Heston v. Int'l Med. Grp., Inc.
| Decision Date | 24 March 2021 |
| Docket Number | No. 1:20-cv-00479-JRS-MPB,1:20-cv-00479-JRS-MPB |
| Citation | 528 F.Supp.3d 963 |
| Parties | Barbara HESTON, as Executor of Timothy Heston's Estate, Plaintiffs, v. INTERNATIONAL MEDICAL GROUP, INC., an Indiana Corporation, Sirius International Insurance Corporation, a foreign corporation, Defendants. |
| Court | U.S. District Court — Southern District of Indiana |
David F. McNamar, McNamar & Associates, P.C., Westfield, IN, Guy O. Kornblum, Guy O. Kornblum, a Professional Law Corporation, San Francisco, CA, for Plaintiffs.
Brooke Smith, Offer Korin, Katz Korin Cunningham, P.C., Indianapolis, IN, for Defendants.
Entry Ruling on Pending Motions
In April 2019, Timothy Mark Heston purchased insurance from Defendants. He was diagnosed with Stage IV Bowel Cancer
approximately six months later. He made a claim for payment of medical expenses, and the claim was denied based on the pre-existing-conditions exclusion clause in the insurance policy. Heston sued Defendants International Medical Group, Inc. ("IMG"), and Sirius International Insurance Corporation ("Sirius") for breach of contract and breach of the covenant of good faith and fair dealing. He sought sums allegedly due under the insurance coverage, damages, and a declaratory judgment of the parties’ rights under the policy. Heston passed away, and his wife, Barbara Heston, as Executor of Timothy Heston's Estate, has been substituted as Plaintiff.1
Pending before the Court are several motions: IMG's Motion for Judgment on the Pleadings (ECF No. 270), Sirius's Motion for Judgment on the Pleadings (ECF No. 30), Plaintiff's Motion for Partial Summary Judgment (ECF No. 34), Defendants’ Motion to Strike Plaintiff's Surreply (ECF No. 38), and the parties’ Joint Motion to Reset Pending Deadlines (ECF No. 68). The Court decides as follows:
I. Background
The following facts are taken from the pleadings and attached documents.
Timothy Heston purchased medical insurance coverage from Defendants over the past several years. (Am. Compl. ¶ 12, ECF No. 8.) On April 17, 2019, Heston applied for and, effective April 29, 2019, was issued health insurance coverage under a Certificate of Insurance for "Global Medical Insurance Silver without Creditable Coverage" ("the Certificate"), under which he was promised certain insurance benefits for medical expenses and costs incurred by him for his health care. (Id. ¶ 13; Answer ¶ 13, ECF No. 17; Application, Answer, Ex. 1 at 15, ECF No. 17-1.) A true and correct copy of the Certificate is attached to the Amended Complaint as Exhibit 1. (Am. Compl. ¶ 13, ECF No. 8; Answer ¶ 13, ECF No. 17.)
Heston was provided with a "Declaration of Medical Insurance," referencing Certificate GMMS382152741 showing the referenced effective date, and the annual premium charge of $1,353. (Am. Compl. ¶ 13, ECF No. 8; Answer ¶ 13, ECF No. 17.) A true and correct copy of the Declaration is attached to the Amended Complaint as Exhibit 2. (Am. Compl. ¶ 13, ECF No. 8; Answer ¶ 13, ECF No. 17.) The Declaration identifies IMG as the Plan Administrator and Sirius as the Insurer: "Administered by: International Medical Group®, Inc. as agent for the Insurer ... Insurer: Sirius International Insurance Corporation." (ECF No. 8-1 at 2.) The coverage Heston was promised under the Certificate and Declaration was part of Group Insurance Coverage provided to insureds under a "Master Policy" referenced in the Certificate.
In September 2019, Heston became concerned about certain changes in his health related to his stomach and digestive system. These were new symptoms that he had not experienced previously, and they were symptoms for which he had never before sought any medical advice or care. In September 2019, and later in October 2019, Heston sought a medical evaluation for what was later diagnosed as Stage IV Bowel Cancer
. He immediately began treatment for this condition. (Am. Compl. ¶ 14.)
Heston made a claim for the medical insurance coverage promised in the Certificate and Declaration. His claim was denied on the basis that his underlying illness was a "pre-existing" condition. (Id. ¶ 15.) Heston appealed the denial, which appeal was denied on the basis of the pre-existing condition exclusion language. (Id. ¶¶ 16–17.)
