Court Opinion

ID: 616113
Source: CourtListenerOpinion
Date Created: 2011-10-26 17:12:14+00
Date Added: 2024-06-11T17:50:36.033558
License: Public Domain

Case: 11-60230     Document: 00511645228         Page: 1     Date Filed: 10/26/2011

            IN THE UNITED STATES COURT OF APPEALS
                     FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                     Fifth Circuit

                                                                            FILED
                                                                         October 26, 2011

                                     No. 11-60230                          Lyle W. Cayce
                                   Summary Calendar                             Clerk

TIME INSURANCE COMPANY,

                                                  Plaintiff-Appellee
v.

ESTATE OF LARRYE J. WHITE, also known as Larrye J. White;
PATSY WHITE,

                                                  Defendants-Appellants

                   Appeal from the United States District Court
                     for the Southern District of Mississippi
                         Case No. 1:08-CV-16-HSO-JMR

Before BENAVIDES, STEWART, and CLEMENT, Circuit Judges.
PER CURIAM:*
        Defendants-Appellants, Patsy White and the estate of her deceased
husband, Larrye J. White, appeal the district court’s grant of summary judgment
and entry of declaratory judgment in favor of Plaintiff-Appellee, Time Insurance
Co. (“Time”), with respect to its obligations under a health insurance policy. As

        *
         Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
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                                  No. 11-60230

there is no genuine issue as to any material fact, and as the insurance policy is
unambiguous, we AFFIRM the district court’s judgment.
                                        I.
      In May 2005, Larrye J. and Patsy White (“the Whites”) applied for a health
insurance policy from Time. In support of its motion for summary judgment,
Time produced an application signed by the Whites, dated May 25, 2005, which
Time received via facsimile and maintained in its electronic records. The first
page of the application reflects a yearly maximum outpatient benefit of $2,500
and a maximum annual benefit of $100,000.           At the top of each of the
sequentially-numbered seven pages of the faxed application is the Whites’ fax
machine number. Although Larrye White acknowledged in his deposition that
he signed the application as reflected in Time’s records, the Whites’ dispute that
the policy they applied for contained the $2,500 yearly maximum outpatient
benefit.
      After submitting their application, the Whites completed a medical history
review. Based upon the results of the review, Time awarded insurance coverage
to the Whites, contingent upon their agreement to certain exclusions in coverage.
Specifically, Time excluded treatment for Larrye White’s allergies and Patsy
White’s asthma, and increased the monthly premium. On June 7, 2005, the
Whites formally agreed to these changes by signing special exception riders to
the insurance policy, which were faxed to Time. The riders also reflected policy
certificate number 0058461251.
      On June 15, 2005, Time sent the Whites’ insurance agent, Albert W.
Small, a copy of their health insurance policy, certificate number 0058461251,
and an acceptance of offer and attestation form for them to sign. The policy
reflected a calendar year maximum benefit of $100,000 for each insured, and a
calendar year maximum benefit for outpatient services of $2,500 for each

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insured. The policy also provided a 10-day right to examine; if the insureds were
unsatisfied, all premiums would be returned and all coverage would be void.
      On July 21, 2005, Patsy White called Time because she was concerned that
her failure to return the acceptance of offer form might result in a lapse in
coverage. At the beginning of the call, Patsy was prompted to provide the policy
number, and she recited 0058461251-M, as reflected in the packet delivered by
Time to Small. The customer service representative, Precious Crowell, assured
Patsy that she and her husband were covered, and Patsy agreed to fax the
acceptance of offer form to Time. On July 27, 2005, the Whites submitted the
signed acceptance of offer form, dated June 20, 2005, which referenced policy
number 0058461251.
      On August 29, 2005, the Whites’ personal belongings, including their copy
of the insurance policy, were destroyed in Hurricane Katrina. In November
2006, Larrye White was diagnosed with cancer.           He received outpatient
chemotherapy treatments, and Time refused to cover expenses beyond the
$2,500 yearly cap for outpatient services as reflected in the policy. On October
22, 2007, Patsy White wrote a letter to Small, stating that the Whites needed to
upgrade the insurance policy beyond the present outpatient limits.
      In support of their position that policy number 0058461251 is not the
policy they agreed to, the Whites rely on Small’s affidavit, in which he asserted
that the policy issued to the Whites did not comply with the application he
submitted to Time.
      On January 16, 2008, Time brought this action, seeking a declaration that
it is not obligated to pay benefits for medical treatments exceeding the $2,500
maximum yearly benefit for outpatient services. On December 10, 2008, the
district court granted Time’s motion for judgment on the pleadings, which was
appealed. On December 21, 2009, a panel of this court vacated the judgment on
the pleadings as a premature disposition of the case, and remanded for further

