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Merritt Personal Lines Manual: A Major Family Member Dispute

If you're about to have a baby, read your policy carefully and be extremely cautious about changing your insurance. The 1991 Florida appeals court decision Annemarie Harris v. Florida shows how much even people who are supposed to be familiar with the health insurance system can miscue.

Annemarie Harris, an attorney employed as an assistant public defender by the Dade County Public Defender's Office, chose to enroll in one of the state-approved HMO plans for individual health insurance coverage shortly after she began her state employment. In December 1987 the contract between Harris's HMO and the state was terminated and Harris was left with the option of selecting another HMO insurance plan or the self-insurance plan.

To aid her in deciding which plan to apply for, Harris -- who was then three months' pregnant -- contacted Faith Quincoses, the administrative assistant in the public defender's office designated to advise employees of the benefits available to them under the various plans and to assist them in completing the paperwork necessary to secure such benefits.

Quincoses supplied Harris with the names of several fellow employees whom she could contact regarding their experiences with the health insurance plans they had selected. Following her discussions, Harris elected individual coverage through the state group health self-insurance plan.

In mid-April Harris again consulted Quincoses pertaining to the question of when she should convert from individual to family health insurance, so that her unborn child, who was due for delivery in June 1988, would be covered.

Quincoses erroneously told Harris that in order for her child to be included under the state plan, she must prepare and submit the necessary paperwork within 30 days from the child's birth. Quincoses considered that as long as the employee notified the division and did the paperwork within 30 days after the child's birth, the child would be covered as a family member.

Quincoses subsequently began work on the appropriate forms in order for Harris to complete her application for family coverage prior to June 1, the date scheduled for Harris' maternity leave. Before Harris signed the necessary papers, however, she experienced unexpected and severe complications with her pregnancy, resulting in an emergency premature birth in late April.

Almost immediately following the delivery of the daughter, the child's condition worsened. She was transferred to another hospital with proper neonatal facilities. The infant remained in that hospital for approximately two months, incurring medical expenses of approximately $180,000. While the state health insurance plan covered Harris' expenses resulting from the birth, it refused to pay any of the child's expenses, on the ground that Harris had only individual -- not family -- coverage at the time of her daughter's birth.

Although the paperwork, which Quincoses signed on behalf of Harris, was submitted on or about May 10, the State refused to provide the pertinent benefits available under family coverage, asserting that the child was not a named insured as of the date of her birth and that once she became insured under the policy, her expenses related to a preexisting condition which was not covered under the policy.

In reaching its determination, the State relied on Florida Administrative Code, which provided in relevant part:

An employee or retiree may begin family coverage prior to acquiring any eligible dependents. Since such coverage is effective the first day of any given month, employees who will acquire eligible dependents during the month and are desirous of having immediate coverage of such dependents must make application in time for a complete month's premium to be deducted prior to the first day of the month during which the dependent will be acquired. Otherwise, coverage cannot be effective on the actual date the dependent is acquired.

Under the division's interpretation of this rule, in order for the medical expenses of Harris' daughter to be covered, the premium for such coverage was required to have been paid before April 1. Because the first premium was not paid until sometime after May 10, or on a date following the child's birth, the division concluded that the child was not insured at the time of its birth. Therefore none of the child's medical expenses could be paid under the coverage provided.

Harris appealed the order denying her request for coverage for her infant daughter under the state group health self-insurance plan. She contended that the state hearing officer handling her case erred in failing to construe the ambiguous insurance document against its drafter, the State and in failing to find that the state was prohibited from denying coverage by virtue of a material misrepresentation made to Harris by its agent, Quincoses.

Considering Harris' first argument -- that the insurance plan was ambiguous -- the appeals court reviewed the applicable features of the plan. It was described in the "State of Florida Employees Group Health Self Insurance Plan Brochure." Although this benefit document provided general information regarding the effective date of coverage, it said nothing about a change from single to family coverage, or the effective date for doing that.

However, the appeals court wrote, "While we consider that it would be far more informative for the state to provide a copy of the policy to each of its insureds, we cannot say that the benefit document is on its face ambiguous."

Considering Harris' second argument -- that the State should be prohibited from not covering the baby girl -- the court was equally inconclusive. It couldn't find enough fact to make any conclusions about this point, either. It wrote:

If Quincoses first gave the erroneous advice to Harris in December 1987, or at any point prior to April 1, 1988, Harris could have relied on that advice to her detriment by failing to convert to family coverage before April 1, 1988. The impediment to our adequately reviewing this issue, however, relates to the lack of a sufficient record pertaining to the elements of Harris' reasonable reliance on the representation and her detrimental change in position caused by that representation and reliance.

This was effectively a victory for Harris and her daughter.

The appeals court reversed the hearing officer's conclusions and remanded the matter with directions for the hearing officer "to take such additional evidence as is necessary to fully resolve the issues presented."

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