recognizes – indeed, requires – balancing the scope of coverage with its
cost. This suggests that within EHB categories, insurers must cover
necessary and medically acceptable services (and providers), but need not
include expensive services where safe and effective alternatives are less
One might be concerned that courts today could be reluctant to engage
in this type of functional analysis.144 Both the reasonable expectations
doctrine and the statutory intent canon fall on the functional side of rules of
interpretation.145 That is, each interprets the meaning of policy and
statutory language, respectively, in light of its function and purpose, rather
than relying on the text alone (unless the text is ambiguous or unclear).146
But reliance on text alone is not likely to resolve disputes over the meaning
of EHB coverage, at least in most cases. Thus, a rule based on function or
purpose seems inevitable. The idea that ACA plans serve a remedial
statutory function only reinforces this conclusion.
Resistance to the rule of function comes most often from scholars and
courts that prefer the formal approach to contract interpretation credited to
Professor Williston.147 This approach resists consideration of any extrinsic
evidence outside the “four corners” of the contract unless the text is
unclear.148 The text is presumed to state the parties’ intention, so that the
“plain meaning” of the text must be enforced.149 Courts in the majority of
jurisdictions view themselves as bound by their role as interpreters to avoid
making judgments that could be considered rewriting the contract between
the parties.150 Judges who are uncomfortable trying to interpret a contract
144. See, e.g., Antonin Scalia & Bryan A. Garner, Reading Law: The Interpretation of
Legal Texts (2012) (arguing for a textualist interpretation); William N. Eskridge, Jr., The
New Textualism and Normative Canons, 113 Colum. L. Rev. 531, 532–33 (2013) (describing
conceptions of textualism); Richard A. Posner, Reflections on Judging 178–235 (2013)
(arguing that there is no principled hierarchy of canons of construction).
145. See Peter N. Swisher, Judicial Rationales in Insurance Law: Dusting Off the
Formal for the Function, 52 Ohio St. L.J. 1037, 1052–53 (1991).
146. Fischer, supra note 49, at 180 (The doctrine of reasonable expectations “needs to
shed its disguise of policyholder expectations and sustain itself on its true grounding of
insurance as a public good and the corollary that coverage decisions should be based on
147. Samuel Williston, A Treatise on the Law of Contracts (1961); see Swisher, supra
note 145, at 1047 (comparing formalist and functionalist approaches to interpreting
148. See Randall, supra note 6, at 110–11.
149. See Restatement (First) of Contracts (1932) (presenting the formal rule of
construction); Restatement (Second) of Contracts § 211(3) (1981) (reflecting a somewhat
more functional approach) (“Where the other party [insurer] has reason to believe that the
party [policyholder] manifesting such assent [to a standard form contract] would not do so if
he knew that the writing contained a particular term, the term is not part of the agreement.”).
150. See Stempel, Unmet Expectations, supra note 45, at 252–53; see also John E.