Opinion
NO. 1:03-CV-01329-DFH-TAB
April 28, 2004
ENTRY ON MOTION TO DISMISS
The question in this case is whether the applicable federal statutes and the insurance policy for the Family Servicemembers' Group Life Insurance program insured the life of an infant who was stillborn at a gestational age of 38 weeks. The court finds as a matter of law that the statutes and the policy do not provide such coverage. The court therefore grants the motion to dismiss filed by defendant Prudential Insurance Company of America under Rule 12(b)(6) of the Federal Rules of Civil Procedure.
Rule 12(b)(6) Standard
In ruling on a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the court must assume as true all well-pleaded facts set forth in the complaint, construing the allegations liberally and drawing all inferences in the light most favorable to the plaintiffs. See, e.g., Jackson v. E.J. Brach Corp., 176 F.3d 971, 977-78 (7th Cir. 1999); Zemke v. City of Chicago, 100 F.3d 511, 513 (7th Cir. 1996); McMath v. City of Gary, 976 F.2d 1026, 1031 (7th Cir. 1992). For purposes of the motion, the court determines whether the plaintiffs might be able to prove any set of facts consistent with the allegations that would give them a right to relief. Wudtke v. Davel, 128 F.3d 1057, 1061 (7th Cir. 1997), citing Leatherman v. Tarrant County Narcotics Intelligence Coordination Unit, 507 U.S. 163, 168 (1993). Dismissal is appropriate only if it appears beyond doubt that the plaintiffs can prove no facts consistent with their complaint that would entitle them to relief. Conley v. Gibson, 355 U.S. 41, 45-46 (1957).In ruling on the motion to dismiss, the court may consider the exhibits attached to the complaint, such as the insurance policy and autopsy report. See Fed.R.Civ.P. 10(c) ("A copy of any written instrument which is an exhibit to a pleading is a part thereof for all purposes."); Rosenblum v. Travelbyus.com Ltd., 299 F.3d 657, 661 (7th Cir. 2002); see also Menominee Indian Tribe of Wisconsin v. Thompson, 161 F.3d 449, 456 (7th Cir. 1998) (affirming dismissal based on treaties that were were referenced in complaint and central to it, but not attached to it).
Factual A negations
The alleged facts are both sad and straightforward. Plaintiff Michael Patrick Warnock is a member of the United States Air Force Reserve. He purchased a life insurance policy through the Family Servicemembers' Group Life Insurance program ("FSGLI") established under federal law, 38 U.S.C. § 1965-1980. The policy was issued by defendant Prudential Insurance Company of America.
The policy provides life insurance of $10,000 for dependent children of members of the armed forces who enroll in the FSGLI program. Dependent children are defined in relevant part in the policy as: "All natural born children. . . ." For a child who is born while the service member is on duty, life insurance coverage "will be effective . . . the date of birth." Cplt. Ex. A.
On April 14, 2002, Warnock's wife gave birth to a stillborn infant whom the Warnocks named Joshua M. Warnock. Joshua had reached an estimated gestational age of 38 weeks. As required by Indiana law for a stillborn infant past 20 weeks, an autopsy was performed and Joshua was buried. See Ind. Code § 16-37-3-1 et seq. The autopsy found that Joshua had died before labor of unknown causes. Cplt. Ex. B.
Plaintiff submitted a timely claim for life insurance benefits. Defendant denied the claim, and plaintiff brought this suit pursuant to 38 U.S.C. § 1975. The court has jurisdiction pursuant to 28 U.S.C. § 1331 and 38 U.S.C. § 1975. Plaintiff has pled the case as one on behalf of a plaintiff class of similarly situated persons, and against a defendant class of insurers who provide FSGLI policies for dependent children. No class has been certified at this early stage of the case. The court is exercising its discretion under Rule 23(c)(1)(A) of the Federal Rules of Civil Procedure to decide the merits of the case before putting the parties to the expense and effort of a class certification and notice process under Rule 23(b)(3).
Discussion
The coverage issue under this federal insurance program for members of the United States armed forces is governed by federal law. Prudential Ins. Co. v. Athmer, 178 F.3d 473, 475 (7th Cir. 1999). The insurance policy must be construed together with the federal statutes that create the FSGLI program.
The statutes, like the policy, provide that life insurance coverage for a dependent child is effective on "the date of birth of such child." 38 U.S.C. § 1967(a)(5)(F). Federal law more generally instructs that, in determining the meaning of statutes and regulations, the term "child" includes "every infant member of the species homo sapiens who is born alive at any stage of development." 1 U.S.C. § 8(a). The phrase "born alive" means the "complete expulsion or extraction" of the infant accompanied by specified signs of life. 1 U.S.C. § 8(b).
