Callahan v. Washington National Ins. Co.

• Court: Nebraska Supreme Court
• Writing for the Court: MILLER-LERMAN, J.
• Citation: Callahan v. Washington National Ins. Co., 608 N.W.2d 592, 259 Neb. 145 (Neb. 2000)
• Decision Date: 07 April 2000
• Docket Number: No. S-98-1288.,S-98-1288.
• Parties: Troy CALLAHAN, appellant, v. WASHINGTON NATIONAL INSURANCE COMPANY, appellee.

608 N.W.2d 592

259 Neb. 145

Troy CALLAHAN, appellant, v. WASHINGTON NATIONAL INSURANCE COMPANY, appellee.

No. S-98-1288.

Supreme Court of Nebraska.

April 7, 2000.

M.J. Bruckner and John C. Fowles, of The Bruckner/Ballew Law Firm, P.C., Lincoln, for appellant.

Thomas J. Walsh, Jr., of Walsh, Fullenkamp & Doyle, Omaha, for appellee.

WRIGHT, CONNOLLY, GERRARD, STEPHAN, McCORMACK, and MILLER-LERMAN, JJ.

MILLER-LERMAN, J.

NATURE OF CASE

Troy Callahan filed a declaratory judgment action against Washington National Insurance Company (Washington National) seeking a determination that Washington National was obligated to insure him pursuant to an application for health insurance which he completed on April 15, 1996. Washington National rejected Callahan's application after he was injured in a farm accident on April 30. Callahan filed a motion for partial summary judgment, and Washington National filed a cross-motion for summary judgment. The district court for Hall County reasoned that Callahan's application was an offer to purchase insurance coverage which was not accepted by Washington National. The district court overruled Callahan's motion and sustained Washington National's motion for summary judgment. Callahan appealed. We affirm.

STATEMENT OF FACTS

Callahan began working as a farmhand for Louis Myers in March 1996. Shortly thereafter, Myers arranged for Callahan to apply for health insurance for which Myers would pay the premiums. On April 15, at the Sorenson Larson Agency in Cairo, Nebraska, Callahan filled out an application for Washington National's "WNGUARD" group plan health care insurance. Dorothy Obermeyer, a partner in the Sorenson Larson Agency, assisted Callahan in completing the application. Obermeyer wrote Callahan's responses on the application, and Callahan signed the application. Lennis Devine, Obermeyer's partner and a licensed agent of Washington National, signed the application as its "Producer."

The application contained a section labeled "Requested Effective Date" which included three options: a specific date, the date of the underwriting approval, or the first specified day of the month following the underwriting approval. The instructions for the section provided that the date requested must be at least 10 days but no more than 60 days after the application date. For his proposed effective date, Callahan selected the "date of the underwriting approval" option.

A section of the application labeled "Applicant's Attestation" contained the following language:

By signing below, I attest that I have read the completed application form and that all my answers and statements recorded therein are correct, complete and wholly true to the best of my knowledge and belief. I understand that my qualification for insurance is based upon my answers and statements. I understand: 1) that this completed application, is the basis upon which Washington National will decide to insure me....

The "Applicant's Attestation" section further provided:

I understand that the insurance applied for shall not become effective until the date specified on the schedule page of the certificate issued by WNIC, or any amendment thereto, and the initial premium (including applicable fees) is paid in full, but in no event will insurance become effective earlier than 10 days after the date of this application.

The application also included a section labeled "Disclosure Authorization" which provided:

By signing below, I authorize any licensed physician, medical practitioner, hospital, clinic or other medical or medically-related facility, insurance company, Equifax, the Medical Information Bureau (MIB) or other organization, institution or person that has any information about me or my family members named in this application, or our health, to disclose to WNIC or its reinsurers, any such information.... This form is valid for 30 months from the date shown below.

