Gold v. Rowland
156 A.3d 477
Conn.2017Background
- Anthem Insurance (an Indiana mutual) merged with Blue Cross of Connecticut (a Connecticut mutual) in 1997; merger documents included amended articles of incorporation (1997 articles), a guaranty policy, and an agreement to merge. The 1997 articles and the guaranty policy contemplated that certain Blue Cross policyholders or enrollees could receive membership rights in Anthem upon merger or in the event of a later demutualization.
- Connecticut (the state) held premerger Blue Cross group policies (e.g., Care Plus) and later obtained a 1999 fully insured group policy from New CT-Blue (a postmerger subsidiary). Many state enrollees under the 1999 policy were former Care Plus enrollees by default when Care Plus was terminated in 2000.
- Anthem demutualized in 2001–2002 and issued ~1.6 million shares to the state based on Anthem’s determination that the state (the group policyholder), not individual enrollees, were the eligible members entitled to proceeds; individual enrollees received nothing.
- Plaintiffs (state employees and retirees enrolled in the 1999 group policy) sued, alleging they were entitled to membership and a share of demutualization proceeds. After prior sovereign-immunity rulings, the breach-of-contract claims proceeded to trial against the insurer defendants; the trial court found the merger documents ambiguous and, consulting extrinsic evidence, ruled for defendants. Plaintiffs appealed.
- The Connecticut Supreme Court applied Indiana contract law (parties agreed Indiana law governs), held the merger documents (1997 articles, agreement to merge, guaranty policy, etc.) form a single integrated transaction, concluded the documents are ambiguous on whether individual enrollees under the 1999 policy became Anthem members, and affirmed the trial court’s judgment for defendants after finding extrinsic evidence supported the insurer defendants’ interpretation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the 1997 articles alone unambiguously made individual enrollees under the 1999 group policy members entitled to demutualization proceeds | Gold: §7.6(c)(1) plainly grants membership to holders of certificates under group policies originally issued by a qualified membership subsidiary after the merger; the 1999 policy was such a postmerger policy, so enrollees became members | Anthem: The 1997 articles must be read with the other merger documents; guaranty policy and agreement to merge support treating premerger group policyholders (the state) as the member and grandfathering their membership rights across replacement policies | Court: Documents are ambiguous when read together; not unambiguous in plaintiffs’ favor; affirmed trial court that considered extrinsic evidence |
| Whether the 1997 articles and other merger documents are part of a single agreement or whether some documents are extrinsic | Gold: 1997 articles govern membership and stand alone for interpretation | Anthem: The articles, agreement to merge, guaranty policy, and plan/joint agreement are interrelated, cross-referenced, and conditions of the merger and must be construed together | Court: They are part and parcel of the same transaction and properly construed together |
| If ambiguous, whether extrinsic evidence (drafting history, counsel testimony, regulatory filings, fairness report, member notices) may be considered to determine intent | Gold: Extrinsic statements by merger counsel were not communicated to individual enrollees; plaintiffs are third parties and cannot be bound by such internal intent; post-adoption statements are irrelevant; ambiguities should be construed against drafter (contra proferentem) | Anthem: Extrinsic evidence, including public regulatory statements and counsel testimony, is admissible; it shows parties intended premerger group members (e.g., state) to retain membership and exclude individual enrollees of replaced policies | Court: Extrinsic evidence properly considered (including counsel testimony and public regulatory filings); it supported defendants’ interpretation; contra proferentem unnecessary because extrinsic evidence resolved the ambiguity |
| Whether contra proferentem should be applied against Anthem (drafter) | Gold: Ambiguities should be resolved against drafter; plaintiffs were not parties to drafting so rule favors them | Anthem: Contra proferentem is a last-resort tie-breaker only after extrinsic evidence is exhausted | Court: Because extrinsic evidence resolved the ambiguity in defendants’ favor, contra proferentem was not applied |
Key Cases Cited
- Gold v. Rowland, 296 Conn. 186 (Conn. 2010) (prior appellate decision addressing sovereign-immunity issues and part of this litigation history)
- University of Southern Indiana Foundation v. Baker, 843 N.E.2d 528 (Ind. 2006) (Indiana rule allowing extrinsic evidence to interpret ambiguous contracts)
- Mell v. Anthem, Inc., 688 F.3d 280 (6th Cir. 2012) (analogous post‑merger/demutualization decision relying on guaranty policy language disallowing enrollees’ equity rights)
- Cruz v. Visual Perceptions, LLC, 311 Conn. 93 (Conn. 2014) (statement of contract-interpretation standard under Connecticut law applied by the court)