Jarvis v. Prudential Ins. Co. of America

Decision Date14 July 1982
Docket Number81-048,Nos. 80-451,s. 80-451
Citation122 N.H. 648,448 A.2d 407
CourtNew Hampshire Supreme Court

Brown & Nixon, P. A., Manchester (David L. Nixon and Mark A. Abramson on brief and orally), for plaintiffs.

Sulloway, Hollis & Soden, Concord, and Stark & Peltonen, Manchester (John W. Mitchell, Concord, on brief and orally, and Rodney L. Stark, Manchester, on brief), for defendant.

BROCK, Justice.

In this case, the plaintiffs, Genevieve D. Jarvis and John P. Jarvis, seek damages from the defendant insurance carrier for its refusal to pay and alleged bad-faith denial of health insurance benefits. The action arose when the defendant denied the plaintiffs' claim for reimbursement of certain medical expenses, claiming that the expenses were not covered by the health insurance policy. The plaintiffs' writ, as amended, includes counts in both contract and tort, seeking a full range of consequential and punitive damages, including an award for emotional distress. The defendant moved to dismiss all counts, except the one alleging simple breach of contract, for failure to state a cause of action. The Trial Court (Flynn, J.), pursuant to RSA 491:17, transferred, without ruling, the following question to this court.

"Do the plaintiffs have a cause of action against the insurance carrier for those counts contained in plaintiffs' motion to amend, dated December 18, 1980?"

The plaintiffs also argue that the superior court erred in denying their motions to produce all the defendant's advertisements for the five years preceding this action and to reveal pending lawsuits against the defendant.

We hold that the plaintiffs have no cause of action in tort. Depending upon the outcome of a petition for declaratory judgment still pending in the superior court, however, they may have a cause of action for bad-faith breach of contract, enabling them to recover damages ex contractu. Further, we affirm the trial court's denial of the plaintiffs' motions for discovery.

The plaintiff, John P. Jarvis, is seventy-two years old and suffers from cerebral arteriosclerosis, a condition that results in deterioration of the thought processes and causes mental aberration, agitation and combativeness. In late 1979, he was hospitalized due to aggravated mental confusion, hallucinations, and psychotic agitation. At that time, he required twenty-four-hour nursing care, including restraint and constant supervision because of his violent and self-destructive behavior. Although his condition remained unimproved, he was discharged from the hospital on October 29, 1979. His physician conditioned his release upon continuation of twenty-four-hour nursing care and the presence of a male nurse during Mr. Jarvis' waking hours. Because no male nursing personnel were available in the Manchester area, it was necessary that a male licensed certified aid (L.C.A.) be employed instead.

Mrs. Jarvis immediately contacted the defendant's agent to inform him about the unavailability of male nurses in Manchester and requested his permission to employ a male L.C.A. The agent agreed to the alternative, and the insurance company assumed responsibility for payment of all medical services to Mr. Jarvis. In January 1980, however, it notified the plaintiff that the insurance policy did not cover the services of L.C.A.s. Thereupon, the defendant stopped all further reimbursements of medical expenses to the plaintiffs. In March 1980, it agreed to reimburse the plaintiffs for medical expenses they had incurred during January through March for one eight-hour shift of nursing services per day and to resume payments to the plaintiffs on that basis.

In their original writ, the plaintiffs alleged that, when the defendant refused to reimburse them for the cost of medically necessary services by a male L.C.A., the defendant wrongfully denied them insurance benefits to which they were entitled under their health insurance policy. Because they believed that the insurance company had, in bad faith, denied them insurance benefits to which they were clearly entitled, in total disregard of information readily available to it, the plaintiffs subsequently decided to amend their pleadings, by adding several counts in tort, as well as an additional count in contract. Total damages claimed are $1,000,000 for each plaintiff.

In determining whether the defendant's motion to dismiss the various counts should be granted, all facts properly pleaded are assumed to be true, and the reasonable inferences therefrom are construed most favorably to the plaintiffs. See Morgenroth & Assoc.'s Inc. v. Town of Tilton, 121 N.H. 511, 516, 431 A.2d 770, 773 (1981). If the plaintiffs could recover upon any set of the facts under the pleadings, the motion to dismiss should be denied. Lawton v. Great Southwest Fire Ins. Co., 118 N.H. 607, 610, 392 A.2d 576, 578 (1978).