Heston filed a First Amended Complaint for breach of contract, damages, and a declaratory judgment as to the parties’ rights under the insurance policy. Plaintiff alleges that the pre-existing condition exclusion violates the Indiana Insurance Code, common law, Indiana law, and federal law. Plaintiff further claims the denial of Heston's claim was a breach of contract and an unreasonable and bad faith breach of contractual obligations. Plaintiff has not alleged that Heston's bowel cancer
was not a pre-existing condition as defined by the insurance policy. Defendants filed their Answer to the Amended Complaint, denying all liability.
The Amended Complaint alleges that:
Plaintiff is informed and believes that at all times mentioned herein, Defendants, and each of them, were the agents, servants, employees, joint venturers and/or alter egos of each other, and were, as such, acting within the course, scope and authority of said agency, employment, joint venture and/or alter ego relationship, and that each and every Defendant, as aforesaid, when acting as a principal, was negligent in the selection, hiring, acquiring, and/or creating of each and every other Defendant as an agent, employee, joint venturer, and/or alter ego.
(Am. Compl. ¶ 9, ECF No. 8.) Defendants have admitted that IMG acts as the disclosed agent for its principal Sirius, and that at all times relevant, IMG was acting within the course, scope and authority granted to it through that principal-agent relationship. (Answer ¶ 9, ECF No. 17.)
The Application identifies IMG as Sirius's agent: (ECF No. 17-1 at 10.) The Application also states that "[Plaintiff] purposefully initiate[s] and take[s] advantage of the privilege of conducting business with the Company in Indiana, through IMG as its selected agent and administrator ...." (Id. at 6, 16.) Furthermore, the Application contains an Acknowledgement that states: "[T]he Company, as carrier and underwriter of the plan, is solely liable for the coverages and benefits to be provided thereunder, and IMG acts solely as agent/coverholder for the Company and has no direct or independent liability under the Master Policy or any Certificate or policy of insurance." (Id. at 7, 16.)
The Application provides in relevant part:
SUBSCRIPTION (For coverage issued by Sirius International Insurance Corporation (publ) only): I (we) hereby apply to the Global Medical Services Group Insurance Trust, c/o Mutual Wealth Management Group ... for Global Mission Medical Insurance .... I (we) understand and agree that: (i) no coverage will be effective until this Application has been duly accepted in writing by the Company, (ii) no modification or waiver relating to this Application or the coverage applied for will be binding upon the Company or IMG unless approved in writing by an officer of the Company or IMG; (iii) IMG and the Company will rely on the accuracy and completeness of the information provided herein ..., (v) by submission of this Application and/or any future claim for benefits I (we) purposefully initiate and take advantage of the privilege of conducting business with the Company in Indiana, through IMG as its selected agent and administrator ....
(ECF No. 17-1 at 6.) The Application further provides that "I (we) agree that Indiana surplus lines law shall govern all rights and claims arising under this insurance ...." (ECF No. 17-1 at 6.)
The Certificate, evidencing the terms of the insurance contract, states that:
AGREEMENT: Sirius International Corporation (publ) (the Company) promises and agrees to provide the Insured Person with the benefits described in the Master Policy, as outlined herein and coverage for which is certified hereunder by the Company .... The Company hereby recognizes International Medical Group®, Inc., as the Company's authorized representative and as the Plan Administrator of the Master Policy and this Certificate.
(ECF No. 8-1, 10.) The Certificate declares: "ENTIRE AGREEMENT: The Master Policy, the Application, the Declaration and any Riders shall constitute the entire agreement among the Company, the Assured, and the Insured Person" (the "Policy"). (Id. ) The "Master Policy" is defined as:
Master Policy: The applicable Master Policy issued by the Company to the Assured, and under which insurance coverage and benefits are provided by the Company to the Insured Person, subject to the Terms thereof, and as outlined and evidenced by this Certificate and subject to the Terms hereof. The Company, as insurance carrier and underwriter of the Master Policy, is solely liable and responsible for the coverage and benefits provided thereunder.
(D.E. 8-1, 31.) "Plan Administrator" is defined as:
Plan Administrator: The Plan Administrator for this insurance is International Medical Group®, Inc. .... As the Plan Administrator, International Medical Group, Inc., acts solely as the disclosed and authorized agent and representative for and on behalf of the Company, and does not have, and shall not be deemed, considered or alleged to have any, direct, indirect, joint, several, separate, individual, or independent liability, responsibility or obligation of any kind under the Master Policy, the Declaration, any Riders or this Certificate to the Insured Person or to any other person or entity ....
(Id. ) But the Certificate states: "This Certificate is not part of the insurance contract." The Certificate provides for certain exclusions from the Policy, including pre-existing conditions:
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