Danzig v. Dikman

• Decision Date: 23 December 1980
• Docket Number: I,No. 3,3
• Citation: 434 N.Y.S.2d 217,78 A.D.2d 303
• Parties: Daniel DANZIG and Ida Danzig, Plaintiffs-Appellants, v. Michael DIKMAN, as President of the Queens County Bar Association, Edwin J. Freedman, as President of the Nassau County Bar Association, Blue Cross and Blue Shield of Greater New York, Paine Ward Agency,nc., Bernard J. Ferguson, Individually, and as Chairman, Committee on Insurance Law Queens County Bar Association, and Fred A. Brue, as Executive Director, Queens County Bar Association, Defendants-Respondents.
• Court: New York Supreme Court — Appellate Division

Page 217

434 N.Y.S.2d 217

78 A.D.2d 303

Daniel DANZIG and Ida Danzig, Plaintiffs-Appellants, v. Michael DIKMAN, as President of the Queens County Bar Association, Edwin J. Freedman, as President of the Nassau County Bar Association, Blue Cross and Blue Shield of Greater New York, Paine Ward Agency, No. 3, Inc., Bernard J Ferguson, Individually, and as Chairman, Committee on Insurance Law Queens County Bar Association, and Fred A Brue, as Executive Director, Queens County Bar Association Defendants-Respondents.

Supreme Court, Appellate Division, First Department.

Dec. 23, 1980.

Richard A. Danzig, New York City, of counsel (Douglas J. Danzig, New York City, with him on brief; Fanelli, Moore, Bosco, Penzel & McMillan, New Rochelle and Wender, Murase & White, New York City), for plaintiffs-appellants.

John F. Mulholland, Garden City, of counsel (Mulholland, Minion, Roe & Clifford, Garden City), for defendant-respondent, Paine Ward Agency No. 3, Inc.

Jerrold I. Ehrlich, New York City, for defendant-respondent, Blue Cross and Blue Shield of Greater New York.

Lincoln D. Harkow, Forest Hills, of counsel (Frey & Harkow, Forest Hills, for defendants-respondents Dikman, Ferguson and Brue.

Before KUPFERMAN, J. P., and BIRNS, FEIN, SANDLER and LUPIANO, JJ.

LUPIANO, Justice.

Defendant Blue Cross and Blue Shield of Greater New York (hereinafter Blue Cross) issued a "Group Contract" to defendants, the Queens County Bar Association and the Nassau County Bar Association, the "Contract Holder." Plaintiff Daniel Danzig, a member in good standing of the Queens County Bar Association, applied for medical insurance under this group contract for himself (and for his spouse, plaintiff Ida Danzig, as a family member). Concomitant with plaintiff Daniel Danzig's endeavoring to enroll and become a subscriber to this group insurance, he received a booklet from the Queens County Bar Association, entitled "Blue Cross and Blue Shield and Major Medical Health Protection Program," which set forth the benefits of the policy which could be purchased at that time from Blue Cross through the Association. The booklet, under the section entitled "Major Medical Benefits," provides (at p. 27) that "Covered Services" include "Private Duty Nursing Service performed by a registered graduate nurse (RN) or a registered practical nurse, when the attending physician certifies that the service is needed." The booklet, further provides (at p. 26) that after the deductible ($100) is met, during each Benefit Period, "Major Medical Benefits then apply" and Major Medical will then pay "80% of Covered Expenses up to a maximum allowance of $50,000" with "(t)he lifetime maximum" being "unlimited."

Several years ago, and while a subscriber to the medical insurance provided through the Bar Association, as aforesaid, plaintiff Daniel Danzig suffered a massive stroke requiring that he have daily nursing care. Defendant Blue Cross, pursuant to the terms of the policy subscribed to by said plaintiff (which, in pertinent part, specifically provided that there was no lifetime maximum for private duty nursing services) granted plaintiff Daniel Danzig private duty nursing benefits to the extent of 80% of the expense incurred in connection with such daily nursing care, after application of the $100 deductible, during each benefit period, up to September 1, 1978. It is asserted by counsel for Blue Cross that in consequence of general increases in the cost of health care covered under the Group Contract, Blue Cross was substantially increasing the premium for the contract year to commence September 1, 1978. He further stated that in order to avoid this increase, the parties to the Group Contract (the Bar Associations and Blue Cross) negotiated modification of that contract to take effect on September 1, 1978. Insofar as here pertinent, the benefits for private duty nursing were substantially affected by the modification, in that the contract, as amended, effective September 1, 1978, provided that a lifetime maximum of $5000 was available for private duty nursing care in place of the prior unlimited lifetime maximum.

It is admitted by Blue Cross' counsel that as a benefit period had commenced on March 18, 1978 (prior to the modification) for Mr. Danzig, Blue Cross continued to pay benefits for private duty nursing care to him until the benefit period ended on March 17, 1979, whereupon Blue Cross commenced paying benefits under the modification until the maximum amount of $5000 was disbursed. No further payments for the daily private duty nursing care required by Mr. Danzig will be forthcoming, according to Blue Cross.

Plaintiffs commenced the instant action seeking, inter alia, a declaration of their rights under the group policy. All defendants subsequently moved for partial summary judgment dismissing the first two causes of action of the amended complaint. The first cause of action against all defendants, in essence, alleges that the consent of the plaintiffs to the modification respecting nursing services was not obtained, which consent was required because plaintiffs' right to such benefits had vested. Injunctive, or, in the alternative, declaratory relief, is requested. The second cause of action against all defendants alleges breach of contract in their failure to provide private duty nursing benefits to Mr. Danzig. Trial Term granted the defendants' motions to the extent of dismissing the first and second causes of action and severing same from the third and fourth causes of action remaining in the complaint. We have determined to modify to the extent of declaring the rights of the parties under the Group Contract in this controversy.

The critical issue is not whether the parties to the Group Contract can enter into a modification of that contract, but whether such modification is binding upon plaintiffs, provided plaintiffs have theretofore obtained a vested right under the contract (which right is affected by that modification) without obtaining the consent of plaintiffs to such modification.

Plaintiff Daniel Danzig is presently seventy years of age. His wife unequivocally states that based upon the representation in the booklet above referred to, they subscribed to the policy and would not have done so if the policy permitted Blue Cross to terminate benefits at the end of any benefit period.

The Group Contract issued by Blue Cross to the Queens and Nassau County Bar Associations, set forth in the report, states that

"(i)n consideration of the application ... and of the payment of charges as provided in Article V hereof, AHS and UMS agree to provide benefits under the terms of this Contract ... for a period of One Year ... and for like Contract Periods thereafter, unless this Contract is terminated as provided herein."

Subdivision "D" of Article V provides that

"(t)he Subscription Changes for any Contract Period subsequent to the final Contract Period may be charged by AHS or UMS by giving written notice of such change to the Contract Holder at least 30 days prior to the commencement of such Contract Period."

No reference to the power to modify is set forth in the Group Contract. However, such contract in Article VI, entitled "Termination," grants to the parties (the Contract Holder or AHS or UMS) the option to terminate at the end of any "Contract Period" by the giving...