PLAINTIFF’S BRIEF IN RESPONSE TO DEFENDANTS’ BRIEF IN SUPPORT OF THEIR MOTION TO DISMISS
Plaintiff files this Brief in response to Defendants’ Brief in Support of their Motion to Dismiss Plaintiff’s First Amended Complaint (Doc. 10) and states as follows:
Plaintiff is a beneficiary to the Defendant’s Insurance Policy. Although Defendants fully accepted her status as a beneficiary and Plaintiff herself made the payments on the policy, she was not paid any benefits under the policy; instead they went to her ex-husband. Defendants’ Brief mischaracterizes the nature of this action by likening it either to a claim for life insurance benefits or a claim as an insured. However, Plaintiff is bringing this action as a beneficiary. The right to the payment of benefits was triggered by the insured getting cancer.
II. STATEMENT OF FACTS
Defendants rely upon both Plaintiff’s First Amended Complaint and on documents not attached to the complaint. Additional documents, some not filed by the Defendants with their Brief, are also relevant to the proper adjudication of this matter.
A. Facts Alleged In the Complaint and Taken As True
Because Defendants have moved pursuant to Rule 12(b)(6) for dismissal, the allegations of Plaintiffs’ First Amended Complaint must be taken as true. Some of the essential facts noted therein are as follows.
The First Amended Complaint alleges that Plaintiff was the beneficiary of a Cancer Policy. See Doc. 2, Paragraph 4. If Hershel Brewster was diagnosed with cancer, Defendants would pay cash benefits; however his death was not required under the Cancer Policy for the payment of benefits. See Doc. 2, Paragraphs 5 and 6. By the express terms of the Cancer Policy, the amounts due under the policy are determined in large part by the medical bills incurred by the insured. However, these cash benefits could be used by the beneficiaries for any purpose—they did not have to actually be used to pay the medical bills. Id.
The Cancer Policy was amended by both Plaintiff and Defendants to include Plaintiff as a beneficiary (via a “Beneficiary Change Form,” aka “Policyowner Service Request”). Id. Paragraphs 7 and 8. Defendants fully accepted both 1) the fact that Plaintiff became a beneficiary, and 2) that the Policyowner Service Request amended the terms of the Cancer Policy. Id. Paragraphs 9 and 10. Pursuant to the Cancer Policy, as amended by the Beneficiary Change Form, benefits were payable directly to the beneficiaries upon the insured (Mr. Brewster) getting cancer. Id. Paragraph 15. Plaintiff was a beneficiary since 2007 and, although the insured got cancer, Plaintiff was not paid any benefits. Id. Paragraphs 17 and 19.
B. Facts Outside the Four Corners of the Complaint
Documents Defendants recently produced have added additional facts to this matter—and additional questions. As reflected in the attached Exhibit 1, Defendants sent a letter to Hershel Brewster in response to his “request on the referenced policy.” According to paragraph 2 of that letter, it instructs Mr. Brewster on how to “designate a new beneficiary” under the policy (emphasis supplied). The document attached hereto as Exhibit 2 is presumably the Beneficiary Change Form referenced in Plaintiff’s complaint—a document actually (and more appropriately) titled “Policyowner Service Request.” Signed by Hershel Brewster, this “Service Request” named Plaintiff as a beneficiary beginning from February 2, 2007.
The attached Exhibit 2 (Policyowner Service Request) provides numerous provisions which supplement the Cancer Policy. For example, the following language “revoke[s] the existing settlement elections”:
I hereby revoke the existing settlement elections, if any, and request the Company to change the beneficiary under the above numbered policy as follows: First Beneficiary: Bonnie E. Cordell Brewster (emphasis supplied).
The document attached hereto as Exhibit 3 states that Defendants received the Policyowner Service Request and “have updated our records accordingly.” That same letter states the following: “Enclosed is an endorsement verifying the change. Please attach the endorsement to the policy as a permanent record.”
