Peterman v. Midwestern Nat. Ins. Co.
| Decision Date | 27 January 1993 |
| Docket Number | Nos. 91-2717,92-0050,s. 91-2717 |
| Citation | 177 Wis.2d 682,503 N.W.2d 312 |
| Parties | John D. PETERMAN and Kathy J. Peterman, Plaintiffs-Appellants, v. MIDWESTERN NATIONAL INSURANCE COMPANY, a Wisconsin corporation, Special Products, Inc., a Wisconsin corporation, and Frank A. Busalacchi, Defendants, Visuals Plus, Inc., a Wisconsin corporation, Defendant-Respondent. John D. PETERMAN and Kathy J. Peterman, Plaintiffs-Appellants, v. MIDWESTERN NATIONAL INSURANCE COMPANY, Defendant-Cross Appellant, Visuals Plus, Inc., a Wisconsin corporation, Defendant, Special Products, Inc., a Wisconsin corporation and Frank A. Busalacchi, Defendants-Respondents-Cross Respondents. . Oral Argument |
| Court | Wisconsin Court of Appeals |
Before WEDEMEYER, P.J., and FINE and SCHUDSON, JJ.
John D. Peterman and Kathy J. Peterman (the Petermans) appeal from a judgment dismissing their complaint against Special Products, Inc. (Special Products), and Frank A. Busalacchi (Busalacchi). The Petermans also appeal from a judgment dismissing their complaint against Visuals Plus, Inc. (Visuals).
Midwestern National Insurance Company (MNIC) cross-appeals from a judgment dismissing its cross-claim against Special Products and Busalacchi for indemnification. This is a consolidated appeal.
The Petermans assert the following: (1) the trial court erred in ordering summary judgment in favor of Special Products, Busalacchi and Visuals on the Petermans' state common law claims; and (2) the trial court erred in dismissing the Petermans' amended complaint against Visuals for failing to state a claim upon which relief can be granted. In the cross-appeal, MNIC argues that the trial court erred in granting summary judgment in favor of Special Products and Busalacchi on the issue of indemnification.
Because the Petermans' common law causes of action alleged in the complaint are pre-empted by the Employment Relief Income Security Act, we affirm that part of the judgment dismissing the state common law claims. Because the amended complaint states a cause of action upon which relief can be granted, however, we reverse that part of the judgment. In regard to MNIC's cross-appeal, because there are no genuine issues of material fact, and because Special Products and Busalacchi are entitled to a judgment as a matter of law, we affirm.
The Petermans, a married couple, commenced working for Visuals in 1983. As part of John's employment, Visuals provided a health insurance policy through a group plan that extended coverage to both Kathy and himself. 1 Visuals did not provide Kathy separate insurance coverage because she was considered a dependent under the family coverage of John's policy. In December 1987, Visuals informed John that, commencing January 1, 1988, Visuals would pay the entire premium for his family plan health insurance coverage. Visuals also decided, effective January 1, 1988, to change its insurance carrier to MNIC after receiving an attractive proposal from its insurance agent, Busalacchi, the owner of Special Products.
Sometime in December, Visuals held a meeting with its employees to explain the change in carriers and to discuss how the change would be accomplished. Visuals informed its employees that it did not intend to change the nature of the coverage previously provided. Visuals' management instructed the employees to fill out forms to achieve the change. John and Kathy attended the meeting and filled out the required forms. The Petermans subsequently learned that they would be provided with individual policies rather than a family plan having dependent coverage. The rationale was cost effectiveness. Kathy inquired of a Visuals' insurance administrator about the consequences of pregnancy. Kathy was told that if she became pregnant she could simply change to a family plan at no additional cost. 2
On or about February 14, 1989, Kathy informed the insurance administrator of Visuals that she was pregnant and that her baby was due July 25, 1989. Kathy and the administrator discussed the necessity of changing her insurance coverage to a family plan. The administrator told Kathy that she would contact MNIC to determine the appropriate procedures to effectuate a change to family coverage.
The administrator first contacted Special Products. Special Products did not know how to proceed, but indicated that it would contact MNIC. MNIC informed Special Products that Kathy should change to the family coverage plan one month prior to delivery or, in this case, by June 1, 1989. Special Products informed Visuals who, in turn, relayed the information to Kathy. Visuals, however, did not instruct Kathy on the procedure to be followed to effectuate family coverage nor did it advise her of the consequences of failure to change coverage before the birth of the baby.
The Petermans' baby was born April 10, 1989, three months premature. Following the birth of the baby, the administrator of Visuals instructed the Petermans to fill out the forms necessary to substitute individual coverage for family coverage. MNIC received the forms April 20, 1989. MNIC, however, denied all claims relating to the baby on the basis that no coverage existed when she was born.
Subsequently, the Petermans filed a complaint against MNIC, Special Products, Busalacchi and Visuals alleging: (1) a compensatory damages claim against MNIC under sec. 631.09(2), Stats., 3 as well as a punitive damages claim against MNIC for unreasonable delay in disbursing benefits; (2) a compensatory damages claim against Busalacchi and Special Products for negligence; and (3) a compensatory damages claim against Visuals for negligence and breach of contract.