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proceedings.   On March 16, 2010, Larrye White died, and his estate was
substituted as a defendant.
      On March 17, 2011, after voluminous discovery, the district court granted
Time’s motion for summary judgment, and rendered a declaratory judgment in
Time’s favor as requested in the complaint. Appellants timely appealed.
                                       II.
                                       A.
      This court reviews a district court’s grant of summary judgment de novo,
applying the same standards as the trial court. See Urbano v. Cont’l Airlines,
Inc., 138 F.3d 204, 205 (5th Cir. 1998). Summary judgment is proper if the
evidence shows that there is no genuine issue as to any material fact and that
the moving party is entitled to judgment as a matter of law. Kee v. City of
Rowlett, 247 F.3d 206, 210 (5th Cir. 2001). “Only disputes over facts that might
affect the outcome of the suit under the governing law will properly preclude the
entry of summary judgment.          Factual disputes that are irrelevant or
unnecessary will not be counted.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
248 (1986). The nonmoving party “must identify specific evidence in the record
and articulate the manner in which that evidence supports that party’s claim.”
Johnson v. Deep East Tex. Reg’l Narcotics Trafficking Task Force, 379 F.3d 293,
308 (5th Cir.2004). The identified evidence “must be sufficient to sustain a
finding in favor of the nonmovant on all issues as to which the nonmovant would
bear the burden of proof at trial.” Id. The Court views all evidence in the light
most favorable to the non-moving party and draws all reasonable inferences in
that party’s favor. Crawford v. Formosa Plastics Corp., 234 F.3d 899, 902 (5th
Cir. 2000).
                                       B.
      The parties agree that Mississippi law governs this diversity case. Under
Mississippi law, “[t]he burden of proving coverage rests with the insured.”

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Architex Ass’n, Inc. v. Scottsdale Ins. Co., 27 So. 3d 1148, 1157 (Miss. 2010); see
also S. Life & Health Ins. Co. v. Kemp, 300 So. 2d 782, 785 (Miss. 1974) (“The
burden rested upon the beneficiary to establish by some proof that the death of
the insured occurred under circumstances for which the policy provided
coverage.”).
      “[I]nsurance policies are contracts, and their construction and
interpretation is according to the same rules which govern other contracts.”
Provident Life and Acc. Ins. Co. v. Goel, 274 F.3d 984, 991-92 (5th Cir. 2001)
(internal quotation marks and citation omitted). “[I]f a contract is clear and
unambiguous, then it must be interpreted as written.” U.S. Fid. and Guar. Co.
v. Martin, 998 So. 2d 956, 963 (Miss. 2008). “A policy must be considered as a
whole, with all relevant clauses together.” Id. “The most basic principle of
contract law is that contracts must be interpreted by objective, not subjective
standards. A court must effect a determination of the meaning of the language
used, not the ascertainment of some possible but unexpressed intent of the
parties.” Cherry v. Anthony, Gibbs, Sage, 501 So. 2d 416, 419 (Miss. 1987). “The
mere fact that the parties disagree about the meaning of a provision of a contract
does not make the contract ambiguous as a matter of law.” Id. “Parol evidence
as to surrounding circumstances and intent may be brought in where the
contract is ambiguous, but where . . . the contract [i]s found to be unambiguous
it has no place. The parties are bound by the language of the instrument.” Id.
      “An insured, of course, has an affirmative duty to read the terms and
conditions of the insurance policy.” Titan Indem. Co. v. City of Brandon, 27 F.
Supp. 2d 693, 698 (S.D. Miss. 1997) (citing Gulf Guar. Life Ins. Co. v. Kelley, 389
So. 2d 920, 922 (Miss. 1980)). “[I]nsureds are bound as a matter of law by the
knowledge of the contents of a contract in which they entered notwithstanding
whether they actually read the policy.” Stephens v. Equitable Life Assurance
Soc’y, 850 So. 2d 78, 83 (Miss. 2003). “Any alleged oral agreement . . . does not

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have any effect on the written insurance contract.” Id. A contracting party “will
not as a general rule be heard to complain of an oral misrepresentation the error
of which would have been disclosed by reading the contract.” Id. at 82 (internal
citation omitted).
      “To prove the content of a writing, . . . the original writing . . . is required
. . . .” Fed. R. Evid. 1002. “If data are stored in a computer or similar device, any
printout or other output readable by sight, shown to reflect the data accurately,
is an ‘original.’” Fed. R. Evid. 1001(3). Time provided ample evidence that its
copy of the insurance policy, and the faxed application, riders, and acceptance
of offer form, all signed by the Whites, were maintained by its computers in the
regular course of business and are inalterable. Accordingly, the documents
produced by Time are originals, and are admissible to prove their contents.
      Under Mississippi law, knowledge of the terms of the insurance policy is
imputed to the Whites, regardless of whether they in fact read the policy. In
order to challenge the applicability of policy number 0058461251, Appellants
rely chiefly on the affidavit of Small, which asserts that the policy the Whites
applied for differs from the policy ultimately issued. However, this affidavit fails
to create a genuine issue of material fact. Small’s assertions are immaterial
because all parties are bound by insurance policies actually agreed upon, not by
applications for insurance policies. “[A]n application for insurance is simply an
offer to contract. The potential insurer is free to accept the offer as written or
it may issue a policy different from the one requested in the application.”
Provident, 274 F.3d at 991-92.
      In the present case, the original documents produced by Time reflect that
the Whites applied for policy number 0058461251, such application clearly
reflecting an outpatient maximum of $2,500 and an annual maximum of
$100,000. However, even accepting as true Small’s claim that the Whites
applied for a different policy, the Whites remain bound by their acceptance of

