Pedler v. Aetna Life Insurance

Douglas, J. This case involves the applicability of principles of equitable estoppel. The sole issue before this court is whether an insurer may enforce the limitation on eligibility for coverage clearly stated in its master policy and in literature distributed to the insured despite the acceptance of premium payments and the issuance of a certificate specifying greater coverage. We answer in the affirmative and, in so doing, hold that an insurer is estopped from denying the full value of coverage stated on the insurance certificate, based upon limitations or exclusions contained in the master policy, where the insured bargained and paid for such coverage, unless the insured knew or should have known of his ineligibility. The court of appeals, in ruling in favor of the appellee, relied upon the reasoning of this court in Talley v. Teamsters Local No. 377 (1976), 48 Ohio St. 2d 142 [2 0.0.3d 297], that where group insurance is provided: “It is generally held that the certificate of coverage [issued to the insured] merely evidences * * * [that] employee-member’s right to participate in the insurance provided under the terms and conditions imposed in the group policy. Consequently, the provisions of the group policy are controlling over the provisions of the certificate, and the rights of the parties in a group insurance enterprise are dependent upon the group contract.” Id. at 144. Appellant argues, however, that for two reasons, Talley, supra, should not control the decision in this case. First, appellant contends that Talley is readily distinguishable on its facts. In Talley, the group insurance was paid for entirely by the insured’s employer. A certificate of insurance was mailed to the insured which reflected an amount of coverage in excess of that amount paid for by the employer. After his death, the insured’s beneficiary sought to collect the insurance benefit outlined on the insurance certificate and the trial court ruled in her favor. The appellate court reversed. Relying upon the American Law Institute’s statement of the law of promissory estoppel,2 that court reasoned that since neither the insured nor the employer bargained or paid for this increased amount, promissory estoppel would not lie in the absence of any discernible action or forbearance in reliance upon the coverage “promised” by the certificate. In the case now before us, Pedler bargained and paid for the insurance evidenced by the certificate and, therefore, appellant maintains, [10] in reliance upon this coverage, Pedler made no alternative arrangements for additional coverage. In her second argument, appellant directs this court’s attention to the trend followed in recent cases cited at Annotation (1981 and Supp. 1985), 6 A.L.R. 4th 835, and others, which allegedly support her proposition that where the master policy of insurance contains limitations or exclusions not clearly stated on the face of the certificate of insurance, such limitations or exclusions should not be given effect based upon a theory of estoppel.3 She urges that the “old rule,” as set forth in Talley, be set aside. We agree with appellant that the case sub judice is factually distinguishable from Talley in that Pedler bargained and paid for the supplemental coverage herein. However, we do not find Talley to be at odds with the underlying equitable policy considerations expressed by the courts in the remaining cases cited by appellant, although they too are factually dissimilar to the instant case. See Kirkpatrick v. Boston Mut. Life Ins. Co. (1985), 393 Mass. 640, 473 N.E. 2d 173; Hale v. Life Ins. Co. of North America (C.A. 6, 1984), 750 F. 2d 547; Krauss v. Manhattan Life Ins. Co. of New York (C.A. 2, 1983), 700 F. 2d 870. Kirkpatrick, Hale and Krauss each involved situations where the insured had no knowledge of the limitations or exclusions in the master policy. The stipulations of the parties in this case make it clear that Pedler was provided with a plan summary, in addition to other material outlining his ineligibility. The failure of the appellee to specifically note the limitation on the face of the certificate is not sufficient, standing alone, to estop the denial of coverage where the insured had the means of acquiring knowledge of the limitation. As stated in 42 Ohio Jurisprudence 3d (1983) 109-110, Estoppel and Waiver, Section 66: [11] “* * * [I]t is essential to the application of the principles of equitable estoppel that the person claiming to have been influenced by the conduct or declarations of another party to his injury should have been destitute of knowledge of the facts, or at least * * * of any convenient and available means of acquiring such knowledge, for if he lacks such knowledge he is bound to exercise reasonable diligence to obtain it. “Obviously, a party who acts with full knowledge of the truth has not been misled and cannot claim estoppel. Hence, there can be no estoppel where the party claiming it is chargeable with knowledge of the facts, as where he either knows the facts or is in a position to know them or the circumstances are such that he should have known them; or where the circumstances surrounding the transaction are sufficient to put a person of ordinary prudence on inquiry which would have disclosed the facts; * * *.” (Emphasis added.) Accordingly, and for the reasons set forth in this opinion, the judgment of the court of appeals is affirmed. Judgment affirmed. Celebrezze, C.J., Sweeney, Locher, Holmes and Wright, JJ., concur. C. Brown, J., dissents. Footnotes [2] “A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. [3] We note at the onset that the majority of cases appellant relies upon are inapposite: Davis v. Crown Life Ins. Co. (C.A. 11, 1983), 696 F. 2d 1343. Although factually similar, the Davis court applied Florida common law which holds that conflicts between the master policy and the insurance certificate are to be construed to include, rather than to exclude, coverage. Bain v. Benefit Trust Life Ins. Co. (1984), 123 Ill. App. 3d 1025, 79 Ill. Dec. 528, 463 N.E. 2d 1082. The court applied Illinois common law which holds that the insurance certificate is normally controlling where its provisions conflict with those of the master policy. Domke v. Farmers & Mechanics Savings Bank (Minn. App. 1985), 363 N.W. 2d 898. The decision in this case rests upon Minnesota statutory law which requires that the insurance certificate set forth any applicable limitations. Kates v. St. Paul Fire & Marine Ins. Co. (D. Mass. 1981), 509 F. Supp. 477. This case is not helpful in resolving the issue before us in that it involved the interpretation of the public policy underlying the Massachusetts coordination of benefits statute. Investor’s National Life Ins. Co. v. Norsworthy (1981), 160 Ga. App. 340, 287 S.E. 2d 66. The decision in this case rests upon Georgia statutory law which requires actual delivery of the insurance certificate to the insured. Denial of summary judgment was held proper where there were issues of fact surrounding the actual delivery of the certificate. We note, however, that Georgiá common law provides that the provisions of the master policy control even where applicable limitations do not appear on the insurance certificate.