Luningham v. Arkansas Poultry Fed'n Ins. Trust

Charles LUNINGHAM v. ARKANSAS POULTRY
FEDERATION INSURANCE TRUST

CA 95-750                                          ___ S.W.2d ___

                  Court of Appeals of Arkansas
                           Division I
                 Opinion delivered May 22, 1996


1.   Judgment -- summary judgment -- when properly granted. -- 
     Summary judgment should be granted only when a review of the
     pleadings, depositions, and other filings reveals that there
     is no genuine issue regarding any material fact, and the
     moving party is entitled to judgment as a matter of law; in
     considering a motion for summary judgment, the court may also
     consider answers to interrogatories, admissions, and
     affidavits; when the movant makes a prima facie showing of
     entitlement, the respondent must meet proof with proof by
     showing a genuine issue as to a material fact; summary
     judgment is not proper where evidence, although in no material
     dispute as to actuality, reveals aspects from which
     inconsistent hypotheses might reasonably be drawn and
     reasonable minds might differ.

2.   Judgment -- summary judgment -- factors on review. -- 
     In an appeal from the granting of summary judgment, facts are
     reviewed in the light most favorable to the appellant, and any
     doubt is resolved against the moving party; on review, the
     appellate court need only decide if the granting of summary
     judgment was appropriate based on whether the evidentiary
     items presented by the moving party in support of a motion
     left a material question of fact unanswered.

3.   Contracts -- modification of -- determination as to whether
     modification has taken place a question of fact for
     chancellor. -- Both parties must agree to the modification of
     a contract and to the terms of modification; any parties who
     can make a contract can rescind or modify it by mutual
     consent; if they are capable of making the contract in the
     first instance, they may by mutual consent modify it in any
     manner; whether there has been a modification is a question of
     fact for the chancellor.

4.   Insurance -- group policy -- contract between employer and
     insurer not employee and insurer. -- Arkansas law contemplates
     that a group insurance policy is a contract between the
     employer and the insurer and not a contract between the
     employee and the insurer.

5.   Insurance -- group policy existed -- appellee not required to
     obtain appellant's agreement before making modifications. --
     Where it was clear that the parties to the 1981 plan, appellee
     and the federation, agreed to modify the plan, appellee
     insurer was not required to obtain appellant's agreement
     before putting such modifications into effect; appellant was
     only a plan participant.

6.   Judgment -- appellee failed to make prima facie showing of
     entitlement to judgment -- summary judgment reversed and
     remanded. -- Where, from a review of the record, it was not
     possible to determine precisely how appellee applied the terms
     of the modified plan to deny each expense claimed by
     appellant, appellee failed in its initial burden of making a
     prima facie showing of entitlement to judgment as a matter of
     law, and the summary judgment was reversed and remanded for
     trial on this issue.

7.   Attorney & client -- attorney no longer represented party --
     attorney's affidavit was properly considered by trial court. -
     - An attorney for a party cannot testify in person or give
     such testimony by affidavit; where an attorney who had
     represented appellee in this proceeding, but who, at the time
     he signed the affidavit in support of the motion for summary
     judgment, no longer represented appellee in the proceeding,
     his affidavit was properly considered by the court.  



     Appeal from Pope Circuit Court; John S. Patterson, Judge;
affirmed in part; reversed and remanded in part.
     John Harris, for appellant.
     John T. Hardin, for appellee.

     John Mauzy Pittman, Judge.*ADVREP*CA2*                DIVISION I    




                                       CA 95-750
                                        
                                                     May 22, 1996      



CHARLES LUNINGHAM                    AN APPEAL FROM POPE COUNTY
                 APPELLANT           CIRCUIT COURT
                                     NO. CIV94-281                    
VS.
                                     HONORABLE JOHN S. PATTERSON,
ARKANSAS POULTRY FEDERATION          CIRCUIT JUDGE
INSURANCE TRUST
                 APPELLEE            AFFIRMED IN PART;
                                     REVERSED AND REMANDED IN PART






                      John Mauzy Pittman, Judge.

