A question of ethics

Question

Alma McMillan worked as a sales and reservations supervisor in a Trans World Airlines, Inc, (TWA) office located in Philadelphia. At 10:00 P.M. one evening, after she had completed her work shift, McMillan left her office and exited the building onto a covered walkway. While she stood on this walkway, her estranged husband fatally stabbed her. As a TWA employee, McMillian was covered by a group life insurance policy issued by State Mutual Life Assurance Co of America. A provision of the policy, marked "Hazard F," provided for a payment of $100,000 to the insured's beneficiaries in the event of death resulting from "a felonious assault while on authorized business of

Answer 1

A QUESTION OF ETHICS
1. The majority opinion of the appellate court was based on the following reasoning: First, the phrase "on authorized business" was ambiguous because it was reasonably suscepti-ble to more than one interpretation; therefore, it should be construed against the insurer and in favor of the insured. Second, in the absence of any case law addressing this issue, the court reasoned by analogy that "on authorized business" could be likened to the phrase "in the course of employment." For purposes of the state's workers' compensation law, an employee will be compensated if the injury took place "in the course of employment," and this phrase includes employees who have been injured while still on an "integral part of the employer's operating premises." The same law defines employer's premises to include "all the area which an employee is required to traverse to access the work site, regardless of who actually owns or controls the area." Third, a reasonable person would, in the eyes of the court, interpret the phrase "on authorized business" to include entering into and exiting from the employer's premises, not just entering into or exiting from his or her specific work station or the building in which the work station was situated.
The dissent argued that the concept of conducting the employer's business was distinct from the concept of being on the employer's premises and that this distinction was made under the state workers' compensation law. Workers were to be compensated not only for injuries suffered while engaged "in the furtherance" of the employer's business but also when, even though not so engaged, they are on the employer's premises. The judge held that just because the scope of workers' compensation was, for policy reasons, extended to include the latter did not justify the majority's conclusion in this case. In support of his criticism, the judge commented that the majority would probably not have reached the same conclusion if "this tragedy had occurred as McMillan was waiting on the public sidewalk for a commuter bus to take her home"—even though under workers' compensation law, she would be deemed to still be on the "premises" of the employer.
2. The court, at least, had no difficulty in concluding that the meaning of this phrase was sufficiently ambiguous to construe it against the insurer. First, the term business is capable of numerous interpretations. Indeed, as the court stated, "it is hard to imagine a word with more varied uses in our society." Second, the term authorized also presents problems. Should authorized business include that five minutes of time in which an employee tends to a personal task at his or her desk? Should it encompass employees who run an errand for their supervisor after working hours? The court concluded that "[l]aw students in a first year torts class no doubt could generate endless variations on this theme, but taken together the resulting refrain resounds clear with a unified voice: the meaning of ‘on authorized business' is not self-evident."
In addressing the second issue in this question, the most important factor to consider is the relative bargaining power of the parties to insurance contracts. Obviously, the insurance company holds most of the bargaining chips: It determines the types of risks it will insure against, it determines the terms of the policy, it determines how those terms will be phrased, and it prepares the form in which those terms are expressed. Furthermore, insurers are experts in their field, while those seeking insurance may be (and commonly are) fairly unversed in insurance provisions and practices. An insurance contract is thus a kind of adhesion contract between two parties not equally situated. In the interests of equity, courts will thus interpret am-biguous provisions against the insurer.