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Time’s counter-offer of policy number 0058461251, as reflected in their signed
and returned special exception riders and acceptance of offer form. The policy
itself afforded the Whites an opportunity to read it and revoke it if it did not
meet their satisfaction. Instead of reading the policy they agreed to, the Whites,
after the passing of a number of years, argue that this is not the agreement they
intended to reach. This case is, therefore, similar to Zepponi v. Home Insurance
Co., 161 So. 2d 524 (Miss. 1964), in which an insured challenged the terms of an
insurance policy on the ground that he had never received a copy.             The
Mississippi Supreme Court ruled “as a matter of law that Insured is charged
with knowledge of the terms of the policy upon which he relied for protection for
nearly five years. . . . Human memory is a frail record and the fact of delivery
should not rest thereon after five years.”       Zepponi, 161 So. 2d at 526.
Accordingly, even if the Whites applied for a different policy in 2005, they are
bound by the policy they agreed to, had a duty to read, and relied upon for
protection until the time of Larrye White’s illness.
      Moreover, there is no genuine issue of material fact because Appellants
cannot meet their burden, under Mississippi law, of proving coverage merely by
relying on the unavailability of their own copy of the policy. As expressed above,
pursuant to the Federal Rules of Evidence, the electronic printout of the
insurance policy produced by Time is an original. In opposition to summary
judgment, Appellants submitted six exemplar policies that Time also marketed
at the time of the Whites’ application. However, there is no evidence to establish
which of these alternative policies were ever actually issued to the Whites. In
this respect, this case is similar to Harrow Products, Inc., v. Liberty Mutual
Insurance Co., 64 F.3d 1015 (6th Cir. 1995), in which a company relied on
missing policies to establish an entitlement to coverage. In that case, the Sixth
Circuit ruled that the company could not meet its burden of proving coverage:

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      Of course, we cannot state that a party can never prove the terms
      of a policy without a copy of the policy or a reasonable facsimile
      thereof. But the party trying to do so certainly faces a formidable
      burden. Here no jury could find, absent sheer speculation, the scope
      of coverage, the relevant notice requirements, and all of the other
      aspects of the policy, on which coverage often hinges.
Harrow, 64 F.3d at 1021. Likewise, in this case, Appellants’ invitation to
speculate about which policy might have been issued cannot raise a genuine
issue of material fact where an original of the policy is in evidence.
                                        C.
      Lastly, we agree with the district court that the insurance policy is not
ambiguous. The benefits schedule clearly limits coverage to a $2,500 yearly
maximum outpatient benefit and a $100,000 annual maximum benefit.
Appellants assert that the “Covered Medical Services” section of the policy
creates an ambiguity with respect to the maximum benefits. The opening
paragraph of this section states that “Covered Medical Services include only
Covered Charges for the services and supplies listed in this certificate. Charges
are subject to all the terms, limits, and conditions of this plan.” The section goes
on to list twenty-four categories of medical services covered by the policy.
Included in the description of twelve of these types of services, including “X-ray
and laboratory services” and “Sterilization,” is a phrase indicating that this type
of service is limited to the outpatient calendar year maximum. Additionally,
certain categories of services, such as “Wellness services” and “Physical, Speech
& Occupational Therapy” are limited to maximum dollar amounts, such as fifty
or five hundred dollars, in addition to the annual outpatient maximum benefit.
Appellants argue that because the descriptions of the categories of “Hospital
Services” and “Health Care Practitioner Services” do not include a phrase
stating that coverage is limited to the annual outpatient maximum benefit, the

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policy is ambiguous with respect to whether these services are limited by the
maximum benefits as provided in the benefits schedule.
      Upon our independent review of the policy, we determine that there is no
conflict between the “Covered Medical Services” section and the policy benefits
schedule. Rather, the descriptions under the “Covered Medical Services”section
which specifically reference the calendar year maximum outpatient benefit only
clarify that, even if such services could, in context, be characterized as inpatient
services, they remain subject to the maximum outpatient benefit. For instance,
an insured might receive X-ray or chiropractic services while hospitalized
following a car accident. Although receiving those services while a hospital
patient, under the terms of the policy, the insured’s benefits would still be
subject to the yearly maximum outpatient benefit.
      However, “Hospital Services” and “Health Care Practitioner Services”
encompass both inpatient and outpatient services. Whether particular services
falling under these categories are limited to the annual maximum outpatient
benefit depends on whether the services are properly characterized as inpatient
or outpatient. If the services are outpatient services, then they are subject to the
annual maximum outpatient benefit located in the benefits schedule.
Accordingly, taking all relevant clauses together and finding no ambiguity, the
contract must be enforced as written.
                                        III.
      For the foregoing reasons, the district court’s judgment is AFFIRMED.

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