     Charles Luningham has appealed from the entry of summary
judgment for appellee, Arkansas Poultry Federation Insurance Trust,
in this action to recover medical benefits.  We affirm in part and
reverse and remand in part.
     Appellant is a poultry grower and has been a member of the
Arkansas Poultry Federation for many years; as a member, he has
been able to participate in a group health benefit plan that the
federation obtained from appellee.  In 1994, appellant incurred
medical bills totalling more than $50,000.00.  Appellee paid more
than $24,000.00 and denied the balance of appellant's claim. 
Appellant then sued appellee.  He stated in his complaint that,
although he did not have a copy of his benefit plan, he believed
that his coverage was the same as that shown on a brochure labelled
Exhibit "A" to appellant's complaint, which set forth the terms of
appellee's Producer Option Health Plan.  Appellant alleged in his
complaint that, under the terms of that plan, appellee owed him
$24,573.17.
     In its answer, appellee denied that it owed appellant any
money or that appellant had coverage under the Producer Option
Health Plan.  It admitted, however, that, "at various times, the
[appellant] has been a member of the [appellee's] group plan."  In
appellee's answers to interrogatories, it stated that appellant had
had various policies with appellee over the years and that the plan
became self-funded in 1981.  Appellee stated that, as shown in
Exhibit "A" to the answers to interrogatories, Don Weeks, senior
vice president of the plan's administrator, Fewell & Associates,
Inc., sent a letter on July 26, 1991, to the insured poultry
producers, including appellant, announcing changes in the plan's
benefits.  Appellant also attached as Exhibit "B" to the answers to
the interrogatories the plan booklet reflecting the benefits as
announced in the July 26, 1991, letter.  Appellee stated that these
items were furnished to appellant.  
     In Interrogatory No. 2, appellant asked the following:  "What
material changes, either in benefits or premiums, have been made to
[appellant's] original policy with said [appellee]?  Please attach
copies of each and every said material change made to [appellant's]
policy or plan aforementioned."  Appellee objected to this
interrogatory and referred appellant to Exhibits "A" and "B." 
Appellee asserted that the changes noted in Exhibits "A" and "B"
were in effect at the time of appellant's loss in 1994.  Appellee
also objected to appellant's request for copies of every notice
sent to him about material changes in the plan.  In its answers to
interrogatories, appellee stressed that appellant was not covered
by the Producer Option Health Plan and had never applied for
coverage thereunder.  In its answers to Interrogatories Nos. 12 and
13, appellee discussed why it had determined certain expenses to be
ineligible for coverage.  
     On December 1, 1994, appellant moved for an order compelling
appellee to answer Interrogatories Nos. 1, 2, 3, 4, 5, and 13.  On
December 13, 1994, Randy Coleman was relieved as counsel for
appellee, and John Hardin was substituted as its counsel.  
     On April 4, 1995, appellee moved for summary judgment. 
Appellee argued that appellant was a participant in the 1981
Growers Health Benefit Plan and that, although he was notified that
he could apply for coverage under the Producer Option Health Plan,
he had never applied for benefits thereunder.  Appellee further
argued that appellant's claims in the complaint were not covered by
the 1981 plan.  In support, appellee attached the affidavit of
Randy Coleman, who stated that, since January 1, 1981, appellant
has been a participant under the 1981 Growers Health Benefit Plan,
which has been modified from time to time.  He also stated that
this plan is between the Arkansas Poultry Federation as sponsor and
appellee as provider and that appellee and the federation have
agreed to changes in the terms of the plan; as a participant,
appellant was subject to these modifications.  He stated that
appellant never applied for health benefits under the Producer
Option Health Plan and that the claims for which this suit was
brought were not covered by the 1981 plan.  Attached to this motion
were copies of the apparently unmodified 1981 plan and a letter
from Fewell & Associates to the self-employed poultry producers in
1990 offering the Producer Option Health Plan.
     In response, appellant argued that he had never received
notice of the Producer Option Health Plan and that, if he had, he
would have applied for that coverage.  Additionally, appellant
argued that he had never agreed to and had never been notified of
any major benefit modifications of the 1981 plan.  In his affidavit
attached to his response, appellant stated:
          4.  There is not much difference in the premiums for
     the two plans; I understand it's only about $35.00 a
     month, and if I had known I could have the 1991 plan, I
     would have applied for it if it is a better plan, but I
     didn't even know it existed until after I had my heart
     attack when the defendant wouldn't pay some of my claims. 
     I should have the coverage they sold to me and the
     coverage I've paid for all these many years, and they
     should have given me the opportunity to apply for the
     1991 plan if it is better than the 1981 plan that the
     defendant says I still have, but either policy should pay
     more than what's been paid.

