insurance coverage context,  the coverage issue only comes up after an accident, where a subsequent case-by-case determination is arguably “not an adequate solution.” As such, Justice Ditkoff affirmed that Plaintiff was not entitle to recover under his partner’s parents’ policy.

In a rather blistering dissent, Justice McDonough found the Turner case must be instructive because Mr. Turner and Mr. Oliveira were in the same situation, with an “identical material relation” as one another: a biological son in relation to a grandparent, and the same rules of interpretation must apply in both cases. Justice McDonough argues that automobile insurance is both a statutory and policy-driven creature, and that the interpretation of the policy language of the Commissioner cannot be in conflict with relevant statutes. He refers to the relevant UIM statute, G.L. c. 175 § 113L(2), which provides that a person may seek coverage under a UIM option of a policy of a “resident relative”. Relative, nor “resident relative,” are defined in the statute, and as Turner is the only case in Massachusetts which considers the phrase “related by blood,” Justice McDonough argues that the majority’s reading of Turner is incongruous with its interpretation of the policy language. He also notes that the majority ignores the “changing realities” of the structure of the modern American family, which have been readily acknowledged in other cases of the Commonwealth, which causes an unmarried parent and household member to be victimized by an underinsured driver, and further burdens children with stigma and disadvantages of illegitimacy. Lastly, Justice McDonough finds that the term “household member” cannot have a precise or inflexible meaning, and the analysis must proceed on a case-by-case basis.

As of November 6, 2018, an application for further appellate review was entered on the docket. It will be with attentive and curious eyes which we will watch for the response of the SJC.

If you have any questions about the implications of this decision, please feel free to contact our attorneys.