Heighley v. J.C. Penney Life Ins. Co.

• Decision Date: 14 April 2003
• Docket Number: No. 02-7794 NM.,02-7794 NM.
• Citation: 257 F.Supp.2d 1241
• Parties: Anthony HEIGHLEY, Plaintiff, v. J.C. PENNEY LIFE INSURANCE CO. and J.C. PENNEY CO., INC., Defendants.
• Court: U.S. District Court — Central District of California

257 F.Supp.2d 1241

Anthony HEIGHLEY, Plaintiff, v. J.C. PENNEY LIFE INSURANCE CO. and J.C. PENNEY CO., INC., Defendants.

No. 02-7794 NM.

United States District Court, C.D. California, Western Division.

April 14, 2003.

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Alan I. Moss, Alan I. Moss Law Offices, San Francisco, CA, for Anthony Heighley, Plaintiff.

Margaret Levy, Becky J. Belke, Manatt Phelps & Phillips, Los Angeles, CA, Thomas M. Herlihy, Michael G. Glanzberg, Jeffrey R. Cluett, Kelly Herlihy & Klein, San Francisco, CA, for J.C. Penny Life Insurance Co., J.C. Penny Co. Inc., defendants.

ORDER GRANTING IN PART AND DENYING IN PART DEFEDANTS' MOTION FOR SUMMARY JUDGMENT; DENYING PLAITIFF'S MOTION FOR CONTINANCE

MANELLA, District Judge.

I. INTRODUCTION

On August 7, 2001, Anthony Heighley ("Plaintiff) filed an action in San Francisco Superior Court against J.C. Penney Life Insurance Co. ("JCPenney Life") and J.C. Penney Co., Inc. (JCPenney Co.) (collectively "Defendants"), and Does 1 through 20 inclusive. Plaintiffs Complaint alleges: (1) breach of contract, (2) breach of the implied covenant of good faith and fair dealing, (3) negligence, (4) violation of Bus. & Prof.Code § 17200, and (5) violation of Bus. & Prof.Code § 17500. On September 6, 2001, Defendants filed a notice of removal to the United States District Court for the Northern District of California. On October 7, 2002, this court accepted transfer. This action arises out of Defendants' denial of policy benefits to Plaintiff in connection with the death of his mother.

Currently before the court are (1) Defendants' motion for summary judgment or, in the alternative, partial summary judgment and (2) Plaintiffs motion for a continuance to conduct discovery pursuant to Federal Rule of Civil Procedure 56(f). Defendants assert the following grounds:

(1) on Plaintiffs first claim for breach of contract that Plaintiff has not met his burden of establishing a triable issue of fact as to coverage;

(2) on Plaintiffs second claim for breach of the covenant of good faith and fair dealing that:

(a) Plaintiffs claim is barred by the statute of limitations;

(b) JCPenney Life acted reasonably and Plaintiffs claim was properly denied; and

(c) at most, a genuine dispute as to coverage existed.

(3) on Plaintiffs third claim for negligence that:

(a) Plaintiffs claim is barred by the statute of limitations;

(b) such a claim is improper against an insurance company; and

(c) JCPenney Life acted reasonably at all times.

(4) on Plaintiffs fourth and fifth claims for violation of Business and Professions Code sections 17200 and 17500 that JCPenney Life did not violate these sections;

(5) on each and every claim asserted by Plaintiff against JCPenney Co. that JCPenney Co. had no involvement in the denial of Plaintiffs claim or other acts complained of by Plaintiff, and therefore is an improper party to this lawsuit; and

(6) on Plaintiffs request for punitive damages that JCPenney Life did not act with malice, oppression, or fraud.

II. RELEVANT FACTUAL BACKGROUND

This action arises out of an "Accidental Death and Dismemberment" Group Policy of insurance ("Group Policy") issued by J.C. Penney Life Insurance Company ("JCPenney Life") to J.C. Penney Co., Inc. ("JCPenney Co."), under which Margaret Heighley, Plaintiffs mother, was covered. Defendants' Uncontroverted Facts ("UF") 1; Declaration of Charles Costa ("Costa Decl.") ¶ 2. Mrs. Heighley was eligible for coverage under the Group Policy because she was a JCPenney Co. credit card holder. UF 2; Costa Decl. ¶ 2. The Group Policy is subject to California Insurance Code section 106. Plaintiffs Genuine Issues, PI. Fact ("Pl.Fact") 3.

On October 23, 1990, Mrs. Heighley completed a written enrollment form for coverage under the Policy. Costa Decl. ¶ 113, Ex. A. On or about November 2, 1990, Mrs. Heighley was issued Accidental Death and Dismemberment Certificate No. 74A6414795 by JCPenney Life which evidenced her coverage under the Group Policy.¹ UF 4; Costa Decl. ¶ 3, Ex. B (Certificate).² Mrs. Heighley paid monthly premiums of $3.95, which were billed to her JCPenney Co. credit card. UF 6; Costa Decl. ¶ 3. Mrs. Heighley developed malignant breast cancer in 1992 at the age of 76 and underwent radiation therapy. UF 7, Costa Decl. ¶ 4.³ In early 1997, as a result of symptoms of shortness of breath and chest discomfort, Mrs. Heighley underwent diagnostic testing, which indicated pulmonary nodules as well as a right pleural effusion. Bone scans were consistent with metastatic disease. UF 8; Costa Decl. ¶ 4; Moss Decl., Ex. 10 (Discharge Summary of Dr. Fakhrai), p. 1 of 4.