Although Exhibit 3 clearly references an “Enclosed endorsement,” and although it states at the bottom left that there is an “Enclosure,” Defendants have not provided the Enclosure. This missing endorsement will be the subject of discovery in this case.
C. Missing or Concealed Information Preclude Dismissal at this Early Stage.
The attached Exhibits 1 and 3 are not the only documents Defendants did not file while requesting early dismissal of this action. Notably, in making its “original Motion to Dismiss” (filed in State Court), Defendants refused to attach Exhibit 2 (the Policyowner Service Request) to that Motion. Moreover, Defendants had failed to produce the Policyowner Service Request to Plaintiff in the State Court litigation. The first time Defendants produced it was when they filed it as an exhibit to their “Brief” in support of their State Court Motion to Dismiss, although it had been specifically requested in discovery exchanged in State Court.
Additionally, Plaintiff made the payments under the Cancer Policy and kept those payments current. She eventually became divorced from Mr. Brewster. Other information, such as the fact that Plaintiff paid the premiums on the Cancer Policy, accompany the apparently undisclosed “Enclosed endorsement” to Exhibits 3 and preclude dismissal.
Defendants make two primary arguments for early dismissal of this case. First, Defendants claim that only Central United Life Insurance Company is a proper Defendant. This claim though is opposite to 1) documents Plaintiff has in her possession, 2) Defendants’ own sworn declaration filed in connection with this case, and 3) Defendant’s initial discovery responses.
Second, Defendants claim that Plaintiff cannot sue because she does not “claim to be an ‘insured person’ under the policy.” However, under Florida law beneficiaries can maintain an action for breach of contract against insurers over the nonpayment of benefits.
A. Central United Life Insurance Company is not the only proper Defendant.
Defendants, such as the Manhattan Insurance Group, claim they have been improperly sued and seek dismissal. However, as referenced in the attached Exhibits 1 and 3, Defendants Central United Life, Central United Life Insurance Company, and Manhattan Insurance Group are all on the same letters to Plaintiff granting her status as a beneficiary.
Adding to the puzzle, while this matter was pending in State Court, Plaintiff served the following interrogatory and received the following verified response:
Interrogatory No. 2: Identify any persons or entities whom You contend are persons needed for just adjudication of this matter, but who have not been named by Plaintiff.
Answer to Interrogatory No. 2: Central United specifically incorporates and asserts its general objections. Subject to the foregoing general objections, Central United states that discovery is ongoing in this case and it has not yet determined whether other persons or entities should be joined in this matter. Central United expressly reserves its right to amend this response, as necessary.
(emphasis supplied); See the complete Interrogatories and Answers attached hereto as Exhibit 4.
Moreover, Defendants have admitted under oath in this case that they are all “affiliated.” See Doc 11-4. They all have the same counsel and share an obvious relation to one another. This relationship between these “affiliated” parties has never been explained; along with the fact that they share the same letterhead sent to the insured regarding his instructions to make Plaintiff the beneficiary.
Finally, none have provided statements (sworn or otherwise) that they were not either insurers and/or service providers of the Cancer Policy at issue. None have explained why their names are on the letters attached hereto as Exhibits 1 and 3. The interrogatory answers attached hereto as Exhibit 4 have not been amended, despite supposedly reserving that right and declaring that “discovery is ongoing”. Although Defendants themselves claim to need additional discovery to determine who are proper parties, they are seeking dismissal of their affiliated companies without any explanation of each company’s role in this matter.
B. Plaintiff may bring a breach of contract action as a beneficiary under the Cancer Policy.
There is no dispute that Plaintiff is a beneficiary under the Cancer Policy. The attached Exhibits 1, 2 and 3 unquestionably prove that she was made a beneficiary, and that this change was accepted by Defendants. Moreover, Exhibit 2 (the Policyholder Service Request) states that the election of Plaintiff as a beneficiary “revoke[s] the existing settlement elections” as per the Cancer Policy. Exhibit 2 was executed by both the insured (Mr. Brewster, Plaintiff’s ex-husband) and Defendants. Furthermore, Exhibit 3 proves that the change was “endorsed” by Defendants. The Defendants even requested that the “endorsement” be attached to “the policy as a permanent record.” Id.
