Lutsky v. Blue Cross Hosp. Service, Inc., of Missouri

Citation695 S.W.2d 870
Decision Date07 August 1985
Docket NumberNo. 66698,66698
PartiesDennis B. LUTSKY and Judith Lutsky, Plaintiffs-Respondents, v. BLUE CROSS HOSPITAL SERVICE, INC., OF MISSOURI and Missouri Medical Service, d/b/a Blue Shield, Defendants-Appellants.
CourtUnited States State Supreme Court of Missouri

Martin J. Toft, Jonathan W. Igoe, Ann E. Buckley, Henry J. Mohrman, St. Louis, for defendants-appellants.

Norton Y. Beilenson, Ralph M. Lake, Clayton, for plaintiffs-respondents.

BLACKMAR, Judge.

The plaintiffs became members of the Missouri Farm Bureau Federation (Farm Bureau) in May, 1981. This membership made them eligible for a group health care plan (Com-Pac) provided by defendants Blue Cross Hospital Service, Inc. of Missouri and Missouri Medical Service (Blue Shield). Plaintiffs applied for membership in the Com-Pac program and were issued a membership card insuring themselves and their minor son, Loren.

On October 8, 1981 Loren became a patient at Meninger Foundation Children's Hospital in Topeka, Kansas, for treatment of a mental illness, and remained there until, at least, the time of judgment in the trial court. His expenses for hospital and medical care were paid by defendants through November of 1982. On December 1, 1982, the Com-Pac program was replaced by a new program emanating from the defendants, and denominated the "comprehensive" plan. Under Com-Pac, the lifetime maximum for hospital and medical service to any one person was stated to be $1,000,000. The Comprehensive Program maintained the $1,000,000 maximum except for mental illness, as to which an annual maximum of $5,000 and a lifetime maximum of $25,000 were specified. The defendants claim that benefits for Loren's illness after December 1, 1982 are subject to the limits of the comprehensive program.

The plaintiffs filed suit for declaratory judgment and damages. The trial court entered summary judgment for the plaintiffs in the amount of $84,219.34 on account of expenses incurred up to the time of judgment, and directed the payment of future benefits for Loren's illness and hospitalization. The judge prepared a helpful opinion in support of his judgment, concluding that the $1,000,000 maximum applied to an illness having its inception while the Com-Pac contracts were in force and that this limit could not be cut down, as to a particular type of illness, by subsequent agreement between the defendants and the sponsor, Farm Bureau. A count based on deceptive advertising was dismissed with prejudice. Only the defendants have appealed.

The Court of Appeals, Eastern District, reversed, holding that the contract modification was expressly permitted as provided for in the contracts between the defendants and Farm Bureau. The court also held that, by reason of these contracts, the only benefits payable were for those provided by the contracts in force when the covered services were rendered. Primary reliance was placed on Robin v. Blue Cross Hospital Service, Inc., 637 S.W.2d 695 (Mo. banc 1982).

We granted transfer and now take the case as on original appeal. We agree with both the trial court and the Court of Appeals that there are no fact issues and that the case is ripe for decision. We conclude that the trial court correctly determined the issues, and affirm its judgment.

1. The Contractual Provisions

The parties are not in agreement as to the governing contract terms. The plaintiffs attached to their petition five exhibits, as follows:

A. An agreement, undated, between defendant Blue Cross Hospital Service, Inc. of Missouri and Farm Bureau entitled "Group Hospitalization Certificate", providing for hospital care.

B. An agreement, undated, between defendant Missouri Medical Service and Farm Bureau entitled "Group Medical-Surgical Certificate" and providing for medical care.

C. An agreement, undated, between both defendants and Farm Bureau entitled "Group Major Medical Certificate", providing for reimbursement for excess costs. (Benefits under this particular agreement are not involved in the present litigation).

D. A document alleged to have been furnished by the defendants to prospective sponsors, defining and explaining the features of the Com-Pac plan, and containing the statement, "and to insure adequate protection in case of severe illness or accident, the new program will provide up to $1,000,000 in benefits, per person, during a life-time."

