Court: District Court, D. Puerto Rico; April 21, 1991; Federal District Court
The Court, presided over by District Judge PIERAS, is addressing cross motions for summary judgment in a case involving plaintiffs Rebecca R. Nieves and her children, who are seeking medical expenses and life insurance benefits from defendant Intercontinental Life Insurance Company of Puerto Rico. The plaintiffs claim that the deceased, Anthony J. Nieves, was covered under a policy issued to Saint Lawrence Garment Co. Inc. despite his employment with Office of Strategic Security Inc. They assert coverage existed from the date of his accident on September 9, 1985, until his death on October 5, 1985, and are seeking $152,201.18 for medical expenses, $10,000 for death benefits, and funeral costs.
Defendant Intercontinental disputes coverage, contending that Nieves was not covered by the policy and positing that any claim is barred since the plaintiffs have recovered expenses from third parties responsible for his death. Additionally, Intercontinental has filed a third-party complaint against St. Lawrence, alleging that St. Lawrence improperly induced Nieves to apply for insurance and breached the insurance contract by including him as a covered employee. They argue that this breach led to Intercontinental unlawfully paying benefits and seek reimbursement from St. Lawrence.
The Court grants the plaintiffs' motion regarding coverage and life insurance benefits while partially granting the defendants' motion concerning medical and funeral expenses. The legal standard for summary judgment is outlined, indicating it is appropriate when there are no genuine issues of material fact, and the moving party is entitled to judgment as a matter of law. The burden lies with the moving party to show the absence of evidence supporting the nonmoving party's claims, while the nonmovant must demonstrate the existence of a genuine material issue.
In *Brennan v. Hendrigan*, 888 F.2d 189, 191 (1st Cir.1989), the court emphasizes that the nonmovant in a summary judgment scenario cannot rely solely on allegations or denials but must provide specific facts through affidavits or supporting evidence to show a genuine issue for trial, as per Fed. R.Civ. P. 56(e). When cross motions for summary judgment are filed, the court must evaluate each motion separately, as each party bears the burden of proving the absence of a genuine material fact issue. A failure by one party to meet this burden does not automatically grant summary judgment to the opposing party.
In the context of this diversity action, Puerto Rican law is applicable, following *Erie Railroad Co. v. Tompkins*, 304 U.S. 64 (1938). Under the Insurance Code of Puerto Rico, insurance contracts must be interpreted according to their entire terms and any lawful modifications. If the Insurance Code lacks specific guidance, the Civil Code serves as a supplementary interpretive source. Article 1233 of the Civil Code mandates that clear contract terms should be honored literally.
The defendant argues that the plaintiffs are not covered under the policy, claiming that the policy applies only to employees of St. Lawrence working at least thirty hours a week, and asserts that Mr. Nieves did not meet this criterion. Conversely, the plaintiffs assert that Nieves and his family are insured under the policy, contending that St. Lawrence used different criteria to classify Nieves as an eligible employee, and that the insurance company represented to Nieves that he was covered. Notably, the stipulated facts include that a group policy was issued with Nieves listed as an insured individual, effective from March 1, 1985, to March 1, 1986, and that his family was designated a beneficiary of a death benefit provision under the policy.
Intercontinental provided benefits to Anthony J. Nieves and his dependents under group policy G-0365, certificate number 82, for multiple claims. In a letter dated March 24, 1986, Intercontinental acknowledged coverage for Nieves and confirmed the plaintiffs' entitlement to life insurance and health benefits, issuing a $5,000 check to Mrs. Nieves as partial payment of the death benefit. The court disagreed with defendant Continental's assertion that Nieves was not covered under the policy. After reviewing the insurance agreement, it was determined that Nieves qualified as both an “eligible employee” and an “insured” per the policy's definitions. The policy, held by St. Lawrence, stipulates that payments are due to those entitled under its terms. Section definitions clarify that an “eligible employee” must work at least 30 hours per week or meet an employer-defined criterion. The employer, St. Lawrence, opted to classify Nieves as eligible despite his part-time status due to his consulting work for the company. Stanley Varón, an executive at St. Lawrence, confirmed that Nieves was included in the medical plan based on his contributions to the company. Additionally, Varón noted that St. Lawrence covered all policy premiums and that other employees with similar job responsibilities were also included under the policy using alternative eligibility criteria.
