Hazelett v. Blue Cross and Blue Shield of Indiana, 2-278A38
| Docket Nº | No. 2-278A38 |
| Citation | 400 N.E.2d 1134 |
| Case Date | February 21, 1980 |
| Court | Court of Appeals of Indiana |
Page 1134
v.
BLUE CROSS AND BLUE SHIELD OF INDIANA, Mutual Hospital
Insurance, Inc., and Mutual Medical Insurance,
Inc., Appellee (Defendant Below).
Allen C. Mattson, Ford & Mattson, Hartford City, for appellant.
Donald C. Trigg, Indianapolis, for appellee.
BUCHANAN, Chief Judge.
Ruth B. Hazelett (Hazelett) appeals the dismissal of her suit against Blue Cross and Blue Shield of Indiana, et al (Blue Cross), claiming she was not required to exhaust any administrative remedies prior to bringing her action.
We reverse.
Page 1135
FACTS
The facts are not in dispute:
Hazelett had health insurance coverage under Blue Cross and Blue Shield personal protection plan certificates of membership, which had previously been approved by the Indiana Insurance Commissioner (Commissioner). Under Article I(O) of the certificates, major medical benefits were payable only after payment from other insurance coverage had been deducted. Clearly stamped on the outside of the major medical certificate of membership was the following notice:
MAJOR MEDICAL BENEFITS will be paid only after other insurance payments covering this loss are first deducted as by POLICY PROVISIONS. See Article I, Paragraph "N" and "O".
Hazelett obtained "other coverage" through the Colonial Penn Franklin Insurance Company (Colonial Penn).
Hazelett made claim for $6,070.40 to Blue Cross for surgical and hospitalization charges incurred from June 6 through June 30, 1976. Blue Cross paid $4,614.44 to the hospital. The outstanding balance of $1,456.00 1 was submitted to Blue Cross under Hazelett's major medical policy. Because she received a check from Colonial Penn for $210.00, Blue Cross deducted the Colonial Penn payment, and tendered 80% of the remaining balance $996.80. 2
Hazelett filed suit in the Grant Circuit Court alleging that the "other insurance" provision in the Blue Cross policy violated public policy. Hazelett sought $168.00 in actual damages and one million dollars in punitive damages. She also sought certification to proceed with the suit as a class action.
On Blue Cross' motion, the trial court dismissed the suit on the grounds that Hazelett had failed to exhaust her administrative remedies by challenging the disputed provision before the Indiana Insurance Commissioner.
Hazelett appeals.
Hazelett raises but a single issue on appeal:
Did the trial court properly dismiss the suit because of failure to exhaust administrative remedies?
PARTIES' CONTENTIONS Hazelett contends that she need not exhaust her administrative remedies because they are inadequate. As she was seeking actual damages, punitive damages, and attorneys' fees via a class action suit, items which the Commissioner did not have the power to award, she claims that resort to the administrative agency would have been a meaningless step.
Blue Cross replies that before challenging an insurance policy provision in the courts as being against public policy, Hazelett was required to exhaust any administrative remedies available to her, and that Ind.Code 27-8-5-1 required her to first challenge the provision before the Insurance Commissioner.
CONCLUSION The trial court improperly dismissed Hazelett's action as there was no administrative remedy for Hazelett to exhaust.
Of necessity, the requirement of exhaustion of administrative remedies is contingent upon the existence of a remedy.
Blue Cross sees an administrative remedy for Hazelett in Ind.Code 27-8-5-1 (the Statute):
No policy of accident and sickness insurance shall be issued or delivered to any person in this state nor shall any application, rider or endorsement be used in connection therewith until a copy of the
Page 1136
form thereof and of the classification of risks and the premium rates, or, in the case of assessment companies the estimated cost pertaining thereto, have been filed with the commissioner. This section shall be applicable also to assessment companies and fraternal benefit associations or societies.No such policy shall be issued, nor shall any application, rider, or...
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