These statutory definitions were enacted as part of the "Born-Alive Infants Protection Act of 2002," Pub.L. 107-207 ("the Act"), which was enacted in response to the Supreme Court's decision in Stenberg v. Carhart, 530 U.S. 914 (2000). Carhart held unconstitutional a state statute prohibiting a particular method of abortion. The legislative history of the Act shows that Congress was aware that its "born alive" definition could apply to thousands of federal statutes and programs, though the FSGLI program was not specifically identified. See H.R. Rep. 107-186 at 33 (2002), reprinted in 2002 U.S.C.C.A.N. 620, 636 (additional views noting "that the full implications of H.R. 2175 are unknown," and that a "complete analysis of the bill would require enormous resources").
The Act became law on August 5, 2002, several months after Joshua's stillbirth in this case. However, the Act's new definition of "child" was intended only to broaden the definition of "child" to extend the definition to infants born alive. Legislative responses to judicial decisions can sometimes be deemed to have "restored" a prior state of the law, or to have "clarified" an earlier ambiguity, or to have changed the law as interpreted by the courts. See generally Rivers v. Roadway Express, Inc., 511 U.S. 298, 304-14 (1994) (discussing different types of statutory amendments with different effects on pending cases); Liquilux Gas Corp. v. Martin Gas Sales, 979 F.2d 887, 890 (1st Cir. 1992) (finding that statutory amendment was clarification rather than an alteration of the earlier statute); Brown v. Marquette Sav. and Loan Ass'n, 686 F.2d 608, 615 (7th Cir. 1982) (finding that amendment was intended to remove the dispute surrounding the interpretation of statute and to clarify the original intent of the Congress). Under any of these treatments, however, as applied to Joshua and his family, the Act cannot be interpreted as having removed or restricted rights that existed under prior law. As applied to this case, therefore, the Act can be deemed interpretive or clarifying, so that the Act can fairly be applied to interpret the FSGLI statutes and insurance policies in existence before the Act's enactment.
The court is not attempting to comment here on any constitutional issues that might be presented in other contexts by the fact that the Act was a legislative response to a constitutional decision by the Supreme Court in Carhart.
That application to this case is clear. The facts alleged in the complaint show that Joshua was not born alive. The autopsy found that he died before labor began. As a result, under the terms of the policy, as clarified by the general statutory definition in 1 U.S.C. § 8, Joshua was not covered by the FSGLI policy. Plaintiff is therefore not entitled to the life insurance benefits he seeks.
Plaintiff suggests that coverage for stillborn infants in the late stages of development would be consistent with the overall policies of the FSGLI program, especially when state law requires a family to incur the expense of burial for a stillborn infant. Where the meaning of the statutory language is clear, however, as it is here, that plain meaning applies even if Congress might reasonably have decided to write the statute differently. E.g., Hartford Underwriters Ins. Co. v. Union Planters Bank, 530 U.S. 1, 6, 13-14 (2000); Connecticut Nat'l Bank v. Germain, 503 U.S. 249, 254 (1992); United States v. Ron Pair Enterprises, Inc., 489 U.S. 235, 241 (1989).
Defendant Prudential has argued that coverage here would run counter to the "fortuity" doctrine of insurance law, which Indiana courts call the "known loss" doctrine. The doctrine teaches that losses which the insured knows at the time of agreement are actual or highly probable or imminent may not be proper subjects of an insurance agreement. General Housewares Corp. v. Nat'l Surety Corp., 741 N.E.2d 408, 413 (Ind.App. 2000); accord, e.g., Pittston Co. Ultramar America Ltd. v. Allianz Ins. Co., 124 F.3d 508, 516 (3d Cir. 1997). No insurer would issue a fire insurance policy on a house that has already burned down or a life insurance policy on a person who has already died. "The concept of insurance is that the parties, in effect, wager against the occurrence or non-occurrence of a specified event; the carrier insures against a risk, not a certainty." Bartholomew v. Appalachian Ins. Co., 655 F.2d 27, 29 (1st Cir. 1981). In the case of life insurance, of course, the future death of the insured is inevitable, since living has a 100 percent mortality rate. The uncertainty that is insured against is the timing of death.
The known loss doctrine has no force or application to this case. Congress could write the statute, or an insurer could write a policy, to cover future stillbirths. Under the fortuity or known loss doctrine, the key issue is whether the loss has occurred or is imminent at the time the insurance agreement is made. "The known loss' defense requires consideration of whether, at the time the insured bought the policy (or the policy incepted), the loss was known." General Housewares, 741 N.E.2d at 416, quoting and supplying emphasis to Stonewall Ins. Co. v. Asbestos Claims Mgmt. Corp., 73 F.3d 1178, 1215 (2d Cir. 1995) (finding that insurance could apply to asbestos liability claims where, at time of agreement, existence of losses was known, but extent of losses was unknown).
The limited record here does not show exactly when plaintiff Warnock signed up for life insurance coverage, but it was certainly before April 14, 2002. At the time he signed up, the possibility of a stillbirth remained only a possibility. It was a risk that could be the proper subject of insurance, if the parties had so agreed and/or if Congress had so provided. As explained above, however, the applicable statutes show that Congress did not extend FSGLI life insurance coverage to stillborn infants. Accordingly, defendant Prudential's motion to dismiss is hereby granted, and the court will enter final judgment in favor of the defense.
So ordered.