Summary
noting that New Hampshire has not recognized liability for negligent interference with a contractual relationship
Summary of this case from Ferrero v. CouttsOpinion
No. 82-029 No. 82-379
Decided March 24, 1983
1. Subrogation — Insurance — Generally When an insurance policy contains a valid subrogation clause, the insurer's subrogation rights are determined by the clause.
2. Infants — Medical Treatment — Liability for Expenses Generally, a parent rather than a minor is liable for the minor's medical or hospital expenses when the minor is living with or supported by his parents.
3. Parent and Child — Parental Rights — Right To Recover Medical Expenses The supreme court has held that the parent, rather than the child, is entitled to recover the medical expenses of a minor child injured by another.
4. Subrogation — Insurance — Particular Cases Where a minor was injured when the motorcycle on which he was a passenger was struck by a school bus, the minor had no right to recover medical expenses incurred on his behalf during his minority due to the accident, and the health insurer of minor correspondingly had no rights under insurance policy subrogation clause that it could "specifically enforce" to recover those expenses; rather, since minor's father was liable for the cost of medical services furnished to his minor son, the father had the right to recover them from the bus driver or the bus driver's employer, and the health insurer was subrogated to the father's rights to recover those benefits.
5. Subrogation — Insurance — Particular Cases Where a minor was injured when the motorcycle on which he was a passenger was struck by a school bus, the minor had no right to recover medical expenses incurred on his behalf during his minority due to the accident, and the health insurer of minor correspondingly had no rights under insurance policy subrogation clause that it could "specifically enforce" to recover those expenses, and health insurer's argument that such recovery should be permitted in order to prevent the minor's father from settling with the bus driver or bus driver's employer for a small amount in return for a larger settlement for his son was not persuasive since the health insurer, in the absence of an agreement that its interests would be protected, had the right to intervene in the father's suit to protect its interests and since if the father or the insurance carrier for the third-party tortfeasor refused to acknowledge and protect the health insurer's interest, or if the father failed to bring suit, the health insurer had the right to enforce its subrogation rights by itself instituting an action in the name of the father.
6. Process — Substituted Service — Particular Cases Where a minor was injured when the motorcycle on which he was a passenger was struck by a school bus and where the minor's health insurer later instituted an action against the minor to recover medical expenses it had paid on his behalf while he was a minor, health insurer's argument that minor's father should be considered a party defendant in the action since the father was the recipient of substitute service of the health insurer's writ, which was approved by the superior court only because the minor was in the military service when the suit was instituted, was rejected since the father did not have actual notice of an action against him, and since, on the contrary, the substitute service indicated that the health insurer had not sued him, but had sued his son.
7. Subrogation — Insurance — Particular Cases Where a minor was injured when the motorcycle on which he was a passenger was struck by a school bus, the supreme court held that the trial court's ruling that the health insurer could specifically enforce its subrogation rights against the minor for medical expenses while he was a minor was erroneous and should be reversed.
8. Contracts — Interference by Third Party — Tortious Conduct The tort of tortious interference with a contractual relationship requires the plaintiff to prove that the defendant intentionally interfered with the performance of a contract between another and a third person.
9. Contracts — Interference by Third Party — Negligent Interference The supreme court has not recognized liability for negligent interference with a contractual relationship.
10. Contracts — Interference by Third Party — Tortious Conduct In health insurer's action against insurer of third-party tortfeasor for tortiously interfering with health insurer's contractual rights by settling litigation without notice, merely because counsel for third-party tortfeasor's insurer may have acted negligently in acting as stated in an affidavit in support of that insurer's motion for summary judgment, that he either never received notice of the health insurer's claim or else merely neglected to note it, did not necessarily mean that the insurer of third-party tortfeasor did not act intentionally with regard to the health insurer's claim.
11. Principal and Agent — Liability of Principal While a principal may be liable for the negligence of an agent, it does not follow that the mental states of the agent and the principal must be the same.
12. Judgments — Summary Judgment — Issue of Material Fact In health insurer's action against insurer of third-party tortfeasor for tortiously interfering with health insurer's contractual rights by settling litigation without notice, trial court incorrectly granted motion for summary judgment of insurer of third-party tortfeasor where counsel for third-party tortfeasor's insurer stated in an affidavit accompanying the motion that he either never received notice of the health insurer's claim or else merely neglected to note it, since merely because counsel may have acted negligently did not necessarily mean that insurer of third-party tortfeasor did not act intentionally, and therefore, the insurer of third-party tortfeasor failed to show that there was no genuine issue of material fact as to its intention. RSA 491:8-a, III (Supp. 1981).
