King v. John Hancock Mut. Life Ins. Co., No. 17932

CourtSupreme Court of South Dakota
Writing for the CourtHENDERSON; MILLER, C.J., and AMUNDSON; SABERS; ZINTER; ZINTER, C.J., sitting for WUEST; SABERS; ZINTER
Citation17 EmployeeBenefitsCas. 1080,500 N.W.2d 619
Parties17 Employee Benefits Cas. 1080 Ron KING, Plaintiff and Appellee, v. JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY, Petitioner and Appellant.
Docket NumberNo. 17932
Decision Date19 May 1993

Page 619

500 N.W.2d 619
17 Employee Benefits Cas. 1080
Ron KING, Plaintiff and Appellee,
v.
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY, Petitioner and Appellant.
No. 17932.
Supreme Court of South Dakota.
Argued Jan. 11, 1993.
Decided May 19, 1993.

Rick Johnson, Johnson, Eklund & Abourezk, Gregory, for plaintiff and appellee.

Stanley E. Whiting, Whiting Law Office, Winner, for petitioner and appellant.

HENDERSON, Justice.

PROCEDURAL HISTORY/ISSUES

Appellee Ron King (King) commenced this action against appellant John Hancock Mutual Life Insurance Company (Hancock) in July of 1990 to collect money for medical expenses that Hancock refused to cover. King further alleged a cause of "bad faith"

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for the refusal. After depositions, King moved for summary judgment on the liability claim. Hancock cross-motioned on the same and moved to dismiss the bad faith claim.

On April 20, 1992, the trial court granted King's motion for summary judgment while denying Hancock's motions, holding that the bad faith claim had material facts at issue. From a July 12, 1992 order granting petition for allowance of appeal from an intermediate order, this Court agreed to review the following issues raised by Hancock:

I. Was King entitled to extended COBRA coverage despite his Medicare eligibility?

II. Was Hancock entitled to summary judgment on King's bad faith claim?

We affirm on Issue I, reverse on Issue II, and remand for determination of attorneys' fees.

FACTS

As a response to the growing number of Americans without any health insurance coverage, Congress passed the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) requiring employers to provide continuation of health coverage to employees after they leave their jobs. COBRA mandated that an employer must offer continuation coverage to most ex-employees for eighteen months; such coverage could be terminated if the ex-employee became "a covered employee under any other health plan." 29 U.S.C. § 1162; National Companies Health Benefit Plan v. St. Joseph's Hospital, 929 F.2d 1558 (11th Cir.1991).

In 1984, Ron King was diagnosed with Multiple Sclerosis (MS). Within four years, he was declared totally disabled and qualified for Social Security disability benefits. Despite this setback, in April of 1988, King used his civil engineering degree to obtain employment with the South Dakota Department of Water and Natural Resources (DWNR).

As a part of his orientation to the new job, King was required to complete numerous forms including a notice of participation in group health insurance (contracted through John Hancock Mutual Life Insurance Company and administered by the State of South Dakota) which expressly provided, "Your coverage will go into effect on the first day of the second month following your hire date." No exceptions for Medicare recipients were indicated in the materials. As of May 1, 1988, King was covered by the state's group health plan. One month later, on July 1, he also became eligible for Medicare benefits. Unfortunately, deteriorating health led King to resign his new position on July 29 of the same year. From July 1 through July 29, King was simultaneously covered by group health and Medicare.

Soon thereafter, King received a notice from the state informing him that he could extend his state group health plan. (His termination from employment was a qualifying event making him eligible for extended coverage. 42 U.S.C.S. § 300bb-3.) This notice from the state specifically stated:

We have checked your records and find that you are entitled to extend your single coverage.

King, desiring to continue coverage, completed the required forms, including a section for "employee's death, divorce or legal separation, or the employee's entitlement to Medicare," and submitted them on August 11, 1988. Upon receiving approval in September for extended coverage, King began his monthly premium payments.

Meanwhile, King was under the care of Dr. J.D. Sabow of Rapid City, South Dakota, who, during January of 1989, wanted to administer hyperbaric oxygen (HBO) for King's MS. Both Sabow and King individually contacted Hancock requesting coverage for HBO.

King finally received a letter approving coverage in July, 1989--which was after eleven (11) months of COBRA coverage, eleven (11) months of premium paying. Upon receipt of this approval, King underwent the recommended HBO treatments at a cost of approximately $3,000. Dr. Sabow's bill was then forwarded to Hancock. Despite the earlier approval, claim supervisors

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at Hancock responded by refusing coverage alleging that King's Medicare eligibility made him ineligible for COBRA. The state benefit program manager, who is responsible for making such eligibility determinations, however, was not contacted nor did he have any input in denying King's benefits.

Following Hancock's refusal to pay, the state offered to refund King's COBRA premiums and pay half of the HBO bill. King refused the offer and initiated this action.

The trial court determined that Hancock's action denied King the opportunity to exercise his right of election to continue coverage as mandated by COBRA. Hancock further usurped the state's authority to make its own eligibility determinations.

