Rowe et al v. Bankers Life and Casualty Company et al, No. 2:2007cv01281 - Document 143 (D. Ariz. 2008)
Court Description: ORDER denying 138 Motion for Reconsideration but granting Defendants alternative Motion for Clarification to the extent set forth in this Order. FURTHER ORDERED directing Defendants to provide Plaintiffs with at least twenty-four months of coverage under their Policy. Signed by Judge Mary H Murguia on 9/15/08.(MAP)
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Rowe et al v. Bankers Life and Casualty Company et al 1 Doc. 143 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 10 11 12 13 14 15 16 Gloria A. Rowe by her Guardian ad Litem) ) Fred Rowe, and Fred Rowe, ) ) Plaintiffs, ) ) vs. ) ) Bankers Life and Casualty Company;) Falicia M. Stoller; and John Does 1) ) through 2, ) ) Defendants. ) ) No. CV 07-1281-PHX-MHM ORDER 17 18 Now pending before the Court is Defendants’ Motion for Reconsideration (Doc. 138) 19 of the Court’s July 1, 2008 Order (Doc. 129) granting Plaintiffs’ Motion for Partial Summary 20 Judgment (Doc. 96). 21 LEGAL STANDARD 22 Motions for reconsideration should be granted only in rare circumstances. Defenders 23 of Wildlife v. Browner, 909 F. Supp. 1342, 1351 (D. Ariz. 1995). Mere disagreement with 24 a previous order is an insufficient basis for reconsideration. See Leong v. Hilton Hotels 25 Corp., 689 F. Supp. 1572, 1573 (D. Haw. 1988). Nor is reconsideration to be used to ask the 26 court to rethink what it has already thought through. United States v. Rezzonico, 32 F. 27 Supp.2d 1112, 1116 (D. Ariz. 1998). Reconsideration is only appropriate if the district court 28 Dockets.Justia.com 1 “(1) is presented with newly discovered evidence, (2) committed clear error or the initial 2 decision was manifestly unjust, or (3) if there is an intervening change in controlling law.” 3 School Dist. No. 1J, Multnomah County v. ACandS, Inc., 5 F.3d 1255, 1263 (9th Cir. 1993). 4 DISCUSSION 5 I. 6 Defendants argue that the Court improperly construed disputed facts in favor of the 7 Plaintiffs. For example, Defendants contend, the Court disregarded the testimony of Falicia 8 Soller in which she stated that the policy was marketed and sold to the Rowes as a “short- 9 term care, limited benefit, convalescent care policy” and denied that the policy was ever 10 represented to the Rowes, prior to purchase, as providing a “lifetime” or “unlimited” benefit. 11 Defendants assert that whether the Rowes’ policy was ever represented, marketed, or sold 12 as a “long-term care insurance” policy and whether Mrs. Rowe is entitled to any additional 13 benefits is a dispute issue of material fact. 14 However, contrary to the Defendants contention, the way in which the policy was 15 marketed and sold to the Rowes is not a material fact. In its July 1, 2008 Order, the Court 16 found that the coverage provided under the policy falls squarely within the Arizona Revised 17 Statute’s definition of long-term care.1 A policy that meets the definition of long-term care 18 19 20 21 22 23 1 Mrs. Soller testified that the policy covers home health care or nursing home care, personal care benefits, custodial care, and even housekeeping. Dep. of Falicia Soller, October 19, 2007. As stated in the July 1, 2008 Order, the Arizona Revised Statute Section 20-1691 ¶ 8 defines “long-term care insurance” as a policy that provides the following coverage: 27 an individual or group insurance policy . . . advertised, marketed, offered or designed to provide coverage for each covered person on an expense-incurred, indemnity, prepaid or other basis for one or more necessary or medically necessary diagnostic, preventative, therapeutic, rehabilitative, maintenance, personal or custodial care services provided in a setting other than an acute care setting of a hospital . . . . Long-term care insurance also includes a policy . . . that provides for payment of benefits based on cognitive impairment or 28 -2- 24 25 26 1 insurance, as defined by Section 20-1691 of the Arizona Revised Statutes, as the policy does 2 here, is required to comply with Title 20 of the Arizona Revised Statutes. Title 20 states that 3 “[a] long term care policy shall provide coverage for at least twenty-four consecutive months 4 for each person covered.” A.R.S. § 20-1691.03(c). 5 Interpretation of insurance contracts is a question of law for this court to decide. 