Seligman v. Guardian Life Ins. Co. of America

• Decision Date: 10 November 1977
• Citation: 59 A.D.2d 859,399 N.Y.S.2d 121
• Parties: Bernard L. SELIGMAN, etc., Plaintiff-Respondent, v. The GUARDIAN LIFE INSURANCE COMPANY OF AMERICA, Defendant-Appellant.
• Court: New York Supreme Court — Appellate Division

Page 121

399 N.Y.S.2d 121

59 A.D.2d 859

Bernard L. SELIGMAN, etc., Plaintiff-Respondent, v. The GUARDIAN LIFE INSURANCE COMPANY OF AMERICA, Defendant-Appellant.

Supreme Court, Appellate Division, First Department.

Nov. 10, 1977.

L. A. Cohen, New York City, plaintiff-respondent.

M. F. Curran, East Islip, defendant-appellant.

Before KUPFERMAN, J. P., and SILVERMAN, LANE and MARKEWICH, JJ.

MEMORANDUM DECISION.

Order, Supreme Court, New York County, entered on April 5, 1977, granting permission to maintain a class action, unanimously reversed, on the law and in the exercise of discretion, and the motion denied. Appellant shall recover of respondent $40 costs and disbursements of this appeal.

The applicable statute, (CPLR 902) states "the matters which the court shall consider in determining whether the action may proceed as a class action." However, "(i)n recommending the class action legislation, the Judicial Conference made it clear that the considerations listed in CPLR were intended to be non-exhaustive. The court may consider the merits of the action . . . The court should eliminate spurious and sham suits as early as possible to avoid the expenditure of both time and money by both the courts and the opponents of the class." (section 902.10, Weinstein-Korn-Miller, New York Civil Practice).

We find the proposed action to be without merit. Suit is upon a major medical insurance policy, sold at a reduced rate because of reduced benefits fashioned to cover costs not compensated by Medicare. Medicare's agreement with covered hospitals is to the effect that charges paid by Medicare are channelled directly to the treating hospital, and the covered patient is not to be held liable for any such charge. This plaintiff, with Medicare coverage, entered such a hospital for surgery, incurring costs totaling $3,846 of which $3,515 was paid directly by Medicare. Defendant insurer paid for other medical charges not covered by Medicare, but declined payment to plaintiff of the $3,515 already paid to the hospital. Such a payment to him would have given him a 100 percent bonus, never contemplated by his insurance contract. He was a nominal debtor to the hospital only in the event Medicare defaulted in payment, Medicare being the prime obligor under its agreement with the hospital. His insurance contract called for defendant to pay only those charges for which plaintiff was legally obligated to pay, and this did not include the charge picked up by Medicare.

As...