Whyte v. Connecticut Mut. Life Ins. Co.

• Decision Date: 11 May 1987
• Docket Number: 86-1296,Nos. 86-1295,s. 86-1295
• Citation: 818 F.2d 1005
• Parties: Ursula C. WHYTE, etc., et al., Plaintiffs, Appellees, v. CONNECTICUT MUTUAL LIFE INSURANCE COMPANY, Defendant, Appellant. Ursula C. WHYTE, a/k/a Wendy Whyte, as Trustee of the S. William Whyte Revocable Trust, Plaintiff, Appellant, v. CONNECTICUT MUTUAL LIFE INSURANCE COMPANY, Defendant, Appellee.
• Court: U.S. Court of Appeals — First Circuit

Page 1005

818 F.2d 1005

Ursula C. WHYTE, etc., et al., Plaintiffs, Appellees, v. CONNECTICUT MUTUAL LIFE INSURANCE COMPANY, Defendant, Appellant.

Ursula C. WHYTE, a/k/a Wendy Whyte, as Trustee of the S.

William Whyte Revocable Trust, Plaintiff, Appellant, v. CONNECTICUT MUTUAL LIFE INSURANCE COMPANY, Defendant, Appellee.

Nos. 86-1295, 86-1296.

United States Court of Appeals First Circuit.

Argued Sept. 9, 1986.

Decided May 11, 1987.

Donald A. Beaudry and Pamela Rollins with whom Ely, King, Corcoran, Milstein &

Beaudry, Springfield, Mass., were on brief, for Connecticut Mut. Life Ins. Co.

John C. Sikorski with whom Robinson, Donovan, Madden & Barry, P.C., Springfield, Mass., was on brief, for Ursula C. Whyte.

George W. Marion with whom Philip J. Tarpey, Jr. and Bulkley, Richardson and Gelinas, Springfield, Mass., were on brief, for Charles A. Bergeron.

Before COFFIN, Circuit Judge, WISDOM ^* and ALDRICH, Senior Circuit Judges.

WISDOM, Senior Circuit Judge:

This appeal raises two issues: the first involves the scope and validity of federal regulations limiting the disclosure of hospital records relating to treatment for alcoholism and the second involves the application of Massachusetts statutes providing a civil cause of action to persons injured as a result of unfair practices in claim settlements by insurance companies. We conclude that the district court properly applied the federal regulations and limited the scope of disclosure of certain hospital records. We also conclude that the district court properly ruled in favor of one plaintiff on his unfair claim settlement claim and against the other plaintiff on her claim. We therefore affirm.

FACTS

The plaintiffs, Ursula C. Whyte, the widow, and Charles A. Bergeron, a business associate, are the named beneficiaries of two life insurance policies issued by the defendant, Connecticut Mutual Life Insurance Company ("Connecticut Mutual"), on the life of S. William Whyte. Each of the two policies contained a clause excluding coverage if Mr. Whyte should die as a result of suicide. Mr. Whyte died on March 2, 1981, at his home in Wilbraham, Massachusetts. He was found sitting in his automobile, which was parked inside a closed garage, with the engine running. After efforts to revive Mr. Whyte were unsuccessful he was pronounced dead. Following a brief investigation, the medical examiner concluded that Mr. Whyte had committed suicide by asphyxiating himself.

Mr. Bergeron and Mrs. Whyte filed claims with Connecticut Mutual asserting that Mr. Whyte had not committed suicide but had died as a result of an accident. Connecticut Mutual invoked the suicide exclusion clauses and refused to pay the claims. Mrs. Whyte and Mr. Bergeron separately sued in the Federal District Court for the District of Massachusetts on the insurance contract and under state consumer protection statutes. The cases were consolidated and went to trial in September of 1985. The issue in the contract claims, whether Mr. Whyte died accidentally or as a result of suicide, was presented to a jury. The consumer protection claims were presented to the trial judge.

Connecticut Mutual argued to the jury that Mr. Whyte was a troubled man. He had a history of alcohol problems and had been diagnosed as suffering from manic depression. He was engaged in the business of selling residential property and developing commercial property, and some of his business deals had resulted in major financial setbacks. He was separated from his wife who, despite his hopes for a reconciliation, intended to divorce him. Connecticut Mutual also noted the circumstances of Mr. Whyte's death and argued that they pointed conclusively toward suicide. Mr. Whyte was found in his car with the engine running inside a closed garage. Although the temperature outside was around 40 degrees and although Mr. Whyte had an important meeting scheduled for that afternoon, he was found wearing casual kakhi trousers, a short sleeve sport shirt, and no socks. When the police checked the automatic garage door opener on top of the console in the car, they found that it was in perfect working order.

