JASON W. LOZE v. D. KEITH KEY
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RENDERED: May 25, 2001; 10:00 a.m.
NOT TO BE PUBLISHED
C ommonwealth O f K entucky
C ourt O f A ppeals
NO.
2000-CA-001269-MR
JASON W. LOZE
APPELLANT
APPEAL FROM OWEN CIRCUIT COURT
HONORABLE STEPHEN L. BATES, JUDGE
ACTION NO. 98-CI-00064
v.
D. KEITH KEY
APPELLEE
OPINION
AFFIRMING IN PART, REVERSING IN PART, AND REMANDING
** ** ** ** **
BEFORE:
GUIDUGLI, KNOPF, AND SCHRODER, JUDGES.
SCHRODER, JUDGE:
This is an appeal by Jason W. Loze from an
order of the Owen Circuit Court granting summary judgment to D.
Keith Key in a defamation lawsuit.
The suit arose out of
statements made by Key at a public meeting and in a letter
written to the Kentucky Department of Insurance.
We affirm
summary judgment with respect to the statements made at the
public meeting because the statements were true or not otherwise
defamatory.
We reverse and remand, however, with respect to the
statements made in the letter to the Department of Insurance,
because the letter falsely accused Loze of fraud and illegal
conduct and, though the letter was conditionally privileged, it
would not be impossible for a jury to believe that Key was
grossly negligent or acted with malice in making the accusations
contained in the letter.
Loze and Key are both insurance agents.
In late 1996
and early 1997, the two were in competition for the group health
insurance business for the county employees of Owen County.
In
conjunction with the bidding process, the Owen County Fiscal
Court, the authority in charge of awarding the insurance
contract, convened a public meeting on May 13, 1997.
Prior to
the meeting, the Fiscal Court had issued a bid packet to
interested insurance agents which included a census listing
persons currently covered under the county health insurance plan.
For some reason the census listed Harold H. Gaines as a county
employee.
In fact, Gaines was not a county employee; however,
Gaines was the ex-spouse of a county employee and was entitled to
coverage under the county health plan pursuant to his rights
under COBRA.
At the meeting, Key gave a presentation to the Board
which, Loze contends, included statements which slandered him by
falsely accusing him of improper, illegal, and fraudulent conduct
relating to the placement of a non-employee, Gaines, on the
county’s group health insurance plan.
Immediately following the
presentation by Key, Loze gave a presentation in which he
explained that Gaines was properly included in the county’s
insurance plan under his COBRA rights as the ex-spouse of an
existing county employee.
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Despite the explanation given by Loze during his
presentation at the public meeting, on May 16, 1997, Key wrote a
letter to Janice Wilson of the Kentucky Department of Insurance.
In the letter, Key unambiguously accused Loze of “fraudulently
add[ing] an individual to a group health insurance plan who is
not an employee” and, by innuendo, accused Loze of “blatantly
violating the law.”
It is now undisputed that Loze did nothing
fraudulent or unlawful with respect to the listing of Gaines as a
county employee, and the erroneous listing apparently occurred as
a result of a mistake by the insurance carrier.
On May 13, 1998, Loze filed a lawsuit seeking a
judgment and damages against Key on the basis that the statements
made by Key at the public meeting and in the letter to the
Department of Insurance were defamatory.
On February 26, 2000,
Key filed a motion for summary judgment.
On May 1, 2000, the
trial court entered an order granting Key’s motion for summary
judgment.
This appeal followed.
In order to qualify for summary judgment, the movant
must “show that there is no genuine issue as to any material fact
and that the moving party is entitled to a judgment as a matter
of law."
CR 56.03.
The record must be viewed in the light most
favorable to the party opposing the motion for summary judgment
and all doubts are to be resolved in his favor.
Steelvest, Inc.
v. Scansteel Service Center, Inc., Ky., 807 S.W.2d 476, 480
(1991).
Summary judgment should only be used when, as a matter
of law, it appears that it would be impossible for the respondent
to produce evidence at trial warranting a judgment in his favor
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and against the movant.
Id. at 483 (citing Paintsville Hospital
Co. v. Rose, Ky., 683 S.W.2d 255 (1985)).
A party opposing a
properly supported motion for summary judgment cannot defeat it
without presenting at least some affirmative evidence showing
that there is a genuine issue of material fact for trial.
Steelvest, 807 S.W.2d at 482.
We first consider the trial court’s granting of summary
judgment with respect to Key’s statements made at the May 13,
1997, meeting of the Owen Fiscal Court.
