AMERICAN FAMILY LIFE ASSUR. CO. OF COL. v. Aetna Life Ins. Co., 28952.

• Decision Date: 13 August 1971
• Docket Number: No. 28952.,28952.
• Citation: 446 F.2d 1178
• Parties: AMERICAN FAMILY LIFE ASSURANCE COMPANY OF COLUMBUS, Plaintiff-Appellant, v. AETNA LIFE INSURANCE COMPANY et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

446 F.2d 1178 (1971)

AMERICAN FAMILY LIFE ASSURANCE COMPANY OF COLUMBUS, Plaintiff-Appellant, v. AETNA LIFE INSURANCE COMPANY et al., Defendants-Appellees.

No. 28952.

United States Court of Appeals, Fifth Circuit.

August 13, 1971.

Malcolm A. Hoffman, Edward A. Woolley, New York City, Tom Watson Brown, Atlanta, Ga., S. E. Kelly, Jr., Kelly, Champion & Henson, Columbus, Ga., Huie & Harland, Atlanta, Ga., for plaintiff-appellant; Simon W. Selber, New York City, of counsel.

Paul Weiss, Goldberg, Rifkind, Wharton & Garrison, Jay H. Topkis, New York City, B. D. Murphy, Powell, Goldstein, Frazer & Murphy, J. Winston Huff, Atlanta, Ga., for defendants-appellees; Sidney S. Rosdeitcher, Edward R. Korman, New York City, of counsel.

Before RIVES, GOLDBERG and MORGAN, Circuit Judges.

RIVES, Circuit Judge:

This appeal is from a decision denying the motion of plaintiff-appellant, American Family Life Assurance Company of Columbus, Georgia (AFL), for a permanent and temporary injunction against eight defendants-appellees.¹

AFL contends that a provision uniformly adopted in defendants' group health insurance policies, the Coordination of Benefits (COB) provision, results in a boycott of AFL made illegal by Section 1 of the Sherman Act.² AFL further contends that it is entitled to injunctive relief,³ notwithstanding the provisions of the McCarran-Ferguson Act.⁴

AFL is primarily engaged in the sale of dread disease (cancer) insurance on a franchise basis, i. e., to employees whose employers pay the premiums deducted from the employees' wages. The defendants sell to employers for the coverage of their employees broad coverage medical care (health and accident) insurance, which includes the risk of cancer. The respective contentions on the merits were aptly stated by Judge Edenfield:

"Defendants seek to justify the COB clause on the ground that it takes away the `profit\' from an illness by reimbursing only up to an insured\'s medical expenses, reduces group health premiums, helps stabilize rising medical costs and eliminates medical malingering. Plaintiff, on the other hand, argues that the COB provision in defendants\' comprehensive group health policies forces it to always be the primary carrier and pay `first,\' reduces benefits to the insured who receives but a single benefit for two or more premiums, and excludes plaintiff from the large employer market. Plaintiff reasons that employees with comprehensive group health plans which include, among many other things, protection against cancer, would be unreceptive to plaintiff\'s dread disease policy since their cancer recovery would be reduced under their group health plan to the extent of plaintiff\'s reimbursement. Plaintiff adduces certain evidence which allegedly demonstrates that the employees of several companies have dropped plaintiff\'s policies due to the COB provisions in their comprehensive group plans."

While AFL moved for a permanent, as well as a preliminary, injunction, it did not submit for a final decree. The motion for permanent injunction was properly denied for the reason well stated by Judge Edenfield:

"A permanent injunction for the plaintiff is obviously not proper at this early stage, since it would amount to a final determination of the action. The uncertain record in this case does not permit its issuance against the defendants. 3 Barron & Holtzoff, Federal Practice and Procedure, § 1433 p. 494."

Judge Edenfield called attention that the purpose of a preliminary injunction is to preserve the status quo, 7 Moore Federal Practice ¶ 65.04 1, and that several factors must coalesce before the plaintiff may secure a preliminary injunction, including (1) that the plaintiff has no adequate remedy at law and will be irreparably harmed if the injunction does not issue; (2) that the balance of hardships tilts toward the plaintiff; and (3) that the plaintiff has at least a reasonable likelihood of success on the merits. Judge Edenfield held: "On the present state of the record, plaintiff cannot carry the day on any of these factors."

We agree with Judge Edenfield's reasoning on the first two factors — irreparable injury⁵ and the balancing of hardships.⁶

Both the plaintiff-appellant and the defendants-appellees devote the major part of their respective briefs and arguments to the third factor — likelihood of success on the merits. The propositions of law are so intriguing that we are severely tempted. We are, however, bound by the consistent and wise policy of this Circuit not to decide the merits of a case on an appeal from a decision denying a motion for preliminary injunction.⁷

Application of some such rule is especially desirable in this case, because any decision on the merits would be of such importance that the losing party should have some opportunity to obtain review by the Supreme Court.

We hold simply that because of the plaintiff's failure with respect to the first two factors, irreparable injury and balancing of hardships, the district court did not abuse its discretion in denying plaintiff's motion for a preliminary injunction.

Affirmed.

1 Aetna Life Insurance Co., Equitable Life Assurance Society of the United States, Gulf Life Insurance Co., John Hancock Mutual Life Insurance Co., Metropolitan Life Insurance Co., New York Life Insurance Co., Travelers Insurance Co., and Washington National Insurance Co.

2 Section 1 of the Sherman Act, 15 U.S.C. § 1 (1964), provides:

"Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal * * *."

3 Section 16 of the Clayton Act, 15 U.S.C. § 26 (1964), provides:

"Any person, firm, corporation, or association shall be...