          5.  Mr. Coleman also says they have made changes in
     my benefits, but they didn't tell me about any changes
     and I never got any letters or anything letting me know
     about any changes; I wouldn't have agreed to them
     changing my coverage to something less than what I have
     had in the past and what I have been paying good money
     for ever since the `sixties.  I never agreed to less
     benefits, and I would have gotten other insurance
     somewhere else if they had told me they were going to
     give less benefits, but they never told me.  They used to
     have just one policy and it had good benefits, but they
     say they now have two policies, so the new one must have
     better benefits since the premium is higher than the
     other one which they say I still have; but they never let
     me apply for the new one, and this is not right for them
     to tell me I can't have the new one since I didn't apply
     for it.  I didn't apply for it because I couldn't apply
     for it since I didn't know they had it.

          6.  The plan that I bargained for and paid insurance
     premiums for all these many years should cover all of the
     items I am now claiming in my complaint, whether it is
     the 1981 plan or the 1991 plan.  Under the 1981 plan,
     which the insurance company says I now have, I would have
     to pay $2100.00 of my medical expenses due to my heart
     attack and the defendant should pay the balance.  My
     total expenses were $50,995.84, my part would be $2100.00
     and the defendant's part would be $48,895.84.  They have
     only paid $24,152.67, so they owe me $24,743.17 even
     under the 1981 plan which they insist I still have.

     At the hearing on the motion for summary judgment, appellant
argued that, under basic principles of contract law, appellee could
not modify the insurance contract without notifying appellant and
without obtaining appellant's agreement.  He also argued that
whether and how the parties had actually modified the policy and
whether his claims were covered under it were questions of fact. 
     Appellant further argued that, because Mr. Coleman had served
as counsel for appellee, the court should not consider his
affidavit in support of the motion for summary judgment.  The trial
judge noted that Mr. Coleman wrote the affidavit a few months after
being removed as counsel and held that his affidavit could properly
be considered.  On April 20, 1995, the circuit judge entered
summary judgment for appellee.
     Summary judgment should be granted only when a review of the
pleadings, depositions, and other filings reveals that there is no
genuine issue as to any material fact, and the moving party is
entitled to judgment as a matter of law.  Johnson v. Harrywell,
Inc., 47 Ark. App. 61, 885 S.W.2d 25 (1994).  In considering a
motion for summary judgment, the court may also consider answers to
interrogatories, admissions, and affidavits.  Muddiman v. Wall, 33
Ark. App. 175, 803 S.W.2d 945 (1991).  When the movant makes a
prima facie showing of entitlement, the respondent must meet proof
with proof by showing a genuine issue as to a material fact. 
Johnson v. Harrywell, Inc., 47 Ark. App. at 63.  In an appeal from
the granting of summary judgment, we review facts in the light most
favorable to the appellant and resolve any doubt against the moving
party.  Id.  Summary judgment is not proper where evidence,
although in no material dispute as to actuality, reveals aspects
from which inconsistent hypotheses might reasonably be drawn and
reasonable minds might differ.  Id.  On appellate review, we need
only decide if the granting of summary judgment was appropriate
based on whether the evidentiary items presented by the moving
party in support of a motion left a material question of fact
unanswered.  Id.
     Appellant argues that the circuit judge erred in holding that
appellee could unilaterally, without consent from or notice to
appellant, modify the terms of the 1981 plan.  Appellant argues
that, since appellee is exempt under Ark. Code Ann.  23-61-502
(Repl. 1994) from the requirements of the Arkansas Insurance Code,
the basic rules of contract law, which require both parties to
agree to a modification of a contract, apply.  It is true that both
parties must agree to the modification of a contract and to the
terms of modification.  Moss v. Allstate Ins. Co., 29 Ark. App. 33,
776 S.W.2d 831 (1989).  Accord Leonard v. Downing, 246 Ark. 397,
438 S.W.2d 327 (1969).  In Afflick v. Lambert, 187 Ark. 416, 418-
19, 60 S.W.2d 176, 177 (1933), the court stated:  
          It is ... a well-settled rule of this court that any
     parties who can make a contract can rescind or modify it
     by mutual consent.  If they are capable of making the
     contract in the first instance, they may by mutual
     consent modify it in any manner.

