Gold v. Rowland

• Decision Date: 11 April 2017
• Docket Number: SC 19585
• Citation: Gold v. Rowland, 325 Conn. 146, 156 A.3d 477 (Conn. 2017)
• Court: Connecticut Supreme Court
• Parties: Ronald GOLD, individually and on behalf of all others Similarly Situated v. John ROWLAND et al.

325 Conn. 146

156 A.3d 477

Ronald GOLD, individually and on behalf of all others Similarly Situated

v.John ROWLAND et al.

SC 19585

Supreme Court of Connecticut.

Argued October 17, 2016

Officially released April 11, 2017

E.J. Robbin Greenspan, with whom were Matthew T. Wax–Krell, Hartford, and Andrew W. Krevolin, West Hartford, for the appellants(named plaintiff et al.).

Adam K. Levin, pro hac vice, with whom were Patrick M. Fahey, Hartford, and Craig A. Hoover, pro hac vice, and, on the brief, Charles L. Howard, Hartford, and Peter R. Bisio, pro hac vice, for the appellees(defendantAnthem, Inc., et al.).

Palmer, Eveleigh, McDonald, Espinosa and Robinson, Js.^*

PALMER, J.

This certified class action, which arises from a dispute over the proceeds of the 2001 demutualization of the defendantAnthem Insurance Companies, Inc.(Anthem Insurance), comes before this court for the second time.The plaintiffs are a class of state employees and retirees who, at the time of the demutualization, were enrolled in an Anthem Insurance group health care insurance plan.They contend that their participation in that plan entitled them to membership in Anthem Insurance and a share of the demutualization proceeds, and that Anthem Insurance and the other insurance company defendants;seepart I E of this opinion; breached their contractual obligations by not paying the plaintiffs for their membership interests and instead distributing their share of the proceeds to the defendantstate of Connecticut.The first time we considered this case, we concluded that all of the plaintiffs' claims against the named defendant, John Rowland, the former governor of Connecticut, and the state were barred by the doctrine of sovereign immunity or otherwise should have been dismissed.SeeGold v. Rowland , 296 Conn. 186, 205, 209–11, 994 A.2d 106(2010).Following our decision and a subsequent trial to the court of the plaintiffs' breach of contract claims against the remaining defendants, the trial court, Bright, J ., rendered judgment for those defendants.On appeal, the plaintiffs contend that the trial court incorrectly concluded that the relevant contract provisions were ambiguous and improperly consulted extrinsic evidence to determine their meaning.Finding no error, we affirm the trial court's judgment.¹

IFACTUAL AND PROCEDURAL HISTORY

Familiarity with the complete factual record, as detailed in the trial court's memorandum of decision, is presumed.The relevant facts, as found by the trial court or stipulated to by the parties, and procedural history may be briefly summarized as follows.

A

Merger of Anthem Insurance and Blue Cross and Blue Shield of Connecticut, Inc.

The dispute between the parties arises from three principal transactions and two group health care insurance policies.The first occurred on July 31, 1997, when Anthem Insurance, a mutual insurance company organized under Indiana law, merged with Blue Cross and Blue Shield of Connecticut, Inc.(Blue Cross), a mutual insurance company organized under Connecticut law.The merger was executed pursuant to a November, 1996 agreement to merge, which included as attachments a plan and joint agreement of merger, a proposed form of Anthem Insurance's third amended and restated articles of incorporation (1997articles), and a form group guaranty health care insurance policy and certificate of membership (guaranty policy).²Under the plan and joint agreement of merger, Anthem Insurance was designated as the company that would survive the merger.Three months prior to the merger, in April, 1997, the directors and members of Anthem Insurance formally adopted the 1997articles.Following the merger, Anthem Insurance, through its subsidiary, the defendantAnthem East, Inc., continued the former Blue Cross operations under the auspices of the defendantAnthem Health Plans, Inc., doing business as Anthem Blue Cross and Blue Shield of Connecticut (New CT–Blue).

Prior to their merger, the two mutual insurance companies took different approaches to membership.Under Anthem Insurance's premerger membership rules, each employee or individual holder of a certificate of coverage under a fully insured group health care insurance policy was an individual member and owner of Anthem Insurance.The employer, membership organization, or other group that procured the group coverage was not an owner member.

Under Blue Cross' premerger bylaws, by contrast, the employers were the owner members.Each employer was considered one policyholder and would designate a representative to act on behalf of the group for voting purposes.Individual employees who had been issued insurance certificates were not considered to be voting members with equity rights.