DECISION

Statutory interpretation is a question of law for the court to determine, and when the trial court resolves the question in the defendant's favor, summary judgment is appropriate. Schoenwald v. Farmers Cooperative Association, 474 N.W.2d 519 (S.D.1991); Vellinga v. Vellinga, 442 N.W.2d 472 (S.D.1989). Therefore, summary judgment will be affirmed if there exists any basis which would support the trial court's ruling. Weatherwax v. Hiland Potato Chip Co., 372 N.W.2d 118 (S.D.1985). Whereas this is a question of law, our review is de novo. Brown v. Egan Consol. Sch. Dist. 50-2, 449 N.W.2d 259 (S.D.1989).

I. King was eligible for COBRA extended coverage.

When King left state employment, he completed the requisite forms for extended coverage wherein he indicated his Medicare eligibility. According to 42 U.S.C.A. § 300bb-2(2)(D):

The coverage must extend for at least the period beginning on the date of the qualifying event and ending not earlier than the earliest of the following:

The date on which the qualified beneficiary first becomes, after the date of the election --

(i) covered under any other group health plan (as an employee or otherwise) which does not contain any exclusion or limitation with respect to any preexisting condition of such beneficiary, or

(ii) entitled to benefits under Title XVIII of the Social Security Act [42 U.S.C.A. § 1395 et seq.].

(Emphasis added). Hancock interprets this language to mean that an employee with Medicare eligibility prior to termination of...

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15 practice notes
  • Weber v. First Federal Bank, No. 18569
    • United States
    • Supreme Court of South Dakota
    • May 25, 1994
    ...the trial court resolves the questions of law in a party's favor, summary judgment is appropriate. King v. John Hancock Mut. Life Ins., 500 N.W.2d 619 First Federal received the benefits of summary judgment because the trial court ruled that federal law preempted Weber from seeking damages ......
  • Davis v. Knippling, No. 19875
    • United States
    • Supreme Court of South Dakota
    • April 1, 1998
    ...See generally Aadland v. St. Luke's Midland Reg'l Med. Ctr., 537 N.W.2d 666, 668 (S.D.1995); King v. John Hancock Mut. Life Ins. Co., 500 N.W.2d 619, 621 (S.D.1993). ¶12 A clear majority of states have judicially refused to admit evidence of a plaintiff's nonuse of an available seatbelt as ......
  • State Farm Mut. Auto. Ins. Co. v. Ragatz, No. 19964
    • United States
    • Supreme Court of South Dakota
    • September 9, 1997
    ...will be affirmed if there exists any basis which would support the trial court's ruling. King v. John Hancock Mut. Life Ins. Co., 500 N.W.2d 619, 621 ¶9 South Dakota's financial responsibility law, SDCL 32-35-113(1) permits motor vehicle owners to demonstrate financial responsibility by "[h......
  • Alverson v. Northwestern Nat. Cas. Co., Nos. 19296
    • United States
    • Supreme Court of South Dakota
    • February 14, 1996
    ...de novo. Aadland v. St. Luke's Midland Regional Medical Ctr., 537 N.W.2d 666, 668 (S.D.1995); King v. John Hancock Mut. Life Ins. Co., 500 N.W.2d 619, 621 ¶6 1. WHETHER THE POLICY EXCLUDES COVERAGE FOR ALVERSON'S LOSS ¶7 Both parties claim the language of the policy exclusion is unambiguous......
  • Request a trial to view additional results
15 cases
  • Weber v. First Federal Bank, No. 18569
    • United States
    • Supreme Court of South Dakota
    • May 25, 1994
    ...the trial court resolves the questions of law in a party's favor, summary judgment is appropriate. King v. John Hancock Mut. Life Ins., 500 N.W.2d 619 First Federal received the benefits of summary judgment because the trial court ruled that federal law preempted Weber from seeking damages ......
  • Davis v. Knippling, No. 19875
    • United States
    • Supreme Court of South Dakota
    • April 1, 1998
    ...See generally Aadland v. St. Luke's Midland Reg'l Med. Ctr., 537 N.W.2d 666, 668 (S.D.1995); King v. John Hancock Mut. Life Ins. Co., 500 N.W.2d 619, 621 (S.D.1993). ¶12 A clear majority of states have judicially refused to admit evidence of a plaintiff's nonuse of an available seatbelt as ......
  • State Farm Mut. Auto. Ins. Co. v. Ragatz, No. 19964
    • United States
    • Supreme Court of South Dakota
    • September 9, 1997
    ...will be affirmed if there exists any basis which would support the trial court's ruling. King v. John Hancock Mut. Life Ins. Co., 500 N.W.2d 619, 621 ¶9 South Dakota's financial responsibility law, SDCL 32-35-113(1) permits motor vehicle owners to demonstrate financial responsibility by "[h......
  • Alverson v. Northwestern Nat. Cas. Co., Nos. 19296
    • United States
    • Supreme Court of South Dakota
    • February 14, 1996
    ...de novo. Aadland v. St. Luke's Midland Regional Medical Ctr., 537 N.W.2d 666, 668 (S.D.1995); King v. John Hancock Mut. Life Ins. Co., 500 N.W.2d 619, 621 ¶6 1. WHETHER THE POLICY EXCLUDES COVERAGE FOR ALVERSON'S LOSS ¶7 Both parties claim the language of the policy exclusion is unambiguous......
  • Request a trial to view additional results

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