Pediatricians, Inc. v. Provident Life & Acc. Ins. Co., s. 91-2103

• Decision Date: 10 April 1992
• Docket Number: Nos. 91-2103,91-2129,s. 91-2103
• Citation: 965 F.2d 1164
• Parties: PEDIATRICIANS, INC., Plaintiff, Appellee, v. PROVIDENT LIFE & ACCIDENT INSURANCE CO., Defendant, Appellant. PEDIATRICIANS, INC., Plaintiff, Appellant, v. PROVIDENT LIFE & ACCIDENT INSURANCE CO., Defendant, Appellee. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 1164

965 F.2d 1164

PEDIATRICIANS, INC., Plaintiff, Appellee, v. PROVIDENT LIFE & ACCIDENT INSURANCE CO., Defendant, Appellant.

PEDIATRICIANS, INC., Plaintiff, Appellant, v. PROVIDENT LIFE & ACCIDENT INSURANCE CO., Defendant, Appellee.

Nos. 91-2103, 91-2129.

United States Court of Appeals First Circuit.

Heard April 10, 1992.

Decided May 15, 1992.

Rehearing Denied June 12, 1992.

Edward S. Rooney, Jr. with whom Lyne, Woodworth & Evarts, Boston, Mass., was on brief, for Provident Life & Acc. Ins. Co.

Thomas P. LaFrance with whom John Kenneth Felter and Goodwin, Procter & Hoar, Boston, Mass., were on brief, for Pediatricians, Inc.

Before SELYA, Circuit Judge, CAMPBELL, Senior Circuit Judge, and KEETON, ^* District Judge.

KEETON, District Judge.

The present cross-appeals involve a dispute over life insurance coverage. Pursuant to a Certificate of Insurance on the life of Dr. Thomas A. Flaherty under a group insurance policy issued to the American Medical Association Group Insurance Trust by defendant Provident Life & Accident Insurance Company ("Provident"), Provident paid insurance proceeds to Flaherty's beneficiary, plaintiff Pediatricians, Inc. ("Pediatricians"), in the amount of $100,000.00.

Pediatricians sued to recover an additional $100,000.00, claiming that the coverage amount at the time of Flaherty's death was $200,000.00. The court below entered summary judgment for Pediatricians on its coverage claim.

Pediatricians also contends that it is entitled to attorney's fees, costs, and double or treble damages under Mass.Gen.L. c. 176D Provident now appeals the award of additional death benefits; Pediatricians cross-appeals the denial of attorney's fees, costs, and multiple damages. We affirm.

                and 93A.   After a hearing conducted September 17, 1991, the district court denied plaintiff's claim for relief on that count of its complaint.   Final Judgment was entered September 20, 1991
                

I. Background

The material historical facts are not in dispute. We summarize them briefly and for context identify uncertainties about the timing of some events.

In 1973, Flaherty obtained life insurance from Provident in the amount of $25,000.00, naming his wife as beneficiary. During the next fifteen years he amended his coverage several times. Of significance to this litigation, he eventually increased the amount to $200,000.00 and changed his beneficiary to Pediatricians (a corporation operating a medical clinic), of which he was president and 50% shareholder. A semi-annual premium came due on September 1, 1988. The amount of this premium was $598.50 (the "semi-annual renewal premium" of $855 less a "premium credit" under the terms of the Group Policy of $256.50).

It is undisputed that in 1988 Marsh and McLennan Group Associates ("Marsh") regularly issued renewal premium notices to AMA members who were certificate holders and also received payments from them. The record before us does not specify either when this practice commenced or how it was authorized. (An application in the record, however, signed by Flaherty on March 2, 1973, has a printed statement, "The program is Administered by [Marsh].")

In the period August 1988--February 1989, nine events (or sets of events) of interest in this litigation occurred. As the following description discloses, however, the precise timing is not certain in all instances. Some overlapping in time among some of these events is probable.

1. Notice of Renewal Premium due September 1, 1988. In or before August 1988, Marsh sent to Flaherty a notice that a renewal premium of $598.50 for $200,000 of coverage under the Flaherty Certificate was due September 1, 1988.

2. Tender of $299.25 payment. A Pediatricians' check, signed by Donald J. Annino, dated August 31, 1988, and payable to Marsh was mailed in a Pediatricians' envelope, postmarked September 3, 1988 and addressed to Marsh and McLennan Group Associates, 222 So. Riverside, Chicago, ILL, 60606. Also in the envelope was a note in the handwriting of Flaherty and signed by him, stating,

To Whom It May Concern:

Please reduce my coverage on Term Life Insurance from $200,000 to $100,000. The enclosed premium for $299.25 is forwarded herewith.

/s/ Thomas A. Flaherty, M.D.

Plan 1104 AMA

Certificate No. 503722

Marsh received the envelope and enclosures on September 7, 1988.

3. Dr. Flaherty's entry to hospital. At some time on September 19 or 20, 1988, Flaherty was admitted to New England Medical Center with a diagnosis of "sepsis" and "septic arthritis." He remained there until his death.