- All Provisions of the Policyowner Service Request Must be Given Meaning and Effect.
When considering the meaning and effect of the Policyowner Service Request, all of the provisions of that form and the Cancer Policy must be considered. Swire Pac. Holdings v. Zurich Ins. Co., 845 So. 2d 161, 166 (Fla. 2003) (courts should “avoid simply concentrating on certain limited provisions to the exclusion of the totality of others”). Moreover In Wash. Nat’l Ins. Co. v. Ruderman, No. SC12-323 (Fla. Jul. 3, 2013)1, the Florida Supreme Court held that ambiguities must be strictly construed against the insurer and in favor of coverage, without resort to extrinsic evidence. If a provision is susceptible to more than one reasonable interpretation, the policy must be construed in favor of coverage and against the drafter who muddled the language. Id. The court concluded that Florida insurance law supports a strict rule against insurers that precludes the use of extrinsic evidence to clarify ambiguous policy language. Id.
i. The Policyowner Service Request revokes the elections of the Cancer Policy.
Exhibit 2, the Policyowner Service Request, makes it clear that Mr. Brewster (the insured and Plaintiff’s ex-husband) revoked certain portions of the Cancer Policy in favor of Plaintiff. That provision states as follows:
I hereby revoke the existing settlement elections, if any, and request the Company to change the beneficiary under the above numbered policy as follows: First Beneficiary: Bonnie E. Cordell Brewster (emphasis supplied). The effect of this provision is, by its plain terms, to revoke the language of the Cancer Policy as to the settlement elections (i.e. payment to the insured) and change the beneficiary of the policy to Plaintiff.
Defendants’ Brief ignores the above pivotal language. Although Plaintiff is not named in the Cancer Policy and the Cancer Policy’s language states that the payments will go to the insured, those “existing settlement elections” were indisputably revoked. Instead, the Policyowner Service Request created a new person to benefit from the Cancer Policy – the beneficiary (i.e. Plaintiff).
Exhibit 3 makes it clear that Defendants received the Policyowner Service Request and “have updated [their] records accordingly.” It requested that an endorsement reflecting the change be attached “to the policy as a permanent record.” Thus, the terms made by the Policyowner Service Request amended the rights and obligations of the Cancer Policy.
ii. The language of the Policyholder Request Form relied on by Defendants is inapplicable.
Defendants have attempted to liken this matter to a life insurance policy, insuring the life of Mr. Brewster. However, this is a Cancer Policy; Mr. Brewster’s death is not a triggering event to the payment of benefits. His death is not relevant to the payment of benefits.
In support of Defendants’ attempt to treat the Cancer Policy as a life insurance policy, Defendants rely on the following language of the Policyowner Service Request in their Brief:
It is understood and agreed that, unless otherwise directed, proceeds will be paid in equal shares to any first beneficiaries who survive the insured, but if none survives, proceeds will be paid in equal shares to any contingent beneficiaries who survive the insured.
(emphasis supplied). Defendants interpret the above language as meaning that Plaintiff would only be paid proceeds of the Cancer Policy after Mr. Brewster died.
However, the stated purpose of this provision is to govern the relationship between the “first beneficiaries” and the “contingent beneficiaries” in the event the insured dies from the cancer. It does not address or limit the payment of benefits prior to the death of the insured. It does not limit or otherwise describe the amount of the proceeds it references.
Another interpretation of the above provision is that all of the insurance proceeds would only be paid to the beneficiaries once the insured dies. The language states that “proceeds will be paid” to beneficiaries that survive the insured. It does not state, nor does it limit, which proceeds are referenced. Under that interpretation, Plaintiff is still due the benefits payable under the policy because the insured did die, Plaintiff survived him, and there are no other beneficiaries for her to split the proceeds with. This interpretation is equal to or more reasonable than that advanced by the Defendants.
