John Pelliccia, M.D. v. Anthem Insurance Companies, Inc.
90 N.E.3d 1226
| Ind. Ct. App. | 2018Background
- Dr. John Pelliccia purchased an Anthem individual health policy for 2014 with monthly premiums (~$649.77) and automatic bank draft; eleven of twelve monthly payments were received during 2014.
- Anthem’s invoices and the policy referenced a 30/31-day premium "grace period" and sent multiple "Notice of Grace Period" letters informing Pelliccia that coverage would be cancelled if full payment was not received by the end of the grace period and that claims may not be paid during the grace period.
- Pelliccia obtained preapproval for surgery scheduled December 10, 2014; Anthem preapproval conditioned coverage on premiums being paid through the date of service.
- Pelliccia had surgery in December 2014, incurred substantial charges, and did not pay the outstanding premium during the grace period; Anthem sent a cancellation notice stating coverage was cancelled effective December 1, 2014 and denied related claims and a belated premium payment.
- Pelliccia sued Anthem alleging improper retroactive cancellation and bad faith; the trial court granted Anthem summary judgment. The Court of Appeals reversed in part, holding Anthem’s policy required coverage through the last day of the grace period and directed payment for services incurred during that period (subject to deduction of unpaid premium).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Anthem validly retroactively terminated coverage for nonpayment and could deny claims for services during the grace period | Pelliccia: the policy and applicable statute mean coverage continues "during" the grace period and claims incurred then must be paid even if the premium is not ultimately paid | Anthem: the grace period does not create a free month; claims during the grace period are payable only if the belated premium is paid during that period | Held: Policy language unambiguously kept coverage in force through the last day of the grace period; Anthem had to pay claims for services incurred during that period (may deduct unpaid premium from claim payments) |
| Whether the policy’s reference to "existing State laws regarding grace periods" resolves coverage | Pelliccia: statutory language supports coverage through grace period | Anthem: statutory reading allows denial absent payment during grace period | Held: Court need not resolve statute definitively because Anthem’s policy itself plainly required coverage through the grace period and favored Pelliccia |
| Whether ambiguous policy terms should be construed for or against Anthem | Pelliccia: any ambiguity favors insured | Anthem: policy terms should be enforced as written | Held: Court construes ambiguities against insurer; here language was plain that coverage continued through grace period, but ambiguity would also be resolved for insured |
| Remedy at summary judgment stage | Pelliccia: entitlement to partial summary judgment that Anthem must pay December claims | Anthem: summary judgment in its favor | Held: Reversed trial court; granted Pelliccia partial summary judgment for claims during the grace period; bad-faith claim remanded |
Key Cases Cited
- Bradshaw v. Chandler, 916 N.E.2d 163 (Ind. 2009) (policy interpretation principles; ambiguities construed against insurer)
- Wagner v. Yates, 912 N.E.2d 805 (Ind. 2009) (noting insurer drafts policies; interpret for ordinary policyholder)
- First Bankers Ins. Co. v. Newell, 463 S.W.2d 745 (Tex. Ct. Civ. App. 1971) (statute/policy construed to require coverage for losses originating during grace period)
- Zaitschek v. Empire Blue Cross & Blue Shield, 632 N.Y.S.2d 434 (N.Y. Civ. Ct. 1995) (contrasting view: insurer may deny claims incurred during grace period absent payment)