Celtic Life Ins. Co. v. Coats
| Decision Date | 10 June 1992 |
| Docket Number | No. 3-90-279-CV,3-90-279-CV |
| Citation | 831 S.W.2d 592 |
| Parties | CELTIC LIFE INSURANCE COMPANY, Appellant, v. John D. COATS, Jr., Appellee. |
| Court | Texas Court of Appeals |
Alice M. Giessel, Giessel, Stone, Barker & Lyman, Houston, for appellant.
Tim Labadie, Longley & Maxwell, Austin, for appellee.
Before CARROLL, C.J., and ABOUSSIE and KIDD, JJ.
This is an appeal from a suit by an insured against his group health insurer, Celtic Life Insurance Company, for misrepresentations made by the insurer's soliciting agent. Suit was brought under the Insurance Code article 21.21 1 and the Deceptive Trade Practices-Consumer Protection
Act (DTPA), 2 and on theories of common-law fraud and misrepresentation. Judgment was rendered on a verdict in favor of the insured. We affirm the judgment.
In August 1984 appellee, John D. Coats, Jr., acquired ownership of Aloha Pools, a swimming pool construction and service company. Aloha had previously been part of a larger company called Swim Pack. When Aloha became a separate entity it fell below the minimum number of employees necessary to continue group health insurance coverage with Swim Pack's insurer. That coverage ceased for Aloha's employees on January 31, 1985.
In September 1984 Coats met with Ken Harrell, an independent insurance agent and Celtic's soliciting agent, to discuss replacement coverage. According to Coats, he told Harrell he was particularly interested in psychiatric benefits equal to or greater than the $20,000 psychiatric benefits available under Swim Pack's policy.
Harrell returned with a brochure describing the coverage and benefits of a policy from Celtic called the "Horizon Plan." Harrell orally summarized the brochure for Coats and discussed the benefits of the plan with Paula Engelmann, Aloha's business manager. Both Coats and Engelmann maintain that Harrell represented to them that the plan's $1 million maximum lifetime benefit applied to in-hospital psychiatric care. On Engelmann's recommendation, Coats purchased the Celtic policy, which became effective February 1, 1985.
Coats's son was admitted to Shoal Creek Hospital for psychiatric care the following August. Only then did Coats discover that Celtic's policy covered only $10,000 of his son's psychiatric treatment. Despite Harrell's further assurances at this time that the in-hospital psychiatric treatment was covered by the $1 million hospitalization limit, Celtic paid only $10,000 of the $27,000 medical expenses.
Coats filed suit seeking to hold Celtic liable for the additional costs of the psychiatric care on theories of common-law fraud and misrepresentation, and under the DTPA and article 21.21. The jury found that Ken Harrell had authority to explain, on behalf of Celtic, the benefits of the insurance policy and had misrepresented the terms, benefits, provisions, or conditions of the policy, which was the producing cause of damages to Coats. The jury failed to find that the misrepresentation was made knowingly or that Celtic authorized Harrell to make representations outside the scope of the written document concerning the insurance policy's terms, benefits, provisions, and conditions.
The trial court rendered judgment on the verdict awarding Coats $27,584.57 in actual damages, consisting of reasonable and necessary medical expenses and prejudgment interest. This amount was trebled under the mandatory treble-damages provision of article 21.21. 1985 Tex.Gen.Laws, ch. 22, § 3, at 395 (). The trial court also awarded Coats attorney's fees and court costs under article 21.21, section 16.
Celtic's first point of error complains that the evidence was factually insufficient to support the jury's affirmative answer to question number one. As submitted to the jury, this question read:
Did Kenneth Harrell make any misrepresentations concerning the terms, benefits, provisions, or conditions of the insurance policy such as to be a producing cause of damages to John Coats, Jr.,....
The court defined "misrepresentation" to the jury as any of the following:
(1) any untrue statement of a material fact; or
(2) any omission to state a material fact necessary to make the statements made not misleading (considered in the light of the circumstances under which they are made) or;
(3) the making of any statement in such a manner or order to mislead a reasonably In reviewing the factual sufficiency of the evidence the court must consider and weigh all of the evidence, both supportive of and contrary to the contested finding. Plas-Tex, Inc. v. U.S. Steel Corp., 772 S.W.2d 442, 445 (Tex.1989). The contested findings will be upheld unless we find that: (1) the evidence is too weak to support the finding; or (2) the finding is so against the overwhelming weight of the evidence as to be manifestly unjust. Garza v. Alviar, 395 S.W.2d 821, 823 (Tex.1965). We will not substitute our finding for that of the trier of fact merely because we might have reached a different factual conclusion. Otis Elevator Co. v. Joseph, 749 S.W.2d 920, 923 (Tex.App.1988, no writ).
prudent person to a false conclusion of a material fact.
