Barker v. Coastal States Life Ins. Co.

• Decision Date: 18 March 1976
• Docket Number: No. 51866,No. 2,51866,2
• Citation: 138 Ga.App. 164,225 S.E.2d 924
• Parties: Rosa J. BARKER v. COASTAL STATES LIFE INSURANCE COMPANY
• Court: Georgia Court of Appeals

Page 924

225 S.E.2d 924

138 Ga.App. 164

Rosa J. BARKER v. COASTAL STATES LIFE INSURANCE COMPANY.

No. 51866.

Court of Appeals of Georgia, Division No. 2.

March 18, 1976.

Waldrep & Williams, Luis C. Garcia, Peter G. Williams, Columbus, for appellant.

Hatcher, Stubbs, Land, Hollis & Rothschild, Howell Hollis, Columbus, for appellee.

MARSHALL, Judge.

In this appeal the insured appellant contests the validity of a 'co-ordination of benefits' provision in an insurance policy. Apellant's husband incurred substantial medical expenses for the treatment of cancer from which he eventually died. Her husband was an employee of Lummus Industries and was covered under a group health insurance policy issued by the Blue Cross-Blue Shield to that employer. Upon her husband's death, appellant filed a claim for his medical expenses under that policy and the bulk of the claim was paid, less exclusions and limitations within the policy. Her husband was also covered as a dependent under the family protection provisions of her own employer's group insurance policy issued by appellee herein. She filed a claim under this policy for the full amount of the medical expenses. Appellee denied the claim, in part, asserting that he standard 'coordination of benefits' provision in the policy limited its liability to the excess of expenses covered by any other insurance. ¹ Appellee paid part and offered to tender part of the amount which it claimed was the excess of those expenses paid by Blue Cross-Blue Shield.

Appellant brought her complaint in a class action against appellee for the full amount of her husband's medical expenses contending that the 'co-ordination of benefits' clause was invalid for reasons that it 'intends to defeat and lessen competition among insurance companies and therefore encourage monopoly . . .'; was an 'unfair method of competition and unfair and deceptive acts of practice in the business of insurance'; and interfered with the personal property (insurance premiums) of the plaintiff and members of her class and 'deprived (them) of their free enjoyment and full benefits from the policies . . .' Appellee moved for partial summary judgment on the grounds that the complaint was not a proper class action, that the 'co-ordination of benefits' provision was valid, and that appellant had no right of action for the full amount claimed. The trial court found that the provision in question was valid and enforceable, and that it followed that there was no basis for the class action and 'no basis for plaintiff's individual action for any amount in excess of the amounts . . . filed . . . with defendant after deducting therefrom amounts payable by Blue Cross-Blue Shield . . .' The amounts involved were recognized by the court as being disputed by the parties and were specifically reserved for resolution by the lower court. Held:

The only issue in this appeal is the validity of the 'co-ordination of benefits' clause. All other issues and all theories raised by appellant's pleadings, however obscure, revolve around this sole issue. For if the clause is valid, both on its face and in its application, appellee would have negated each theory raised by those pleadings and would be entitled to partial summary judgment.

Insurance, including group insurance, is a matter of contract, and the parties thereto are bound by the terms of the policy. Parris & Son v. Campbell, 128 Ga.App. 165(1), 196 S.E.2d 334; Cherokee Credit Life Ins. Co. v. Baker, 119 Ga.App. 579(1a), 168 S.E.2d 171. 'And the certificate holder (the employee, here) is bound by the provisions of the master policy. Moore v. Prudential Ins. Co., 56 Ga.App. 356, 362, 192 S.E. 731.' Cherokee Credit Life Ins. Co. v. Baker, 119 Ga.App. 579, 584, 168 S.E.2d 171, 175, supra. See also, Metropolitan Life Ins. Co. v. Fields, 53 Ga.App. 76, 184 S.E. 752.

The specific 'co-ordination of benefits' clause in the policy sub judice has not been squarely subjected to review by appellate courts in Georgia, though, obliquely, a similar provision in a Blue Cross-Blue Shield policy was recently reviewed and given effect in Feagin v. Smith, 136 Ga.App. 21, 220 S.E.2d 41. In other jurisdictions, appellate courts have upheld such provisions. The reasoning behind upholding such provisions is best set forth in Gibson v. Metropolitan Life Ins. Co., 213 Kan. 764, 518 P.2d 422, 426 (1974) in which the insured plaintiff attacked the validity of a clause identical to the one in the present case. In upholding the clause, the Kansas Supreme Court stated:

'That which appellants really seem to be arguing is that it just isn't fair for their coverage, for which they have contributed premiums, to be so drastically reduced, and appellee should be estopped from denying liability for...