The Florida Supreme Court recognized the ability of insurers to limit their liability in insurance policies. “However, the insurance company has a duty to do so clearly and unambiguously.” Ruderman, No. SC12-323 (Fla. Jul. 3, 2013). The above referenced provision does not limit either the rights of the Plaintiff or the proceeds it references in a manner that is clear and unambiguous. In fact, it has no limiting language at all.
Clearly, the Plaintiff is due benefits from all of the proceeds paid under the above provision. At a minimum, this provision is both unclear and ambiguous – as if it were actually meant for a life insurance policy. The provision has very limited application to a Cancer Policy because many or all of the payments made under Cancer Policies occur before the insured dies (i.e., when the insured gets cancer). At the very least, the Cancer Policy (read as a whole and as modified by the Policyholder Request Form), is ambiguous regarding the rights of beneficiaries either 1) in the event the insured doesn’t die or 2) prior to the insured’s death. Ambiguities are to be decided in favor of the insured and against the insurer. See In Wash. Nat’l Ins. Co. v. Ruderman, No. SC12-323 (Fla. Jul. 3, 2013). Florida law requires that any such provisions that are susceptible to more than one reasonable interpretation be construed in favor of Plaintiff and against the drafter who muddled the language (the Defendants). See Id.; See also Taurus Holdings, Inc. v. U.S. Fid. & Guar. Co., 913 So. 2d 528, 532 (Fla. 2005).
iii. The plain meaning of the term “beneficiary”
“Under Florida law, insurance contracts are construed according to their plain meaning.” Taurus Holdings, Inc. v. U.S. Fidelity and Guar. Co., 913 So.2d 528, 532 (Fla. 2005). Defendants chose to label Plaintiff as the “first beneficiary” in the Policyholder Service Request, without defining that term in the Cancer Policy. The term “beneficiary,” according to the dictionary2 has the following definitions3:
1. One that receives a benefit: I am the beneficiary of your generosity.
2. The recipient of funds, property, or other benefits, as from an insurance policy or will.
The plain meaning of Plaintiff being a beneficiary under the Cancer Policy can only mean that she is the “one that receives [the] benefit” or the “recipient of funds . . . as from an insurance policy.”
The Policyholder Request Form, and other documents attached hereto as Exhibits 1 and 2, indisputably make Plaintiff a “beneficiary”. This is a term chosen by Defendants to describe Plaintiff. Thus, once the payments under the Cancer Policy are triggered by Mr. Brewster getting cancer, Plaintiff (as beneficiary) should be the “one that receives [the] benefit.” By the express terms of the Cancer Policy, Plaintiff had the right to use the benefits for any purpose and was not required to use them to pay any medical bills. These payments are due upon the insured getting cancer, via the Cancer Policy’s express language – not upon his death.
iv. The term “beneficiary” is undefined and thus cannot be narrowly construed.
The term “beneficiary” (or “beneficiaries”) is not defined by the Cancer Policy. “[W]hen an insurer fails to define a term in a policy, …. the insurer cannot take the position that there should be a
narrow, restrictive interpretation of the coverage provided.' " State Comprehensive Health Ass'n v. Carmichael, 706 So.2d 319, 320 (Fla. 4th DCA 1997); see also State Farm Mut. Auto. Ins. Co. v. Pridgen, 498 So.2d 1245, 1247 n. 3 (Fla.1986); National Merchandise Co. v. United Serv. Auto. Ass'n., 400 So.2d 526, 530 (Fla. 1st DCA 1981).accident’ in a liability policy is not defined, the term …. encompasses not only
When a term is undefined and is susceptible to varying interpretations, the interpretation is construed against the insurance company. See e.g. State Farm Fire & Cas. Co. v. CTC Dev. Corp., 720 So.2d 1072, 1076 (Fla. 1998) ("[W]here the term
accidental events,' but also injuries or damage neither expected nor intended from the standpoint of the insured."). See also Fayad v. Clarendon Nat'l Ins. Co.ü, 899 So. 2d 1082, 1086 (Fla. 2005) (holding that "[a]mbiguous coverage provisions are construed strictly against the insurer that drafted the policy and liberally in favor of the insured"); Bankers Life & Cas. Co. v. Vadra, 563 So. 2d 200, 201 (Fla. 3d DCA 1990) (holding that insurance policies must be construed against the insurance company and in favor of the insured and insurance coverage).narrow, restrictive interpretation of the coverage provided.’ ” State Comprehensive Health, 706 So.2d at 320. The more broad, and actual Dictionary definition, of the term “beneficiary” must be applied.
