Principal Health Care of Louisiana, Inc. v. Lewer Agency, Inc.

• Decision Date: 23 November 1994
• Docket Number: No. 93-3741,93-3741
• Citation: 38 F.3d 240
• Parties: , 18 Employee Benefits Cas. 2525 PRINCIPAL HEALTH CARE OF LOUISIANA, INC., Plaintiff-Appellant, v. The LEWER AGENCY, INC., and General American Life Insurance Company, Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 240

38 F.3d 240

63 USLW 2357, 18 Employee Benefits Cas. 2525

PRINCIPAL HEALTH CARE OF LOUISIANA, INC., Plaintiff-Appellant, v. The LEWER AGENCY, INC., and General American Life Insurance Company, Defendants-Appellees.

No. 93-3741.

United States Court of Appeals, Fifth Circuit.

Nov. 23, 1994.

Daniel Aubry Ranson, J. Michael Daly, Jr., Windhorst, Gaudry, Ranson, Higgins & Gremillion, Gretna, LA, for appellant.

Walter F. Marcus, III, Lemile & Kelleher, New Orleans, LA, for appellee.

Appeal from United States District Court for the Eastern District of Louisiana.

Before REAVLEY, DeMOSS and STEWART, Circuit Judges.

STEWART, Circuit Judge:

This diversity case arising in Louisiana involves the issue of which parent's health care insurer provides coverage for the neonatal medical care of their illegitimate child under the provisions of the parents' policies. Because we conclude that the magistrate judge erroneously held that the Principal Health Care plan provided primary coverage, and thus that the court improperly granted summary judgment in favor of the mother's insurer, we reverse.

FACTS

On December 27, 1991, Danielle C. Plauche (Plauche) gave birth to Justin Plauche (Justin) at East Jefferson General Hospital. The birth certificate listed Fred B. Pepper (Pepper) as the baby's father. Pepper and Plauche were not married at the time of Justin's birth, nor have they ever been married to each other or lived together. Pepper has formally acknowledged his paternity of Justin, and Plauche concurred in this acknowledgement as provided under Louisiana law.

Pepper's employee health care plan was issued by Principal Health Care of Louisiana, Inc. Immediately after Justin's birth, Pepper purportedly added Justin as an additional assured and/or member under Principal's policy. Pepper paid for the dependent coverage himself through payroll deductions.

At the time of Justin's birth, Plauche's employee health care plan was provided by General American Life Insurance Company through The Lewer Agency, Inc. Immediately after Justin was born, Plauche also added Justin to her health care policy as Pepper had done with his plan. Plauche's dependent coverage was paid by her employer.

Justin was born four months premature and had to remain at East Jefferson from the date of his birth (December 27, 1991) until April 13, 1992, incurring expensive medical bills for his neonatal care. Fortunately, Justin eventually became healthy enough to leave the hospital. When he was discharged, he went to live with his mother, where he has remained. There is no evidence that there has ever been any judicial determination involving Justin's custody. However, in August 1992, the Juvenile Court for the Parish of Jefferson ordered that Pepper provide child support and maintain his current medical insurance for Justin and that he be responsible for the health care expenses of Justin.

Because there were two employee welfare plans involved, a dispute arose as to which employee welfare plan provided primary coverage for Justin's medical expenses. Because the sum total of the bills did not exceed the maximum limits of either plan, the primary carrier necessarily would be responsible for the entire amount. Plauche filed suit against Principal in state court asserting Justin's coverage under the Principal plan and seeking attorney's fees and penalties under La.R.S. 22:657 ¹. After negotiations, Plauche compromised her state court suit in exchange for an agreement between Principal and General American whereby each company would Pursuant to the agreement, Principal filed this declaratory judgment action against General American and Lewer in the federal district court for the Eastern District of Louisiana. Principal also filed a motion for summary judgment. Lewer and General American brought a cross-motion for summary judgment. The case was referred to the federal magistrate. The magistrate granted General American and Lewer's motion for summary judgment, ruling that Justin was covered under the Principal plan as Pepper's "dependent child" during the time that Justin was at East Jefferson, and that Principal was the primary insurer of Justin under the so-called "birthday rule" in the coordination of benefits provisions of the Principal plan, because Pepper's birthday precedes Plauche's in the calendar year. 831 F.Supp. 570. This appeal followed.

pay fifty (50%) percent of the outstanding medical bills, which totalled $245,089.88. Of that amount, all but approximately $500.00 represented expenses incurred during Justin's hospitalization at East Jefferson. The agreement between Principal and General American further provided that Principal would file a declaratory judgment action to seek a determination of the respective obligations of the parties. The prevailing party would be entitled to reimbursement from the other party.

