No. 2694, October Term, 1978, Appeal of Sun Oil Company from the Order dated October 3, 1978 by the Court of Common Pleas of Philadelphia County, January Term, 1973, No. 4636
William J. O'Brien, Philadelphia, for appellant.
Sheridan P. Hunt, Jr., Philadelphia, for appellees.
Hester, Hoffman and Catania,*fn* JJ.
[ 280 Pa. Super. Page 150]
This was a class action brought by William D. MacAleer and Scott C. Wilson, against Sun Oil Company. At trial,
[ 280 Pa. Super. Page 151]
plaintiffs represented a class consisting of former employees of Sun Oil Company who participated in a Group Health Service Plan for all or a portion of the period from July 1, 1971 to June 30, 1972. The plan was contracted by Sun with two Health Plan Corporations commonly referred to as Blue Cross/Blue Shield.
According to the plan, Sun was required to pay a fixed premium with the employees' contribution fluctuating according to the risk. At the end of the first plan year, June 30, 1972, an evaluation of the year's experience and the premium costs for the next year would be fixed in accordance with the experience. The evaluation resulted in a surplus of $1,043,084.52 to be refunded to the company, and maintenance of the same premium for the subsequent plan year.
Sun had the option of distributing this surplus to employees or calling a moratorium on premiums for the next plan year until the surplus was depleted. Sun chose the former, and in January 1973 distributed all except $114,743.62 among those employees of Sun Company who were in the Health Plan as of June 30, 1972 and were still employees in January 1973 or had retired. In the subsequent plan year, another surplus existed at which time it was distributed to employees along with the remaining $114,743.62 created by the first surplus. This class action was brought by those employees who were members of the plan during the year that the surplus was created but were no longer employed by Sun in January, 1973. The trial court, sitting without a jury, entered a judgment for members of the class action. We reverse.
The contract between Sun and Blue Cross/Blue Shield contained no provision for returning the surplus to employees and since a third party beneficiary has no greater rights than are enunciated in the contract itself, the trial court was unable to base its decision on that document. Grim v. Thomas Iron Company, 115 Pa. 611, 8 A. 595, 596 (1887); Restatement of Contracts, section 140. However,
[ 280 Pa. Super. Page 152]
the Court found a contract to have been created in the offer and acceptance of a 1971 brochure which explained the proposed health plan to the employees. Although there was no mention of a surplus in the brochure, the Court reasoned that since it stated that Sun's contribution to the plan was fixed, it ...