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Cary v. United of Omaha Life Insurance Co.2/28/2005
JUDGMENT REVERSED AND CASE REMANDED
EN BANC
JUSTICE KOURLIS dissents, and JUSTICE BENDER joins in the dissent.
JUSTICE COATS dissents.
Petitioner, Thomas Cary, individually and on behalf of his minor daughter, Dena Cary, appeals a judgment of the court of appeals holding that the Arvada Medical and Disability Health Care Plan unambiguously excludes Dena's injuries from coverage.
We hold that the Plan is ambiguous because it is susceptible to more than one reasonable interpretation. Therefore, we reverse the court of appeals' holding and remand with instructions to return the case to the trial court for proceedings consistent with this opinion.
I. Facts and Procedural History
Petitioner was an employee of the City of Arvada, which provided him and his fourteen-year-old daughter, Dena, with health coverage under the Arvada Medical and Disability Health Care Plan (Plan), a partially self-funded municipal health plan overseen by the Arvada Medical and Disability Trust Fund (Trust). Like all Arvada employees, Petitioner did not receive a copy of the Plan itself. Rather, in February 1994, Arvada distributed a summary plan description (1994 SPD), which highlighted relevant aspects of the Plan.
In 1996, the Trust retained Respondent, United of Omaha Life Insurance Company (United), to administer the Plan. United was responsible for handling and processing all claims, and for determining the extent of coverage. United's determinations were appealable to the Trust. Mutual of Omaha of Colorado, Inc. (Antero) sub-contracted with United to fulfill some of United's claims investigations and appeals responsibilities.
In November 1996, Arvada distributed a flier entitled "Mutual Omaha Companies Point-of-Service Plan Summary" (1996 Flier) that summarized benefits and listed general exclusions from the Plan. In or around July 1997, Arvada distributed a new summary plan description to its employees (1997 SPD) which stated that it was effective January 1, 1997. Both the 1996 Flier and the 1997 SPD contained markedly different exclusions than the 1994 SPD.
In June 1997, Dena shot herself under the chin in an unsuccessful suicide attempt. At the time, she was suffering from a major depressive episode associated with diagnosed bipolar disorder, a biologically based mental illness covered by the Plan. Dena's gunshot injuries required extensive treatment, hospitalization, and multiple surgeries.
Petitioner and Dena (Insureds) applied for benefits under the Plan, but United denied the claim. After an unsuccessful appeal to the Trust, Insureds brought suit in Denver District Court (trial court) against Arvada, the Trust, United, and Antero seeking a declaration that the Plan covered Dena's injuries, as well as damages for breach of insurance contract and bad faith failure to provide insurance benefits.
On cross motions for summary judgment, the trial court held that the Plan's definitions and exclusionary provisions were ambiguous, and resolved the ambiguity in favor of coverage. Additionally, the trial court dismissed Insured's bad faith claim with prejudice, holding that claims of insurance bad faith against third-party administrators are limited to the workers' compensation arena.
Insureds appealed summary judgment on their claim of insurance bad faith, and United cross-appealed summary judgment on the issue of coverage. In Cary v. United of Omaha Life Insurance Co., 43 P.3d 655, 659 (Colo. App. 2001) (Cary I), the court of appeals affirmed the trial court's grant of summary judgment on Insureds' bad faith claim. Having determined that judgment for United w
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