F. Robert Souers, M.D. v. Ins. Co. of North America, and Daniels-Head & Associates, Inc.
| Decision Date | 25 March 1981 |
| Docket Number | 9885,81-LW-4256 |
| Parties | F. ROBERT SOUERS, M.D., Plaintiff-Appellee Cross-Appellant, v. INSURANCE COMPANY OF NORTH AMERICA, and DANIELS-HEAD & ASSOCIATES, INC., Defendant-Appellants Cross-Appellees. C.A. |
| Court | Ohio Court of Appeals |
APPEAL FROM JUDGMENT ENTERED IN THE AKRON MUNICIPAL COURT OF THE COUNTY OF SUMMIT, OHIO CASE NO. 79 CV 3304.
RICHARD T. CUNNINGHAM and ROLAND H. BAUER, Attorneys at Law, 1100 First National Tower, Akron, OH 44308 for Plaintiff-Appellee Cross-Appellant.
MICHAEL TRAMONTE and ROBERT ORTH, Attorneys at Law, 300 Centran Bldg., Akron, OH 44308 for Defendant-Appellants Cross-Appellees.
DECISION AND JOURNAL ENTRY
This cause was heard March 2, 1981, upon the record in the trial court, including the transcript of proceedings, and the briefs. It was argued by counsel for the parties and submitted to the court. We have reviewed each assignment of error and make the following disposition:
Plaintiff below, Dr. Robert Souers, was awarded a money judgment against defendant Insurance Company of North America (INA). The latter seeks to reverse that judgment stating:
ASSIGNMENTS OF ERROR (INA)
Dr. Souers, also unsatisfied with the judgment, states in his cross-appeal:
ASSIGNMENT OF ERROR (SOUERS)
"Interest should have been assessed against INA on the judgment for $7,470.39 recovered by Dr. Souers."
In the main, the facts giving rise to the instant litigation, and thereafter to this appeal, are not in dispute.
Dr. Souers is, and has been at all times pertinent to the instant cause, a member of the Ohio State Medical Association (OSMA). As such, he became an insured under a certain health and accident policy. The named parties to the policy are INA as the insurer and OSMA as the policyholder. Benefits under the policy are restricted to members of the medical profession and their families. Acting as agent for INA and administrator thereof is Daniels-Head & Associates (Daniels); also named as a defendant in the cause below.
In 1975 certain modifications were made in regard to the Part II Description of Coverage portion of the policy. Dr. Souers claims he was not notified of this change; he continued to pay premiums regularly; thus he continued as an insured.
In 1978, plaintiff made claim for compensation. INA, in keeping with the modification in coverage mentioned above, paid but a fraction of that claim.
Plaintiff brought suit contending, in brief, that he was not bound by the terms of the modified coverage inasmuch as he had not been notified of its existence. The trial court agreed stating:
"***."
Defendant argues, first, that the facts suggest that plaintiff did receive notice of the policy change. This is a factual determination to be made, in this instance, by the trial judge. We believe the state of the evidence to be such as to warrant the decision that plaintiff did not receive the notice in question.
But defendant argues next, that even if defendant was not notified, it was, in any event, not necessary so long as the policyholder was made aware of the change. Defendant contends that particularly where, as here, the change in the policy resulted from negotiations between OSMA and INA, any failure of INA to notify plaintiff does not preclude plaintiff's being bound by the modification made.
In reaching our opinion in the cause, we have considered the sources relied upon by both the parties and by the court. We affirm the conclusion reached below.
In a strict sense, the cause before us is one of first impression in this state. The only two reported opinions, Hinkler v. Equitable Life Assur. Society (1938), 61 Ohio App. 140 and Taylor v. Continental Assur. Co. (1956), 104 Ohio App. 78, are factually distinguishable, and of limited assistance in reaching our opinion. The Taylor court's opinion suggests the desirability of affording employees notice of policy changes, but states that proper interpretation of the policy provisions in question does not permit mandating such action. The Hinkler case deals with the legal positions of the contracting parties and the necessity of consent by parties insured under a group life plan when the interest of those parties become vested. The issue of consent is not involved in the cause before us.
Finding, as we do, that the trial judge's findings of fact are correct, we are presented with the question: Where an insured party under a group health and accident policy (in which there appears no provision concerning notice of cancellation or modification) is not notified of the modification of the coverage provisions thereof, is that insured bound by the terms of the modification where these terms provide for less coverage than that to which the insured was entitled prior to modification?
Our review of various sources persuades us to answer this question in the negative.
We mention, first, in our discussion of this question, that the majority of the opinions considered deal with contracts associated with employer-employee relationships. Such a relationship inevitably raises the issue of the employees' contribution to the total premium payments made, and the effect of that contribution on the interest of the employer in the policy itself. In the instant cause, we have no need to consider that issue inasmuch as Dr. Souers and others are full contributors to the insurance plan. Being so, they become members of a class recognized in a great number of opinions: a class of insureds who stand in the position of parties to the contracts rather than mere nonpaying third-party beneficiaries thereto.
The Ohio statute recognizes group sickness and accident insurance as being issued upon one of a number of bases (R.C. 3923.12). One of these concerns policies issued to an employer (deemed the policyholder) insuring his employees; a second, such as the one before us now, concerns policies issued to an association formed for a purpose other than obtaining insurance. In the latter category, the policy is not maintained to benefit the association, its officers or trustees; it benefits the contributory members. We see clearly in the facts before us that members such as Dr. Souers are principals in relation to the contract at least to the degree that where modifications or cancellations are made in regard to the contract, such insureds are entitled to reasonable notice of such changes.
Other courts in other jurisdictions have considered the problem considered by us now. Without quoting their words on the subject, we refer to some as being of particular interest pertinent text material is also added. Annot. ...
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