Halverson v. Metropolitan Life Ins. Co.
| Decision Date | 28 December 1979 |
| Docket Number | No. 12665,12665 |
| Citation | 286 N.W.2d 531 |
| Parties | Darrell G. HALVERSON, Plaintiff and Appellant, v. METROPOLITAN LIFE INSURANCE COMPANY, a Corporation, et al., Defendants and Appellees. |
| Court | South Dakota Supreme Court |
Max A. Gors, Pierre, for plaintiff and appellant.
Roger L. Severns, Jr., Atty. S. D. Retirement System, Pierre, for defendants and appellees, Board of Trustees, Al Asher and Linda Nill; David O. Carter, Asst. Atty. Gen., Mark V. Meierhenry, Atty. Gen., Pierre, on brief.
Howell L. Fuller of Woods, Fuller, Shultz & Smith, Sioux Falls, for defendant and appellee, Metropolitan Life Insurance Co.
Appellant Halverson appeals from an order of the circuit court, Sixth Judicial Circuit, granting summary judgment to Metropolitan Life Insurance Co. and various members of the Board of Trustees of the South Dakota Retirement System (appellees). Appellant argues that the circuit court erred in concluding that, as a matter of law, the provisions contained in a certificate of life insurance issued to appellant's wife were incorporated into the group life insurance policy and binding upon her. We affirm.
Appellant's wife became employed with the State Chemical Laboratory as a secretary on August 2, 1974. On that date, she signed an enrollment card to obtain coverage under a group life insurance program underwritten by Metropolitan Life Insurance Co. (Metropolitan) for employees of the State of South Dakota. Under that program, employees may choose coverage in a multiple of their salary ( 1/2 times salary, 1 times salary, 2 times salary, 3 times salary). Mrs. Halverson elected coverage in the amount of one times salary which was $8,000.00. A group insurance certificate was issued to Mrs. Halverson a short time later. Around August of 1975, Mrs. Halverson, who also served as the payroll clerk for the laboratory employees, increased her coverage to two times salary ($16,000.00) by making an adjustment on her payroll card which increased the premium to be withheld from her paycheck. Mrs. Halverson did not notify Metropolitan of this change or furnish the insurer with evidence of her insurability. In fact, Mrs. Halverson could not have provided such evidence since she discovered in early 1975 that she was suffering from cancer.
In October of 1975, Mrs. Halverson terminated her employment with the State because of her illness. In November of 1975, she elected to convert her group policy to an individual policy. 1 Based on the payroll data which showed that Mrs. Halverson had elected two times salary, Metropolitan issued her a $16,000.00 policy. Mrs. Halverson died of cancer on January 23, 1976. Appellant, as her named beneficiary, furnished Metropolitan with proof of death. Metropolitan refused to pay the face amount of the policy, claiming that Mrs. Halverson never gained the additional coverage because she had not complied with the requirement found in the certificate that proof of insurability be provided to the insurer before coverage will be increased. The insurer tendered the $8,000.00 coverage and a refund of all excess premiums paid.
The proper amount of insurance coverage is dependent entirely upon whether Mrs. Halverson was bound by the provisions contained in the certificate of insurance. The master policy, a copy of which is not given to state employees unless requested, contains the following language:
In consideration of the payment by the Employer of the initial premium and of the payment hereafter by the Employer, during the continuance of this Policy, of all premiums when they fall due as hereinafter provided, Metropolitan Life Insurance Company promises to pay the insurance and other benefits described in the Exhibits listed in the Schedule of Exhibits hereof as such Exhibits have applicability to the respective Employees insured hereunder, in accordance with and subject to the provisions of this Policy.
The provisions hereinafter contained, including those in the Exhibits, are part of the Policy as fully as if recited over the signature hereto affixed.
Only one exhibit is listed in the Schedule of Exhibits and that exhibit is the certificate of insurance which by statute 2 and by the terms of the policy itself must be delivered to each employee insured under the program. According to the master policy, the certificate "shall state the insurance to which such employee is entitled under this Policy and to whom benefits are payable, and . . . shall summarize the provisions of this Policy principally affecting the employee." The master policy also states that "this policy and the application of the Employer, a copy of which is attached hereto, constitutes the entire contract between the parties."
The certificate of insurance which Mrs. Halverson received states:
This certificate contains only a summary of the provisions of the Group Policy. It is not a contract of insurance. The insurance is subject in every respect to the provisions of the Group Policy which alone constitutes the contract under which the insurance is provided.
Also contained In the certificate is a provision that an employee who requests insurance after thirty-one days of the date when he becomes eligible for insurance (the first payday after employment) "must furnish at his own expense evidence of insurability satisfactory to the insurance company before such insurance may become effective." The master policy contains no such provision. Appellant argues that the language of the certificate indicates Metropolitan's clear intent to limit the contract of insurance to the terms found in the master policy. Appellees respond, however, that the certificate was validly incorporated by reference into the master policy so that Mrs. Halverson was bound by the certificate's provisions, including the requirement of proof of insurability.
Appellant relies on Boseman v. Connecticut General Life Insurance Co., 301 U.S. 196, 57 S.Ct. 686, 81 L.Ed. 1036 (1937), to support his position that a certificate of insurance forms no part of the insurance contract. In Boseman, the master policy stated that Pennsylvania law was to govern the contract rights of the parties. The certificate was delivered to the insured in Texas and its terms did not vary from those in the master policy. The insured did not comply with Pennsylvania law which required written notice of disability and claimed that delivery of the certificate of insurance to him in Texas made the law of that state applicable. The court rejected the insured's argument and reasoned that
the certificate is not a part of the contract of, or necessary to, the insurance. It is not included among the documents declared "to constitute the entire contract of insurance." Petitioner was insured on the taking effect of the policy long before the issue of the certificate. It did not affect any of the terms of the policy. It was issued to the end that the insured employee should have the insurer's statement of specified facts in respect of...
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Cheney v. Metropolitan Life Ins. Co.
...is the identical certificate which was held to be a part of the group life insurance policy by this court in Halverson v. Metropolitan Life Ins. Co., 286 N.W.2d 531 (S.D.1979). The court, in Halverson, The certificate involved here contains several substantive terms and conditions which can......
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...In support of this contention, Monumental cites Butler v. MFA Life Ins. Co., 591 F.2d 448 (8th Cir.1979), and Halverson v. Metropolitan Life Ins. Co., 286 N.W.2d 531 (S.D.1979). We find these cases distinguishable. In Butler, the insured failed to take action necessary to convert his group ......
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