The plaintiffs presented a different picture of Mr. Whyte to the jury. Although they admitted that Mr. Whyte had had some problems, they contended that he had overcome many of them. Mr. Whyte had recently received alcoholism treatment and had given up drinking. After receiving treatment he joined Alcoholics Anonymous and was proud of having overcome his drinking problem. Moreover, a business deal that Mr. Whyte had been working on was finally about to come to fruition; he was excited about its prospects. In addition, Mr. Whyte had hopes of a reconciliation with his wife. Witnesses testified that Mr. Whyte was a happy, forward thinking man making plans for the future. Indeed, on the afternoon of his death, Mr. Whyte was scheduled to meet with the lieutenant governor of Massachusetts.

The plaintiffs also argued that the circumstances pointed to the conclusion that Mr. Whyte's death was accidental. They presented experts who testified that most carbon monoxide poisonings are accidental. Carbon monoxide poisoning affects the body in such a way that the capacities to perceive danger and to perform even simple tasks such as turning off a car or operating a garage door opener are quickly and severely diminished, often in less than two minutes. Moreover, Mr. Whyte had a history of being forgetful and was not mechanically adept. The plaintiffs hypothesized that Mr. Whyte had stopped to look at the newspaper found in the front seat of his car and never realized what happened. Although Mr. Whyte was a constant notewriter, no suicide note was found.

The jury found for the plaintiffs concluding that Mr. Whyte had not committed suicide but had died accidentally. While the jury was deliberating, the judge considered the plaintiffs' claims that they were entitled to recover damages, attorney's fees, and costs under Mass. Gen. Laws chs. 93A & 176D. These are consumer protection statutes that prohibit unfair practices by insurance companies. The judge found that Connecticut Mutual had committed an unfair practice in its handling of Mr. Bergeron's claim but not in its handling of Mrs. Whyte's claim.

Connecticut Mutual now takes this appeal from the jury verdict on the contract claims and from the court's decision on Mr. Bergeron's unfair practice claim. Mrs. Whyte appeals from the court's decision on her unfair practice claim.

DISCUSSION

I. Beech Hill Records

Connecticut Mutual contends that it should be granted a new trial on the contract claims because the district court erroneously refused to release to Connecticut Mutual the complete Beech Hill Hospital records of Mr. Whyte on the grounds that federal law prohibited disclosure. Approximately four months before his death, Mr. Whyte was admitted to Beech Hill Hospital in Dublin, New Hampshire for alcoholism treatment. He remained at Beech Hill for 19 days. During discovery, Connecticut Mutual sought to obtain the complete records relating to Mr. Whyte's treatment. Mrs. Whyte, who was in possession of a copy of the records, asserted that the records were confidential under 42 U.S.C. Sec. 290dd-3 (Supp.1985) and the regulations promulgated under that statute, ¹ and therefore were not subject to discovery.

Section 290dd-3(a) prohibits disclosure of records relating to alcoholism treatment "which is conducted, regulated, or directly or indirectly assisted by any department or agency of the United States". ² Section 290dd-3(b)(2)(C) ³ provides, however, that disclosure may be authorized by court order upon a showing of good cause by the party seeking disclosure. After a hearing, the magistrate to whom the matter was referred ruled that Connecticut Mutual had established good cause. The magistrate concluded, however, that the regulations promulgated under Sec. 290dd by the Secretary of Health and Human Services, particularly 42 C.F.R. Sec. 2.63(a), ⁴ limited disclosure to "objective data" only and that Mr. Whyte's statements made during treatment could not be released. The magistrate therefore authorized the release to Connecticut Mutual of "sanitized copies" of the Beech Hill records containing only objective information.

Connecticut Mutual objected to this ruling arguing that Mr. Whyte's statements during treatment were crucial evidence concerning the key issue of his state of mind at the time of his death. Connecticut Mutual argued to the district court that the magistrate had erred for two reasons: first, Sec. 290dd-3 does not apply in this situation because Beech Hill Hospital is not directly or indirectly assisted by the federal government and second, the nonobjective information is discoverable under Fed.R.Civ.P. 34. The district court rejected both arguments and upheld the magistrate's order limiting disclosure to the objective data contained in the records.

On appeal, Connecticut Mutual does not argue that Sec. 290dd-3 is not applicable or that Fed.R.Civ.P. 34 allows discovery. Rather, Connecticut Mutual argues, apparently for the first time, that 42 C.F.R. Sec. 2.63 is invalid because it is at odds with the statute under which it was promulgated, specifically Sec. 290dd-3(b)(2)(C). This court has repeatedly held that "we will not consider a legal theory not presented to the trial court, however meritorious it may be". ⁵ Although this rule is not absolute, "it is relaxed only in 'horrendous cases when a gross miscarriage of justice would occur' ". ⁶ "In addition, the new ground must be 'so compelling as virtually to insure appellant's success'." ⁷

After reviewing the record, we find that upholding the regulation and limiting disclosure to objective data will not result in a "gross miscarriage of justice", nor is Connecticut Mutual's new position so compelling as virtually to insure its success.

The federal statute, 42 U.S.C. Sec. 290dd-3, expressly authorizes the Secretary of Health and Human...