Antinora v. Nationwide Life Ins. Co.

• Decision Date: 21 December 1973
• Citation: 76 Misc.2d 599,350 N.Y.S.2d 863
• Parties: Theresa ANTINORA and Ronald F. Antinora, Plaintiffs, v. NATIONWIDE LIFE INSURANCE COMPANY and Nationwide Mutual Insurance Company, Defendants.
• Court: New York County Court

Page 863

350 N.Y.S.2d 863

76 Misc.2d 599

Theresa ANTINORA and Ronald F. Antinora, Plaintiffs, v. NATIONWIDE LIFE INSURANCE COMPANY and Nationwide Mutual Insurance Company, Defendants.

Monroe County Court.

Dec. 21, 1973.

Houghton & Pappas (Thomas E. Lenweaver, Rochester, of counsel), for plaintiffs.

Sullivan, Gough, Skipworth, Summers & Smith, Rochester (Thomas W. Sullivan, Rochester, of counsel), for defendants.

DECISION

DAVID O. BOEHM, Judge.

This is a motion for summary judgment, pursuant to CPLR 3212, upon an action brought by the plaintiffs to recover money due under an accident and health group insurance policy.

Ronald F. Antinora (Ronald) one of the plaintiffs herein, commenced employment for the Nationwide Life Insurance Company, the defendant herein, on May 20, 1968. Both defendant corporations are licensed to do business in the State of New York and maintain offices in the County of Monroe and the State of New York and are, among other things, in the accident and health insurance business.

On April 1, 1966 Nationwide Life Insurance Company and Nationwide Mutual Insurance Company issued and delivered a group insurance policy in the State of Ohio to the four Nationwide Companies insuring agents of the four companies who elected to participate for specified coverages, including hospital and medical expenses of the participating agent and/or members of his family. For the coverages the agent paid a reduced premium. The policy contained a conversion privilege permitting an agent whose employment had terminated to maintain the coverages at an individual premium rate if the agent made written application therefor and made payments of the first premium to the insurer within thirty-one (31) days from the date of termination of employment. Further, the policy contained a provision stating that 'This policy is delivered in the state' (Ohio) 'specified above and is governed by the laws thereof.'

Ronald and his family became insured under this group health insurance plan through the defendant who was his employer and who was also the insurer. Upon his becoming insured, Ronald received in the State of New York the Certificate of Insurance, which is a summary of the provisions of the group policy. This certificate made no mention of what state law would govern this policy. Periodically, premiums were deducted from Ronald's paycheck by the defendant employer to pay for this group accident and health insurance.

On July 13, 1971, Ronald submitted his letter of resignation to his employer which was to be effective July 15, 1971. Neither of the plaintiffs made written application for conversion within thirty-one (31) days of the date of termination of employment which was actually July 31, 1971. Through what the defendants claim to be a clerical error, a premium payment by means of a withholding from sums due to Ronald by his employer was made on August 15, 1971 and a reimbursement check for the amount withheld was forwarded to the plaintiffs on November 9, 1971.

On August 10, 1971, Ronald's wife Theresa, co-plaintiff in this action, began to experience medical symptoms and illness. Theresa was admitted to the hospital on August 12, 1971. While in the hospital, Theresa required surgery. She incurred medical expenses for the hospitalization, doctors' care, medication and other medical expenses through the period ending September 7, 1971. Plaintiffs filed a claim for the medical expenses incurred in the amount of One Thousand Six Hundred Eight Dollars and Ninety-eight Cents ($1,608.98) on September 21, 1971. This claim was refused on October 12, 1971 by the defendant because plaintiff did not exercise his conversion privilege within thirty-one (31) days of his employment termination.

There is no dispute as to the fact that the medical expenses were incurred, the amount of such expenses, that the master policy was issued and delivered in Ohio, that the certificate was issued for delivery in the State of New York or that the plaintiff did not exercise his conversion privilege within thirty-one (31) days of termination of employment.

The first issue is whether New York State Insurance Law supercedes provisions of an insurance policy where the insurance law requires that an insured must have certain rights under a policy, but the policy grants no such rights or lesser rights to the insured.

