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December 17, 1968


Appeal from a judgment of the Civil Court of the City of New York, County of New York, entered on June 30, 1967, in favor of plaintiff.

Hofstadter and Markowitz, JJ., concur in memorandum by Markowitz, J.; Hecht, J., dissents in dissenting memorandum.

Author: Markowitz

 Plaintiff-respondent was hospitalized from May 28, 1965 to June 1, 1965. A few weeks prior thereto she had a siege of the mumps, and following her recovery complained of abdominal pain. She was examined by a Dr. Kamin who treated her with an antibiotic. On May 28, 1965, pursuant to earlier arrangement, she was admitted to the hospital by Dr. Bloom, Dr. Kamin's associate, who had discussed the case with Dr. Kamin. It was Dr. Bloom's testimony that plaintiff was admitted for the afore-mentioned specific complaint, that only by hospitalizing her could he treat this complaint, that hospitalization was warranted by the onset of the pain and the mumps which preceded it, and the treatment prescribed was observation. He was emphatic in his position that he admitted plaintiff for treatment purposes and not diagnosis. While at the hospital, plaintiff was subjected to and received various laboratory tests, X rays and the like. Defendant-appellant is the issuer of a hospitalization policy covering the plaintiff. It disclaims liability on the basis of the "Exclusions" clause in the policy which bars recovery under the policy for hospital stays "primarily" for diagnostic studies, rest cures or otherwise unnecessary for "proper treatment."

There is no question that hospitalization for purely diagnostic procedures or for a rest cure is excluded from coverage under the contract. The question here, however, is whether hospitalization for observation purposes may be considered hospitalization for treatment and thus within the ambit of the policy even though incidentally thereto diagnostic tests are made.

It is apparent that observation lies in an area between conventional treatment for an illness and diagnostic studies. In the instant case, plaintiff's expert testified that the treatment he prescribed for the particular ailment he was consulted for and which was as yet undiagnosed was observation. There are conceivably situations where in a physician's professional judgment a condition could be alleviated by the watchfulness of specialized personnel who would be at hand to administer whatever treatment was called for when symptoms revealed themselves. While tests and other medical procedures could be simultaneously conducted, it is possible that the patient may primarily be there to avoid anguish, suffering, and perhaps danger, which might befall him were he not hospitalized.

Hospitalization primarily for diagnostic studies is institutionalization for the sake of convenience. Treatment is not necessary; the patient is there because the facilities are, and it is more practical for him to be there. Hospitalization primarily for observation may, as defendant contends, be primarily for diagnosis, but it does not necessarily always have to be so. Expert opinion in this case has established that it was basically treatment procedure. This was sufficient for the trier of the facts to base a finding upon, and such finding, not being against the weight of credible evidence, should not be disturbed.

Defendant's contention that inclusion of observation in the contract would prove too costly is not relevant here. The cost to a contracting party of an agreement is seldom a factor in considering liability thereunder. Moreover, observation per se is not necessarily within the contract's orbit for any purpose. It is only where it is the prescribed treatment that it comes within the policy provisions. To hold otherwise, would place in unanticipated peril a patient who enters a hospital at the urging of his physician for treatment of a condition and as to whom it is ultimately concluded that positive ministrations are no longer called for or have by a turn of events become unnecessary. A person covered by hospitalization insurance should be reasonably certain as to his coverage upon entry to the hospital and not face the possibility of loss of coverage merely because idle treatment as opposed to direct treatment was given. It would be a different situation if he were aware from the very beginning that he was primarily going in for diagnostic study or a rest cure.

Defendant's reliance on Goldfarb v. Associated Hosp. Serv. (55 Misc. 2d 76) is unconvincing. There, the court found, on the objective evidence submitted, that the services rendered were primarily diagnostic, regardless of the claimant's purpose in entering the hospital. It is not the patient's purpose that should be determinative of the question, it is the physician's. Here, the physician quite clearly indicated his purpose and the Trial Judge chose to believe. His decision should remain undisturbed.

The judgment should be affirmed, with $25 costs.


Judgment affirmed, etc.

Hecht, J. (dissenting). I dissent and vote to reverse the judgment and to dismiss the complaint. Plaintiff's hospitalization would be excluded from coverage under her Associated Hospital Service policy upon a finding of any of the following: (1) that she was admitted to the hospital primarily for diagnostic studies; (2) that, regardless of the original purpose for admission, the services actually rendered were primarily diagnostic studies; (3) that the hospital stay was for a rest cure; or (4) that, in any event, hospital confinement was not necessary for the proper treatment of plaintiff. The record shows that this New York City resident was admitted to the Putnam Community Hospital in Carmel, New York, for a five-day stay in 1965. The admitting physician had not examined the plaintiff himself but admitted her on the basis of a consultation with a New York City colleague to whom plaintiff had been referred by her original physician. No reason for hospitalizing plaintiff in this up-State institution is apparent, other than the fact that it suited the convenience of the admitting physician, who had privileges at that institution. Allegedly, plaintiff's principal complaint was persistent abdominal pain (following the mumps) -- for which she had received antibiotics in the week prior to admission -- and tentative diagnosis on admission was pyelonephritis (i.e., inflammation of the kidney). The hospital record reveals that no medication was ever administered for abdominal pains, and, indeed on the day of admission a laxative was administered, which, according to defendant's expert, is always contraindictated where there are nonspecific abdominal pains. Neither was plaintiff put on any special diet. Rather, the admitting physician prescribed a regular diet, and bed rest with bathroom privileges. The admitting physician, who was plaintiff's expert witness at trial, was emphatic in asserting that he admitted plaintiff for treatment purposes and not diagnosis. However, this doctor's view of the relationship between treatment and diagnosis was highlighted by his testimony that, in his opinion, "diagnosis implies treatment. Treatment implies diagnosis and medically, I cannot separate them." When pressed to describe the specific treatment given plaintiff during her hospital stay, this doctor's answer was "observation". During the course of her brief hospital stay, plaintiff's bed rest was interrupted for the administration of no less than 20 different laboratory studies, examinations and diagnostic X rays. Upon discharge, the final diagnosis was "viremia following mumps and prob. pancreatic involvement", coded on the hospital record with a question mark. The record also lists plaintiff's "condition upon discharge" as "unimproved". It is to be noted that this concluding diagnosis differs from the initial one and, notwithstanding the battery of diagnostic studies, appears to be rather inconclusive.

I believe that the record herein amply demonstrates that plaintiff's hospital stay falls within one or more of the exclusions contained in the Associated Hospital Service policy. The opinion of plaintiff's medical expert (who was also the attending physician) that mere "observation" constitutes medical treatment is entitled to the same consideration as his opinion that no possible distinction can be made between treatment and diagnostic procedures, an opinion which runs counter to well established case law.

While I share my brothers' solicitude for Associated Hospital Service subscribers, who presumably are at the mercy of their physicians when it comes to a determination of whether or not hospitalization is actually required, I am also mindful of the fact that documented studies by our State Insurance Department have established that unnecessary hospital utilization is a major contributing factor in ever-rising subscriber rates in the Associated Hospital Service plan. I believe that the record herein describes just such a case of unnecessary hospital utilization. In all events, I view the record as clearly establishing that the exclusion provisions of the Associated Hospital Service policy are controlling and I would reverse the judgment.


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