Hicks v. Globe Life and Acc. Ins. Co.
Decision Date | 31 May 1991 |
Citation | 584 So.2d 458 |
Parties | Betty E. HICKS v. GLOBE LIFE AND ACCIDENT INSURANCE COMPANY and J.C. Phillips. 1900291. |
Court | Alabama Supreme Court |
Jere L. Beasley and Kenneth J. Mendelsohn of Beasley, Wilson, Allen, Mendelsohn & Jemison, Montgomery, for appellant Betty E. Hicks.
Philip H. Butler of Robison & Belser, Montgomery, for appellee Globe Life and Acc. Ins. Co.
James W. Garrett, Jr. of Rushton, Stakely, Johnston & Garrett, Montgomery, for appellee J.C. Phillips.
Betty E. Hicks sued Globe Life and Accident Insurance Company and its agent, J.C. Phillips, alleging intentional fraud arising out of the sale of a Globe hospitalization policy to Ms. Hicks. (We will sometimes refer to the defendants together as "Globe.") This is a fraud action involving a consumer transaction. The trial court entered a summary judgment for Globe and Phillips, holding, in pertinent part, as follows:
Ms. Hicks appeals.
This case was filed subsequent to June 11, 1987; therefore, the applicable standard of review is the "substantial evidence rule." "Substantial evidence" has been defined as "evidence of such weight and quality that fair-minded persons in the exercise of impartial judgment can reasonably infer the existence of the fact sought to be proved." West v. Founders Life Assurance Co., 547 So.2d 870, 871 (Ala.1989); Ala.Code 1975, § 12-21-12; Economy Fire & Casualty Co. v. Goar, 551 So.2d 957, 959 (Ala.1989). All reasonable doubts concerning the existence of a genuine issue of fact must be resolved in favor of the nonmoving party. Hanners v. Balfour Guthrie, Inc., 564 So.2d 412 (Ala.1990).
As required under the applicable standard of review, we view the evidence in the light most favorable to Ms. Hicks. Viewed most favorably, that evidence is as follows:
Upon her retirement, Ms. Hicks had purchased a major medical health insurance policy with Blue Cross-Blue Shield ("Blue-Cross"). The Hicks family had no other health or medical insurance at the time. Ms. Hicks, whose husband had been disabled as the result of a stroke, often took her husband to the Luverne Nutritional Center ("the center") for lunch and for social activities. On March 13, 1985, Ms. Hicks had taken her husband to the center. On that same day, Phillips had made arrangements to come to the center to show a videotape that related to Medicare and Medicaid in order to make contacts to solicit sales of insurance. When Ms. Hicks returned to the center for her husband, even though Phillips had completed his presentation he introduced himself to Ms. Hicks; he questioned her concerning her insurance coverage and stated that he could save her money on a policy and provide her with a policy as good as, or better than, the one she already had. Phillips asked to come to her house to discuss the insurance in more detail, but Ms. Hicks told him that she was satisfied with her Blue Cross policy. Phillips persisted until Ms. Hicks agreed to allow him to come to her house to discuss the Globe policy. According to Ms. Hicks, Phillips arrived with a "big book which he used to go over certain items related to insurance" and told Ms. Hicks that if she was hospitalized due to an illness, the Globe policy would pay 80% of all hospital and doctor's bills with no deductible. Phillips also told Ms. Hicks that if she was not admitted to a hospital, the policy would not pay for any medical bills.
Initially, Ms. Hicks did not want to change policies, but based on Phillips's representations that the Globe policy would pay 80% of her hospital bills with no deductible, that the policy was comparable to her Blue Cross policy, and that the Globe policy would cost less than her Blue Cross policy, 1 Ms. Hicks decided to take the Globe policy. Thereafter, Phillips completed the application, and Ms. Hicks signed it. Three days later, Phillips delivered the policy to Ms. Hicks, who placed the policy in a desk drawer in her bedroom, without reading it. Subsequently, Ms. Hicks stopped paying premiums on the Blue Cross policy, causing that policy to lapse.
In April 1989, Ms. Hicks experienced shoulder pain and an irregular heartbeat. She was admitted to the hospital for a catherization. When her condition worsened, she was rushed to the CCU (critical care unit) for double bypass open heart surgery, for which she incurred medical expenses in excess of $40,000. Thereafter, Ms. Hicks submitted claims in the amount of $40,000 to Globe for her hospitalization. 2 Globe refused to pay 80% of the submitted claim, because Ms. Hicks's policy was not a major medical policy. Globe paid only $8,925 of the $40,000, because the policy provided only limited benefits for hospital and surgical care. In June and August 1989, Ms. Hicks was readmitted to the hospital with other problems related to her circulatory system. Once again, Globe refused to pay 80% of the amount claimed by Ms. Hicks. Ms. Hicks sued Globe, alleging fraud.
Phillips said he did not specifically recall the meeting at Ms. Hicks's house or the discussion with Ms. Hicks, but that he was certain that he followed a standard procedure--that he went to her house with Globe brochures that outlined available coverage; reviewed these brochures with her; filled out the application in her presence, using the information she provided; obtained her signature on the application after she had had ample time to review the application; and received a $20 application fee and a deposit on the premium. Prior to his leaving, Phillips informed Ms. Hicks that the policy carried a 10-day "free look" provision that was clearly stated on the front of the policy, by which she could receive a refund if she returned the policy within that time period. He also left a receipt and a copy of the application with her. Subsequently, Globe mailed Ms. Hicks a copy of her application to review in order to ascertain if there were any errors on the application. Upon receipt of the approved application, Phillips then hand delivered the policy to Ms. Hicks and once again reviewed the policy with her, specifically addressing room and board amounts, accident coverage, surgical benefits, and intensive care. According to Phillips, at the time he met with Ms. Hicks, Globe did not sell a major medical policy. Furthermore, the application that Phillips filled out from information provided by Ms. Hicks clearly stated that the policy was not intended "to replace or change any existing accident and health insurance policy." According to Globe, Ms. Hicks testified that had she bothered to take the time to read either the application or the policy itself upon its delivery, she would have understood exactly what it stated and what coverage was provided. Ms. Hicks was not someone with a limited education who would have difficulty understanding the English language, insurance provisions, or medical terms--Ms. Hicks had graduated from college, had been certified as a registered nurse, and had taken post-graduate courses. Furthermore, according to Globe, when given an opportunity to review the policy during her deposition, Ms. Hicks stated that she found no provisions that she was unable to understand and that had she read the policy at the time she received it, she would have been able to understand it sufficiently to know of the alleged fraud.
The issues for our review are whether the trial court erroneously held that Ms. Hicks's reliance on Phillips's representations was unreasonable and whether the trial court erroneously held that Ms. Hicks's fraud claim was barred by the applicable statute of limitations. 3
Ms. Hicks contends that the trial court applied the wrong standard when it entered the summary judgment for Globe based on the "reasonable reliance" standard instead of the "justifiable reliance" standard. She also contends that she presented substantial evidence of justifiable reliance, so as to preclude the summary judgment.
As Ms. Hicks points out in her brief, in Harris v. M & S Toyota, Inc., 575 So.2d 74 (Ala.1991), this Court stated that it has abandoned the reasonable reliance standard:
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