Case Title: In re UNUM Life Insurance Co.

Citation: 162 Vt. 201, 647 A.2d 708

Docket Number: 

State: vermont

Court: Vermont Supreme Court

Date: 1994-06-17T00:00:00Z

Document:
IN_RE_UNUM_LIFE_INSURANCE_CO.93-467; 162 Vt. 201; 647 A.2d 708

[Opinion Filed June 17, 1994]


 NOTICE:  This opinion is subject to motions for reargument under V.R.A.P. 40
 as well as formal revision before publication in the Vermont Reports.
 Readers are requested to notify the Reporter of Decisions, Vermont Supreme
 Court, 109 State Street, Montpelier, Vermont 05609-0801 of any errors in
 order that corrections may be made before this opinion goes to press.


                                 No. 93-467


 In re UNUM Life Insurance                    Supreme Court
   Company of America
                                              On Appeal from
                                              Banking & Insurance

                                              March Term, 1994



 Elizabeth R. Costle, Commissioner

 Peter Cullen of Theriault & Joslin, P.C., Montpelier, and Andrew J.
    Bernstein, Portland, Maine, for plaintiff-appellant

 Jeffrey L. Amestoy, Attorney General, and William Griffin, Chief Assistant
    Attorney General, Montpelier, for defendant-appellee



 PRESENT:  Allen, C.J., Gibson, Dooley, Morse and Johnson, JJ.



      JOHNSON, J.    UNUM Life Insurance Company of America (UNUM) appeals
 the August 1993 decision of the Commissioner of Banking, Insurance and
 Securities (commissioner), which disapproved UNUM's proposed group life
 insurance policy.  We affirm.
      UNUM originally applied to the Vermont Department of Banking, Insurance
 and Securities (Department) in February 1990 for permission to market a group
 life insurance policy to the Vermont State Employees Credit Union (Credit 
 Union).  The Department disapproved the policy.  The Department stated, in 

 

 part, that a preexisting conditions exclusion (exclusion)(FN1) in the policy 
 violated 8 V.S.A. { 3542(2) because it was ambiguous and misleading and 
 deceptively affected the risks to be insured under the policy.


       UNUM subsequently requested a hearing before the Department.  Then-
 Commissioner Jeffrey Johnson appointed a hearing officer to preside over the
 hearing.  The hearing officer issued a proposed determination, recommending
 approval of the policy.(FN2)

 

      Commissioner Johnson rejected the hearing officer's proposed
 determination, although he adopted the hearing officer's findings of fact.
 Commissioner Johnson found that UNUM had not met its burden of demonstrating
 the need for the exclusion.  He further found that UNUM's proposal to send a
 notice to potential insureds explaining the exclusion did not aid in
 demonstrating a need for the exclusion, "but rather points out the problem
 with this [exclusion] . . . ; the [policy] does not meet the consumer's
 expectations."  Commissioner Johnson concluded that "the exclusion[] would
 unreasonably affect the risks purported to be covered by the policy and must
 be rejected."
      UNUM appealed Commissioner Johnson's decision to the Vermont Supreme
 Court.  This Court, in an unpublished decision, reversed and remanded
 Commissioner Johnson's decision so that "the commissioner may explain his
 ruling."  In re Unum Life Ins. Co. of America, No. 92-191, slip.op. at 2 (Jan.
 7, 1993).  We noted that Commissioner Johnson did not make clear whether the 
 finding that fifteen of twenty-seven insured members who have one of the 
 excluded conditions and die within twenty-four months after the effective date
 of coverage would be denied benefits was sufficient to disapprove the policy.
 The Court concluded that Commissioner Johnson did not adequately explain "why

 

 this specific exclusion is contrary to public policy, or how consumer 
 expectations would not be met should [the policy] be approved."
      Due to a change in commissioners, the case on remand came before
 Commissioner Elizabeth Costle, who requested memoranda from the parties and
 heard oral arguments.  On August 27, 1993, Commissioner Costle issued a
 decision concurring with her predecessor's ruling.  In her order,
 Commissioner Costle set out "Supplemental Findings of Fact," which were
 drawn from the record of the hearing before the hearing officer, to help
 explain her decision.(FN3) Commissioner Costle concluded that UNUM's policy "is
 contrary to public policy" and is in violation of 8 V.S.A. { 3542(2) because
 the preexisting-conditions exclusion is "ambiguous and misleading" and
 "deceptively affect[s] the risk that UNUM would purport to assume."
 UNUM now appeals Commissioner Costle's order.  UNUM argues on appeal
 that Commissioner Costle's order: (1) exceeds this Court's scope of remand,
 (2) contradicts and overrules the findings of fact previously adopted by
 Commissioner Johnson, and (3) is erroneous because the proposed policy
 complies with all applicable Vermont statutes and regulations.
                                      I.
      As a preliminary matter, we hold that Commissioner Costle did not exceed
 the scope of remand of our January 1993 order.  UNUM argues first that 

 

 Commissioner Costle was limited by our remand to writing an order that
 explained why the policy should be disapproved based only on the findings of
 fact adopted by Commissioner Johnson.  While we stated in our order that the
 purpose of remand was to permit Commissioner Johnson to "explain his
 ruling," we did not bar him from making more findings of fact on remand.
 Actually, we implied that more findings of fact would be necessary to
 explain his ruling, because the hearing officer's findings of fact were
 already before this Court during the prior appeal.  Cf. Isabelle v. Proctor
 Hosp., Inc., 132 Vt. 243, 245-46,