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ELSIE PERRY AND CHARLES DIFERDINANDO AS PARENTS AND AS NATURAL AND APPOINTED GUARDIANS JOSEPH DIFERDINANDO AN INCOMPETENT v. MIDDLE ATLANTIC LUMBERMENS ASSOCIATION AND STATE MUTUAL LIFE ASSURANCE COMPANY AMERICA (INSURANCE & PENSION DIVISION). APPEAL STATE MUTUAL LIFE ASSURANCE COMPANY AMERICA (04/12/88)

filed: April 12, 1988.

ELSIE PERRY AND CHARLES DIFERDINANDO AS PARENTS AND AS NATURAL AND APPOINTED GUARDIANS OF JOSEPH DIFERDINANDO AN INCOMPETENT
v.
MIDDLE ATLANTIC LUMBERMENS ASSOCIATION AND STATE MUTUAL LIFE ASSURANCE COMPANY OF AMERICA (INSURANCE & PENSION DIVISION). APPEAL OF STATE MUTUAL LIFE ASSURANCE COMPANY OF AMERICA



Appeal from the Order of the Court of Common Pleas of Philadelphia County, Civil at No. 4302 February Term, 1984.

COUNSEL

George G. O'Brien, Philadelphia, for appellant.

Roger J. Harrington, Philadelphia, for appellees.

Cirillo, President Judge, and McEwen and Montemuro, JJ.

Author: Montemuro

[ 373 Pa. Super. Page 557]

Appellant, State Mutual Insurance Company, appeals from an order granting summary judgment in favor of appellees, Elsie Perry and Charles DiFerdinando, acting as appointed guardians of Joseph DiFerdinando. We affirm, but base our decision on a rationale different from that adopted by the trial court.

This matter was heard as a case stated on a stipulation of facts. Joseph DiFerdinando was employed as a laborer by Hatboro Lumber and Fuel Company (Hatboro). Hatboro was a member of the Middle Atlantic Lumbermens Association Group Trust (MALA). Appellant, State Mutual Insurance Company, issued a group insurance policy to the trustees of MALA. Pursuant to this policy Joseph DiFerdinando, as an employee of Hatboro, became an insured on February 1, 1981. All of DiFerdinando's premiums were paid by Hatboro. On March 8, 1981, DiFerdinando was totally disabled as the result of an automobile accident. At that time he ceased active employment with Hatboro. Hatboro continued to pay premiums on the policy up to December 31, 1981, but on that date ceased paying premiums. DiFerdinando was never notified of his possible rights to convert his group policy to an individual policy. However, the parties agree that DiFerdinando's employment with Hatboro ended no later than December 31, 1981. Appellant paid medical benefits under the policy up to and including December 31, 1982, with the exception of $13,271.57, and has made no further payments.

Appellant and appellees filed cross motions for summary judgment on the stipulated facts. The trial court granted appellees' motion for summary judgment, finding that cessation of active service because of disability was excluded from the termination provisions of the policy. As a result, the court concluded that appellant was required to compensate DiFerdinando for medical expenses incurred over a

[ 373 Pa. Super. Page 558]

    year after his employment had ended. The trial court also found that DiFerdinando had provided adequate proof of loss to satisfy the policy provision. This timely appeal followed.

Initially we note that our standard of review in cases awarding summary judgment is plenary. Thornburgh v. Lewis, 504 Pa. 206, 209, 470 A.2d 952, 954 (1983). Summary judgment may be granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Pa.R.C.P. 1035. In considering a motion for summary judgment, the trial court is bound to follow several firmly established principles. Specifically, the court must examine the entire record in the light most favorable to the nonmoving party. The court's sole function is to determine whether there is an issue of fact to be tried and not to decide issues of fact. Finally, the court must resolve all doubts as to the existence of a genuine issue of fact against the party moving for summary judgment. See Taylor v. Tukanowicz, 290 Pa. Super. 581, 586, 435 A.2d 181, 183 (1981); Schacter v. Albert, 212 Pa. Super. 58, 62, 239 A.2d 841, 843 (1968).

The first issue raised by appellant is whether DiFerdinando's insurance coverage terminated under the termination provision of the policy so that the extended loss provision of the policy was triggered, requiring appellant to compensate DiFerdinando only for those expenses incurred within one year from the date of termination of insurance. Resolution of this question rests upon the legal effect of certain language contained in the "Termination of Insurance" provision of the insurance policy. The relevant provisions are as follows:

TERMINATION OF INSURANCE. The insurance in force on the Employee automatically terminates on the first to occur of the termination events:

(3) the termination of the Employee's employment.

[ 373 Pa. Super. Page 559]

    loss provision was not triggered, and that appellant owes him $45,000, which is the amount of medical bills incurred after December 31, 1982.

Both appellees and the trial court read the termination and extended loss provisions to mean that DiFerdinando's insurance coverage continues indefinitely until his disability ceases, even though his employment has been terminated and premium payments have been discontinued. We disagree with this interpretation.

In Brown v. Carnegie-Illinois Steel Corp., 168 Pa. Super. 380, 77 A.2d 655, aff'd, 368 Pa. 166, 81 A.2d 562 (1951), we construed a termination provision much like the provisions presented in this case. The group policy provision in Brown provided:

The insurance of any employee shall automatically cease upon the occurrence of any of the following events: (a) the termination of this policy, (b) the cessation of premium payments on account of such employee's insurance hereunder, (c) the thirty first day following the termination of his employment in the classes of employees insured hereunder. Cessation of active work by an employee shall be deemed to constitute termination of his employment except that, an employee absent from work because of disability due to injury or sickness or on account of lay-off or leave of absence will, subject to the continuance of premium payments on account of such employee's insurance, be regarded as still in the employment of the employer during the period of such disability, lay-off or leave of absence until the effective date of the discontinuance of such employee's insurance as entered on the employer's records . . . . At the end of the respective periods mentioned above ...


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