Title: Gibson v. Metropolitan Life Ins. Co.

State: kansas

Issuer: Kansas Supreme Court

Document:

213 Kan. 764 (1974)
518 P.2d 422
BILLEE GIBSON and PHILLIP GIBSON, Appellants,
v.
METROPOLITAN LIFE INSURANCE COMPANY, Appellee.
No. 47,103

Supreme Court of Kansas.
Opinion filed January 26, 1974.
Donald W. Vasos, of Scott, Daily and Vasos, of Kansas City, argued the cause and was on the brief for the appellants.
Robert D. Benham, of McAnany, Van Cleave and Phillips, of Kansas City, argued the cause and was on the brief for the appellee.
The opinion of the court was delivered by
HARMAN, C.:
This is an action against an insurer under a group plan to recover further benefits for medical expense incurred by plaintiffs. The issue is the applicability of a coordination of benefits clause contained in the policy. The insurer prevailed and the certificate holders have appealed.
The entire matter was submitted for determination by the trial court upon an agreed statement of facts, as follows:
As indicated, the parties have agreed that the coordination of benefits clause, the crux of this lawsuit, is as summarized in paragraph 3 of insurer's booklet, quoted above. It should be mentioned that the word "plan" used therein is defined in the policy amendment (exhibit A) to mean "any plan providing benefits or services for or by reason of medical care or treatment, which benefits or services are provided by (i) any group, blanket, or franchise insurance plan, or any other plan covering individuals or members as a group; (ii) any group hospital service prepayment plan, group medical service prepayment plan, Group practice, or other group prepayment coverage; (iii) any coverage under Governmental programs, or any coverage required or provided by any statute." The amendment further contains rules to be used in establishing the order of benefit determination under the clause, including one as follows:
The statement of claim form signed by plaintiffs and submitted to Metropolitan (exhibit D) reveals plaintiffs indicated there were no other medical benefits provided under any other group insurance plan on account of the accident or illness for which claim was being made against Metropolitan.
In their suit here plaintiffs claim $1,424.15, the full amount of Mrs. Gibson's medical expense.
The trial court's decision was embodied in a letter opinion as follows:
Plaintiffs now appeal from rendition of judgment against them.
Appellants first contend that before appellee can take advantage of the coordination of benefits clause contained in the policy it must first refund, or make tender to them of, a pro rata portion of premiums paid by them, which was never done. Appellants base this contention on certain provisos contained in K.S.A. 1973 Supp. 40-2203 which are:
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Appellants rely on the statutory language italicized. Their position cannot be sustained for several reasons. We need mention but one. That which is now K.S.A. 1973 Supp. 40-2203 forms a part of legislation enacted more than twenty years ago (Laws 1951, Ch. 296), the title of which stated: "An Act relating to insurance, providing for uniform policy provisions in certain types of insurance *768 policies...." (Emphasis supplied.) This enactment now appears as article 22, chapter 40, K.S.A., as amended.
K.S.A. 40-2201 defines the term "policy of accident and sickness insurance".
By their own terms K.S.A. 40-2202, 40-2203, 40-2204, 40-2205, 40-2206 and 40-2207, as amended, taken together, apply only to accident and sickness policies issued and delivered to individuals, as distinguished from other types of accident and sickness policies mentioned later in the same article. K.S.A. 1973 Supp. 40-2209 defines the form of coverage known as group sickness and accident insurance and makes provision for certain clauses to be contained therein. K.S.A. 1973 Supp. 40-2210 defines the form of coverage known as blanket sickness and accident insurance and prescribes clauses for that type of insurance, while K.S.A. 40-2211 and 40-2212 are similarly applicable only to policies to assure payment of workmen's compensation.
As is evident from the language employed, which we need not set out inasmuch as appellants concede the fact, each of the four types of mentioned forms of insurance is separately dealt with by the legislature in prescribing mandatory policy provisos. Beyond this, however, and as an extra-precautionary legislative measure so far as regulation of group accident and sickness policies is concerned, K.S.A. 40-2208 provides:
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Thus it is clear that nothing in the statute relied upon is in any way applicable to appellants' policy  a group policy. As already indicated they acknowledge 40-2203 is applicable only to individual policies yet at the same time, by reason of the fact they contributed a part of the premium, they attempt to "bootstrap" themselves into it by reason of certain language in our opinion in Ogden v. Continental Casualty Co., 208 Kan. 806, 494 P.2d 1169. This was an action to recover under a group policy providing disability benefits to employees of a particular employer, premiums for which coverage were paid in equal proportion by the employer and each employee. A certificate evidencing the coverage under the master policy was issued to each employee, including plaintiff, on September 1, 1966. *769 The policy was modified by an endorsement dated January 1, 1967, which had the effect of reducing the benefits by any amount received as payments under the workmen's compensation act or the social security act. The endorsement reducing the coverage was agreed upon by the insurer and the employer in order to avoid an increase in premium. Allegedly the employer distributed new certificates containing the endorsement of each of its employees but plaintiff testified, and the trial court found as a fact, he had never received notice of change in the benefits provided by his policy. Plaintiff became disabled February 28, 1968, and the lawsuit was precipitated when the insurer claimed credit for its liability by reason of social security payments received by plaintiff. The trial court found plaintiff was entitled to notice of the modification made in his policy before his rights could be affected thereby. This court affirmed, stating, inter alia, the following:
However, in Ogden, we also had this to say:
Obviously, the situation in Ogden where claimant had no notice of changes substantially reducing the benefits for which he was paying, is quite different from that in the case at bar in which the coordination of benefits clause was in the policy when appellants' certificate was issued to them and they are charged with knowledge of the coverage being furnished. Nothing said or held in Ogden aids appellants' cause.
That which appellants really seem to be arguing is that it just isn't fair for their coverage, for which they have contributed premiums, to be so drastically reduced, and appellee should be estopped from denying liability for the full amount of their medical expense. The elements of estoppel (see Marett v. World Fire & Marine Ins. Co., 160 Kan. 125, 160 P.2d 664) simply do not exist. Appellants *770 also overlook the fact insurance is a matter of contract and the parties have the right to employ whatever terms they wish, and courts will not rewrite them, so long as those terms do not conflict with pertinent statutes or public policy. Manifestly, in any type of insurance the amount of the premium is correlated with the amount of coverage provided. Lower premium rates have always characterized group insurance contracts as compared to those for individual policies (1 Appleman, Insurance Law and Practice, § 41).
Viewed from the standpoint of public policy we see nothing unjust or wrong in the clause of which appellants complain. The general purpose of the particular coverage is to indemnify the insured for medical expenses resulting from accident and sickness. The precise question is one of first impression with us; however, other courts have dealt with it in the same or analogous situations. Although the language may vary it is not uncommon to find provisos in group policies limiting or reducing the coverage where the loss incurred is payable from other sources as those mentioned in the coordination of benefits clause under consideration here. Generally those provisos are enforced by the courts (see, e.g., McKay v. Equitable Life Assurance Society of U.S., 421 P.2d 166 [Wyo.]; Medical-Dental Service, Inc., v. Boroo, 92 Idaho 328, 442 P.2d 738; Metropolitan Life Insurance Company v. Smith, 3 Conn. Cir. 169, 209 A.2d 693; Dina v. Aetna Life Ins. Co., 65 Misc.2d 97, 316 N.Y.S.2d 654; Blue Cross v. Ayotte, 35 A.D.2d 258, 315 N.Y.S.2d 998; see, also, anno. 81 ALR 2d 927, 936-937). Reasons mentioned for the results reached include the intent expressed in the policy by such a clause as that under consideration to: Prevent the insured from recovering more than is necessary to make him whole (Dina); keep premium rates as low as possible while assuring full compensation to the group policy holder (Ayotte); reimburse employees for their medical expenses and not to enable them to make a profit out of being ill by obtaining multiple benefits for the same expenses, thereby encouraging malingering (Smith).
No ambiguity in the language of the coordination of benefits clause is asserted by appellants and, indeed, none appears. The clause is applicable to appellants' claim and there is no alternative to enforcing the agreement which they have made. That agreement made Mrs. Gibson's coverage with appellee secondary and subject to benefits received from the group policy with her own employer, thus limiting recovery from appellee to the remainder of her medical *771 expenses, or the sum of $66.26. The trial court correctly rendered judgment for appellee.
Judgment affirmed.
APPROVED BY THE COURT.