In this case, the Defendants interpret the term “beneficiaries” as persons that survive the insured. However, the term could (at a minimum) also be interpreted to mean a person “that receives a benefit” from the insurance policy – as per the dictionary definition cited supra. Because the Defendants' interpretation of the term “beneficiary” is more restrictive than that of the dictionary definition, Florida law prohibits the Defendants'
The Cancer Policy itself uses the term “benefits” very broadly. For example, Page 7 of the Cancer Policy (filed as Doc. 10-1) provides a laundry list of “Benefit Amounts We Will Pay.” This list includes, but is not limited to: a Physical Service Benefit, a Radiation Therapy and Chemotherapy Benefit, and a Nursing Care Benefit. Page 6 of the Cancer Policy provides a chart of operation related “Benefit Amounts We Will Pay.” See also Pages 3, 4 and 5 of the Cancer Policy – all of which provide numerous “benefits” that would be incurred during the insured’s treatment for cancer. These would necessarily, by their own terms, be incurred during the life of the insured and are tied directly to the amounts of medial bills expended in treating the cancer.
v. The term “proceeds” also cannot be narrowly construed.
The Cancer Policy dictates that the proceeds are determined by the medical bills incurred by the insured for the treatment of his cancer. Defendants interpret the term “proceeds” to only those paid after the insured’s death in the following cause: “unless otherwise directed, proceeds will be paid in equal shares to any first beneficiaries who survive the insured, but if none survives, proceeds will be paid in equal shares to any contingent beneficiaries who survive the insured.”
However, this provision does not limit the proceeds in any manner. It does not say “proceeds paid after the insured died will be paid” – it only says proceeds. Moreover, reading this provision in conjunction with the Cancer Policy, the “proceeds” would necessarily be those amounts that become due while the insured is alive because the payments under the Cancer Policy are tied to the amount of medical bills the insured incurs while being treated for cancer.4
Once the insured dies, the proceeds payable under the Cancer Policy would stop being due. Because there would be no additional medical treatment once the insured dies (at least for cancer), the term proceeds would not logically be limited to those that become due after the insured’s death. Normally, as with the instant case, there would be no medical payments for the treatment of cancer after a person dies. Therefore, when read in conjunction with the Cancer Policy, the Policyholder Service Request’s usage of the term “proceeds” must (at a minimum) refer to the benefits paid while the insured is obtaining medical treatment – i.e. when he was alive.
vi. The Defendants’ meaning of the term “beneficiary” is wrong.
Plaintiff is indisputably a beneficiary under the Cancer Policy, and benefits were due under that policy because the insured indisputably got cancer. Despite the clear language and intent of the policy, the Defendants attempt to convince the Court that the undefined term “beneficiary” is someone that receives benefits only upon the death of the insured. Case law and other statutes demonstrate the fallacy of the Defendants’ argument.
For example, in ERISA § 3(8), 29 U.S.C. § 1002(8), The term “beneficiary” is defined as “a person designated by a participant, or by the terms of an employee benefit plan, who is or may become entitled to a benefit thereunder.” (e.s.). Thus, Defendants’ interpretation of the term “beneficiary” as only one that “may become entitled to a benefit thereunder” is both narrow and totally unsupported.
