Provident Life and Acc. Ins. Co. v. Leonard, s. 86-2954

• Decision Date: 17 May 1988
• Docket Number: Nos. 86-2954,86-3083,s. 86-2954
• Citation: 13 Fla. L. Weekly 1200,526 So.2d 721
• Parties: 13 Fla. L. Weekly 1200 PROVIDENT LIFE AND ACCIDENT INSURANCE COMPANY, Appellant, v. T. Armlon LEONARD, Jr., Appellee.
• Court: Florida District Court of Appeals

Page 721

526 So.2d 721

13 Fla. L. Weekly 1200

PROVIDENT LIFE AND ACCIDENT INSURANCE COMPANY, Appellant, v. T. Armlon LEONARD, Jr., Appellee.

Nos. 86-2954, 86-3083.

District Court of Appeal of Florida,

Third District.

May 17, 1988.

Rehearing Denied July 11, 1988.

Steel, Hector & Davis and Joseph P. Klock, Jr. and John W. Little III, Miami, for appellant.

Stinson, Lyons, Gerlin & Bustamante, Daniels and Hicks and Mark Hicks, Miami, for appellee.

Before SCHWARTZ, C.J., and NESBITT and JORGENSON, JJ.

PER CURIAM.

Provident Life and Accident Insurance Company (Provident) appeals a final summary judgment in its action for a declaration of rights under a health insurance contract. T. Armlon Leonard, Jr. cross-appeals a final summary judgment on his counterclaims of bad faith in Provident's handling of his benefits claim and emotional distress. We reverse the summary judgment entered against Provident and affirm that entered against Leonard.

Leonard is a retired executive and member of the board of directors of Leonard Brothers who was severely injured in a car accident. At the time of the accident, he was sixty-six years old and covered by a group health insurance policy which Leonard Brothers had with Provident. The policy extended coverage to active employees and retirees and to members of the board of directors. Medical care benefits were subject to a maximum of $1,000,000 per insured. One limitation on this amount was that any insured person who was eligible for Medicare was covered only up to $50,000. Subsequent to issuance of the policy, the Tax Equity and Fiscal Responsibility Act (TEFRA) of 1982 was enacted. ¹ It resulted in cancelling out Provident's policy provision limiting benefits as it applied to active employees who qualified for Medicare and were between the ages of 65 and 69. As a result of TEFRA, any active employee between those ages became entitled to the policy's $1,000,000 maximum benefits.

After the accident, Provident paid out over $100,000 in claims filed by Leonard before it stopped, citing the $50,000 policy limitation. Provident later filed suit seeking a declaration as to its liability under the policy and recovery of overpayments. The trial court entered summary judgment for Leonard on the issue of coverage, finding that he was entitled to $1,000,000 in benefits. It ruled against Leonard on his counterclaim for bad faith handling of his claim and the resulting emotional distress he suffered. Both parties appeal.

Because the policy clearly states that an insured person of Leonard's age would be limited to $50,000 in medical benefits, appellee's only basis for claiming that he is entitled to the maximum $1,000,000 in benefits is that the TEFRA amendment applied to him. However, the language of the amendment indicates that TEFRA applies only to active employees. Moreover, the legislative history of the act shows that the central purpose of TEFRA as it applied to the Age Discrimination in Employment Act (ADEA) was to reduce Medicare expenditures for the working aged. See S.Conf.Rept. No. 530, 97th Cong., 2d Sess., 414-415 (1982). Finally, Equal Employment Opportunity Commission regulations promulgated to implement the new statutory provision state that "retirees are not embraced by the term employee and are, therefore, not covered by the literal wording of the new section." 48 Fed.Reg. 26434-01 (codified at 29 C.F.R. § 1625.20(a)(4) (1983)). See also, Karlen v. City Colleges of Chicago, Case No. 84-C-2925, slip op. (N.D.Ill. Dec. 12, 1986) (TEFRA does not cover the insurance rights of retirees.) On over twenty claim forms submitted to Provident on his behalf, Leonard was listed as "retired" and "retired executive." On...