After considering all of the evidence in the record we hold that the evidence was sufficient for the jury to conclude that Harrell made untrue statements of material fact, omitted to state a material fact, and made a statement that misled Coats to arrive at false conclusions regarding the policy's coverage, all of which come within the court's definition of misrepresentation.
Coats testified that he told Harrell at their first meeting that he was particularly interested in psychiatric benefits because one of his sons had required psychiatric care and he anticipated that his second son might need similar care. He gave Harrell a brochure explaining Swim Pack's coverage and requested that Harrell find replacement coverage that included psychiatric benefits equal to or greater than the $20,000 available under Swim Pack's policy. Harrell returned with a brochure describing Celtic's Horizon Plan and orally summarized the plan for Coats, comparing Swim Pack's plan limit of $20,000 psychiatric benefits to the Horizon Plan's maximum lifetime hospitalization benefits of $1 million, without mentioning that psychiatric benefits were limited to $10,000. Coats could not remember whether Harrell ever expressly told him that the $10,000 limit on psychiatric care benefits applied only to doctors and not to hospitalization. Coats never read the brochure himself. Even if he had read there was a $10,000 limit, he conceded that he might have bought the policy anyway.
Coats testified that he delegated the responsibility for finding out about the insurance coverage to Engelmann, asking her to go over the brochure, listen to Harrell's presentation, and have Harrell answer her questions. Engelmann never told Coats the substance of her conversations with Harrell about the psychiatric-care benefits; she told him only that she was satisfied with the policy. Coats bought the policy based on Engelmann's opinion.
After his second son was admitted to Shoal Creek Hospital in August 1985 for psychiatric care, Coats discovered for the first time there was a $10,000 limit on psychiatric-care benefits. He called Harrell, who again assured him that he was covered and that the plan covered $1 million of hospitalization. Celtic paid only the $10,000 and Coats paid the remaining $17,000.
Engelmann testified that she was present when Coats told Harrell at their first meeting that he was interested in psychiatric-care benefits. When she read in the brochure that there was a $10,000 limit on psychiatric benefits she discussed the matter with Harrell. He told her that the $10,000 limit applied only to out-patient psychiatric care while the $1 million hospitalization limit applied to in-patient psychiatric care.
Engelmann agreed that the section of the brochure explaining psychiatric benefits does not specify that the $10,000 limit applies only to out-patient care and that Harrell did not tell her he was authorized to change or alter the terms of the policy. Nevertheless, after reading the brochure and discussing the coverage with Harrell, Engelmann told Coats she was satisfied with the policy.
Harrell was unable to recall the details of his dealings with Coats and Engelmann. He testified that he was not sure whether he told Coats the psychiatric care was limited to $10,000, but he testified he never told anyone there was a $1 million limit on Although there was conflicting evidence, the jury was able to hear the testimony and view the demeanor of Coats, Engelmann and Harrell. They apparently found Coats's and Engelmann's versions of the events more persuasive than Harrell's. The jury is the sole judge of the credibility of the witnesses and the weight of their testimony and is free to believe or disbelieve that testimony in whole or in part. Rego Co. v. Brannon, 682 S.W.2d 677, 680 (Tex.App.1984, writ ref'd n.r.e.). We overrule Celtic's first point of error.
psychiatric-care coverage, whether in-hospital or at the doctor's office; he knew that the $10,000 applied to all psychiatric care. He never told Coats or Engelmann that he was authorized to do more than explain coverage discussed in the brochure and he had no incentive to trick Coats because his commission was only about sixty dollars per month. He testified that Coats and Engelmann told him at one meeting that they did not have time to sit down and go over all the details of the policy and asked him to leave a brochure for them to review.
In points of error two and three Celtic complains that the trial court erred in refusing to submit its proposed jury question on reliance and in entering judgment without obtaining a jury finding that Coats relied on Harrell's misrepresentation in deciding to purchase the insurance...
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