Blue Cross/Blue Shield of Florida, Inc. v. Weiner

• Decision Date: 26 April 1989
• Docket Number: 4-86-2925,4-86-2926 and 4-86-2927,Nos. 4-86-2899,4-86-2924,s. 4-86-2899
• Citation: 14 Fla. L. Weekly 1024,543 So.2d 794
• Parties: 14 Fla. L. Weekly 1024 BLUE CROSS/BLUE SHIELD OF FLORIDA, INC., Appellant, v. Robert WEINER, Margaret Weiner, Mark Weiner and Robert Weiner as Personal Representative of the Estate of Steven Weiner, Blue Cross of Maryland, Inc., Blue Shield of Maryland, Inc., Blue Cross and Blue Shield of Maryland, Inc., Appellees.
• Court: Florida District Court of Appeals

Page 794

543 So.2d 794

14 Fla. L. Weekly 1024

BLUE CROSS/BLUE SHIELD OF FLORIDA, INC., Appellant, v. Robert WEINER, Margaret Weiner, Mark Weiner and Robert Weiner as Personal Representative of the Estate of Steven Weiner, Blue Cross of Maryland, Inc., Blue Shield of Maryland, Inc., Blue Cross and Blue Shield of Maryland, Inc., Appellees.

Nos. 4-86-2899, 4-86-2924, 4-86-2925, 4-86-2926 and 4-86-2927.

District Court of Appeal of Florida Fourth District.

April 26, 1989.

Rehearing and Rehearing En Banc Denied

June 19, 1989.

Alan C. Sundberg and Sylvia Walbolt of Carlton, Fields, Ward, Emmanuel, Smith, Cutler & Kent, P.A., Tampa; Esler & Kirschbaum, P.A., Fort Lauderdale; Podhurst, Orseck, Parks, Josefsberg, Eaton, Meadow & Olin, Miami; for appellant.

Joan Fowler and G. Bart Billbrough of Walton Lantaff Schroeder & Carson, West Palm Beach, for Blue Cross/Blue Shield of Maryland, Inc., Blue Cross of Maryland, Inc., and Blue Shield of Maryland, Inc.

Larry S. Stewart and James B. Tilghman, Jr., of Stewart Tilghman Fox & Bianchi, P.A., Miami, for appellees-Weiner.

STONE, Judge.

This is a consolidated appeal from a final judgment in favor of the Weiners, the insureds, against Blue Cross and Blue Shield of Florida (Florida) and Blue Cross and Blue Shield of Maryland (Maryland). The jury returned a verdict against both companies on claims of fraud and intentional infliction of emotional distress, and against Maryland on negligence as well.

The claims arose out of a denial of coverage by Maryland. Maryland had issued a group health insurance plan which it sold to individual gasoline service station retailers through an independent marketing company, ASFI, supposedly in cooperation with the national and state service station dealers associations. Maryland retained Florida as its agent to service those accounts in this state. Maryland wrote the policies, and prepared a National Account Enrolled Group Summary (NAEGS), which set out guidelines to be followed by the servicing agents in each state in administering the group policy.

The plaintiff joined Service Station Dealers of America and purchased health insurance coverage for his family through ASFI, which became effective in March 1982. At that time the policy covered his sons, Mark, age 18, and Steven, age 20, who was enrolled as a full-time student. Tragically, on August 21, 1982, Mark, as a result of an accident, became a quadriplegic. During that same summer, Steven was diagnosed as having a fatal illness and did not return to school. Both required hospitalization and extensive nursing care. In August 1983, a decision was made by Maryland, and communicated to plaintiffs through Florida, that Mark was not covered since the accident occurred after his 19th birthday, and that Steven was not covered because he was no longer a full-time student.

In fact, the benefits book prepared by Maryland provided that children were covered until the end of the calendar year in which they turned 19 and that full-time students were covered until the end of the calendar year in which they turned 23. However, the NAEGS provided that, where a 19 year old, or older, child was incapable of self support due to physical incapacity, that child would remain covered, provided the incapacity occurred prior to the child's 19th birthday.

The Weiners' nursing service terminated home care as to both children when they learned that coverage was no longer available. The plaintiffs' attorney contacted Florida and was told that the question of coverage was Maryland's decision. The attorney was referred to a Maryland executive, who advised him that Maryland had terminated coverage. The result was loss and suffering by the family from the lack of nursing care. Florida did offer, and did furnish, a conversion policy as to Mark, which did not include major medical coverage. It did not advise plaintiffs of their right to a conversion policy for Steven.

