Preston Ins. Agency v. May
| Citation | 788 S.W.2d 608 |
| Decision Date | 20 March 1990 |
| Docket Number | No. 9749,9749 |
| Parties | PRESTON INSURANCE AGENCY, Appellant, v. Daryl MAY and wife, Faith May, Individually and as Next Friends of Jared Ryan May, Appellees. |
| Court | Texas Court of Appeals |
Hugo C. Schmidt, Saunders, Schmidt, Echols & Weathers, Tyler, Mike A. Hatchell, Ramey, Flock, Jeffus, Crawford, Harper, Tyler, for appellant.
Ron Adkison, Wellborn, Houston, Adkison, Mann, Sadler, Henderson, for appellees.
Preston Insurance Agency appeals from an adverse judgment in a damage suit brought against it by Mr. and Mrs. Daryl May. The Mays alleged that Preston and others negligently caused the loss of health insurance coverage for their son, which in turn caused them damages in unpaid medical and hospital bills, and mental anguish.
In 1982, on the recommendation of Daryl May's mother, the Mays went to the Preston Insurance Agency to seek health insurance coverage. They asked Preston's agent, Rex Wiley, about a "Double Eagle" group insurance policy plan which could be purchased through United Services Association of America. Mr. May's mother had told them about the policy. Patrons could become a member of United Services Association and thus be eligible to purchase the group policy, by paying a $15.00 membership fee. At the time the Mays enrolled in the group, the group policy was written by Continental Bankers of the South, a company which had a C rating by the A.M. Best Company. The policy featured a reduced premium and a low deductible. United Services Association controlled the policy and had the power to replace the underwriting insurance company. The group policy allowed the insurance carrier to terminate the policy of the entire group at any time, but not as to individual members only. The right of termination was expressly stated in the policy and in the brochure describing the policy. The policy also contained a deferral provision concerning dependents who were hospitalized or totally disabled at the time coverage began which provided for deferred coverage until (1) the dependent was engaged in all the normal activities of a person in good health of the same age and sex, (2) there had been furnished satisfactory evidence of the dependent's insurability, and (3) the dependent was no longer confined to a medical facility.
In 1984, Continental terminated the group policy. An identical policy covering the group was then underwritten by Hermitage Insurance Company. The transfer of coverage occurred without any loss of benefits to any group members. In 1984, Jared May was born. He suffered from serious heart and liver difficulties which required major hospitalization. According to the terms of the policy, Jared was fully covered at his birth. In 1985, Hermitage terminated its policy and later became insolvent. The group policy was then picked up by Keystone Life, a company which had a B rating from A.M. Best Company. When Keystone discovered the condition of Jared May, it waived coverage as to him because he did not meet the requirements of the deferral rule contained in the policies.
The Mays sued the Preston Agency, United Services Association, Keystone, and Hermitage to recover the unpaid medical and hospital bills they had incurred for Jared, as well as damages for mental anguish and punitive damages. The suit was based on allegations of misrepresentation, fraud, bad faith, breach of implied warranty, breach of contract, negligence in exposing the child to lack of coverage, and negligence in failing to investigate the financial solvency of the insurance companies.
Only negligence and false misrepresentation questions were submitted to the jury. The jury found that Preston and United Services Association were negligent, but failed to find that any false representation had been made. They also failed to find gross negligence. Damages of $140,000.00 for unpaid medical expenses were awarded. Only Preston has appealed. In three points of error, it contends that there is no evidence to support the findings of negligence and damages, and that the undisputed evidence shows unpaid medical bills of only $19,000.00.
In reviewing a no evidence contention, we consider only the evidence tending to support the finding, viewing it in the light most favorable to the verdict, giving effect to all reasonable inferences that may properly be drawn therefrom and disregarding all contrary or conflicting evidence. Garza v. Alviar, 395 S.W.2d 821 (Tex.1965). If there is any evidence, more than a scintilla, supporting the finding, the no evidence contention will be overruled.
The Mays contend on appeal that Preston was negligent in placing their insurance in a plan inadequate to their needs and which exposed them to the possibility of having no coverage on their child.
We find no evidence in the record of any negligent act on Preston's part which was a proximate cause of the loss of coverage.
It first should be noted that the Mays make no claim, and there is no evidence, that their child's loss of coverage was in any way caused by the insolvency, financial irresponsibility, or any kind of malfeasance or misfeasance on the part of any insurer. The only fact asserted to be a direct cause of the loss is that the group policies covering the Mays allowed the insurance company to terminate the policy as to the complete group, and that this termination right caused a "switching of underwriters" which ultimately left Jared without coverage. Thus, any liability of Preston, the agent, must be based on some negligence on its part in securing for, or inducing the Mays to purchase, that type of policy.
Considering only that which bears on the question and which could conceivably support the Mays' case, the only evidence we find in the record on this issue is summarized as follows:
Rex Wiley testified that he learned about the Double Eagle group policy from literature he received from U.S.A.A., and he thought it was a good policy because it had lower rates, a low deductible which started at $100.00, and it only insured persons in good health.
Wiley testified that after securing the insurance coverage he became aware that Mrs. Faith May had become pregnant...
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May v. United Services Ass'n of America
...as to misrepresentation. On this verdict, the trial court rendered judgment for the plaintiffs, but the court of appeals reversed. 788 S.W.2d 608. We affirm the judgment of the court of appeals because there is no evidence in the record before us that the agent breached the duty to use reas......