Curran v. Time Ins. Co., Civ. A. No. 82-314-JLL.

• Decision Date: 30 September 1986
• Docket Number: Civ. A. No. 82-314-JLL.
• Citation: 644 F. Supp. 967
• Parties: Michael CURRAN and Catherine Curran, Plaintiffs, v. TIME INSURANCE COMPANY and Massachusetts Mutual Life Insurance Company, Defendants.
• Court: U.S. District Court — District of Delaware

644 F. Supp. 967

Michael CURRAN and Catherine Curran, Plaintiffs, v. TIME INSURANCE COMPANY and Massachusetts Mutual Life Insurance Company, Defendants.

Civ. A. No. 82-314-JLL.

United States District Court, D. Delaware.

September 30, 1986.

Louis B. Ferrara of Aerenson, Ferrara & Lyons, Wilmington, Del., for plaintiff.

Donald Elihu Evans of Bryde, Ament & Evans, Wilmington, Del., for defendant Time Ins. Co.

George H. Seitz III and Michael P. Kelly of Prickett, Jones, Elliott, Kristol & Schnee, Wilmington, Del., for defendant Massachusetts Mut. Life Ins. Co.

OPINION

LATCHUM, Senior District Judge.

This is an action for recovery under certain medical insurance policies. The action is brought by Michael Curran and Catherine Curran (the "plaintiffs") against Time Insurance Company ("Time"), a Wisconsin corporation, and Massachusetts Mutual Life Insurance Company ("Massachusetts Mutual"), a Massachusetts corporation, to recover the cost of medical care provided for the plaintiffs' minor son, Michael Curran III. Both Time and Massachusetts Mutual seek determinations by this Court that they are not liable, as a matter of law, to plaintiffs for extended benefits coverage, given certain facts stipulated to by the parties. For the reasons stated in this opinion, declaratory judgment will be granted in favor of defendant Massachusetts Mutual but denied with respect to defendant Time.

I. FACTS PERTAINING TO THESE MOTIONS

The parties have agreed by stipulation to many of the facts in this case, although some of the facts discussed in this section represent contentions made by one of the parties. (Docket Item "D.I." 39.)

On May 4, 1980, the plaintiffs' minor son, Michael Curran III ("Michael"), was injured in an accident. At the time of the accident, the plaintiff Michael Curran ("Curran") and his dependents were insured under a group medical plan issued to Michael Curran's employer, Epicom, Inc. ("Epicom"). The policy was issued by Time. On July 1, 1980, Epicom switched providers of group medical insurance from Time to Massachusetts Mutual. This change terminated Curran's and his dependents' insurance coverage with Time.

The Time policy had an "Extension of Benefits Upon Termination of Master Policy" clause. The clause stated:

When the Insured Member or eligible dependent is totally disabled at the time the Master Policy terminates, coverage for that covered person will continue and benefits will be provided for injury sustained or sickness contracted prior to termination, subject to policy provisions. Such extension will continue (1) for 365 days, (2) until the covered person is no longer disabled or (3) until the covered person is eligible for Group coverage by a succeeding carrier whichever occurs earliest.

Appendix to Defendant Time Insurance Company's Answering/Opening Brief, p. B-65. (D.I. 49A.) This clause serves as the basis for the plaintiffs' claim against Time. The plaintiffs contend that Michael was totally disabled on July 1, 1980, when the master policy was terminated and therefore, Time should cover medical expenses incurred through July 1, 1981. Time disputes this contention on grounds that once Epicom changed to the Massachusetts Mutual policy on July 1, 1980, Michael was eligible for group coverage by a succeeding carrier.

Curran and his dependents were covered by the Massachusetts Mutual policy for just the month of July 1980, because Curran's employment with Epicom ended on July 25, 1980.¹ The Massachusetts Mutual policy had an extended benefits clause similar to that in the Time policy. The clause stated:

If a Covered Individual incurs Covered Medical Expenses within a period of 12 months immediately following the discontinuance of such individual's insurance under this Part, benefits shall be payable as to such expenses as though such expenses had been incurred prior to such discontinuance, if

a. the expenses are due to an illness which commenced prior to such discontinuance, and

b. the individual was totally disabled by such Illness on the date of such discontinuance and remained so disabled continuously until the incurrence of the expenses for which claim is made.

Appendix to Defendant Massachusetts Mutual Life Insurance Company's Answering/Opening Brief, p. A-33a. (D.I. 42A.) (Emphasis added.) The Massachusetts Mutual policy defines "total disability of a dependent" as a "disability which commences subsequent to the effective date of the employee's insurance with respect to the dependent and which prevents the dependent from engaging any and all of his or her usual activities." Id. at A-3a. (Emphasis added.) The application for insurance filed by Epicom with Massachusetts Mutual stated that no member of the group to be insured were prevented by disability from performing their usual occupational duties.