Section 162 of the New York State Insurance Law entitled 'Group or blanket accident and health insurance policies; standard provisions' includes the following in paragraph 1:

'No policy of group or blanket accident or health insurance or accident and health insurance and no certificate thereunder shall . . . be delivered or issued for delivery in this state unless the policy contains in substance each and all of the provisions set forth in the following paragraphs . . .'

Paragraph 5 of Section 162 sets forth the requirement for a conversion privilege in all policies of accident and health insurance. Further, this paragraph 5 states:

'Each certificate holder in the insured group shall be given written notice of such conversion privilege and its duration within fifteen days after the date of termination of group coverage, provided that if such notice be given more than fifteen days but less than ninety days after the date of termination of group coverage, the time allowed for the exercise of such privilege of conversion shall be extended for fifteen days after the giving of such notice. If such notice be not given within ninety days after the date of termination of group coverage, the time allowed for the exercise of such conversion privilege shall expire at the end of such ninety days . . .'

There is no question then that the law of New York requires each certificate of insurance issued for delivery in the State of New York to contain a conversion privilege as well as a notice provision concerning the conversion privilege. A review of New York case law as well as major treatises in this area lead one to the conclusion that New York law must prevail. This is true even though this particular group contract was entered into and delivered in the state of Ohio, the contracting parties to this master policy were Ohio corporations and the master policy itself states that the laws of Ohio shall apply.

In the case of Salzman v. Prudential Insurance Company of America, 296 N.Y. 273, 72 N.E.2d 891, the Court of Appeals held, among other things, that statutory conditions precedent to lapsing of insurance coverage may not be waived by a policy holder. The general rule as there set forth is that a statute such as the one in question is grounded upon important positions of public policy formulated by the legislature and that statutory conditions precedent to lapsing or declaration of forfeiture may not be contracted away or waived by a policy holder. This would appear to mean that the insureds residing in New York may not waive their statutory rights by obtaining a group health insurance contract that did not contain a provision concerning notice of conversion. (See also, Hopkins v. Connecticut General Life Insurance Company, 225 N.Y. 76, 121 N.E. 465.)

Reading Section 162 of the Insurance Law and the appropriate cases thereunder, as well as Section 143, which concerns the law governing non-conforming contracts in particular paragraph 2 thereof, we again see that the law of New York will apply. Section 143, paragraph 1 states:

'Except as otherwise specifically provided in this chapter any contract or policy of insurance or annuity contract delivered or issued for delivery in this state in violation of the provisions of this chapter shall be valid and binding upon the insurer making or issuing the same, but in all respects in which its provisions are in violation of the requirements or prohibitions of this chapter it shall be enforceable as if it conformed with such requirements or prohibitions.'

This section implies that Section 162 concerning standard provisions and health and accident will be read into the Antinora policy.

Further, Section 143, paragraph 2, states:

'No contract or policy of insurance delivered or issued for delivery in this state shall provide that the rights or obligations of the insured or of any person rightfully claiming thereunder shall, with respect to policies of life, accident or health insurance or annuity contracts upon persons resident in, or to policies of insurance upon property then in this state, or with respect to the liabilities to be incurred by the insured as a result of any activity then carried on by the insured in this state, be governed by the laws of any state or country other than this state. . . ..'

Anderson, Couch on Insurance 2d is one of the authoritative works in the field. It sets forth the applicable law, as follows:

'As a general rule, stipulations in a contract of insurance in conflict with, or repugnant to, statutory provisions which are applicable to, and consequently form a part of, the contract, must yield to the statute, and are invalid, since contracts cannot change existing statutory laws. This is especially true where the contract provisions are not in accord with public policy, and are not as advantageous to the insured, or as desirable, as the prescribed provisions, or when the statute itself expressly provides that any stipulation in a policy contrary to its provisions shall be void.'

(§ 13:7, pp. 537--539; see also, §§ 3:7, 3:8, 3:16, 13:6, 13:8, 13:11)

'An insurance commpany incorporated in a foreign state may not make such provisions in its contracts as will violate the insurance laws of the state in which it is permitted to do business.'

(Id. at § 13:12, p. 545; see also, § 13:19; 29 N.Y.Jur. Insurance, §§ 140, 518, 519; 12 Appleman, Insurance Law and Practice, §§ 7072, 7074).

Since no notice of such conversion privilege was ever communicated by defendant to plaintiffs, the problem here arises because Section 162(5) or any other section does not state...