Bice v. Indurall Chemical Coating Systems, Inc.

• Decision Date: 28 April 1989
• Citation: 544 So.2d 948
• Parties: 116 Lab.Cas. P 56,347 Arthur BICE and Patti Bice v. INDURALL CHEMICAL COATING SYSTEMS, INC., et al. 87-1547.
• Court: Alabama Supreme Court

Page 948

544 So.2d 948

116 Lab.Cas. P 56,347

Arthur BICE and Patti Bice v. INDURALL CHEMICAL COATING SYSTEMS, INC., et al.

87-1547.

Supreme Court of Alabama.

April 28, 1989.

Frank R. Farish, Birmingham, for appellants.

Cathy S. Wright and David M. Smith of Maynard, Cooper, Frierson & Gale, Birmingham, for appellees.

SHORES, Justice.

Arthur and Patti Bice appeal from a summary judgment in favor of Indurall Chemical Coating Systems, Inc. ("Indurall"), and two of its supervisory employees, Pat McNamee and Tim Mayfield.

Arthur Bice quit his job as assistant manager at Winner's Centerpoint restaurant on December 31, 1984. He answered an employment advertisement placed by Indurall on January 3, 1985, by driving to Indurall's Hoover store, where he spoke to Tim Mayfield. Bice and Mayfield discussed the available job as relief manager, its duties, and its salary. Mayfield told Mr. Bice that there was health insurance coverage that was paid for by the company. Mr. Bice returned later that same day for a second interview, this time with Pat McNamee and Mayfield. During this meeting, according to Mr. Bice's testimony, he was told:

"[M]e and my dependents would be covered without any cost to me. It [health insurance] was paid for by the company, no deductions from your check, just automatically paid."

Patti Bice was six months pregnant at the time her husband was interviewed. Mayfield and McNamee told Mr. Bice that they did not know if the birth of his child would be covered by the insurance.

Mr. Bice was hired. He began work on January 7, 1985, and at that time he was given an employee handbook and a "summary plan description of health insurance" issued by Associated Industries of Alabama Group Health Benefits Trust ("A.I.A."), Indurall's group health insurer. That night, Mr. Bice read and signed the following statement:

"I, Arthur R. Bice, Jr., have read and understand the employee handbook; I have been allowed to ask questions about it; and I understand that I can always ask for further clarification on any matter as my employment continues."

Mrs. Bice's baby was not due until some time in March, but she gave birth prematurely, on February 24, 1985, to a baby girl with a birth defect that required emergency surgery. The child remained in intensive care for an extended period.

Upon inquiry, Mayfield informed Mr. Bice that the medical expenses were not covered under the A.I.A. policy because they accrued prior to the effective coverage date of March 1, 1985.

Arthur and Patti Bice filed suit on December 18, 1985, against Indurall, Pat McNamee, Tim Mayfield, A.I.A. Group Health Benefits Trust, and Pilot Life Insurance Company (Pilot had issued a separate individual policy to the Bices that covered a limited amount of the medical expenses for the birth of their child), alleging fraudulent misrepresentation, negligence, and bad faith. The Bices filed an amended complaint on April 5, 1988, alleging breach of contract and negligent failure to provide insurance. Indurall, Mayfield, and McNamee filed a motion for summary judgment, which was granted on August 22, 1988, following a hearing. ¹ The summary judgment was made final pursuant to Rule 54(b), A.R.Civ.P. The Bices appeal from the summary judgment only as to the allegations of fraudulent misrepresentation, negligence, and negligent failure to insure.

We affirm.

The employee handbook contained the following health insurance provisions, entitled:

"Hospital and Medical Insurance

"Hospital and Medical Insurance is included in the Group Insurance Plan at no cost to the employee. This plan of insurance covers 80% of eligible medical costs (50% in the case of certain treatment of mental, psychoneurotic and personality disorders) in the excess of an annual deductible.

"For the employee to be eligible for this benefit, he must enroll in the program on the first day of employment. However, the employee must be on the payroll at least thirty (30) days before the insurance company will process the application. Coverage will begin once your application has been processed. Maximum processing time is sixty (60) days.

"A copy of the Plan is furnished by the insurance carrier and describes the Plan in detail. Should you have any questions concerning your coverage, please contact the insurance company."

David Hood, the president of Indurall, testified that if everything goes routinely, an employee will be accepted and the insurance will be in force on the first day of the month following the 30-day period. Mr. Bice testified that he understood this provision to mean that he would be covered beginning 30 days after he was placed on the payroll.

Mr. Bice acknowledged that he had read the "summary plan description of health coverage," which provides in part:

"ELIGIBILITY: Eligibility for this plan begins on the first day of the month following --- days of employment. Only employees who regularly work 30 or more hours per week are eligible."

That document also contains the following terms:

"WAITING PERIODS

"All members are subject to the following waiting periods (unless waived on the employer's Participation Agreement):

"A. Pre-existing Conditions:

"Benefits are available for pre-existing conditions only after nine (9) consecutive months as a Member, beginning with the effective date of such Member's coverage hereunder. (A pre-existing condition is a condition, including pregnancy, disease or ailment, congenital or otherwise, which existed on a Member's effective date of coverage, whether manifested or not, or for which medical or surgical treatment or advice has been rendered within one year prior to the coverage date.)"

Mr. Bice never discussed these provisions or the employee handbook insurance provisions with anyone at Indurall; that fact is shown by his testimony:

"Q. And as I understand your testimony, ... from the time of your second interview with them until the date of that phone call at the time of the birth, you didn't have any conversations with Tim [Mayfield] or Pat [McNamee] or anyone at Indurall about the coverage provided under their plan?

"A. No.

"Q. Is that right, that you had no conversations?

"A. No, we had never talked about that.

"Q. Did they provide anything to you in writing about that, other than the employee handbook and the summary plan description?

"A. No."

Furthermore, Mr. Bice stated in an affidavit that the summary plan description of health insurance was referred to as the insurance company's booklet, not Indurall's.

Mr. and Mrs. Bice allege in their complaint:

"[T]he defendants were knowledgeable or led the plaintiffs to believe that they were knowledgeable in matters of hospitalization insurance, and expressly advised the plaintiffs to rely upon the defendants' assertions and representations pertaining to the...