Specifically, Loze
alleges that at the May 13, 1997 meeting, Key, with actual
knowledge that Loze was the current agent providing the Owen
County employee health insurance plan, made the following
statements:
I think you also want an agent who will
continue to service the client after the sale
- not just make the money and run, but to also
be here and to serve us afterwards. . . .
I think finally too, it is the responsibility
of the agent to make sure that their health
care plan not only fits the needs of the
community and the employer, but it is also
important for the agent to make sure that the
health care plan maintains compliance with the
state law. There is a concern that I have
regarding your plan in that area now.
On the census that you sent to me, that I have
questioned whether this was the accurate
census, and it was told to me that it was,
there’s an individual on here that probably
does not work for the county, but is receiving
group health care benefits. My concern about
that is real, in two areas. Number one - if
indeed he is on a group health care plan and
he is not an employee of the county, and he
were to go out and have a heart attack
tomorrow, and the company were to find out
that he was not an employee of the county,
they would fight paying the claim. So he’s
paid all the premiums all along the way, and
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he may not have the benefits. In that case,
the agent’s errors & omissions insurance would
have to come forward to pay the claim. That’s
scary.
I think the second thing that is even more
concerning to me that is the aspect that if
there is an individual on here, which the
census says there is, that is not an employee
of the county, it opens up the whole issue of
discrimination, and that is, “What about all
the other residents of the county - would you
make your health insurance available to them
as well?”. And if they were to find out about
it, they might be upset.
So, if you look at this, I think it is the
agent’s responsibility not to let that
happen. There are plenty of health care
plans out there that are available for
individuals; it takes someone who is willing
to go out and look for it and find it. He
could have the same coverage at approximately
the same price as an individual. It’s
available.
The second aspect now is, in Kentucky, during
the month of May - from May 1st to May 31st there’s open enrollment with all companies
for individual health care. So now there’s
no need to have an individual on the health
care plan that is not an employee of the
county. He can get individual coverage.
It’s the agent’s responsibility not to let
that happen because it opens you up to a lot
of issues that you really don’t need to deal
with.
So, if I present the plan - If I’m awarded
the plan - the quote that I gave is “off”
just a little bit because that individual
would not be on our health care plan. We
would find the individual coverage that they
need.
So, when you look at that, we’ve presented to
you the most flexibility. I think we’ve
presented to you the lowest cost; in the
meantime we’ve also provided to you the
largest network of providers, and I think we
are also presenting to you two agents who
would work to serve you and the employees of
Owen County. Thank you.
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Four elements are necessary to establish a defamation
action: (1) defamatory language; (2) about the plaintiff; (3)
which is published; and (4) which causes injury to reputation.
Columbia Sussex Corp., Inc. v. Hay, Ky. App., 627 S.W.2d 270, 273
(1981).
Whether the words are defamatory is to be determined
from the statement as a whole.
Ball v. E.W. Scripps Co., Ky.,
801 S.W.2d 684, 690 (1990), cert. denied, 499 U.S. 976, 111 S.
Ct. 1622, 113 L. Ed. 2d 719 (1991) (quoting Yancey v. Hamilton,
Ky., 786 S.W.2d 854, 857 (1989)); McCall v. Courier-Journal and
Louisville Times Co., Ky., 623 S.W.2d 882, 884 (1981), cert.
denied, 456 U.S. 975, 102 S. Ct. 2239, 72 L. Ed. 2d 849 (1982).
Truth is a complete defense to a defamation action.
Benovitz, 301 Ky. 661, 192 S.W.2d 730, 732 (1945).
Stat. (KRS) 411.045.
Wolff v.
Ky. Rev.
This is so even when the publication is
made with malice, ill will, or is libelous per se.
Bell v.
Courier-Journal and Louisville Times Co., Ky., 402 S.W.2d 84, 87
(1966).
Absolute truth is not the standard; as long as the
statements are substantially true, the defense is available.
Id.
at 86.
We need not address whether Key’s statements were, in
fact, defamatory or entitled to a qualified privilege because
Loze’s slander case is fatally deficient in that he has failed to
cite us to a single particular statement in Key’s presentation
that is untrue.
To defeat summary judgment, Loze, as the
plaintiff in this case, bears the burden of producing affirmative
evidence so as to demonstrate that it would not be impossible for
a jury to find that Key made defamatory statements about him
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which are untrue.
In its order granting summary judgment, the
trial court stated with respect to this issue as follows:
The Court queried Plaintiff’s Counsel
regarding which of the statements [before the
Fiscal Court] were false, as falsity is the
first consideration of a defamation case.