STANDARD OF REVIEW

We review a district court's grant of summary judgment de novo. Topalian v. Ehrman, 954 F.2d 1125 (5th Cir.1992). Summary judgment is proper if the pleadings, depositions, answers to interrogatories, and admissions on file together with the affidavits filed in support of the motion, if any, show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986).

Interpretation of an insurance policy is a question of law. FDIC v. Barham, 995 F.2d 600 (5th Cir.1993). Accordingly, we review a district court's interpretation of an insurance policy de novo. FDIC v. Mijalis, 15 F.3d 1314 (5th Cir.1994); Harbor Insurance Co. v. Urban Construction Co., 990 F.2d 195, 199 (5th Cir.1993).

ANALYSIS

Resolution of this case depends solely upon an interpretation of policy language. Neither party asserts that there are genuine issues of material fact which would preclude summary judgment. In fact, both parties have filed motions for summary judgment on the assertion that there are no genuine issues of material fact. Principal makes two arguments in support of its position that the magistrate erred in granting summary judgment in favor of General American. Principal contends that there are two separate and distinct clauses contained within its policy which apply to this issue and which would absolve it of any liability for the medical expenses Justin incurred at East Jefferson.

First, Principal argues that Justin was not dependent upon Pepper for the majority of his financial support and thus does not qualify as a dependent pursuant to the Principal plan. Thus, Principal contends that Justin is not in fact eligible for coverage under the plan albeit that Pepper ostensibly added Justin to it. Second, and alternatively, Principal argues that pursuant to the terms of the coordination of benefits provisions in both policies, the General American plan should provide primary coverage, even if we determine that Justin is covered under the plan. ²

As a federal court sitting in diversity, we apply Louisiana rules of policy interpretation The rules for interpreting contracts are set forth in various articles of the Louisiana Civil Code. Article 2045 provides that "[i]nterpretation of a contract is the determination of the common intent of the parties." Article 2046 goes on to state that "[w]hen the words of a contract are clear and explicit and lead to no absurd consequences, no further interpretation may be made in search of the parties' intent." Article 2047 provides that "[t]he words of a contract must be given their generally prevailing meaning." Article 2048 provides that "[w]ords susceptible of different meanings must be interpreted as having the meaning that best conforms to the object of the contract." Finally, Article 2050 provides that "[e]ach provision in a contract must be interpreted in light of the other provisions so that each is given the meaning suggested by the contract as a whole."

in this case. Louisiana law is clear that the interpretation of insurance policy provisions is to be governed by the rules pertaining to the interpretation of other types of contracts. Battig v. Hartford Accident and Indemnity Co., 608 F.2d 119 (5th Cir.1979).

The coverage issue

As noted above, Principal first argues that Justin does not qualify as a dependent under the provisions of the Principal plan. Pursuant to the plan's terms, Justin would have to qualify as a "dependent child" of Pepper in order to be covered under the Principal plan. The term "dependent child" as defined in the Principal plan includes, inter alia, "(1) the Subscriber's unmarried, natural or legally adopted child residing within the service area; ..." But the provisions go on to provide that "... the child must be dependent upon the Subscriber for a majority of his or her financial support ... and must be either under nineteen (19) years of age, a full-time student, or a disabled dependent."

It is undisputed that Justin's mother has provided for her son almost singlehandedly from the time of conception forward. Any and all prenatal care, hospital visits and examinations prior to birth were paid for by Plauche alone. From the time Justin was discharged from the hospital, Plauche has provided for all of Justin's needs, including a home, food, clothing, and emotional nurturing. Pepper's only contributions to Justin's support for expenses incurred during the time Justin was in the hospital were a one-time $200.00 payment toward the medical bills and the approximately $88 per month in insurance premiums for Justin's dependent coverage. Overall, Pepper's only other contribution is the approximately $13.50 per month in child support he has been ordered to pay. Thus, Principal contends that Justin does not qualify as Pepper's "dependent child" under the Principal plan because he is not dependent upon Pepper for a majority of his financial support.

The first time Principal appears to have asserted the coverage issue was...