6 Benevides v. Arizona Property & Cas. Ins. Guar. Fund, 184 Ariz. 610, 911 P.2d 616, 619 7 (Ariz.App. 1995); Blue Ridge Ins. Co. v. Stanevich, 142 F.3d 1145 (9th Cir. 1998). The 8 Arizona Supreme Court decision St. Paul Fire & Marine Ins. Co. v. Gilmore, sets forth that 9 “[u]nder the operation of our statutes governing insurance, the type of policy is determined 10 by the type of coverage provided, not by the label affixed by the insurer . . . . The statutes are 11 part of every insurance policy and mandate that policies providing specific types of coverage 12 meet specific requirements.” 168 Ariz. 159, 812 P.3d 977, 983 (1991). 13 Thus, the Court finds that any dispute about the manner in which the policy was 14 represented, marketed or sold is not a material fact because the policy falls under the 15 definition of long term care. Long-term insurance policies are required to provide coverage 16 for at least twenty-four consecutive months for each person covered. A.R.S. § 20-1691. 17 Therefore, the Court is not persuaded to reconsider it’s July 1, 2008 Order with regard to its 18 19 20 21 22 23 24 25 26 loss of functional capacity. Long-term care insurance does not include any insurance policy that is offered primarily to provide basic medicare supplement coverage, basic hospital expense coverage, basic medical and surgical expense coverage, major medical expense coverage, disability income or related asset protection coverage, hospital confinement indemnity coverage, accident only coverage, specified disease coverage, specified accident coverage or limited benefit health coverage or riders to the insurance policy or a life insurance policy that accelerates the death benefit for terminal illness, medical conditions requiring extraordinary medical intervention or permanent institutional confinement, that provides the option of a lump sum payment for those benefits and in which the benefits or the eligibility for the benefits is not conditioned on the receipt of long-term care. 27 28 -3- 1 finding that the policy issued to the Rowes was a long-term care policy nor as to the fact that 2 the Rowes are entitled to at least twenty-four months of coverage. 3 II. 4 Defendants further request that the Court reconsider its finding with respect to the 5 “Restoration of Benefits” clause. Defendants assert that for the “Restoration of Benefits” 6 clause to be construed as a limitation, it must be assumed that the policyholder is entitled to 7 a “lifetime” or “unlimited” benefit. The Court disagrees. Because the policy is a long-term 8 care policy, which is required to provide at least twenty-four months of coverage, the 9 Restoration of Benefits improperly serves to limit the policy coverage. The Court will leave 10 it to a jury to decide whether the policy entitles Plaintiffs to more than twenty-four months 11 of coverage. 12 III. 13 Defendants additionally seek clarification of two aspects of the Court’s July 1, 2008 14 Order. First, Defendants contend that the Court declared that Restoration of Policy Benefits 15 clause does not conform to Arizona Administrative Code (“A.A.C.”) R20-6-1004(B)(2), but 16 the Court did not determine the consequences of the nonconformity. Second, Defendants 17 contend that because the Court found that the policy is contrary to the law and to public 18 policy, the policy should be found to be invalid, but the Court did not comment on whether 19 this finding, in fact, rendered the Policy void ab initio. The Court will address these two 20 topics in turn. 21 First the Court will address Defendants’ request with regard to the policy’s 22 nonconformity with A.A.C. R20-6-1004(B)(2). Defendants seek clarification as to the affect 23 of the Court finding that the Restoration of Policy Benefits clause2 does not meet the 24 25 26 2 The Restoration of Policy Benefits states as follows: 27 This policy’s Maximum Benefit for Any One Period of Expense will be fully restored when a Family Member has not required treatment or services covered 28 -4- 1 requirements of A.A.C. R20-6-1004(B)(2). Defendants ask whether the Court finds this 2 violation to invalidate the clause or whether it simply creates the potential for an 3 administrative action by the Department of Insurance. 4 Plaintiffs brought this action alleging breach of the duty of good faith and fair dealing, 5 negligence, malpractice, and several claims of fraud. Moreover, as Defendants noted in their 6 response to Plaintiffs’ motion for partial summary judgment, prosecution of a violation of 7 an Arizona Department of Insurance regulation such as A.A.C. R20-1004(B)(2) is left 8 exclusively to the discretion of the Arizona Department of Insurance. See e.g., Melancon v. 9 USAA Cas. Ins. Co., 174 Ariz. 344, 347, 849 P.2d 1374, 1377 (Ariz. Ct. App. Div. 2, 1992). 