Cardinale v. Genesee Valley Medical Care

— Order reversed, with costs, and defendant’s motion denied. Memorandum: In granting defendant summary judgment dismissing the complaint, Special Term ignored the existence of a factual issue as to whether defendant waived its right to assert that plaintiffs’ claim is time barred by a course of conduct which may have “lulled plaintiff [s] into believing that [their] claim would ultimately be processed and that reliance on this sense of security caused a forebearance to sue” (Pasmear Inn v General Acc. Fire & Life Assur. Corp., 44 AD2d 647). The undisputed facts are these. Plaintiffs transferred their medical policy from coverage under Lynn Cardinale’s employer to a group policy in effect with Alan Cardinale’s employer. They were directly billed for $82.63 for interim coverage during the 967 period August 15 to September 23, 1980. Plaintiffs paid that amount. Before the policy with Alan Cardinale’s employer took effect, he terminated his employment and the policy was transferred back to group coverage with Lynn Cardinale’s employer on or about September 13,1980. Defendant was timely notified of this second transfer and subscriber cards were issued in Lynn Cardinale’s name. Plaintiffs requested but did not receive a bill for coverage during the interim period from September 23 to November 15,1980, at which time the second transfer became effective. Defendant now claims that the policy was not in effect for that period. In making that claim, however, it does not dispute the fact that the nonpayment resulted from its own billing error and that no notice of cancellation was sent to plaintiff. Lynn Cardinale underwent surgery on May 23, 1981, for which she submitted claims to defendant. Her initial claim was approved but she was later advised that her remaining expenses were not covered as the surgery related to a pre-existing condition which defendant asserted arose during the brief period in which coverage was not in effect. Plaintiffs and their counsel had a number of meetings with defendant’s account executive, Linda Rumiano, who requested additional documentation from Alan Cardinale’s former employer, and a check in payment of coverage for the disputed period. When those were supplied, Rumiano advised that the claim would be submitted to defendant’s “reinstatement committee” with her recommendation that the claim be approved. On May 18, 1982, five days prior to expiration of the one-year period provided in the policy for commencement of an action, plaintiffs’ counsel received a letter from defendant advising that the claim for reinstatement had been rejected and that Lynn Cardinale would receive a formal rejection letter from the committee. By affidavit, Lynn Cardinale asserts that she has never received a rejection letter from defendant and, in addition, that she has never received a copy of the policy. Consequently, she denies having notice of the one-year Statute of Limitations. In this regard, she notes further that, although a brochure which she was furnished by Blue Shield contains such limitation under its major medical plan, there is no similar limitation in that portion of the brochure which deals with basic benefits, the portion of the policy under which she claims. Assuming plaintiffs’ allegations are true, as we must, there is an adequate factual basis from which a jury could determine that the conduct of defendant’s representative lulled plaintiffs into believing that their claim would be settled and that the limitation period in the policy would not be asserted. This is sufficient to raise a triable issue as to whether defendant should be estopped from asserting the 12-month limitation period in the contract (Dresserville Farms v Firemen’s Ins. Co., 54 AD2d 1118, 1119; 3 Richards, Insurance [5th ed], § 557). We note further that a factual question is presented as to whether plaintiff had adequate notice of the shortened period of limitations. Parties may, of course, by written agreement shorten the statutory period for commencement of an action. However, if such condition is a term of an insurance contract, the insured must be made aware of it. Where, as here, the insurer seeks the benefit of a period of one sixth of the statutory time for commencing an action, it is incumbent upon it to show that the insured knew or should have known of such limitation; otherwise it runs the risk of being estopped from asserting it (see Aarons Fifth Ave. v Insurance Co. of North Amer., 52 AD2d 855; Conte v Yorkshire Ins. Co. of N. Y., 5 Misc 2d 670, 672; Clark v Union Mut. Life Ins. Co., 692 F2d 1370; Godwin v Continental Ins. Co., 436 F2d 712, 714). All concur, except Hancock, Jr., J. P., and Moule, J., who dissent and vote to affirm, in the following memorandum.