4. Tender of $598.50 payment. A check of $598.50, signed by Donald J. Annino, dated September 23, 1988, and payable to Marsh was mailed to Marsh on an undetermined date and received on an undetermined date.

5. Dr. Flaherty's death. Dr. Flaherty died at 4:21 a.m., September 29, 1988, from "cardiac arrest" incident to "sepsis" and "septic arthritis."

6. Reminder Notice. A machine-generated Reminder Notice, not dated, addressed to Flaherty at 955 Main Street, Winchester, MA 01840 was sent by Marsh and delivered by mail to that address. The Reminder Notice states, "Make check payable to: Marsh and McLennan Group Associates, P.O. Box 2204, Bedford Park, IL 60499-2204," "Total Amount Due $299.25," and "Coverage description: $200,000 Member Life Insurance." The Reminder Notice

                carries the legend "Final Notice" and declares, "Your coverage will lapse unless we receive your payment in our office postmarked no later than October 7, 1988."   At the bottom is the following additional information
                

                Semi-annual Renewal Premium  $855.00
                Less credit balance           299.25
                Premium credit                256.50
                     Total premium due        299.25
                

The top line of this notice reads: "REMINDER NOTICE. IF PAYMENT HAS BEEN MADE, PLEASE DISREGARD." The record is silent as to precisely when the Notice was mailed and when delivered.

7. Notice of Reduction of Coverage to $100,000. In an envelope postmarked October 5, 1988, Marsh sent a machine-generated notice bearing a date of 09/29/88, addressed to Thomas A. Flaherty, M.D., 955 Main St., Winchester, MA 01890, and saying, "Please be advised that as requested we have reduced your benefit to $100,000. Your check for $299.25 has been applied to your account and you are currently paid to 3-1-89...."

8. Refund. By check dated November 15, 1988, payable to "Thomas A. Flaherty, M.D., 955 Main St., Winchester, MA 01840," Marsh attempted to tender a refund in the amount of $799.56, together with an attachment showing the word "deceased" under the printed heading, "Explanation of Refund." Marsh's address, printed on the check, is 222 S. Riverside Plaza, Chicago, Illinois 60606.

9. Provident's Tender of $100,000. Provident tendered a payment of $100,000 by check dated February 24, 1989, payable to "Pediatricians, Inc., 175 Washington Street, Winchester, MA 01840." The check was enclosed in an envelope with a letter reciting that it represented "Group Life Benefits due ... for the death of Thomas Anthony Flaherty, which occurred on December 29, 1988," and that "Dr. Flaherty reduced his Life Insurance to $100,000 on September 1, 1988." The voucher attached to the check, however, stated the "DATE OF LOSS" as "September 29, 1988."

After these events, several exchanges took place between Provident and Pediatricians. Pediatricians asserted that the policy coverage was $200,000.00 and requested a copy of the "subject Life Insurance Policy" as well as documentation of the reason for the decrease in coverage. Provident forwarded to Pediatricians copies of Flaherty's Certificate of Insurance, August 31 check, and September 1 note, among other documents. Provident did not send a copy of the Group Policy. In a subsequent phone call, Pediatricians informed Provident that the full premium had been paid after the September 1 note. Provident responded, however, that in its opinion a premium refund (which had been made) was the appropriate remedy because Flaherty's request for reduction in coverage was effective upon receipt of his note and the $299.25 payment. Eventually, Pediatricians sent a demand letter under c. 93A. Provident's in-house counsel responded that Provident's position was that Pediatricians had no authority to increase Flaherty's coverage. This lawsuit followed.

II. Policy Amount

The district court granted Pediatricians' motion for summary judgment on Count I of the complaint, concluding that at the time of Flaherty's death his life was insured for $200,000.00. The district court reasoned that under either Massachusetts law (which Pediatricians contends is controlling on the issue), Benoit v. Fisher, 341 Mass. 386, 169 N.E.2d 905 (1960), or the law of Tennessee (which Provident contends is controlling under a choice-of-law provision in the Group Policy), Allstate Ins. Co. v. First of Ga. Ins. Co., 753 S.W.2d 672 (Tenn.1988), Flaherty's reduction in coverage was not effective until the insurer took some affirmative action. Although Marsh negotiated Flaherty's initial premium check for $299.25 before Flaherty's death, it placed a qualified endorsement on the back of the check indicating that its action was not an acceptance of any offer to purchase insurance. The district court found that Provident took no relevant affirmative action until after Flaherty's death at 4:21 a.m. on September 29. The conclusion that neither Provident nor Marsh took action to acknowledge a reduction of coverage is We may affirm the judgment of the district court on any independently sufficient ground. Medina-Munoz v. R.J. Reynolds Tobacco Co., 896 F.2d 5, 7 (1st Cir.1990). Because we conclude for the reasons stated below that the coverage at the time of Flaherty's death was $200,000.00, we need not consider and do not decide whether Provident's failure to take some affirmative step might have been outcome determinative.

supported also by the fact that the Marsh "Reminder Notice," issued before Marsh was aware of Flaherty's death,...