13. Appeal and Error — Remand — Amendment of Writ In reversing trial court's granting of motion for summary judgment of insurer of third-party tortfeasor, supreme court permitted health insurer, on remand, to amend its writ to add a count for breach of promise to protect health insurer's interests.
Branch Greenhalge P.A., of Concord (Frederic T. Greenhalge on the brief and orally), for the plaintiff, Blue Cross/Blue Shield of New Hampshire-Vermont, in No. 82-029.
Wiggin Nourie, of Manchester (Dort S. Bigg and Sterling H. Schoen, Jr., on the brief, and Mr. Schoen orally), for the defendant Marc St. Cyr.
Branch Greenhalge P.A., of Concord (Frederic T. Greenhalge on the brief), by brief for the plaintiff, Blue Cross/Blue Shield of New Hampshire-Vermont, in No. 82-379.
Wiggin Nourie, of Manchester (Sterling H. Schoen, Jr., on the brief), by brief for the defendant, American Policyholders Insurance Company.
These consolidated appeals require us to determine whether the plaintiff, Blue Cross/Blue Shield of New Hampshire-Vermont (Blue Cross/Blue Shield), followed proper procedures in attempting to enforce its contractual subrogation rights.
In the first case the defendant, Marc St. Cyr, was seriously injured when a motorcycle on which he was a passenger was struck by a school bus. At the time of the accident, Marc St. Cyr was a minor. Most of Marc St. Cyr's medical expenses resulting from the accident were paid by Blue Cross/Blue Shield.
In July 1979, Blue Cross/Blue Shield advised the boy's father, Emile St. Cyr, that his health insurance policy contained a subrogation clause enabling the company to recover medical expenses that it had paid on behalf of Marc from third parties liable for such injuries. At the same time, the company warned Emile St. Cyr not to enter into a settlement agreement with the bus driver or the bus driver's employer unless Blue Cross/Blue Shield was "fully protected." Counsel for Emile St. Cyr notified Blue Cross/Blue Shield that he did not recognize Blue Cross/Blue Shield's interest.
In September 1980, Blue Cross/Blue Shield instituted the instant action against Marc St. Cyr to recover medical expenses it had paid on his behalf while he was a minor. It also filed a petition to attach $3,000 of any recovery obtained by Marc from the bus driver's insurance carrier. It brought no action against Emile St. Cyr.
In December 1980, Marc and Emile St. Cyr filed separate actions against the bus driver and the bus driver's employer. Marc, having reached the age of majority, sought to recover damages for pain and suffering, loss of earnings and loss of earning capacity, and future medical expenses. Emile St. Cyr sought to recover all medical and hospital expenses which he had incurred for the treatment of Marc, while he was a minor, including the medical expenses paid for by Blue Cross/Blue Shield.
Marc St. Cyr filed a motion to dismiss Blue Cross/Blue Shield's action against him. The Master (Frank B. Clancy, Esq.) concluded that Blue Cross/Blue Shield was entitled to "specific enforcement of its subrogation rights" against Marc St. Cyr because he had received the benefits of Blue Cross/Blue Shield's coverage and should not be allowed to retain a windfall. He stated, however, that the Blue Cross/Blue Shield action was premature because Marc St. Cyr had not yet established any rights against the bus driver. He further stated that Blue Cross/Blue Shield should move to intervene in the St. Cyrs' actions in superior court. The master's recommendation was accepted and approved by the Trial Court (Cann, J.).
The defendant, Marc St. Cyr, challenges the trial court's ruling that Blue Cross/Blue Shield can "specifically enforce" its subrogation rights against him. We hold that Blue Cross/Blue Shield had no right in this case to recover from Marc the sums it had paid for his medical expenses while he was a minor and not legally responsible for their payment. The trial court's ruling on this issue was therefore erroneous.
When an insurance policy contains a valid subrogation clause, the insurer's subrogation rights are determined by the clause. 44 AM. JUR. 2d Insurance 1794, at 784 (1982). In the present case, the relevant provisions of the subrogation clause provided:
"In the event of any payment of benefits under this Certificate, THE PLAN shall be subrogated to all of the Member's rights of recovery of those benefits against any person or organization, and the Member shall cooperate with THE PLAN and do whatever is necessary to secure those rights."