          .... 

          Whether there was a modification ... was a question
     of fact for the chancellor.

See also Askew Trust v. Hopkins, 15 Ark. App. 19, 688 S.W.2d 316
(1985).  
     Here, there is no case directly on point.  However, as
appellee points out, the group health agreement is between the
Arkansas Poultry Federation and appellee; appellant is simply a
plan participant.  Appellee argues, therefore, that appellant's
reliance on general principles of contract law is misplaced and
points out that a similar issue arose in Neely v. Sun Life
Assurance Co. of Canada, 203 Ark. 902, 159 S.W.2d 722 (1942). 
There, the supreme court held that a group policy can be canceled
by mutual agreement of the insurer and the employer because it is
a third-party beneficiary contract; the employee, who pays a part
of the premium, will be bound by their action.  Accord Clapp v. Sun
Life Assurance Co. of Canada, 204 Ark. 672, 163 S.W.2d 537 (1942). 
In Hendrix v. Republic National Life Insurance Co., 270 Ark. 955,
959, 606 S.W.2d 601, 603 (Ark. App. 1980), we stated:  "Arkansas
law contemplates that a group insurance policy is a contract
between the employer and the insurer and not a contract between the
employee and the insurer...." 
     Here, there is no dispute that the parties to the 1981 plan,
appellee and the federation, agreed to modify the plan.  Therefore,
we do not believe that appellee was required to obtain appellant's
agreement before putting such modifications into effect.
     Appellant further argues that whether the purported modifica-
tions to the 1981 plan exclude all of his claimed expenses is a
question of fact.  Appellant points out that, in its answer to
Interrogatory No. 13, appellee only stated that an amount of
$11,381.30 was ineligible.  Appellant argues that his claim for an
additional $13,157.87 has not even been addressed by appellee. 
Appellant also argues that, on its face, the 1981 plan provides
such coverage.  (Appellee apparently attached a copy of the
original 1981 plan to its motion for summary judgment.  However, it
attached a copy of the modified 1981 plan to its answers to
interrogatories.)  Appellant contends that whether these modifica-
tions exclude all of his claims are questions of fact that should
have been tried.  Appellee responds that appellant failed to raise
the issue of how the benefits were actually calculated to the trial
court.  Although the 1991 letter from Mr. Weeks explains the
modifications to the 1981 plan, we do not believe that appellee
proved that, as a matter of law, all of appellant's claims are
excluded from coverage.  In fact, from our review of the record, it
is not possible to determine precisely how appellee applied the
terms of the modified plan to deny each expense claimed by
appellant.  We therefore hold that appellee failed in its initial
burden of making a prima facie showing of entitlement to judgment
as a matter of law and that the summary judgment must be reversed
and remanded in part for trial on this issue.
     Additionally, appellant has raised the issue of whether it was
proper for Mr. Coleman to sign an affidavit in support of the
motion for summary judgment because he had acted as counsel for
appellee.  In Bishop v. Linkway Stores, Inc., 280 Ark. 106, 655 S.W.2d 426 (1983), the supreme court stated that an attorney for a
party cannot testify in person or give such testimony by affidavit. 
Accord McIntosh v. Southwestern Truck Sales, 304 Ark. 224, 800 S.W.2d 431 (1990).  However, at the time he signed the affidavit,
Mr. Coleman no longer represented appellee in this proceeding.  We
agree with the circuit judge that his affidavit could be properly
considered by the court.  
     Affirmed in part; reversed and remanded in part.
     Stroud and Neal, JJ., agree.