Estate of Gleason v. Cent. United Life Ins. Co.
| Citation | 379 Mont. 219,2015 MT 140,350 P.3d 349 |
| Decision Date | 20 May 2015 |
| Docket Number | No. DA 13–0644.,DA 13–0644. |
| Parties | The ESTATE OF Judith K. GLEASON, and Jan Gregson and James Gleason, as Personal Representatives of the Estate of Judith Gleason, Plaintiffs and Appellants, v. CENTRAL UNITED LIFE INSURANCE COMPANY, Helena School District # 1, Gail Mooney and Does 1–10, Defendants, Appellees, and Cross–Appellant. Central United Life Insurance Company, Counter–Plaintiff, and Cross–Appellant, v. The Estate of Judith K. Gleason, and Jan Gregson and James Gleason, as Personal Representatives of the Estate of Judith Gleason, Counter–Defendants. |
| Court | United States State Supreme Court of Montana |
For Appellants: John M. Morrison (argued), Linda M. Deola, Morrison, Sherwood, Wilson & Deola, PLLP; Helena, Montana.
For Appellees: Randall J. Colbert (argued), Robert C. Lukes, Garlington, Lohn & Robinson, PLLP; Missoula, Montana.
¶ 1 Jan Gregson and James Gleason, as co-personal representatives of the Estate of Judith Gleason (the Estate), appeal from various rulings by the First Judicial District, Lewis and Clark County. Defendant Central United Life Insurance, Co. (CULI) cross-appeals. We affirm in part, reverse in part, and remand for a new trial consistent with this opinion.
¶ 2 In 1990, Judith Gleason (Judith) purchased a cancer
benefit insurance policy from Colonial Life & Accident Insurance Company, with an effective date of coverage of February 22, 1990. In March 2002, Judith was diagnosed with breast cancer. She underwent treatment until she died on March 28, 2010.
¶ 3 From the time she purchased the policy until her death, Judith paid all premiums owed. The policy remained in effect when she died in 2010. Judith never submitted a claim on the policy while she lived. After her death, Jan Gregson and James Gleason were named co-personal representatives of her estate (PRs).
¶ 4 In 2004, CULI acquired the cancer
insurance policy from Colonial Life. CULI began servicing the policy in January 2002, and formally assumed the policy on or about October 1, 2004.
¶ 5 On or about April 5, 2010, the PRs submitted a notice of potential claim under the policy to CULI via phone call. The PRs then sent CULI a copy of Judith's death certificate, which attributed her death to cancer
. CULI received the death certificate on April 12, 2010. Medical bills and claim forms were sent to CULI in January 2011. On January 24, 2011, CULI requested additional documentation related to certain services provided from October 2009 through March 2010. On January 25, 2011, CULI issued an explanation of benefits stating that claims not submitted within the policy's notice period were not payable. The policy required claims to be filed within one year plus 90 days of the date of the claim. The PRs provided additional medical records to CULI in February 2011 and early March 2011.
¶ 6 On March 17, 2011, CULI paid certain claims arising within one year and 90 days prior to January 11, 2013, the date the claim forms and medical bills were received by CULI. This payment totaled $57,735.95. CULI reiterated that it would not pay for claims submitted outside the policy time limit.
¶ 7 On April 11, 2011, the PRs advised CULI that the Estate was contesting the denial of the untimely-filed claims. On June 24, 2011, CULI issued payment of a $5,000 death benefit payable under the policy.
¶ 8 On June 24, 2011, CULI filed a declaratory judgment action in Montana Federal Court. The Estate filed this action in State District Court on July 13, 2011. On December 15, 2011, the Federal Court declined to exercise jurisdiction and the declaratory judgment action was remanded to the State District Court for determination.
