Dawes Mining Co. V. Callaha

Dawes Mining Co. v. Callahan

What is the legal issue? The review is on Dawes Mining Co. v. Callahan, 154 Ga.App.229, 267 S. E.2d 830 (1980), in which the Court of Appeals held that when an employer changes its group health insurance policy on employees and the employees are incorrectly advised that the coverage under the new policy is the same as under the old policy, an employee can insurance coverage, and can recover such damages as result from the difference in coverage.

What are the main facts of the case?

Callahan was first employed by appellant Dawes Mining Co. in 1957 as an hourly wage earner. Callahan started participating in Dawes' group health insurance program. In 1975, without consulting the employees, Dawes changed coverage from the existing insurer to another insurance company. The insurer's representative said the coverage was the same as under the former policy and said nothing about exclusion of coverage for pre-existing illnesses. Callahan, who could not read but could sign his name, signed an application for insurance as directed by the insurer's representative. Unknown to Callahan at the time the new insurance master policy had a provision which prohibited payment of medical expenses incurred as a result of pre-existing illnesses until the policy had been in effect a certain period of time. Within that excluded period Callahan's wife was hospitalized for a pre-existing illness and passed. The new insurer mistakenly paid some of the expenses and then demanded repayment.

What is the court's ruling?

The jury returned a verdict for Callahan for an amount equal to the medical and hospital expenses incurred, Dawes' motions for judgment not withstanding the verdict and new trial were dined, and Dawes appealed. The Court of appeal affirmed and we granted certiorari. The court affirmed the judgment in favor of the employee.

How did the court justify its ruling?

The status of the employer and the relationship between the employer and the employee are the items which are controlling. The court has held that for other purposes the employer is an agent of the employee. Employers act not as agents of the insurer but for their employees or for themselves. . Code Ann. Section 37-707 provides that "Any relations shall be deemed confidential, arising from nature or created by law, or resulting from contracts, where one party is so situated as to exercise a controlling influence over the will, conduct, and interest of another: or where, from similar relation of mutual confidence, the law requires the utmost good faith: such as partners, principal and agent, etc. Where a confidential relationship is found to exist between employer an employee or principal and agent, the duty to read does not bar recovery against the employer or agent When changing a group policy insuring contributing employees and obtaining the applications of those employees, the employer acts as an agent of the employees, and as such is under a duty to notify the employees of differences between the old and new policies and of any rights the employees may have to continue the old insurance on an individual basis. Where this duty is breached and employee can recover such damages as result from the difference in coverage. An employer policyholder of a group health and accident policy is obligated to inform the "insured employee of the termination or modification of benefits under the policy."

Metropolitan Life Insurance Co. v. Massachusetts

What is the legal issue?

A Massachusetts statute requires that specified minimum mental health-care benefits be provided a Massachusetts resident who is insured under a general insurance policy, an accident of sickness insurance policy or an employee health-care plan that covers hospital and surgical expenses. The first question before us in this case is whether the state statute, as applied to insurance policies purchased by employee health-care plans regulated by the federal Employee Retirement Income Security Act of 1974, is pre-empted by that Act. The second question is whether the state statute, as applied to insurance policies purchased pursuant to negotiated collective-bargaining agreements regulated by the National Labor Relations Act, is pre-empted by the Labor Act.

What are the main facts of the case?

Mandated-benefit laws that require an insurer to provide a certain kind of benefit to cover a specified illness or procedure whenever someone purchases a certain kind of insurance are a subclass of such content regulation. Mandated-benefit statutes then are only on variety of a matrix of state laws that regulate the substantive content of health-insurance policies to further state health policy. Massachusetts Gen. Laws Ann., ch. 175, Section 47B is typical of mandated-benefit laws currently in place in the majority of States. In respect to a Massachusetts resident, it requires any general health-insurance policy that provides hospital and surgical coverage, or any benefit plan that has such coverage, to provide as well a certain minimum of mental-health protection. Section 47 B requires that a health-insurance policy provide 60 days of coverage for confinement in a mental hospital, coverage for confinement in a general hospital equal to that Provided by the policy for nonmetal illness, and certain minimum outpatient benefits.

What is the court's ruling?

The judgment of the Supreme Judicial Court of Massachusetts is therefore affirmed.

How did the court justify this ruling?

We hold that Massachusetts' mandated-benefit law is a law which regulates insurance and so is not pre-empted by ERISA as it applies to insurance contracts purchased for plans subject to ERISA. We further hold that the mandated-benefit law as applied to a plan negotiated pursuant to a collective-bargaining agreement subject to the NLRA is not pre-empted by federal labor law. They also used section 514(b) (2) (A), 29 U.S.C. and section1144 (b) (2) (A).

Rush Prudential HMO, Inc. v. Moran

What is the legal issue?

Whether the statute, as applied to health benefits provided by a health maintenance organization under contract with an employee welfare benefit