BOWLING V. HMO PARTNERS, INC.

• Decision Date: 05 October 2005
• Docket Number: No. CV-2002-490,CA05-22,CV-2002-490
• Parties: SUSIE BOWLING v. HMO PARTNERS, INC., d/b/a HEALTH ADVANTAGE
• Court: Arkansas Court of Appeals

SUSIE BOWLING

v.HMO PARTNERS, INC., d/b/a HEALTH ADVANTAGE

CA05-22

No. CV-2002-490

Court of Appeals of Arkansas

October 5, 2005

DIVISION III

AFFIRMED

Larry D. Vaught, Judge

Susie Bowling appeals from an order of the Craighead County Circuit Court granting summary judgment to appelleeHMO Partners, Inc., d/b/a Health Advantage.We find no error and affirm the circuit judge's decision.

Bowling is a retired teacher who continued to participate in appellee's group health insurance plan offered by the State of Arkansas and administered by CobraServ.CobraServ collected the premiums and forwarded them to the Employee Benefits Division of the State of Arkansas, which then paid appellee.This process normally took forty-five days.CompLink, LP, assumed CobraServ's duties on November 1, 2001.After Bowling failed to make her October 1, 2001, premium payment on time, CobraServ notified her by letter dated October 23, 2001, that it was overdue, stating:

If full payment has not yet been remitted, please be reminded that it must be postmarked no later than the date your Grace Period ends.If payment is not made by the Grace Period ending date shown above, federal law requires that your COBRA continuation coverage be terminated as of the end of the last fully-paid period for lack of full and timely payment of premium.This requirement cannot be waived, and ifyour coverage is terminated due to lack of full and timely payment, it cannot be reinstated.

Around November 5, 2001, Bowling was hospitalized in Jonesboro with cirrhosis of the liver.Her doctors requested a transfer to the University of Tennessee Bowld Hospital in Memphis; UT Bowld, however, required that her insurance coverage be confirmed before it would admit her.Bowling's husband contacted CompLink and the State's Employee Benefits Division and was told that if a premium payment was made immediately coverage would be reinstated.On November 13, 2001, Bowling's husband wrote a check for the October premium.He also paid CompLink for the months of November and December.On November 13, 2001, according to the Jonesboro hospital's records, CompLink verified that appellant's insurance would be in effect when the payment was made.On November 15, 2001, UT Bowld contacted appellee and confirmed that appellee's medical director, Dr. Connie Meeks, had approved Bowling for an out-of-network transfer.Appellee issued a pre-certification number for the transfer.According to Dr. Meeks in her deposition, this pre-certification was contingent upon Bowling's coverage being in force, in which determination she played no part.Nevertheless, Bowling was transferred to UT Bowld and received medical treatment there, incurring substantial medical bills.She submitted evidence that CompLink and appellee verified coverage to UT Bowld before her transfer.

On November 16, 2001, appellee notified UT Bowld that Bowling's payment had been accepted and that her coverage had been reinstated in error and that she had no coverage.Ashli Davis, communications manager with the Employee Benefits Division, sent Bowling the following letter on November 19, 2001:

This letter is to inform you that the State of Arkansas Employee Benefits Division has no authority to override the decision by CobraServ (in compliance with COBRA law) to cancel your coverage with Health Advantage due to non-payment of October premium.The health and prescription coverage for you and your dependents ended September 30, 2001.

During my initial conversation with your husband on November 8, 2001, I surmised the coverage lapse had arisen during the transition from CobraServ to CompLink, our new COBRA administrator as of November 1st.Therefore, our office offered to take October payment directly and facilitate transition of service from one company to another.Upon further investigation, we learned your coverage had already been cancelled before the new company took over which was a fact we could not dispute.The check you sent to our office is enclosed.

On January 21, 2002, CompLink issued a premium reimbursement to Bowling.CompLink itself was not reimbursed until 2003.

Bowling sued CompLink and Ashli Davis on July 2, 2002.Ms. Davis and CompLink were dismissed as parties, and Bowling amended her complaint to add appellee as a defendant.In a third amended complaint, she alleged actual and constructive fraud, breach of contract, waiver of lapse of coverage, estoppel, CompLink's express or apparent authority as an agent for appellee, appellee's liability for CompLink's actions under the doctrine of respondeat superior, conversion of her premium payment, negligent breach of a duty to accurately advise Bowling of her contractual rights under the insurance plan, and bad faith.Bowling sought judgment for all of her medical bills incurred before January 2002, as well as compensatory and punitive damages for her mental and emotional distress and damaged credit.

