Brown v. Blue Cross & Blue Shield of Miss.

• Decision Date: 23 February 1983
• Docket Number: No. 53536,53536
• Parties: Jerry L. BROWN & Linda L. Brown v. BLUE CROSS & BLUE SHIELD OF MISSISSIPPI, INC., et al.
• Court: Mississippi Supreme Court

Page 139

427 So.2d 139

Jerry L. BROWN & Linda L. Brown v. BLUE CROSS & BLUE SHIELD OF MISSISSIPPI, INC., et al.

No. 53536.

Supreme Court of Mississippi.

Feb. 23, 1983.

Drake & Graben, Robert F. Drake, Hattiesburg, for appellants.

Sally McDavid, Jackson, for appellees.

En banc.

ON PETITION FOR REHEARING

The former opinion in this cause rendered on December 1, 1982, is withdrawn and this opinion substituted therefor.

Jerry L. Brown and his wife, Linda L. Brown, have appealed an order of the Circuit Court of Marion County sustaining a demurrer to their declaration against the defendant Blue Cross and Blue Shield of Mississippi, a Mississippi corporation. We reverse.

The sole issue we address on this appeal is whether the allegations of their declaration (as amended) stated a cause of action against Blue Cross. The Browns alleged Jerry was employed by Corr-Williams Tobacco Company, a Mississippi corporation, from July 1, 1974, through October 1, 1976, and again from November 10, 1977, through April 15, 1978. ¹

Corr-Williams, as employer, had in effect a group policy with Blue Cross for hospital and medical benefits, including maternity benefits, in which the Browns participated. Relying upon this coverage, the Browns planned and conceived a child in October 1975, after the waiting time required in the policy had expired. Mrs. Brown gave birth to a son July 13, 1976, in the Forrest General Hospital in Hattiesburg and was attended by a physician, resulting in medical expenses.

On February 1, 1976, Corr-Williams terminated its employee group coverage with Blue Cross without notification or consultation with the Browns. The replacement insurance carried no maternity benefits, and this cancellation precluded the Browns from obtaining adequate insurance. Had this policy with Blue Cross not been cancelled, the Browns would have been entitled to benefits thereunder. Their maternity benefits had accrued under the policy after they had waited the 270 days after being covered.

In Locomotive Engineers' Mutual Life & Accident Ins. Co. v. Meeks, 157 Miss. 97, 127 So. 699 (1930), this Court, in referring to an insurance contract, stated:

Being a business contract, this policy should be construed, like any other contract, with reference to the object, purpose, conditions, and circumstances.

(157 Miss. at 108, 127 So. at 703).

It is the position of Blue Cross on this appeal that it had the contractual right to terminate all benefits under this policy without any consideration whatever to beneficiaries such as the Browns, who had made plans in reliance thereon, and having irrevocably committed themselves to incur expenses for which they anticipated at least partial payment under the policy. It is extremely unlikely the Browns would have been interested in any insurance policy giving a company a blanket right to terminate all benefits under such circumstances. Of what value is such a policy to an insured?

In Gulf Guaranty Life Insurance Co. v. Kelley, 389 So.2d 920 (Miss.1980), Kelley procured a credit life insurance certificate through a Lucedale bank on June 28, 1975. He suffered a heart attack on July 1, and Gulf Guaranty learned of this July 18, and cancelled the insurance certificate under its contract giving it the absolute right to cancel a certificate at any time within ninety (90) days from the date of the issue of a certificate. Upon appeal, we recognized the contractual rights of the insurance carrier to cancel the policy, but held Gulf Guaranty was estopped to cancel as a matter of public policy:

Defendant argues it had the absolute right under the terms of its master policy to cancel the certificate of insurance issued to Kelley within 90 days from the date of issue. Ordinarily, this defense would be upheld; however, in this case the onset of Kelley's fatal illness occurred after the policy was in effect and continued without remission until his death....