The Petermans moved for summary judgment against all the defendants and Visuals filed a cross-motion for summary judgment. The trial court denied the Petermans' motion against MNIC. The trial court concluded that although the claim against MNIC under sec. 631.09, Stats., was exempt from the operations of ERISA's preemptive provisions, there nevertheless existed a factual issue of causation as between the Petermans and MNIC. Second, the trial court granted summary judgment dismissing the Petermans' negligence and breach of contract claims against Visuals. The trial court reasoned that the claims related to an employee benefit plan and, therefore, were preempted by ERISA. Third, the trial court granted summary judgment dismissing the Petermans' claims against Special Products and Busalacchi because they too were not available under ERISA. Last, the trial court granted summary judgment dismissing the Petermans' bad faith claim against MNIC, as well as MNIC's cross-claim for indemnification against Special Products and Busalacchi.
The Petermans subsequently amended their complaint and added a claim against Visuals for benefits under ERISA seeking to estop a denial of family dependent coverage benefits by Visuals and MNIC. Visuals moved to dismiss the amended complaint for failure to state a claim upon which relief could be granted. The trial court granted the motion on the pleadings, concluding that estoppel principles were not properly applicable and, therefore, the Petermans had failed to state a claim upon which relief could be granted.
The Petermans first claim that the trial court erred in ordering summary judgment on their claims of negligence and breach of contract against Visuals and their claims for a breach of duty of good faith against Busalacchi and Special Products.
Summary judgment is appropriate when there is no dispute of material fact and the moving party is entitled to judgment as a matter of law. Section 802.08(2), Stats. On review, appellate courts apply the summary judgment standards in the same fashion as trial courts. Green Spring Farms v. Kersten, 136 Wis.2d 304, 315, 401 N.W.2d 816, 820 (1987). In summary judgment cases we review the matter de novo. United States Fidelity & Guaranty Co. v. Goldblatt Bros., Inc., 142 Wis.2d 187, 190, 417 N.W.2d 417, 419 (Ct.App.1987).
Under sec. 802.08(2), Stats., the moving party must first establish a prima facie case for summary judgment. That burden having been met, it then becomes incumbent upon the non-moving party to submit facts to raise a genuine issue of material fact so as to prevent summary judgment. Kraemer Bros., Inc. v. United States Fire Ins. Co., 89 Wis.2d 555, 566-67, 278 N.W.2d 857, 862 (1979).
To better inform the reader of the nature and significance of this dispute, we believe a brief explanation of the content and development of ERISA law is appropriate.
ERISA established a comprehensive system regulating private benefit plans including both pension plans and welfare plans. A "welfare plan" is defined to include, inter alia, any plan, fund or program "maintained for the purposes of providing medical or other health benefits for employees or their beneficiaries through the purchase of insurance or otherwise." ERISA § 3(1), 29 U.S.C. § 1002(1) (1988). Subject to certain exemptions, ERISA applies generally to all employee benefit plans sponsored by an employer or an employee organization. ERISA § 4(a), 29 U.S.C. § 1003(a) (1988).
As noted recently by the Supreme Court, ERISA has preemptive effect over state law:
ERISA's pre-emption provision assures that federal regulation of covered plans will be exclusive. Section 514(a) provides that ERISA "shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan" covered by ERISA § 514(a), 29 USC § 1144(a). Several categories of state laws, such as generally applicable criminal laws and laws regulating insurance, banking, or securities, are exempted from ERISA preemption by § 514(b), 29 USC § 1144(b).
To continue reading
Request your trial
-
Maxwell v. Hartford Union High Sch. Dist.
...Wis.2d 192, 405 N.W.2d 732 (Ct.App.1987) (involved non-compliance by the insurer with a statute); Peterman v. Midwestern Nat'l Ins. Co., 177 Wis.2d 682, 698, 503 N.W.2d 312 (Ct.App.1993) (the issue was “whether ERISA, under its federal common law, recognizes claims supported by the doctrine......
-
Buchholz v. Rural Community Ins. Co.
...principles of justice and where applicable, can bar a party from asserting legal or equitable rights." Peterman v. Midwestern National Ins. Co., 177 Wis.2d 682, 698, 503 N.W.2d 312 (1993) (citing Kellogg v. Village of Viola, 67 Wis.2d 345, 350, 227 N.W.2d 55, 58 (1975)). In Wisconsin, the d......
-
Darne v. State of Wisconsin
...(Wis.App.1995); estoppel theory claims of insureds under a group health plan against an insurer, e.g., Peterman v. Midwestern Nat. Ins. Co., 177 Wis.2d 682, 503 N.W.2d 312 (Wis.App.1993); and laws regarding notice and proof of loss, e.g., Rockline Inc. v. Wisconsin Physicians Service Ins., ......
-
Finn v. Nachreiner Boie Art Factory
...STATS. They challenge only the trial court's legal conclusions. Our review is de novo. See Peterman v. Midwestern Nat'l Ins. Co., 177 Wis.2d 682, 691, 503 N.W.2d 312, 315 (Ct.App.1993). A. Does ERISA preempt the Nachreiners' state law cross-claims for fraud in the inducement and The provisi......