Because both Marc and his father were by definition under the policy "members" of the Blue Cross/Blue Shield plans, Blue Cross/Blue Shield is subrogated to their respective rights to recover these medical benefits. In order to determine the effect of this subrogation, we must decide whether either or both of them had the right to recover medical expenses incurred on Marc's behalf during his minority, as a result of the accident.
[2, 3] Generally, a parent rather than a minor is liable for the minor's medical or hospital expenses when the minor is living with or supported by his parents. 42 AM. JUR. 2d Infants 72, at 74 (1969); 59 AM. JUR. 2d Parent and Child 87, at 184 (1971); see Heath v. Seymour, 110 N.H. 425, 429-30, 270 A.2d 602, 605 (1970). As a result, we have held that the parent, rather than the child, is entitled to recover the medical expenses of a minor child injured by another. Heath v. Seymour, 110 N.H. at 429, 270 A.2d at 605.
Thus, Marc St. Cyr had no right to recover medical expenses incurred on his behalf during his minority due to the accident. Blue Cross/Blue Shield correspondingly had no rights under the subrogation clause that it could "specifically enforce" to recover those expenses. Emile St. Cyr was liable for the cost of medical services furnished to his minor son, Marc, and had the right to recover them from the bus driver or the bus driver's employer. Under the terms of the subrogation clause, Blue Cross/Blue Shield was subrogated to Emile St. Cyr's rights to recover these benefits.
Blue Cross/Blue Shield argues that we should nonetheless permit it to recover the medical expenses from Marc St. Cyr in order to prevent Emile St. Cyr from settling with the bus driver or the bus driver's employer for a small amount in return for a larger settlement for his son Marc. We do not find this argument persuasive because Blue Cross/Blue Shield has other adequate remedies to protect its subrogation rights against Emile St. Cyr. After Emile St. Cyr instituted his action against the bus driver and the bus driver's employer to recover the medical expenses he incurred while Marc was a minor, Blue Cross/Blue Shield, in the absence of an agreement that its interests would be protected, had the right to intervene in the suit to protect its interests. Sibson v. Robert's Express, 104 N.H. 192, 194, 182 A.2d 449, 450 (1962).
Further, if Emile St. Cyr, or the insurance carrier for the third-party tortfeasor, refused to acknowledge and protect Blue Cross/Blue Shield's interest, or if Emile St. Cyr failed to bring suit against the bus driver or the bus driver's employer, Blue Cross/Blue Shield had the right to enforce its subrogation rights by itself instituting an action in the name of Emile St. Cyr. Montello Shoe Co. v. Suncook Industries, 92 N.H. 161, 161-62, 26 A.2d 676, 676 (1942).
Additionally, Blue Cross/Blue Shield appears to argue that we should consider Emile St. Cyr a party defendant in the instant action. It contends that service was made on Emile St. Cyr because he was the recipient of substitute service of the Blue Cross/Blue Shield writ. This substitute service was approved by the superior court only because Marc St. Cyr was in the military service when the suit was instituted. Nevertheless, Blue Cross/Blue Shield argues that this was the equivalent of suing Emile St. Cyr because he had actual notice of Blue Cross/Blue Shield's claim. We reject this argument. Emile St. Cyr did not have actual notice of an action against him. On the contrary, the substitute service indicated that Blue Cross/Blue Shield had not sued him, but had sued his son.
In conclusion, we hold that the trial court's ruling that Blue Cross/Blue Shield could specifically enforce its subrogation rights against Marc St. Cyr for medical expenses while he was a minor was erroneous and should be reversed. In doing so, we note that the question of responsibility for future medical expenses has not been raised on the appeal. We find it unnecessary to address other issues raised by the defendant.
In the second case, Aaron Fadden, also a minor, was injured on August 28, 1976, by Raymond Edson. Edson was insured by the defendant American Policyholders Insurance Company (American Policyholders). The medical expenses incurred by Aaron's father were paid in part by the plaintiff Blue Cross/Blue Shield. When Aaron Fadden and his father, James H. Fadden, filed suit against Edson, Blue Cross/Blue Shield notified Edson's insurer, American Policyholders, that it was "subrogated to the extent of monies advanced or to be advanced for medical services to their subscriber . . ." and that "any funds to be paid in settlement [of the claim] are subject to this claim." In response to this notice, American Policyholders stated that it would "honor [Blue Cross/Blue Shield's] lien when final settlement is reached."