BRelevant Health Care Insurance Policies

Before the merger, the state held two Blue Cross group health care insurance policies relevant to the present dispute.³The first, known as Care Plus, provided Medicare supplement group health care insurance for retired state employees and their dependents.The state closed enrollment in Care Plus to new members in 1994 but permitted enrolled members to retain their coverage.The Office of the Comptroller was designated as the voting member for that policy.In connection with the merger, New CT–Blue delivered a guaranty policy for Care Plus to the Office of the Comptroller.

The second plan originated as a Blue Cross health care insurance policy that was offered to state employees and non-Care Plus state retirees prior to 1993.In 1993, the state converted this policy to a self-funded, administrative services only contract with Blue Cross (ASO agreement).It is undisputed that the ASO agreement, as administered by Blue Cross after 1993, was not an insurance policy.Both Care Plus and the ASO agreement were active in 1997 when Anthem Insurance and Blue Cross merged, and they remained in effect through the first half of 1999.

On June 30, 1999, the state terminated the self-funded ASO agreement and instead entered into a new, fully insured group health care insurance policy from New CT–Blue (1999 group policy).Under the 1999 group policy, New CT–Blue began providing health care insurance benefits to substantially the same group of state employees and retirees who had been covered under the ASO agreement.

The following year, in July, 2000, the state also terminated the Care Plus plan.At that time, Care Plus covered 512 state retirees.Those retirees were given the option of enrolling in the 1999 group policy or in any of the other health care insurance plans available to state retirees.Unless they opted out, Care Plus members were, by default, enrolled in the 1999 group policy without a lapse in coverage.Approximately 456 of the 512 former Care Plus retirees ultimately were enrolled in the 1999 group policy without any lapse in coverage.

CDemutualization of Anthem Insurance

The second key transaction that gave rise to the present dispute occurred on June 18, 2001, when Anthem Insurance's board of directors approved a plan to convert from a mutual insurance company to a stock corporation under Indiana law.⁴Under the plan of conversion, upon the effective date of the demutualization, all of the outstanding capital stock of Anthem Insurance would be issued to the defendantAnthem, Inc., and eligible members of Anthem Insurance would become entitled to receive stock in Anthem, Inc., or cash, in exchange for the extinguishment of their membership interests in Anthem Insurance.The plan of conversion defined an eligible member as "a [p]erson who (a) is a [s]tatutory [m]ember of Anthem Insurance on the [a]doption [d]ate [June 18, 2001] and continues to be a [s]tatutory [m]ember of Anthem Insurance on the [e]ffective [d]ate [November 2, 2001], and (b) has had continuous health care benefits coverage with the same company during the period between those two dates under any [p]olicy or [p]olicies without a break of more than one day."During the relevant period from June 18 through November 2, 2001(eligibility period), the plaintiffs continuously held certificates of coverage under the 1999 group policy.

DStock Distribution

The third relevant transaction occurred between late 2001 and early 2002, when Anthem Insurance distributed more than 1.6 million shares of stock in Anthem, Inc., to the state, on the basis of its determination that the state—and not the individual state employees and retirees—was the eligible member under the 1999 group policy.Thereafter, the state sold the stock for $93,768,950, transferred the proceeds to the general fund;seePublic Acts, Spec. Sess., May, 2002, No. 02–1, § 39; and spent them.Gold v. Rowland , supra, 296 Conn. at 193–94, 994 A.2d 106.Anthem Insurance made no distribution to the individual state employees and retirees under the 1999 group policy.

At the time of the demutualization, the state received notice thereof and was given the option to receive its share of the proceeds in stock or cash.There is no evidence that individual enrollees in the 1999 group policy received notice of the demutualization.However, public hearings concerning the demutualization were held before the Indiana Department of Insurance.

EProcedural History

In January, 2002, the named plaintiff, Ronald Gold, a state employee, brought this action on his own behalf and on behalf of all others similarly situated, against the defendants, former Governor Rowland, the state, Anthem, Inc., New CT–Blue, Anthem East, Inc., and Anthem Insurance.⁵Gold initially filed a two count interpleader action alleging that, pursuant to the plan of conversion, he and other similarly situated state employees enrolled in the 1999 group policy were entitled to receive the 1.6 million shares of Anthem, Inc., stock that the insurance company defendants had issued to the state.In a second amended complaint, Gold claimed a right to the funds under various theories sounding in unjust enrichment, constructive trust, resulting trust, conversion of property, breach of...