Likewise, in In re Ebenger, 40 B.R. 463 (Bankr.S.D.Fla.1984), the court explicitly rejected the same notion espoused by the Defendants. The court held as follows:
The term “beneficiary” is not a term of art necessarily restricted to those who receive a benefit upon the death of another (as the trustee argues here).
Defendants, thus, are wrong in their narrow interpretation of the term “beneficiary.” It is not a term of art, and it is not “necessarily restricted to those who receive a benefit upon the death of another.” See Id.
In In re Benedict, 88 B.R. 390 (Bankr.M.D.Fla.1988), Judge Proctor examined the exempt status of the proceeds of an annuity arising from a personal injury settlement. The court found as follows (emphasis supplied):
Even though Merrill Lynch is named as the designated owner under the First Colony annuity contract, it is clear from the settlement agreements that the debtor is the person for whom the annuity was purchased. Furthermore, she is the one who suffered the loss of her spouse and is the only person who needs the protection of the statute. As such, the debtor qualifies as a third party beneficiary under this statute and may preserve the proceeds for her own use, free and clear of the claims of her creditors.
Similar to In re Benedict, the Plaintiff is a beneficiary and is entitled to the proceeds from the policy – regardless of whether she was named the policy’s owner/insured.
- Beneficiaries Can Sue Without Being Insureds.
Plaintiff is an intended beneficiary under the Cancer Policy. Exhibits 1, 2 and 3 prove without a doubt that both Plaintiff and Defendants intended Plaintiff to be a beneficiary. The right of a beneficiary to sue under a contract is recognized in Florida. Security Mut. Cas. Co. v. Pacura, 402 So.2d 1266, 1267 (Fla. 3d DCA 1981), citing Wright v. Terry, 23 Fla. 160, 2 So. 6 (1887). Even third party beneficiaries have a right to sue. See e.g. Maxwell v. Southern American Fire Insurance Company, 235 So.2d 768 (Fla. 3d DCA 1970) (right of a third party beneficiary to bring an action directly against an insurer to recover under contractual provisions of medical payment coverages).
As made clear in Hanneman v. Guarantee Trust Life Ins. Co. (N.D. Fla. Case No 5.10cv115, Order Filed August 5, 2010), beneficiaries are entitled to the same “first party” status as insureds and can sue for breach of the failure to pay them benefits. In Hanneman, the court considered whether a beneficiary could sue for both breach of contract and bad faith. The court noted as follows:
Plaintiff is not a third party asserting a claim against the insured, Kilan Hochstetler. She is not the type of third-party beneficiary contemplated under the common law of third-party bad faith claims. Plaintiff’s claim is properly treated as a first-party bad faith claim subject to the requirements of § 624.155.
Thus, according to the rationale of Hanneman, Plaintiff has equal legal status to that of the insured. Moreover, even third party (or indirect) beneficiaries to insurance contracts are entitled to sue for benefits. Shingleton v. Bussey, 223 So.2d 713, 718 (Fla. 1969) (“Such a view is particularly warranted where as in the present case the injured party plaintiff is a nonconsenting party to the contract and derives standing as a third party beneficiary entitled to sue in a direct joint action to recover the benefits of the policy by virtue of operation of law.”)
Here, Defendant’s Brief reads as though Plaintiff is trying to sue as an insured. In reality, she is suing pursuant to her rights as a beneficiary. Florida law is clear that a beneficiary can sue an insurer for unpaid benefits.
“The term ‘beneficiary’ is not a term of art necessarily restricted to those who receive a benefit upon the death of another.” In re Ebenger, 40 B.R. 463 (Bankr.S.D. Fla. 1984). As the drafters of both the Cancer Policy and the Policyholder Service Request, interpreting the terms “beneficiary” and “proceeds” must be done “strictly against” the Defendants. Taurus Holdings, Inc. v. U.S. Fid. & Guar. Co., 913 So. 2d 528, 532 (Fla. 2005). Therefore, Plaintiff respectfully requests that Defendants’ Motion to Dismiss be denied.