Sometime after the application was completed, Obermeyer received a check from Myers dated April 19, 1996, in the amount of $473.52. Obermeyer forwarded the application and the check to Midwest Health Services, a representative of Washington National in Hastings. Midwest Health Services sent a letter dated April 22, 1996, to the Sorenson Larson Agency acknowledging receipt of the application and the check. Washington National received the application on April 26 and deposited the check into its account on April 30.

Callahan was injured in a farm accident on April 30, 1996. In the accident, Callahan sustained serious injuries including the loss of his left arm from above the elbow and the loss of his right leg below the knee.

On May 9, 1996, Washington National sent a letter to Callahan informing him it was unable to accept his application for health insurance. Washington National stated in the letter, "We regret that we were not able to accept your application because of your recent accident and the severity of the injuries." Washington National enclosed a refund check in the amount of $468.52, representing the amount of the check mailed with the application less a nonrefundable application fee of $5.

Callahan filed a petition for declaratory judgment on April 14, 1997, seeking a determination that he was covered by health care insurance pursuant to the policy of Washington National for which he had applied and was entitled to all benefits provided by the policy including payment of medical bills. Washington National answered that Callahan failed to meet its underwriting guidelines at the time its underwriting department reviewed his application, that its denial was proper, and that no policy had been issued.

Callahan moved for partial summary judgment, asking the district court to find that Washington National was obligated to insure him as a matter of law. A hearing on Callahan's motion for partial summary judgment was held September 1, 1998, at which time evidence was presented and Washington National indicated it would file a cross-motion for summary judgment. The hearing was continued pending the filing of Washington National's motion. Washington National filed its motion for summary judgment, and on November 17, the district court received further evidence and heard further argument.

On November 25, 1998, the district court entered its order overruling Callahan's motion for partial summary judgment and sustaining Washington National's motion for summary judgment. In its order, the district court stated as follows:

The Court finds that in this tragic set of circumstances the insurance application is unambiguous that the Plaintiff submitted that it was an application only and subject to acceptance by the Defendant company after an underwriting decision was made within a certain time period; between the time of the application and the acceptance period Plaintiff suffered a medical condition upon which the Defendant refused to accept the application of the Plaintiff which is an unambiguous right reserved by the Defendant company at the time the application was presented.

(Emphasis in original.) Callahan appealed.

ASSIGNMENTS OF ERROR

Callahan asserts that the district court erred (1) in sustaining Washington National's motion for summary judgment and holding as a matter of law that Washington National reserved the right to refuse Callahan's application based upon a medical condition that occurred after Callahan completed, signed, and delivered the application to Washington National with the first year's premium and a nonrefundable application fee and (2) in overruling Callahan's motion for partial summary judgment and failing to hold that, pursuant to the terms of the application, Washington National was obligated, as a matter of law, to provide Callahan with the coverage for which he had applied for the reason that Callahan was insurable at the time he completed, signed, and delivered the application to Washington National with the first year's premium and a nonrefundable application fee.

STANDARD OF REVIEW

Summary judgment is proper only when the pleadings, depositions, admissions, stipulations, and affidavits in the record disclose that there is no genuine issue as to any material fact or as to the ultimate inferences that may be drawn from those facts and that the moving party is entitled to judgment as a matter of law. Parnell v. Madonna Rehab. Hosp., 258 Neb. 125, 602 N.W.2d 461 (1999). Although the denial of a motion for summary judgment, standing alone, is not a final, appealable order, when adverse parties have each moved for summary judgment and the trial court has sustained one of the motions, the reviewing court obtains jurisdiction over both motions and may determine the controversy which is the subject of those motions or make an order specifying the facts which appear without substantial controversy and direct further proceedings as it deems just. Ferguson v. Union Pacific RR. Co., 258 Neb. 78, 601 N.W.2d 907 (1999).

In an appeal from a declaratory judgment, an appellate court, regarding questions of law, has an obligation to reach its conclusion independent from the conclusion reached by the trial court....