Goff v. Aetna Life & Cas. Co., Inc.

• Decision Date: 08 April 1977
• Docket Number: No. 48218,48218
• Citation: 1 Kan.App.2d 171,563 P.2d 1073
• Parties: Wiibur GOFF, Appellant, .v AETNA LIFE AND CASUALTY COMPANY, INCORPORATED, Appellee.
• Court: Kansas Court of Appeals

Page 1073

563 P.2d 1073

1 Kan.App.2d 171

Wiibur GOFF, Appellant, .v AETNA LIFE AND CASUALTY COMPANY, INCORPORATED, Appellee.

No. 48218.

Court of Appeals of Kansas.

April 8, 1977.

Syllabus by the Court

1. A group sickness and accident policy is required by K.S.A. 40-2209(B)(3) to contain provisions relating to notice of claim, claim forms, and proof of loss which are not less favorable to the individual insured than the corresponding provisions required of individual sickness and accident policies by K.S.A. 40-2203(A)(5), (6), and (7).

2. Where an insurance policy contains provisions less favorable to the insured than those required by statute, the statutory requirements will be read into the policy.

3. 'The period for which the insurer is liable,' as that phrase is used in K.S.A. 40-2203(A)(7), means any period of time, such as a month, for which the insurer is liable for a periodic payment contingent upon a continuing loss such as permanent and total disability.

4. Under K.S.A. 40-2203(A)(7) where the loss is of a continuing nature and the policy provides for periodic payments, if reasonably possible proof of loss must be filed within ninety days after the termination of a period for which a payment is due. If it is not reasonably possible to file proof within that time, the insured has an additional period to file such proof, not to exceed one year from the end of the ninety days.

5. The time limit for filing proof of loss under K.S.A. 40-2203(A)(7) operates in the same manner as a statute of limitations. After each installment is due it becomes barred if proof of loss is not timely filed, but the bar extends only to installments payable for those periods ending more than ninety days before the proof is filed, or ninety days plus one year before it earlier filing was not reasonably possible.

6. In an action to recover disability benefits under a group life, sickness and accident policy where plaintiff's proof of loss was filed more than three years after his coverage under the policy terminated, but because of the obscure nature of his disabling illness it could reasonably be found that he became disabled while covered and that his proof of loss was filed as soon as was reasonably possible, it is held: (a) the trial court erred in finding as a matter of law that plaintiff's proof of loss was not timely and in dismissing the action; (b) if plaintiff can establish that he became disabled while still covered by the policy and that his notice of claim and proof of loss were both filed as soon as was reasonably possible, only those monthly benefits accruing before March 1972 are barred by the required statutory policy provisions; and (c) plaintiff's claim for continuation of life insurance coverage was barred because his proof of loss was not timely under the actual policy provisions. Edward J. Hund, Jr. and Robert C. Brown, of Smith, Shay, Farmer & Wetta, Wichita, for appellant.

Jerry G. Elliott and Stephen T. Phelps, Foulston, Siefkin, Powers & Eberhardt, Wichita, for appellee.

Before FOTH, P. J., and ABBOTT and PARKS, JJ.

FOTH, Judge.

Plaintiff Wilbur Goff brought this action to recover disability benefits under a group life, sickness and accident policy issued by the defendant Aetna Life Insurance Company. The case was tried to a jury. At the conclusion of all the evidence the trial court ordered dismissal, or in the alternative a directed verdict, based on its finding that plaintiff had not timely filed his proof of loss. Plaintiff has appealed.

Plaintiff was an employee of the Boeing Company for some 25 years, reaching supervisory status, and his coverage under the group policy arose out of that employment. His evidence indicated that perhaps as early as 1967 and certainly by the summer of 1969 he began to experience forgetfulness and difficulty in concentrating. In August, 1969, he was put on sick leave with a diagnosis from a general practitioner of 'duodenal ulcer, active, abnormally nervous.' Six months later he was released to go back to work, but when offered a nonsupervisory job he elected to take early retirement (at age 55) instead.

Plaintiff's employment and the payment of his premiums under the policy ceased as of February 12, 1970. Plaintiff's condition slowly deteriorated and in early 1973 he was referred to a neurolgist. After extensive testing his condition was diagnosed as Alzheimer's disease. This is a rare, untreatable, terminal disease of the brain, marked by a slow loss of memory and intellectual power extending over a period of 4 to 20 years. Its onset is described as subtle and insidious, difficult to detect and frequently mistaken for other illnesses. The victim and his family, it is said, tend to compensate for and cover up the victim's deficiencies rather than to seek their cause.

