Opinion ID: 2291362
Heading Depth: 1
Heading Rank: 3

Heading: Art III. Termination of Benefits

Text: A. Termination of Benefits 7. Termination of Service Agreement. If the Service Agreement is terminated pursuant to Article III.B.2., then the Coverage of all Members (subject to any right to continuation of the benefits specifically provided by this Agreement at Article IV) shall terminate on the termination date of the Service Agreement. In such event, the party terminating the Service Agreement shall provide Subscribers with thirty (30) days prior written notice of the termination of this Service Agreement. B. Cancellation 2. This Agreement may be terminated by Group or Health Plan by giving sixty (60) days prior written notice to the other. The organization terminating the Plan must also provide written notice to the Subscriber. In such event, all rights to benefits hereunder shall cease as of the effective date of termination of this Agreement, except as expressly provided in Article IV.A. below.[ [5] ] (Emphasis added.) Furthermore, Article XIV.D of the plan provides that [a]ny notice under th[e] Agreement may be given by United States mail, first class, postage, prepaid, addressed as follows: ... If to a Member: Member's last address known to Health Plan. However, because the plan does not expressly state that only Healthplus can give notice of cancellation to the subscriber, Healthplus maintains that the plan allows it to provide notice through the employer, and accordingly, that appellant was properly notified of cancellation of the group insurance plan. [6] Reading the provisions quoted above together, however, a reasonable person in appellant's position clearly would expect to receive written notice of cancellation of benefits directly from Healthplus and not WCAS. See 1901 Wyoming Ave. Co-op. Ass'n v. Lee, 345 A.2d 456, 461 (D.C.1975) (standard of contract interpretation). The group plan expressly provided that written notice be given to the subscriber (Mueller) by the terminating party (Healthplus). Furthermore, any ambiguity about who is the terminating party with the obligation to give notice to the subscriber should be construed against Healthplus. See Meade v. Prudential Ins. Co. of Am., 477 A.2d 726, 728 (D.C.1984); Vaulx v. Cumis Ins. Soc'y, 407 A.2d 262, 265 (D.C.1979) (citing Van Hulle v. State Farm Mut. Auto. Ins. Co., 44 Ill.2d 227, 232-33, 254 N.E.2d 457, 461 (1969)). Therefore, despite appellant's actual notice of cancellation, we conclude that Healthplus failed to give effective notice as required by the plan. First, for reasons given in Vaulx v. Cumis Ins. Soc'y, supra, 407 A.2d at 265-66, such an interpretation of the plan protects the innocent insured against the uncertainty of coverage. It is easy for the insurance carrier, which drafts the plan, to be clear about conditions. Id. at 265. Second, if an insurance company were able to rely on third parties not expressly authorized under the plan to give notice of cancellation of coverage, the insured would not be protected against receiving misinformation, as occurred here. When WCAS notified appellant of Healthplus' cancellation, WCAS's memorandum stated, incorrectly, that a subscriber would have to find coverage with another carrier. In fact, a subscriber could have converted to individual coverage. [7] Had appellant been so advised, the problems that she encountered in seeking reimbursement for her medical expenses would have been avoided; by paying the premiums herself, she could have retained her treating physician without being subject to a pre-existing condition clause in her insurance coverage. The fact that appellant received actual notice of the cancellation does not cure the defective nature of the notice. See Diamond Serv. Co. v. Utica Mut. Ins. Co., 476 A.2d 648, 652 (D.C.1984) [n]otice provisions in insurance contract are of the essence of the contract); Capital City Benefit Soc'y v. Travers, 55 App.D.C. 214, 215, 4 F.2d 290, 291 (1925) (strict compliance with cancellation notice provisions); 17 R. ANDERSON, COUCH ON INSURANCE 2D, § 67:128 (1983) (if a policy of insurance stipulates as to the manner ... of cancellation, such condition must be obeyed). Accordingly, since the notice of cancellation of coverage was ineffective, appellant was entitled to receive benefits until the expiration date of the policy, see Slaughter v. Smith, 167 Mich.App. 400, 403-06, 421 N.W.2d 702, 704-05 (1988), and the judgment is reversed.