Counsel was unable to point the Court to any
specific false statements of the Defendant.1
The Court having likewise been unable to find
any falsity in reviewing those statements,
the Court must find that there was none.
We have a similar problem in identifying any false
statements among the eight paragraphs of comments made by Key at
the meeting.
It is uncontested that, in the bid package provided
to Key by the Fiscal Court, Gaines was erroneously listed as a
county employee.
Further, it is undisputed that Key was aware
that Gaines was not in fact a county employee because, among
other reasons, he was the insurance agent for the county
employees’ group life policy.
It was within this context that
Key made the comments at the Fiscal Court meeting.
Further,
while Key was clearly alluding to the Gaines situation, he
qualified his entire discussion of the issue by using such terms
as “if indeed,”
“in that case,” and “if there is.”
Given the
qualified nature of Key’s statements, we are unable to identify a
single false statement in the entire text of Key’s comments.
Moreover, Key’s comments regarding the Gaines situation
was in direct reference to information contained within the
bidding packet provided by the Fiscal Court.
1
The packet
It appears that a pretrial conference was conducted on
March 21, 2000, at which Key’s motion for summary judgment was
argued. The record on appeal does not include a transcript or
video of that proceeding.
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reflected a nonemployee who was listed as an employee.
It was
perfectly proper for Key to comment upon information of concern
included within the bidding packet, and ultimately Key concluded
his discussion of the Gaines matter by noting that his bid would
be lower if Gaines was removed from the employee list.
We are persuaded that the trial court properly granted
summary judgment as to the comments made at the Fiscal Court
meeting.
Next, Loze contends that the trial court erroneously
granted summary judgment with respect to the May 16, 1997, letter
to Janice Wilson of the Kentucky Department of Insurance.
letter stated as follows:
I am writing in response to the conversation
we had on Wednesday, May 14 concerning Mr.
Jason Loze. Mr. Loze owns the Owenton
Insurance Agency in Owenton, KY. He has
fraudulently added an individual to a group
health insurance plan who is not an employee.
The employer is aware of the addition and
allows the individual to reimburse them on a
monthly basis.
I make this assertion after confirming the
information. I will provide for you a brief
sketch of the facts surrounding the case as
well as a list bill which documents my claim.
Recently, Mr. Loze and I were in a
competitive bidding situation regarding the
health insurance for Owen County Fiscal
Court. Mr. Loze resides in the county,
whereas, I do not. During the bidding
process I received a bid packet from the Owen
County Judge-Executive’s Office which
included a census (see attached). When I
received the bid packet, I noticed a name
(Mr. Harold Gaines) on the health insurance
list which I did not have on the group life
insurance plan. At this point, I was under
the impression they had hired a new employee
and he should be added to the group life. I
called the office of the County Judge and
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The
spoke with Ms. Cindy Ellis, Deputy Judge
Executive. She informed me that the
individual in question (Mr. Gaines) was not
to be covered by the life insurance because
he was not an employee. I questioned her as
to why he was listed as an employee on the
health insurance. She said, “We added him to
our health insurance because his COBRA had
run out and he needed insurance.” Mr. Gaines
is the ex-husband of a current employee of
the county.
On Tuesday, May 13 I phoned United Healthcare
Member Services to discover if Mr. Gaines was
listed as an employee or for Cobra. They
informed me he was indeed listed as an
employee. Later that evening, at the County
Court meeting, I mentioned my concern about
the county knowingly having an individual on
their group health insurance who was not an
employee. Mr. Loze was quick to reply, “He
is not listed as an employee, he is on
COBRA.”
The next morning, Wednesday May 14th,
concerned that I may have been misinformed by
Ms. Ellis and United Healthcare members
services, I phoned members services again.
Bob, an employee of United Healthcare,
informed me that Mr. Gaines was an employee
of the county. I questioned him again, “Are
you sure Mr. Gaines is not on COBRA?” He
replied, “He is an employee.”
I am concerned for the insured and the
integrity of the fiscal court. For the agent
and the county to knowingly place an
individual on their group health insurance
who is not an employee, may be giving the
insured a false sense of security regarding
health insurance protection. Would it not be
considered fraudulent for an agent to have an
individual to sign a group health application
as an employee when they are not employed by
the county, thereby, jeopardizing the
intended healthcare protection.
Also, if an agent is allowed to add an
individual to a group bill, specifically a
county government bill, could that not be
considered discrimination by the possible
uninsured residents of the county.