Plaintiffs argue that if Time is not responsible for medical costs during the extended benefits period, then Massachusetts Mutual should have to pay for costs incurred through July 31, 1981. Massachusetts Mutual takes the position that even if Michael was totally disabled, he was disabled prior to the effective date of the policy and therefore was excluded both by the terms of the policy and the information contained in Epicom's application for insurance.

Plaintiffs notified Time on December 15, 1980, of the accident and requested the payment of benefits under the Time policy. Time has made payments totalling $1,139.20 for medical bills related to the accident and incurred prior to July 1, 1980, but Time has refused to make payments for bills submitted pursuant to the extended benefits clause. Due to Time's refusal to pay, plaintiffs filed suit against Time in this Court on May 28, 1982.

Plaintiffs contend that they were unaware of the change in group medical insurance providers until counsel for Time identified Massachusetts Mutual as a potential party to this action after suit had been filed against Time. Plaintiffs notified Massachusetts Mutual of the accident and requested the payment of benefits on October 4, 1982. Despite considerable correspondence over the next sixteen months between plaintiffs, plaintiffs' counsel, and Massachusetts Mutual, the plaintiffs' claim was not resolved and Massachusetts Mutual has yet to make any payment for medical expenses related to the May 4, 1980 accident. Due to the inability to resolve the claim, the plaintiffs amended their complaint on February 8, 1984, to add Massachusetts Mutual as a party defendant. (D.I. 15.)

The Court makes its determinations of liability on the basis of the stipulated facts and the parties' briefs. To make such determinations the Court must find that Massachusetts Mutual and Time are entitled to judgment in their favor as a matter of law and that the resolution of the issue of liability does not depend on triable issues of fact. Tomalewski v. State Farm Life Insurance Co., 494 F.2d 882, 884 (3d Cir. 1974), quoting Mintz v. Mathers Fund, Inc., 463 F.2d 495, 498 (7th Cir.1972). Additionally, the evidence "must be viewed in the light most favorable to the opposing party." Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 1608, 26 L.Ed.2d 142 (1970); Brandywine One Hundred Corp. v. Hartford Fire Insurance Co., 405 F.Supp. 147 (D.Del.1975). With these principles in mind, the Court will address the contentions of the parties.

II. LIABILITY DETERMINATION OF MASSACHUSETTS MUTUAL

Massachusetts Mutual puts forth a variety of arguments in support of its contention that the extended benefits provision in its policy does not apply to the plaintiffs. Massachusetts Mutual contends that (1) the policy's definition of "total disability of a dependent" excludes the plaintiffs' minor son from extended benefits coverage, (2) plaintiffs failed to file this action against Massachusetts Mutual within the applicable limitations period, (3) plaintiffs failed to submit proof that Michael was totally disabled, (4) plaintiffs failed to comply with the notice of injury and proof of loss deadlines contained in the policy, (5) Time's extended benefits coverage was in effect which precluded coverage by Massachusetts Mutual due to an "other insurance" rider in the Massachusetts Mutual Policy, and (6) the Massachusetts Mutual policy with Epicom is void because of inaccurate information in the application for insurance. The Court bases its conclusion that Massachusetts Mutual is not liable to the plaintiffs on the first two arguments and therefore finds it unnecessary to address or resolve Massachusetts Mutual's other contentions.

A. Policy Language

The Massachusetts Mutual policy clearly states that the extended benefits clause only covers individuals who were totally disabled on the date its policy was discontinued. Although the plaintiffs and Massachusetts Mutual apparently disagree about whether Michael was ever totally disabled, given the policy's definition of "total disability of a dependent," neither this Court nor a jury needs to determine whether Michael was totally disabled on July 31, 1980. As discussed above, the policy defines "total disability of a dependent" as a disability which commences subsequent to the effective date of the policy. Plaintiffs have never alleged that Michael's disability commenced after the Massachusetts Mutual policy became effective. In fact, plaintiffs' action against Time for extended benefits coverage hinges on their contention that Michael was totally disabled prior to July 1, 1980.

The Massachusetts Mutual policy with Epicom specifies that the policy is subject to the laws of Florida. Under Florida law, courts are not authorized to extend insurance coverage beyond the plain language of a policy in the absence of ambiguity, waiver, estoppel, or contradiction of public policy.²Velasquez v. American Manufacturers Mutual Insurance Co., 387 So.2d 427, 429 (Fla.App.1980). See also Blue Cross of Florida, Inc. v. Dysart, 340 So.2d 970, 974 (Fla.App.1976); United States Fire Insurance Co....