Opinion
Docket No. 83781.
Decided October 20, 1986.
Paul B. Newman, for plaintiffs.
Law, Weathers Richardson (by Alan Bennett), for defendant.
Plaintiffs appeal as of right from a circuit court order granting defendant's motion for summary judgment.
In 1975, plaintiffs were the owners of Press's Bakery, a restaurant in White Cloud, Michigan. In July, 1975, they obtained health insurance for themselves and the restaurant's employees through a group policy of insurance issued to the Home Furnishings and Appliance Industry Trust. The policy listed the trustees and "participating employers" as the policyholders. The restaurant was a participating employer.
On December 1, 1980, plaintiffs sold the business to Robert and Kathleen Larsen. Pursuant to a private agreement between plaintiffs and the Larsens, plaintiffs continued to be listed as employees for purposes of the insurance coverage. The Larsens ceased paying the insurance premiums on behalf of the restaurant in January, 1981. By letter dated May 30, 1981, defendant notified the Larsens, as agents of the bakery, that the group policy had been terminated on May 15, 1981, due to nonpayment of premiums. The letter directed the Larsens to notify their employees that the group medical insurance had been cancelled. Plaintiffs were not so notified.
For purposes of the motion, defendant did not contest plaintiffs' claim that they were employees.
On July 1, 1981, plaintiff Virginia L. Jones was hospitalized and incurred substantial medical bills. Plaintiffs submitted a claim for benefits to defendant on August 1, 1981. The claim was denied by defendant because the treatment had occurred after the group insurance had been terminated. Thereafter, plaintiffs commenced the instant action alleging a breach of contract for the nonpayment of insurance benefits. Plaintiffs did not include the employer as a defendant.
Plaintiffs' counsel stated:
[T]he employer had more financial difficulties than just his ability to make the premiums, and there is absolutely no value in obtaining judgment against the employer for failing to give us notice. . . .
Defendant's motion for summary judgment was brought pursuant to GCR 1963, 117.2(3), now MCR 2.116(C)(10). A motion for summary judgment on the ground that there is no genuine issue of material fact tests whether there is factual support for the claim. When passing on a motion based on rule 117.2(3), the court must consider the pleadings, affidavits, depositions, admissions and other documentary evidence available to it. Longley v Blue Cross Blue Shield of Michigan, 136 Mich. App. 336; 356 N.W.2d 20 (1984).
Plaintiffs maintain that defendant was required to provide the employees with notice of termination of insurance. We disagree. First, the contract itself does not require defendant to notify the employees that the insurance has been cancelled.
Second, the Michigan Insurance Code does not require that those insured under a policy of group disability insurance receive notice of termination. Plaintiffs rely on Lease Car of America, Inc v Rahn, 419 Mich. 48; 347 N.W.2d 444 (1984), for the proposition that the insurer must provide notice of termination to each party who qualifies as an "insured" under the policy, not merely the named insured or designated insured. Plaintiffs' reliance on this case is misplaced. In Lease Car, the Supreme Court was called upon to construe MCL 500.3020; MSA 24.13020 which provides that an insurer may cancel a policy of casualty insurance by mailing written notice of cancellation to the insured. The policy of insurance in this case is not one of casualty insurance. There is no analogous statute with respect to group insurance.
Third, plaintiffs cannot point to any Michigan decision wherein the courts have held that the insurer has a duty to personally notify the employees that a contract for group medical insurance has been terminated. While it would be more equitable to require such notice, only the contract or an appropriate statute can make such a requirement. See, e.g., Sims v Buena Vista School Dist, 138 Mich. App. 426, 430; 360 N.W.2d 211 (1984), lv den 422 Mich. 940 (1985); Szymanski v John Hancock Mutual Life Ins Co, 304 Mich. 483, 490; 8 N.W.2d 146 (1943).
Plaintiffs argue that the group insurance policy is a contract of adhesion. This argument is without merit. While the employees are the insureds and, thus, are the beneficiaries of the insurance contract, the contract is between the insurer and the employer. Don-Ray Tool Die, Inc v John Hancock Mutual Life Ins Co, 381 Mich. 416; 163 N.W.2d 225 (1968). An adhesion contract refers to standardized contract forms offered to consumers of goods and services on a "take it or leave it basis." This is not the case here. Furthermore, the "adhesion contract" doctrine is a defense to the enforceability of a contract. Moreover, plaintiffs themselves contracted for the insurance and knew the terms thereof. This is not a "take it or leave it situation."
Plaintiffs argue that summary judgment should not have been granted because discovery is incomplete. We disagree. Plaintiffs can point to no questions of fact left to be resolved. Further discovery would not uncover factual support for plaintiffs' claim. Page v Clark, 142 Mich. App. 697; 370 N.W.2d 15 (1985).
Plaintiffs argue for the first time on appeal that they should be allowed to amend their complaint to add a cause of action grounded in tort. An amendment to plaintiffs' complaint would be futile as plaintiffs have not advanced a meritorious tort claim which can be asserted against defendant.
There are no genuine issues of material fact. Defendant is entitled to judgment as a matter of law.
Affirmed.