Appellee moved for summary judgment, supporting its motion with exhibits that included excerpts from several depositions.In her deposition, Bowling admitted that she would have gone to UT Bowld regardless of whether she had insurance because her condition was terminal.Although Bowling submitted evidence in response to the motion, she did not dispute her admission.After a hearing, the circuit judge granted summary judgment to appellee, stating:

The court is convinced, from the information that has been submitted, that there is no reasonable dispute about the material facts involved in this case....[Bowling] testified in her deposition that she would have allowed herself to be transferred to UT Bowld and receive treatment regardless of whether or not she had insurance.Therefore, [Bowling's] claim that she incurred medical bills as a result of any of Health Advantage's actions fails as a matter of law based upon her own admissions.

This appeal followed.

Summary judgment should be granted only when it is clear that there are no disputed issues of material fact.Holliman v. Liles, 72 Ark. App. 169, 35 S.W.3d 369(2000)(treating a dismissal as a summary judgment).All evidence must be viewed in the light most favorable to the party resisting the motion, who is also entitled to have all doubts and inferences resolved in her favor.Id.Summary judgment is inappropriate when facts remain in dispute or when undisputed facts may lead to differing conclusions as to whether the moving party is entitled to judgment as a matter of law.Id.When the evidence leaves room for a reasonable difference of opinion, summary judgment is not appropriate.Id.The object of summary judgment proceedings is not to try the issues but to determine if there are any issues to be tried, and if there is any doubt whatsoever, the motion should be denied.Id.

In her first point, Bowling argues that the circuit judge erred in finding that she did not incur medical bills in reliance on any actions of appellee.This point logically belongs with her fraud, waiver, and estoppel arguments found in her second, third, and fifth points.Thus, we will address them together.

Bowling asserts that, by telling UT Bowld that her coverage was reinstated and then stating that it was not, a jury could find that appellee committed fraud; at the very least, she argues, appellee had a duty to inform UT Bowld that she did not have insurance coverage.Bowling does not dispute that she failed to pay her premium on time; instead, she argues, her payment of the late premium and her incurring liability for the medical bills, which she would not have owed if she had insurance, constituted legal detriment.Bowling acknowledges that, if she had not had insurance, she would have accepted the transfer to UT Bowld anyway, because the transfer was necessary to save her life.She argues, however, that reliance did occur because UT Bowld would not have accepted her if her coverage had not been reinstated.

In order to establish fraud, the party asserting it must prove the following: (1) a false representation of a material fact; (2) knowledge that the representation is false or that there is insufficient evidence upon which to make the representation; (3) intent to induce action or inaction in reliance on the representation; (4) justifiable reliance on the representation; (5) damage suffered as a result of the reliance.Goforth v. Smith, 338 Ark. 65, 991 S.W.2d 579(1999).Actual reliance means that the plaintiff acted or did not act by reason of the defendant's misrepresentation.Seeco, Inc. v. Hales, 341 Ark. 673, 22 S.W.3d 157(2000).

Bowling also contends that there is a disputed fact as to whether appellee represented to UT Bowld that her insurance coverage was reinstated or, at least, failed to inform it that she did not have coverage.A material misrepresentation of fact may be established by an omission or concealment of a fact when there is a duty to speak affirmatively; this duty only arises in the presence of special circumstances, such as a confidential relationship in which one party knows another is relying on misinformation to her detriment.SeeBerkeley Pump Co. v. Reed-Joseph Land Co., 279 Ark. 384, 653 S.W.2d 128(1983).For liability to arise for non-disclosure of facts, there must be reliance on the non-disclosure.Copelin v. Corter, 291 Ark. 218, 724 S.W.2d 146(1987).Our courts have held that a person may commit fraud even in the absence of actual dishonesty, a moral wrong, or an intention to deceive.SeeKnight v. Day, 343 Ark. 402, 36 S.W.3d 300(2001).This is constructive fraud, in which liability is premised on representations that are made by one who, not knowing whether they are true or not, asserts them to be true.Beatty v. Haggard, ___ Ark. App. ___, ___ S.W.3d ___(June 16, 2004).Constructive fraud has been defined as a breach of a legal or equitable duty, which, irrespective of the moral guilt of the fraud feasor, the law declares to be fraudulent because of its tendency to deceive others.Id.Thus,...