without hanging their hat on a contract term may fall back on limiting their
analysis to the text of the contract.151 The rule also supports predictability
in judicial decisions; if the contract’s text is clear, it will be enforced
without resort to other evidence.152 Such predictability can save an insurer
both administrative and litigation expenses and thereby reduce premium
However, the formal rule does not work for EHB disputes. To the
extent that enforcing clear policy language is intended to encourage the
parties to expressly agree on their specific intended bargain, the parties to
ACA plans simply cannot comply. They do not bargain together, and they
cannot adequately specify what they expect from coverage in advance.
There is not always a plain meaning. Acceptance of formal interpretation
rules only exacerbates the disadvantages of standard form contracts while
offering few, if any, of its advantages. While formal policy interpretation
may lessen the burden of judges and insurers, it is not a credible method of
identifying the intent of the parties in ACA plans.154 As Professor Fischer
argues, “If reading the policy is essentially useless, it is difficult to support
use of policy structure or language complexity as a basis for determining
reasonable expectations, or any expectations for that matter.”155
Professor Stempel argues that the judiciary has little reason to revere
the idea of judicial restraint when interpreting any type of insurance
policy.156 There is even less reason to do so in the case of ACA plans.
Most obviously, the meaning of contract terms is a matter of law for the
court to decide.157 The terms of ACA plans must also meet statutory
Murray, Contract Theories and the Rise of Neoformalism, 71 Fordham L. Rev. 869, 870
(2002); see also Wayne Barnes, The Objective Theory of Contracts, 76 U. Cin. L. Rev. 1119,
151. See Thomas, supra note 47.
152. See Randall, supra note 6, at 110–11. Of course, some judges may incorrectly
assume that their understanding of the meaning of a contract term is the universal
understanding. See generally Lawrence Solan, Terri Rosenblatt & Daniel Osherson, False
Consensus Bias in Contract Interpretation, 108 Colum. L. Rev. 1268 (2008) (discussing
ways in which judges find meaning in contract provisions).
153. See Rappaport, supra note 105, at 244–45.
154. Swisher, supra note 145, at 1073 (arguing that decisions sometimes draw on both
approaches, either in the same decision or in different decisions, in what he calls a “clash”
between formalism and functionalism); see Lonegrass, supra note 92, at 54–56; Michael I.
Meyerson, The Reunification of Contract Law: The Objective Theory of Consumer Form
Contracts, 47 U. Miami L. Rev. 1263, 1273 (1993).
155. Fischer, supra note 49, at 169.
156. See Stempel, Unmet Expectations, supra note 45, at 292–93; Stempel, Insurance
Policy, supra note 128, at 230–31 (purpose-oriented methods of analysis are only a short
step from identifying the goals of an insurance policy).
157. See, e.g., Boatner v. Atlantic Specialty Ins. Co., 115 F. 3d 1248, 1251 (5th Cir.
1997); Restatement (Second) of Contracts § 212 cmt. d (1981).