¶ 9 Over the next several months, both parties moved for summary judgment. On July 12, 2012, the District Court issued an order granting the Estate's motion for partial summary judgment and denying CULI's motion for summary judgment. In its order, the court ruled that CULI owed payment for the untimely-filed claims, provided it was not prejudiced by the late notice. CULI admitted that it was not prejudiced because it had the information necessary to consider the claims under the policy. The court also ruled that the eight-year statute of limitations on written contracts barred claims for services rendered prior to April 5, 2002. This ruling was later amended to bar claims for services rendered prior to April 12, 2002.
¶ 10 In August 2012, CULI discovered that certain other medical expenses incurred within the policy time limit should have been covered. Accordingly, on August 20 and 22, 2012, CULI issued payments to the Estate for those claims. These payments totaled $17,195.28 and included prejudgment interest (calculated at 10% per annum) from March 17, 2011 to the date of the payments.
¶ 11 On January 17, 2013, pursuant to the District Court's July 12, 2012 order, CULI issued payment to the Estate for the untimely-filed claims. The payment totaled $539,717.90 and included prejudgment interest from March 17, 2011 to the date of the payment. Shortly thereafter, CULI warned the PRs not to distribute the funds because it intended to seek reimbursement of the payment on appeal. The PRs placed the funds in trust pending the outcome of this dispute.
¶ 12 Prior to trial both parties filed motions in limine. On March 1, 2013, the District Court issued an order on the motions. The court allowed CULI to present testimony about cases decided after its denial of the PRs' claim in order to “illustrate the unsettled nature of Montana law” with regard to the notice issue. The court also allowed the PRs to present testimony regarding CULI's claim handling in other states and how other insurance companies handle late notice claims in other jurisdictions.
¶ 13 The case was tried by jury from March 4–8, 2013. On March 4, 2013, prior to the commencement of trial, the court entered a directed verdict in favor of the Estate on the untimely-filed claims for the amount of $539,717.90. The court advised the jury hat it had directed a verdict on that issue and that CULI had paid that amount to the Estate.
¶ 14 At the conclusion of trial the court submitted a special verdict form to the jury. The verdict form directed the jury to determine the amount of additional money CULI owed under the policy, if any, and whether CULI had violated the Montana Unfair Trade Practices Act (UTPA). If the jury found that CULI had violated the UTPA, it was to determine the amount of damages suffered and, if it awarded damages, to consider whether CULI had acted with malice. If the jury found CULI acted with malice it could then determine whether to award punitive damages.
¶ 15 The jury returned a verdict finding that no additional money was due under the policy. The jury found that CULI had violated the UTPA, but did not award damages. The jury therefore did not consider whether CULI acted with malice.
¶ 16 Following trial, the District Court awarded trial costs to CULI, finding that it was the prevailing party because the jury had awarded no contract or UTPA damages to the Estate. The District Court awarded attorney's fees and costs to the Estate for its recovery under the policy.
¶ 17 The Estate timely appealed and CULI timely cross-appealed. The Estate contends that the District Court erred when it: (a) required proof of UTPA damages in addition to wrongfully denied benefits before allowing the jury to consider malice and punitive damages, (b) failed to grant a directed verdict that CULI violated the UTPA, (c) allowed the jury to consider judicial opinions related to the notice-prejudice rule with regard to whether CULI had a reasonable basis in law to deny the claims, and (d) awarded trial costs to CULI.
¶ 18 On cross-appeal, CULI maintains the District Court erred when it: (a) applied the notice-prejudice rule and determined that the Estate's claims were not barred by the policy's notice provision, (b) applied the statute of limitations from the time CULI received notice of the Estate's claims, (c) failed to dismiss the UTPA claim because CULI had a reasonable basis in law to deny the claim, (d) allowed evidence of claim handling practices by other insurers with regard to whether CULI had a reasonable basis in law to deny the UTPA claim, and (e) awarded attorney's fees and costs to the Estate.
¶ 19 Because of our holding here, we do not reach several of the issues raised by the parties. We therefore restate the issues on appeal and cross-appeal and address them in the following order:
¶ 20 We review a district court's conclusions of law for correctness. Weter v. Archambault, 2002 MT 336, ¶ 18...
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