On April 4, 1997, Mrs. Heighley was admitted to Providence Holy Cross Hospital and underwent surgery that same day, specifically a bronchoscopy, thoracostomy and thoracotomy, all performed by Dr. Mehdi Fakhrai. UF 9; Costa Decl. ¶ 5; Moss Decl., Ex. 10 (Discharge Summary of Dr. Fakhrai), p. 1 of 4. At the time she was admitted, Mrs. Heighley was cleared for surgery based on her physical exam and testing by cardiology and pulmonology specialists. PI. Fact 6; Moss Decl., Ex. 6 (Dr. Mogul Dep.), 66:4-8. The results of the procedures indicated tumor nodules in the lung and pleura, which were biopsied. Costa Decl. ¶ 5. The biopsy revealed that Mrs. Heighley had breast cancer which had metastasized to her lungs. Costa Decl. ¶ 5; Mot., p. 7. Postoperatively, the patient was "coming along well" and was transferred after 24 hours from the ICU to the General Medicine floor. PI. Fact 7; Moss Decl., Ex. 10 (Discharge Summary of Dr. Fakhrai), p. 1 of 4.

On April 13, 1997, Mrs. Heighley went into respiratory arrest and was treated for it. PI. Fact 13; Moss Decl., Ex. 8 (Operative Report of Dr. Fakhrai), p. 1 of 2; Moss Decl, Ex. 16 (Defendant's Supplemental Response to Plaintiffs Request for Admissions), Response to Request No. 27. On or about May 16, 1997, Mrs. Heighley was transferred to Vencor Hospital, a long-term care facility. UF 11; Costa Decl. ¶ 6. From April 13, 1997 until her death, Mrs. Heighley was never able to be removed from a respirator, although several attempts were made to wean her from it. Pl. Fact 15; Moss Deck, Ex. 16 (Defendant's Supplemental Response to Plaintiffs Request for Admissions), Response to Request No. 31. Mrs. Heighley died May 28, 1997 at Vencor Hospital. UF 12; Costa Decl. ¶ 6; Compl. ¶ 9. No autopsy was performed after her death. UF 12; Costa Decl. ¶ 6.

On or about February 27, 1998, Plaintiff contacted JCPenney Life regarding submitting a claim for payment under the Policy issued to his mother. UF 13, Costa Decl. ¶ 7. In a letter dated March 3, 1998, JCPenney Life advised Plaintiff that coverage consisted of accidental coverage only, and that from the information furnished, it appeared Mrs. Heighley's death was due to natural causes and no benefits would be payable. UF 14; Costa Decl. ¶ 8, Ex. C. Nevertheless, JCPenney Life provided Plaintiff with claim forms, including an attending physician's statement form and an authorization form. Id. On or about March 19, 1998, JCPenney Life received an Accidental Death Affidavit of Claimant from Plaintiff, along with an affidavit stating that Plaintiff was the only surviving child of Mrs. Heighley. UF 15; Costa Decl. ¶ 9, Ex. D. The Accidental Death Affidavit of Claimant stated:

After entering the hospital for a biopsy during her recovery, she was mismedicated, leading to a deterioration which weakened her and resulted in her health also deteriorating^] ending in her death.... I have a lawyer preparing a suite [sic] against the hospital. Should they admit their mistake it would then prove that my mother was killed due to an accident caused by her treatment at the hospital. I am filing this claim now to avoid any statute of limitations in the future.

UF 15; Costa Decl. ¶ 9, Ex. D.

In response to JCPenney Life's request, Plaintiff provided a copy of his mother's Death Certificate and the signed authorization form on or about April 21, 1998. UF 19; Costa Decl. ¶ 13, Ex. H. On April 24, 1998, JCPenney Life requested medical records from Mrs. Heighley's health care providers, Providence Holy Cross Medical Center, Vencor Hospital, Dr. Samuel Mogul, and Dr. Mehdi Fakhrai. Costa Decl. ¶ 14. On August 18, 1998, JCPenney Life sent a letter to Plaintiff denying benefits on the ground that Mrs. Heighley did not die as a result of a covered injury. UF 30; Costa Decl. ¶ 22, Ex. M. The letter advised Plaintiff that the Death Certificate indicated that Mrs. Heighley's death was the result of cardiorespiratory arrest due to respiratory distress due to metastatic cancer of the lungs, and that the Medical Examiner's Office had advised that the case was not referred to that office because it was not a Medical Examiner's case. Id.

On or about October 28, 1999, JCPenney Life received a letter from Plaintiff which enclosed a copy of his Settlement Agreement with Providence Holy Cross Hospital in connection with the medical malpractice action Plaintiff had filed in Los Angeles Superior Court against the hospital. UF 31; Costa Decl. ¶ 23, Ex. N. Plaintiffs medical malpractice case against Providence Holy Cross Hospital settled for $6,000, before defendant's motion for summary judgment was scheduled to be heard. UF 32; Belke Decl. ¶ 2, Exs. S, T. JCPenney Life acknowledged receipt of the Settlement Agreement and reiterated its denial of Plaintiffs claim in a letter dated November 2, 1999. UF 34; Costa Decl. ¶ 24, Ex. O. Specifically, JC Penney Life advised Plaintiff that the settlement release did not establish that medical malpractice was involved and pointed out that liability was explicitly denied by Providence Holy Cross Hospital. Id.

Plaintiff then initiated a complaint with the Department of Insurance. UF 35; Costa Decl. ¶ 25, Ex. P. In his complaint, Plaintiff contended that his mother was mismedicated while hospitalized, slipped into a coma, and died...