In October 1983, the Weiners filed suit, alleging the following counts: I.) fraud as to Maryland; II.) fraud as to Florida for falsely representing to the plaintiffs that they needed to purchase a conversion policy for Mark after his 19th birthday; III.) intentional infliction of mental distress as to both companies; IV.) negligence as to Maryland; and V.) negligence as to Florida. In March 1984, Maryland agreed to reinstate the coverage. The jury found in favor of Florida on the negligence claim and in favor of plaintiffs on all other counts. The verdict against Maryland was for $500,000 compensatory damages and $5,000,000 punitive damages, and against Florida for $200,000 compensatory and $1,500,000 punitive damages.

With respect to the fraud claim, Florida contends that there was no evidence that the conduct of its employees was anything more than negligent. Florida argues that it was entitled to rely upon what it was told by its principal, Maryland, and by ASFI, as it did not have the contract, even if a copy of the booklet was in Florida's possession. We concur, and conclude that Florida was entitled to a directed verdict on the fraud claim. Recovery for fraud requires proof of intentional and knowing misrepresentation of material fact, designed to cause detrimental reliance. See First Interstate Development Corp. v. Ablanedo, 511 So.2d 536 (Fla.1987); A.S.J. Drugs, Inc. v. Berkowitz, 459 So.2d 348 (Fla. 4th DCA 1984). As an agent, Florida relayed the decisions of its principal to plaintiffs and their attorney. There was no proof of any intentional misrepresentation or any actual knowledge by Florida that Mark and Steven remained covered by the Maryland policy.

While the failure of Florida to provide broader benefits in the conversion contract may have been negligent, or a breach of contract, there is no proof of fraud. The evidence reflects that even prior to the accident, ASFI, which had no connection to Florida, had advised plaintiffs of the impending expiration of coverage upon Mark's 19th birthday and directed the insured to contact Florida about conversion to a non-group plan for Mark, and that this advice was subsequently repeated to plaintiffs by ASFI. It is further apparent from the record that once Maryland decided to terminate coverage, Florida had a contractual duty to offer the alternative coverage. Thus, the plaintiffs failed to establish that Florida knew that any of its representations, either as to the need for a conversion policy or as to coverage under either policy, were false.

With respect to the intentional infliction of emotional distress claim against Florida, we also reverse. In Metropolitan Life Insurance Co. v. McCarson, 467 So.2d 277 (Fla.1985), the supreme court applied these comments given in the Restatement (Second) of Torts, § 46 (1965):

d. Extreme and outrageous conduct

... It has not been enough that the defendant has acted with an intent which is tortious or even criminal, or that he has intended to inflict emotional distress, or even that his conduct has been characterized by "malice," or a degree of aggravation which would entitle the plaintiff to punitive damages for another tort. Liability has been found only where the conduct has been so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community.

Generally, the case is one in which the recitation of the facts to an average member of the community would arouse his resentment against the actor, and lead him to exclaim, "Outrageous!"

....

g. The conduct, although it would otherwise be extreme and outrageous, may be privileged under the circumstances. The actor is never liable, for example, where he has done no more than to insist upon his legal rights in a permissible way, even though he is well aware that such insistence is certain to cause emotional distress.

There, Metropolitan Life issued a group insurance policy to McCarson, which covered employees of his shop, including his wife. Mrs. McCarson became incapacitated the next year with Alzheimer's disease, and the insurer stopped payment of her benefits, claiming her condition was preexisting. McCarson filed suit and Metropolitan Life was found in breach of contract and ordered to provide coverage. Mrs. McCarson later needed continual nursing care, for which Metropolitan was responsible until the policy lapsed or she became eligible for Medicare. The insurer requested proof of ineligibility for Medicare, and discontinued payment of benefits when it received no response. Looking at the facts in the light most favorable to the plaintiff, the supreme court ruled that they were not, as a matter of law, " 'so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency.' " McCarson at 279.

Here, there was no evidence that Florida had the authority to make independent coverage decisions with respect to Maryland's policy, and it initially double checked the coverage question with Maryland. In any event, it is undisputed that, when questioned about the coverage issue, Florida referred plaintiffs' counsel to Maryland, and that all further discussions were between them. The proof simply failed to reach the heavy burden required for recovery on this tort. See Metropolitan Life Insurance...