The diagnosis was made in plaintiff's case on or about March 30, 1973. He filed his proof of loss with the defendant company on June 11, 1973. It is the company's position, sustained by the trial court, that this was too late because it came almost three and one-half years after his coverage under the policy had terminated.

Limitations on filing proof of loss were contained in two sources: the policy itself and the applicable Kansas statutes. The policy provided:

'Upon receipt by the Insurance Company at its Home Office, either before the discontinuance of premium payments for an employee's insurance, or within twelve months thereafter, of due proof that the employee, while insured under this Title, before attaining age sixty-five and before termination of employment with a Participant Employer, has become permanently and totally disabled, as hereinafter defined,

(1) the Insurance Company shall begin paying to the employee a monthly income in the amount hereinafter provided, and

(2) (provided for continuation of life insurance)

(3) (provided for payment of contributions for medical expense coverage).'

The policy, it may be seen, flatly required proof of loss within twelve months after premium payments stopped, or in this case not later than February 12, 1971. The June 1973, filing was clearly out of time under the policy.

This does not end the inquiry, however, and the trial court did not base its decision on the policy terms. Group sickness and accident policies are governed by K.S.A. 40-2209. The trial court and the parties agree that insofar as it provided monthly benefits the policy here was a group sickness and accident policy and subject to that section. Subsection (B)(3) of 40-2209 commands that each such policy shall contain provisions covering, among other things, 'notice of claim, proofs of loss and claim forms'. It goes on to say: 'Such provisions shall not be less favorable to the individual insured or his beneficiary than those corresponding policy provisions required to be contained in individual accident and sickness policies.'

The reference is to the uniform policy provisions required of individual policies by K.S.A. 40-2203(A). That section, so far as applicable here, requires each policy to contain:

'(5) A provision as follows: 'Notice of claim: Written notice of claim must be given to the insurer within twenty (20) days after the occurrence or commencement of any loss covered by the policy, or as soon thereafter as is reasonably possible. . . .'

'(6) A provision as follows: 'Claim forms: The insurer, upon receipt of a notice of claim, will furnish to the claimant such forms as are usually furnished by it for filing proofs of loss. If such forms are not furnished within fifteen (15) days after the giving of such notice the claimant shall be deemed to have complied with the requirements of this policy as to proof of loss upon submitting within the time fixed in the policy for filing proofs of loss, written proof covering the occurrence, the character and the extent of the loss for which claim is made.'

'(7) A provision as follows: 'Proofs of loss: Written proof of loss must be furnished to the insurer at its said office in case of claim for loss for which this policy provides any periodic payment contingent upon continuing loss within ninety (90) days after the termination of the period for which the insurer is liable and in case of claim for any other loss within ninety (90) days after the date of such loss. Failure to furnish such proof within the time required shall not invalidate nor reduce any claim if it was not reasonably possible to give proof within such time, provided such proof is furnished as soon as reasonably possible and in no event, except in the absence of legal capacity, later than one year from the time proof is otherwise required."

These provisions, it will be noted, are somewhat more favorable to the insured than those of the policy in that the time limits otherwise imposed are waived if compliance is not reasonably possible. A notice of claim is timely under (5) even though more than twenty days have elapsed so long as filed 'as soon thereafter as is reasonably possible'; a proof of loss is timely under (7) if filed 'as soon as reasonably possible,' subject only to the one year limitation of the last sentence. Hence, under the express terms of 40-2209(B) (3) the policy provisions must yield to the more favorable provisions of the statute, as the court below found. Cf. Canal Insurance Co. v. Sinclair,208 Kan. 753, 494 P.2d 1197.

The trial court, in finding the proof of loss was not timely here, cited subsection (7). Presumably it relied on the last sentence, and in particular on the requirement that proof of loss be furnished 'in no event . . . later than one year from the time proof is otherwise required.'

The company, arguing in support of the trial court's conclusion, says that the 'time proof is otherwise required' is, at the latest, the one year from termination of employment permitted by the policy, or February 12, 1971. Adding the statutory one year to that, the company arrives at a final deadline for plaintiff's proof of loss of...