We first consider the plaintiffs' counts sounding in tort. In count I of their amended writ, the plaintiffs allege that the defendant, by refusing to reimburse them for medically required services, in total disregard of the medical information available to it, not only breached its contractual obligation of good faith and fair dealing, but also breached an independent duty to deal fairly with them.

This court recently rejected the argument that an insurer has an independent duty to deal fairly with its insured and held that an insurer's wrongful or bad-faith refusal to settle or pay a claim pursuant to its contractual obligations did not give rise to a cause of action in tort. Lawton v. Great Southwest Fire Ins. Co., 118 N.H. at 613-14, 392 A.2d at 580. The relationship of the parties in the present case is the same as that in Lawton, and the facts alleged in both cases are sufficiently similar that the cases are indistinguishable as a matter of law on this issue. We decline the plaintiffs' request that we overrule Lawton, and we conclude that upon remand the defendant's motion to dismiss count I should be granted.

The plaintiffs' second claim in tort, set forth in count III of the amended writ, alleges that the defendant intentionally inflicted mental distress on Mrs. Jarvis by its "outrageous conduct" in denying the disputed insurance benefits.

Assuming arguendo that this court, in an appropriate case, would recognize the tort of intentional infliction of mental distress, this is not such a case. See generally, New Hampshire's Remedy under Lawton v. Great Southwest Fire Insurance Company for Insurer's Bad Faith Refusal to Pay First Party Insurance Claims, 20 N.H.B.J. 187, 201-02 (1979). Our review of the factual allegations before us convinces us that the defendant's conduct would, as matter of law, fail to meet the definition of "outrageous conduct" set forth in the Restatement of Torts. Restatement (Second) of Torts § 46, at 72-73 (1965). Therefore, upon remand, count III should also be dismissed.

In count IV of the amended writ, Mrs. Jarvis seeks recovery for the negligent infliction of emotional distress. She claims that the defendant's refusal to pay for home-nursing services by an L.P.A. resulted in a horrifying emotional experience for her, as she watched her husband deteriorate in helpless agitation and combativeness.

In support of this argument, she relies upon the Corso case, in which this court recently recognized the right of parents to recover damages for the emotional distress resulting from their contemporaneous perception of a serious accident in which their child was injured. Corso v. Merrill, 119 N.H. 647, 657, 406 A.2d 300, 307 (1979). We do not find sufficient similarity between the two cases to apply the Corso holding to this case. The instant case concerns an allegation of denial of insurance coverage rather than an allegation of infliction of serious physical injury upon Mr. Jarvis which Mrs. Jarvis could have contemporaneously perceived. See id. at 653, 406 A.2d at 307. The plaintiffs' reliance upon Corso is misplaced and, therefore, upon remand, Count IV should be dismissed.

The plaintiffs' last count in tort (count V) alleges that the defendant defrauded the plaintiffs by inducing them to enter into and maintain the health insurance contract by representations and promises which the defendant knew to be false and never intended to fulfill. It is well settled in this State that a writ alleging fraud must specify the essential details of the fraud. See Massachusetts Bonding Co. v. Keefe, 100 N.H. 361, 363, 127 A.2d 266, 268 (1956); see also Studwell v. Travelers Ins. Co., 121 N.H. 1090, 1091, 438 A.2d 942, 943 (1981). Because the plaintiffs do no more than state the general common-law definition of fraud, without making any specific allegations of fact concerning the defendant's fraudulent actions, their allegation of fraud lacks sufficient factual grounds to support their theory. Accordingly, we hold that count V should be dismissed unless it is amended to be more specific.

We next address the plaintiffs' count in contract. Count II of the amended writ alleges that the failure of the defendant to pay certain disputed insurance benefits constituted a bad-faith breach of contract, which entitled them to consequential and punitive damages, including damages for emotional distress.

The underlying factor in determining whether there has been a bad-faith breach of contract is whether the terms of the insurance policy cover the services of an L.P.A. A petition for declaratory judgment is pending in the superior court to determine this question. If it is determined in the declaratory judgment action that the plaintiffs' policy did cover the services of an L.P.A., the plaintiffs will then, and only then, be able to assert their claim that the defendant's denial of benefits was in bad faith.

We will now address what type of damages the plaintiffs can recover if they prove a bad-faith breach of contract by the defendant. We held in Lawto...

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