St. Lawrence applied an alternate criterion to classify Mr. Nieves as an “eligible employee” under the policy, ensuring his coverage. Mr. Nieves was covered from April 1, 1985, to November 1, 1985, and the accident occurred on September 9, 1985, while the policy was active and covered this type of accident.
Intercontinental contends that the plaintiffs cannot recover medical and funeral expenses since they received compensation from third-party tortfeasors responsible for Mr. Nieves' death. The policy's terms indicate that the insured is not entitled to amounts for medical services or funeral expenses, as no policy provision supports such claims.
It is stipulated that Mr. Nieves was hospitalized in Baton Rouge, Louisiana, from September 9, 1985, until his death on October 5, 1985. The plaintiffs assert that medical treatment costs from the accident to death are covered, but the policy specifies a $200 per day reimbursement limit for hospitalization services outside Puerto Rico, which must be paid directly to the physician by the insured. Reimbursement requests should be made upon returning to Puerto Rico.
As the plaintiffs have not proven payment for these services and remain residents of Louisiana, they are not entitled to reimbursement. The maximum reimbursement for hospitalization would be $5,600. The policy includes a $10,000 accidental death benefit and other provisions. Since the policy clearly addresses medical and funeral expenses, there is no need to consider compensation under the Civil Code of Puerto Rico, Article 1150, 31 L.P.R.A. 3222.
Plaintiffs are entitled to $10,000 in death benefits under Policy No. G-0365, which includes a $5,000 benefit for death from any cause and an additional $5,000 for accidental death. The policy states that beneficiaries can receive this amount in various payment forms. Rebecca R. Nieves, as the named beneficiary, received a $5,000 partial payment, with a stop payment ordered on that check for a substitute payment to be issued later. The court found that the plaintiffs are eligible and properly included as insured under the policy. The defendant’s motion for summary judgment was denied concerning coverage, while it was granted for medical and funeral expenses. The plaintiffs' motion for coverage and the $10,000 death benefit was granted, while their request for medical and funeral expenses was denied. The defendant's Third-Party Complaint against St. Lawrence was dismissed. The original contract specified conditions for employee eligibility, but the defendant did not address alternate eligibility criteria in its motion. The case cited by the defendant, Fishel v. American Security Life Insurance Co., was deemed irrelevant as the policies differ significantly in terms of employee coverage criteria. The policy states coverage terminates upon leaving employment.
Information regarding the continuation of insurance post-employment can be obtained from the Company. The Spanish translation states that insurance under the plan ends when employment ceases, with similar instructions for obtaining continuation information. Mr. Nieves was employed by OSS until September 30, 1985, with insurance coverage paid from May 1, 1985, to November 1, 1985, making the issue of the termination clause irrelevant. The contract defines "associated physician" as any authorized doctor in Puerto Rico contracted for medical services.
In earlier case stages, the need for Intercontinental to assert a defense regarding the insurance policy's coverage of medical payments arose, particularly concerning the applicability of Article XII, paragraph 7 to settlement proceeds in a related case (Rebecca R. Nieves, et al. v. Robert H. Baltimore, et al.). The Court allowed Intercontinental to amend its answer to include affirmative defenses, ruling that the plaintiff was not prejudiced. The amended answer stated that liability under Policy Number G-0365 is limited by its terms and that compliance is required for payment eligibility.
The policy excludes coverage for work-related accidents and others where the patient is entitled to hospitalization at no cost, according to Puerto Rican or U.S. law. Since the record indicates Mr. Nieves was not legally entitled to free hospitalization, this exclusion does not apply. The policy also specifies benefits for accidental death or dismemberment, with a payout of $5,000 for death. The parties confirmed Mr. Nieves was involved in a motor vehicle accident in Baton Rouge while working as a security consultant, having been struck by a tractor-truck.