E. A six-page brochure alleged to have been furnished by the defendants to Farm Bureau members, explaining the program highlights. This brochure explains the copayment feature up to a "loss-sharing maximum", and then goes on to provide that, after that maximum is reached, "the program pays 100 per cent of any additional eligible expenses incurred by that individual during the rest of that year, up to the life-time maximum of $1,000,000 per person."

We will, for convenience, use the exhibit designations employed in the petition. Exhibit E contains a statement as follows:

Complete details of benefits and terms under which they are provided are contained in the Master Group Membership Certificate on file with Missouri Farm Bureau and the St. Louis Blue Cross and Blue Shield office.

The defendants argue that Exhibits D and E were not properly authenticated, by affidavit or otherwise, and therefore were not appropriate for consideration in ruling a motion for summary judgment. We conclude, however, that the defendants must be held to have judicially admitted that these documents emanated from them and were tendered to Farm Bureau and to prospective members as containing an authentic description of the Com-Pac plan and the available benefits. To the portion of the petition incorporating and characterizing Exhibits D and E, the defendants answered as follows:

12. Defendants admit that Exhibits "D" and "E" have reference to the Com-Pac program provided by these defendants. Defendants state that those exhibits speak for themselves and defendants deny each and every other allegation of paragraph 12 of plaintiffs' petition.

The portion of the answer quoted above certainly does not constitute a denial within the meaning of Rule 55.23, which provides as follows:

When any claim or defense is founded upon a written instrument and the same shall be set up at length in the pleading or a copy attached thereto as an exhibit, the execution of such instrument shall be deemed confessed unless the party charged to have executed the same shall specifically deny the execution thereof.

It is the sense of the rule that the answering defendant must clearly state its position if an issue of authenticity of a document attached to the petition is intended to be raised. By reason of the failure of specific denial, then, Exhibits D and E were properly before the trial court for consideration in ruling on the motion for summary judgment.

The defendants, in admitting the authorship of Exhibits D and E, do not of course admit the plaintiffs' characterization of these documents. Still to be decided is the question of their contractual effect. The Court of Appeals held simply that "the advertising brochure is not a part of the contract sued upon." 1 We disagree.

The Blue Cross Agreement, (Exhibit A) provides in paragraph II-A as follows:

The Membership Agreement shall consist of the written application of the member, BCHS enrollment regulations in force from time to time, the enrollment agreement, if any, between BCHS and the Group Sponsor, the membership card, this Group Comprehensive Program Certificate and duly executed riders, and the provisions of the bylaws of BCHS as amended from time to time. The aforesaid constitute the entire agreement between the parties. No officer, employee or agent of BCHS is authorized to vary or change any of the terms hereof. This Certificate supersedes all prior membership certificates.

Exhibits A, B and C clearly do not contain all essential contract terms. Exhibit A refers to, but does not define, "program benefit maximum" and "loss sharing maximum". Exhibit B contains similar references without specification. Neither of these documents, nor Exhibit C, contains any reference to the $1,000,000 per person lifetime benefit maximum. It is obviously necessary to look elsewhere to flesh out the contractual provisions.

There is no evidence of "BCHS regulations ...," or an "enrollment agreement" or "the provisions of the by-laws of BCHS" or amendments to these, all of which are said to be parts of the "membership agreement." The written application of the plaintiffs and their membership card were brought before the trial court, but neither of these contains all provisions necessary to complete the contract. We do not understand the defendants to claim that there are other material contractual provisions which were not before the trial court. They had the duty, in responding to the motion for summary judgment, to bring any further provisions to the court's attention. Rule 74.04(e).

It is apparent, then, that Exhibits D and E contain provisions found nowhere else which are essential to a complete contract, and that they have contractual force. Cf. Bellamy v. Pacific Mutual Life Insurance Co., 651 S.W.2d 490 (Mo. banc 1983); Morris v. Travelers Insurance Company, supra. Because all essential contractual provisions were before the court, and the facts of mental illness and ensuing hospitalization are not disputed, there are no remaining issues of fact and the case was appropriate for disposition on motion for summary judgment.

2. Application of the Contract

The defendants claim that, under a proper construction of the contract, they had every right to reach agreement with Farm Bureau on a new program to supplant the existing Com-Pac program. They point to such provisions as the following:

G. If the Group Sponsor terminates its enrollment agreement with BCHS, or makes available to the group another group hospital care program, or indemnity therefor, this...

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