Opinion ID: 1676263
Heading Depth: 1
Heading Rank: 5

Heading: whether the chancellor abused his discretion and committed reversible error by requiring appellant to maintain appellee as a beneficiary on his health insurance policy and by requiring appellant to pay all insurance premiums necessary to afford complete coverage to appellee.

Text: Elaine requested medical and hospital insurance coverage. The chancellor found that Elaine had a serious pre-existing condition that resulted in a double mastectomy. Since the medical condition was in existence prior to Elaine's employment at Royal Maid, her new employer-provided insurance would not defray expenses for this pre-existing condition. However, the chancellor found that the Charles' existing policy, of which she was a beneficiary, would cover at least some of the medical expenses. Under those circumstances, the chancellor found that it would be unconscionable not to require the defendant to keep coverage in force and pay the premium thereon and therefore, the defendant [was] mandatorily enjoined to keep and maintain the present coverage and continue to pay full premiums, which includes $127.00 or $128.00 that is required to keep this policy in force for the Plaintiff's benefit and to continue to do that until such time as this pre-existing condition no longer exists and Mrs. Bland will have coverage through her employment. The chancellor's order to provide Elaine the continuance of benefits under Charles' policy until such time as the pre-existing condition no longer exists, contemplates that after full recovery from the double mastectomy, and when that condition no longer exists, Charles' obligation for medical insurance will end. This Court interprets this order to mean that Charles must continue to provide insurance benefits for Elaine's pre-existing condition only. Generally, health insurance policies cover a spouse and dependents; however, once a divorce is granted, a former spouse is usually no longer insurable on the other spouse's policy. In reviewing the issue of insurance as it applies to this case, one must remember that insurance is purchased for a future claim or illness which might prove financially devastating. Generally, if the event or illness insured against occurs within the coverage period, the benefits under the policy become vested. One need not pay any further premiums to continue to receive benefits for that particular illness. However, if one wished to secure protection against some other illness or injury, then payment of premiums would have to continue. Benefits vested under the policy as a result of an illness or injury covered by the policy should continue until one of three events occurs: (1) the insured recovers; (2) the insured dies; or (3) benefits under the plan are exhausted. Benefits vest under a casualty policy when the event occurs, i.e., when the collision occurs in an automobile liability, uninsured motorist, medical pay, or comprehensive policy. Likewise, under a health policy, once the illness or injury occurs, those benefits attributable to that particular injury or illness are vested. This Court addressed this issue in Brown v. Blue Cross & Blue Shield of Miss., 427 So.2d 139 (Miss. 1983). Brown and his wife were insured under his employer's group policy. They waited until the policy provision of time allowing maternity benefits to be covered had elapsed and conceived a child during the policy period. During the term of her pregnancy, Brown's employer terminated its employee group coverage without notification to the Browns. The child was born after the cancellation of the policy. Blue Cross denied benefits, claiming that there was no maternity contract in existence at the time of birth. This Court denied upholding the cancellation on public policy grounds. In effect, this Court held that the maternity benefits had vested at the time the child was conceived, due to the fact that Mr. and Mrs. Brown had a reasonable expectation of coverage. This Court quoted from Keeton, Insurance Law Rights at Variance with Policy Provisions, 83 Harv.L.Rev. 961, 967 (1970), which defined the reasonable expectation doctrine under an insurance contract as follows: The objectively reasonable expectations of applicants and intended beneficiaries regarding the terms of insurance contracts will be honored even though painstaking study of the policy provisions would have negated those expectations. Further, in Gulf Guar. Life Ins. Co. v. Kelley, 389 So.2d 920 (Miss. 1980), Kelley procured a credit life insurance certificate through a Lucedale bank, and approximately three days later, suffered a heart attack. Gulf Guaranty learned of the attack some two weeks later and cancelled the insurance certificate under the contract. The contract gave Gulf Guaranty the absolute right to cancel a certificate at any time within ninety days from the date of the issuance of the certificate. This Court, however, held that Gulf Guaranty was estopped from cancelling the coverage as a matter of public policy. The Gulf Guaranty Court stated: Defendant argues that it had the absolute right under the terms of its master policy to cancel the certificate of insurance issued to Kelley within 90 days from the date of issue. Ordinarily, this defense would be upheld; however, in this case the onset of Kelley's fatal illness occurred after the policy was in effect and continued without remission until his death. Considerations of public policy persuade us that, exercise by the insurer of its right to cancel should not be permitted after the onset of a fatal illness and death therefrom, upon the ground of estoppel. In Volume 3A of Appelman's Insurance Law and Practice, § 1813, the author states: And where the company has accepted the premium on a policy and the insured has relied on its protection, the company is estopped to cancel the policy after the insured has reached such a physical condition that he cannot obtain desirable insurance on his life in any reputable company. [ Mutual Benefit Life Ins. Co. v. Robison, C.A. Iowa 1893, 54 F. 580, 598]. 389 So.2d at 922. In a case originating in Mississippi, the Fifth Circuit in Pitts v. American Security Life Insurance Co., 931 F.2d 351 (5th Cir.1991), held that the benefits guaranteed during the lifetime of the policy vested after the illness was incurred during the policy period. American Security had paid in excess of $250,000.00, when it sought to increase premiums in a conscious effort to force cancellation of the policy. The Fifth Circuit held that even though Pitts was unable to pay the increased premiums, he was still able to receive the benefits already vested for the particular illness. The Fifth Circuit affirmed the lower court's decision which held that the vested benefits in Pitts did not require him to pay any additional premiums. Insurance does not vest, but benefits do, upon the happening of the insured event, whether or not additional premiums are paid. The Fifth Circuit held: The district court cogently summarized the reasons that Pitts should prevail: (1) Pitts had a reasonable expectation of continued benefits; (2) the entitlement of benefits vested at the time of the injury, which was before American Security decided to cancel the policy; (3) the total disability resulting from the accident precluded Pitts from obtaining other coverage; and (4) Pitts was innocent of any wrongdoing. See Brown v. Blue Cross Blue Shield, Inc., 427 So.2d 139, 141 (Miss. 1983); Gulf Guar. Life Ins. Co. v. Kelley, 389 So.2d 920, 922 (Miss. 1980); Keeton, Insurance Law Rights at Variance with Policy Provisions, 83 Harv.L.Rev. 961, 967 (1970). 931 F.2d at 356. As she was insured under Charles' policy and diagnosed with breast cancer during the policy period, it appears that Elaine's benefits for this particular illness or injury have vested. If so, her benefits will remain vested until such time as she either recovers, dies, or the benefits are exhausted. It is not necessary for Charles to continue paying her premiums, since he is not required to continue to provide insurance for other illnesses which might occur. While it would be unconscionable to leave Elaine without insurance coverage for her condition, which is not the case, it is likewise unconscionable to require the impossible of Charles, i.e., to maintain a former spouse as a dependent on his current insurance policy in contemplation of future illness. This Court reverses and renders this provision of the chancellor's order and holds that Charles should not be subject to contempt for non-compliance with the portion of the chancellor's decree which requires him to continue to pay premiums for Elaine's insurance.