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Furthermore, as an agent who attempts to
comply with state regulations, it gives an
unfair bidding advantage for an agent to
blatantly violate the law and to involve the
county judge in the process.
I would appreciate your investigation into
this matter. I believe it to be in the best
interest of all parties concerned. For Mr.
Gaines, he would be able to attain the
coverage he needs. For the county, it would
remove the possible embarrassing situations
which may occur. First, for an individual to
be denied the coverage he has paid for
because of fraudulent information on an
application. Second, the perception of
discrimination by the community at large.
(emphasis added).
Libel is "the publication of a written, defamatory, and
unprivileged statement."
McCall v. Courier-Journal and
Louisville Times Company, 623 S.W.2d at 884.
A defamatory
writing is a writing which tends to (1) bring a person into
public hatred, contempt, or ridicule; (2) cause him to be shunned
or avoided; or (3) injure him in his business or occupation.
Id.
As previously noted, the elements of defamation are: (1)
defamatory language, (2) about the plaintiff, (3) which is
published, and (4) which causes injury to reputation.
Columbia
Sussex Corp., Inc. v. Hay, 627 S.W.2d at 273.
The May 16, 1997, letter is affirmative evidence
sufficient to defeat summary judgment with respect to the issue
of whether Key libeled Loze in the letter.
In the letter, Key
states that Loze had “fraudulently added an individual to a group
health insurance plan who is not an employee” and, by innuendo,
accuses Loze of “blatantly violat[ing] the law.”
It is, however,
now undisputed that Loze did nothing fraudulent or unlawful in
conjunction with the listing of Gaines as a county employee on
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the health insurance records.
Nevertheless, the trial court
granted summary judgment in favor of Key based upon the qualified
privilege prescribed in KRS 304.47-050.
KRS 307.47-050 provides,
in relevant part, as follows:
(2) The following individuals having
knowledge or believing that a fraudulent
insurance act or any other act or practice
which may constitute a felony or misdemeanor
under this subtitle is being or has been
committed shall send to the division a report
or information pertinent to the knowledge or
belief and additional relevant information
that the commissioner or his employees or
agents may require:
(a) Any professional practitioner
licensed or regulated by the
Commonwealth, except as provided by
law;
(b) Any private medical review
committee;
(c) Any insurer, agent, or other
person licensed under this chapter;
and
(d) Any employee of the persons
named in paragraphs (a) to (c) of
this subsection.
. . . .
(8) In the absence of malice, fraud, or gross
negligence, no insurer or agent authorized by
an insurer to act on its behalf, law
enforcement agency, the Department of
Workers' Claims, their respective employees,
or an insured shall be subject to any civil
liability for libel, slander, or related
cause of action by virtue of filing reports
or for releasing or receiving any information
pursuant to this subsection. (emphasis
added).
We are persuaded that the trial court erroneously
granted summary judgment in favor of Key.
The qualified
privilege prescribed in KRS 304.47-050(8) is conditioned on the
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requirement that there be no malice or gross negligence
associated with the privileged defamatory statement.
While it is uncontested that Gaines was incorrectly
listed as an employee on the group health plan and that Loze was
the agent of the plan, it is obviously fallacious to add those
two facts together and conclude that Loze is engaging in fraud
and blatant violations of the law.
As proved to be the case,
there were possible innocent explanations for the erroneous
listing.
It would not be impossible for a jury to conclude that
Key was grossly negligent in concluding, and then reporting to
the Department of Insurance, that Loze was engaged in fraudulent
and unlawful activity.
While under the statute it appears that
Key was required to report the discrepancy, his conclusion and
accusations may be perceived by a jury as gross negligence.
Alternatively, since Loze prevailed over Key in obtaining the
Owen County insurance contract, the jury may conclude that Key
accused Loze of fraud and illegal conduct out of malice.
In
either case, the qualified privilege as provided under KRS
304.47-050(8) would be unavailable to Key as a defense.
In summary, there is a genuine issue of material fact
with respect to whether Key’s accusations of fraud and illegal
conduct in the May 16, 1997, letter are privileged under KRS
304.47-050(8).
We accordingly reverse with respect to the trial
court’s granting of summary judgment regarding the statements
made by Key in his May 16, 1997, letter to the Department of
Insurance.
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For the foregoing reasons, we affirm in part, reverse
in part, and remand.
ALL CONCUR.
BRIEF FOR APPELLANT:
BRIEF FOR APPELLEE:
H. Douglas Rouse
Florence, Kentucky
Robert W. Kellerman
Frankfort, Kentucky
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