Blue Shield of California Life & Health Insurance v. Superior Court
120 Cal. Rptr. 3d 713
Cal. Ct. App.2011Background
- Kawakita sued Blue Shield in July 2009, alleging breach of contract, tortious bad faith, and declaratory relief over Blue Shield's August 2006 rescission after discovery of misstatements in her application.
- Blue Shield rescinded primarily due to height/weight discrepancies and other undisclosed health problems revealed in Kawakita’s records.
- Kawakita alleged Blue Shield initially authorized the gastric bypass but later canceled the policy, making the denial of coverage the core issue.
- Section 10350.11 requires three years to sue on a health policy based on written proofs of loss; Blue Shield argued this only applies to contract claims, not tort claims.
- The trial court held the policy language was identical to § 10350.11, thus limiting tort claims as well; Blue Shield sought a writ directing reversal.
- The court held Blue Shield drafted a more favorable three-year limitation provision that extended to tortious bad faith claims, and denied the petition.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does § 10350.11 extend to tortious bad faith claims? | Kawakita argues § 10350.11 governs time to sue on the policy, extending to tort claims. | Blue Shield argues § 10350.11 is contractual and does not extend to tort claims; torts remain two years. | Section 10350.11 does not govern tort claims for Blue Shield; the policy language expands three-year limit. |
| Whether Blue Shield’s three-year provision applies to Kawakita’s tortious bad faith claim. | Kawakita contends the policy’s three-year trigger runs from denial of coverage and covers tort claims arising from plan. | Blue Shield contends the three-year limit is only for contract claims or those arising under § 10350.11. | The policy language may be interpreted to provide three years for tortious bad faith as well. |
| What interpretation governs the policy language when it diverges from statutory wording? | Ambiguities should be construed in Kawakita’s favor as a lay reader would. | If language mirrors § 10350.11, contract-interpretation rules apply. | Ambiguities resolved in insured’s favor; policy language read to include three-year period for arising claims. |
Key Cases Cited
- Wetzel v. Lou Ehlers Cadillac Group Long Term Disability Ins. Program, 222 F.3d 643 (9th Cir. 2000) (policy provisions under § 10350.11 treated as contractual limitations separate from statutes)
- NN Investors Life Ins. Co. v. Superior Court, 208 Cal.App.3d 1070 (Cal. App. 3d 1989) (policy language under § 10350.11 discussed in context of tort vs contract claims)
- Flynn v. Paul Revere Ins. Group, 2 Fed.Appx. 885 (9th Cir. 2001) (held tortious bad faith claim subject to statutory two-year period and contractual three-year provision may not save claim)
- Heighley v. J. C. Penney Life Ins. Co., 257 F.Supp.2d 1241 (C.D. Cal. 2003) (contractual three-year provision did not extend two-year statute for tort claims when inconsistent)
- 20th Century Ins. Co. v. Superior Court, 90 Cal.App.4th 1247 (Cal. App. 4th 2001) (fire policy § 2071 limitations treated as statute of limitations for interpretation)
- Frazier v. Metropolitan Life Ins. Co., 169 Cal.App.3d 90 (Cal. App. 3d 1985) (tort actions in life policies historically considered on the policy for purposes of limitations)