Rule v. New Hampshire-Vermont Health Service

• Citation: 477 A.2d 622,144 Vt. 323
• Decision Date: 13 April 1984
• Docket Number: HAMPSHIRE-VERMONT,No. 83-012,83-012
• Court: Vermont Supreme Court
• Parties: William & Charmaine RULE v. NEWHEALTH SERVICE.

Page 622

477 A.2d 622

144 Vt. 323

William & Charmaine RULE v. NEW HAMPSHIRE-VERMONT HEALTH SERVICE.

No. 83-012.

Supreme Court of Vermont.

April 13, 1984.

Reargument Denied May 9, 1984.

Susan F. Eaton of Langrock, Sperry, Parker & Wool, Middlebury, for plaintiffs-appellees.

Leslie C. Pratt and Robert H. Opel of Paterson, Walke & Pratt, P.C., Montpelier, for defendant-appellant.

Gibson, Noble & Goodrich, Montpelier, for amicus curiae Vermont Health Service Corp.

Before BILLINGS, C.J., HILL, PECK and GIBSON, JJ., and KEYSER, J. (Ret.), Specially Assigned.

BILLINGS, Chief Justice.

This is an interlocutory appeal, pursuant to V.R.A.P. 5(b)(1), from an order of the Addison Superior Court. That court found the defendant-appellant liable to the plaintiffs in a class action suit, for the refund of insurance premiums paid to Eastern Seaboard Dealers Service (Eastern), a trade association, for prepaid health care benefits (the Plan) offered by the defendant. The plaintiffs also sued for damages, but, by agreement of the parties, the question of damages was reserved for a later hearing.

The trial court certified three questions, but in view of our disposition of the first certified question, it is unnecessary for us to reach the remaining two. The question presented is:

(a) Based upon the evidence in the case, did the Court properly conclude that Eastern Seaboard was an agent of defendant as to the plaintiffs?

The court made extensive findings of fact; the defendant does not contest these findings and therefore they are binding. DeLance v. Hennessey, 137 Vt. 214, 216, 401 A.2d 903, 904 (1979); Druke v. Town of Newfane, 137 Vt. 571, 573, 409 A.2d 994, 995 (1979). The conclusions of the court respecting the liability of the defendant on a theory of agency "must stand if the findings of fact fairly and reasonably support them." Druke, supra.

The court found that Eastern was in the business of promoting and protecting the needs of its membership, primarily those engaged in the operation of gasoline service stations. In 1970 an Eastern representative approached the plaintiffs, operators of a family-owned service station, and solicited their membership in the association. Membership entitled the plaintiffs to a number of service station related services, as well as Blue Cross-Blue Shield group health insurance. Plaintiffs were interested in membership because it was only through group insurance that they could obtain major medical coverage. Also, group insurance rates were less expensive than nongroup rates.

Plaintiffs joined Eastern in August, 1970, and were enrolled in the Plan's Eastern group policy No. 9741. Membership cards were sent by the defendant to the plaintiffs setting forth the premium rates for the type of coverage chosen by the plaintiffs. Literature, printed by the defendant, explaining the Plan's benefits and coverage, and identifying the Eastern group policy with the defendant's name and trademark, were given to Eastern by the defendant for distribution to the plaintiffs. Plaintiffs also received subscriber certificates, issued by the defendant, that indicated, among other things, that the remitting agent, in this case Eastern, was the agent of the plaintiffs, as subscribers, and not of the defendant. Both oral and written instructions were provided Eastern, by the defendant, concerning the duties of a remitting agent.

The court further found that plaintiffs paid their Plan's group insurance premium directly to Eastern, by check made payable to Eastern, on a quarterly basis, in response to notices of payment due sent by Eastern. Although plaintiffs paid their premiums to Eastern on a quarterly basis, Eastern paid the defendant on a monthly basis. The defendant knew that Eastern was billing its subscribers quarterly, but did not require an accounting from Eastern respecting its use of subscriber money. The plaintiffs were not familiar with Eastern's premium remitting procedures. Although plaintiffs always paid their premiums to Eastern in a timely fashion, the court found that Eastern consistently failed, over a six year period, to remit the group premium to the defendant when due. Actual claims for benefits were submitted by the plaintiffs directly to the defendant.

In January, 1977, the defendant cancelled Eastern group policy No. 9741 for failure to remit the January, 1977, group premium when due. Eastern had already received and deposited plaintiffs' quarterly premium payment, covering January through March, 1977. Defendant informed the plaintiffs by letter of the cancellation of their group account due to Eastern's untimely payment history. This was the first notice that the plaintiffs had of Eastern's failure to keep the group's account current.

The findings "fairly and reasonably" support the court...