10 The Court stated in its Order that the violation of A.A.C. R20-6-1004(B)(2) is an 11 inappropriate limitation on benefits and granted summary judgment in Plaintiffs’ favor. As 12 such, the provision is invalid. Zuckerman v. Transamerica Ins. Co., 133 Ariz. 139, 144, 650 13 P.2d 441, 446 (1982) (finding that if a provision of an insurance agreement is found to take 14 advantage of a claimant with an inferior bargaining position, it may be found invalid). The 15 Court finds that Plaintiffs are entitled to at least twenty-four months of coverage under the 16 policy. A jury can decide whether Plaintiffs are entitled to more than twenty-four months 17 of coverage. 18 A.A.C R20-6-1004(B)(2), states as follows: 19 A long-term care insurance policy or certificate containing any limitations or conditions for eligibility . . . shall describe the limitations or conditions . . . in a separate paragraph of the policy . . . and shall label the paragraph “Limitations or Conditions on Eligibility for Benefits.” 20 21 22 23 24 27 under this policy for six consecutive months for the same cause or causes for which a previous Period of Expense began. If this policy includes the Annual Benefit Increase Option, as shown on the Schedule page, the amount restored will include any accumulated benefit increases provided as of the policy's last anniversary. 28 -5- 25 26 1 The Restoration of Policy Benefits at issue here did not meet the requirements set 2 forth under A.A.C. R20-6-1004(B)(2). It is not the intent of the Court to revise, modify, 3 alter, or extend the policy. 4 interpretation. See Benevides, 184 Ariz. 610, 911 P.2d at 619 (finding that interpretation of 5 insurance contracts is a question of law for this court to decide); see also Blue Ridge Ins. Co. 6 v. Stanevich, 142 F.3d 1145 (same). The policy falls within the statutory definition of long 7 term care. In Arizona, any long term care policy is required to provide at least twenty-four 8 months of coverage. Any clause, including the Restoration of Policy Benefits clause, that 9 limits Plaintiffs’ benefits to less than twenty-four months is contrary to the statutory 10 requirements for long term care. Accordingly, Defendants are directed to provide Plaintiffs 11 with at least twenty-four months of coverage. A jury can decide whether Plaintiffs are 12 entitled to coverage beyond the statutorily required twenty-four months. However, the Court is in a position to conduct policy 13 Second, Defendants seek clarification contending that if the policy is contrary to the 14 law and to public policy, the Court should have found the policy to be invalid and void ab 15 initio. It is well established that parties to an insurance agreement may contract for any 16 lawful coverage, and that an insurance company has the right to limit its liability by imposing 17 conditions and restrictions on its contractual obligations; however, these conditions and 18 restrictions may not be inconsistent with public policy. Kepner v. Western Fire Ins. Co., 109 19 Ariz. 329, 330, 509 P.2d 222, 223 (1973). If a provision of an insurance agreement is found 20 to take advantage of a claimant with an inferior bargaining position, it may be found invalid. 21 Zuckerman v. Transamerica Ins. Co., 133 Ariz. 139, 144, 650 P.2d 441, 446 (1982). Thus, 22 “where the conditions do no more than provide a trap for the unwary, the insurer will be 23 estopped to raise them.” Id. 24 The Court reiterates its finding in its July 1, 2008 Order that limiting the terms of the 25 Rowes’ policy to anything less than twenty-four months is in violation of State law. The 26 Court does not find that invalidating the policy clauses that are contrary to public policy 27 renders the policy void ab initio. In fact, Defendants include a clause in the policy stating 28 -6- 1 that the policy shall be read to comply with state statute. The Restoration of Policy Benefits 2 policy provision here appears to take advantage of the Plaintiff’s inferior bargaining position. 3 This provision could prove a trap for the unwary, therefore, the insurer will be estopped from 4 relying on it here. 5 In Defendants’ conclusion section they ask that the Court de-publish its ruling until 6 Defendants have exercised all of their appeal options. The Court has not acted to request 7 publication of its Order granting Plaintiffs’ Motion for Partial Summary Judgment. 8 Accordingly, 9 IT IS ORDERED denying Defendants’ Motion for Reconsideration but granting 10 Defendants’ alternative Motion for Clarification (Doc. 138) to the extent set forth in this 11 Order. 12 13 14 IT IS FURTHER ORDERED directing Defendants to provide Plaintiffs with at least twenty-four months of coverage under their Policy. DATED this 15th day of September, 2008. 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -7-
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