In November 1979, Aaron and James Fadden and Raymond Edson agreed to settle the claim, and the settlement agreement, including a general release of all of Edson's liability, was approved by the Superior Court (Johnson, J.). This agreement, although mentioning medical expenses incurred by James H. Fadden and paid for in part by Blue Cross/Blue Shield, failed to provide for payment to Blue Cross/Blue Shield of the medical expenses paid by it.
In February 1982, Blue Cross/Blue Shield brought the instant suit against American Policyholders, Edson's insurer, alleging that American Policyholders had "tortiously" interfered with Blue Cross/Blue Shield's contractual rights by settling the litigation without notice. The defendant, American Policyholders, filed a motion for summary judgment claiming that any interference was negligent, not intentional. In support of its motion, the defendant filed an affidavit by its attorney, Dort S. Bigg, which stated that he either never received notice of the plaintiff's claim or else merely neglected to note it.
Blue Cross/Blue Shield opposed the motion and introduced correspondence between it and the defendant in which the defendant stated that it would honor Blue Cross/Blue Shield's claim. The Trial Court (Cann, J.) granted the defendant's motion for summary judgment. The plaintiff appeals the granting of summary judgment. We reverse and remand.
Blue Cross/Blue Shield argues that summary judgment was improperly granted because the statement by the defendant's counsel that he acted negligently was not conclusive proof that American Policyholders did not act intentionally.
[8, 9] Blue Cross/Blue Shield's writ alleged "tortious" interference with a contractual relationship. This tort requires the plaintiff to prove that the defendant intentionally interfered with the performance of a contract between another and a third person. Hangar One, Inc. v. Davis Associates, Inc., 121 N.H. 586, 589, 431 A.2d 792, 794 (1981). We have not recognized liability for negligent interference with a contractual relationship. See RESTATEMENT (SECOND) OF TORTS 766C (1977). Consequently, the question of the defendant's intent was crucial to the plaintiff's claim.
[10, 11] The plaintiff argues that the affidavit which supported the defendant's motion for summary judgment was an insufficient basis for the granting of summary judgment because, although it stated that the defendant's counsel had acted negligently, not intentionally, it did not state that the defendant, American Policyholders, had not acted intentionally. We agree that merely because the defendant's counsel may have acted negligently does not necessarily mean that the defendant did not act intentionally. While a principal may be liable for the negligence of an agent, it does not follow that the mental states of the agent and the principal must be the same. Cf. Estes v. Crosby, 171 Wis. 73, 81, 175 N.W. 933, 936 (1920) (subagent not liable for misrepresentations made in good faith, but agent liable for knowing misrepresentation).
Summary judgment should be granted on the motion of a party if the pleadings 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. RSA 491:8-a, III (Supp. 1981). After the moving party makes such a showing, the party opposing the summary judgment must, by affidavits, reference to depositions, or answers to interrogatories, show that there is a genuine issue for trial; he may not rest upon mere allegations or denials of his pleading. RSA 491:8-a, IV (Supp. 1981). In this case, the defendant, American Policyholders, was required to show that there was no genuine issue of material fact as to its intention. Because the defendant failed to make such a showing, the plaintiff was not required to rebut the showing, and the court incorrectly granted the defendant's motion for summary judgment.
Having determined that the case must be remanded, a final problem is what form Blue Cross's action should have taken. We note that it would have been more appropriate for Blue Cross/Blue Shield to bring an action against American Policyholders for breach of its promise to protect Blue Cross/Blue Shield's interests, rather than instituting an action for tortious interference with a contractual relationship. American Policyholders specifically promised to protect Blue Cross/Blue Shield's right to recover medical expenses it paid on behalf of Aaron Fadden, and Blue Cross/Blue Shield relied on this promise by not intervening in the underlying action. See RESTATEMENT (SECOND) OF CONTRACTS 90 (1979). In the interest of justice, we will permit the plaintiff to amend its writ within thirty days of remand to add such a count.
No. 82-029 reversed; No. 82-379 reversed and remanded for further proceedings consistent with this opinion.
All concurred.