Haisch v. Allstate Insurance

SULT, Judge,

dissenting.

¶28 I disagree that Mrs. Haisch has not established at least a prima facie claim for consumer fraud. A.R.S. § 44-1522(A), in pertinent part, makes unlawful the “use ... by any person ... of any ... omission of any material fact with intent that others rely upon such ... omission, in connection with the sale ... of any merchandise____” Reduced to its essence, this is a case where an insurance company repeatedly sold a consumer insurance coverage that the consumer may well have chosen not to purchase had the company disclosed it intended to rely on an obscure statute to severely limit coverage *613if the consumer also happened to purchase the wrong kind of health insurance.

¶29 It is undisputed that Allstate never told Mrs. Haisch what the consequences to her medical payments coverage would be if she enrolled in an HMO rather than purchase indemnity health insurance. As she testified,

I paid for the [Med Pay] benefits all along. I did not know-I was not aware that if my medical payments would be paid by ... an HMO, that I could not get anything from-you know, it would not be reimbursed through Allstate.
I still say that I’ve been paying premiums all this time for that and nobody ever told me that if I had any kind of medical coverage, Allstate would never, would never pay for it. They should have told me that up front____

I agree that she should have been told up front. And I contend that Allstate’s failure to do so was an omission of material fact in the marketing of its automobile policy that constituted an unlawful act under section 44-1522(A).

¶ 30 The majority is correct when it observes that consumers purchase insurance coverage to obtain protection from calamity. That is precisely what Mrs. Haisch intended doing here, in accordance with the sound advice her deceased husband had given her. Yet the majority refuses to validate this perfectly reasonable approach to the purchase of insurance when it fails to require Allstate to disgorge the premium Mrs. Haisch unwittingly paid to Allstate for a level of protection significantly less than she reasonably thought she was getting.

¶ 31 The majority justifies its position by arguing that Allstate was not obligated to disclose to Mrs. Haisch that she would be ineligible for what the majority calls a “bonus reimbursement” if she enrolled in an HMO. See supra ¶ 18. This misses the point and mischaraeterizes the issue. What Allstate is charged with knowing is that Mrs. Haisch and all like her purchase medical payments coverage with the expectation that it will pay in the event of a covered injury. If there are to be any exceptions to this reasonable expectation, Allstate is bound to disclose them. This is particularly true when the expected coverage can be defeated by the fortuitous purchase of HMO health coverage rather than indemnity health coverage. Only when full disclosure is made can the Mrs. Haisches of the world make an informed decision whether to still purchase the coverage or to decline to purchase, recognizing that by paying the premium asked, they would be getting less coverage than others who pay the same premium.

¶32 The “bonus reimbursement” pejoration of the majority reflects both the trial court’s and the majority’s apparent impression that Mrs. Haisch is complaining because she has been deprived of a “double recovery” and that such a concept is anathematie in our jurisprudence. This argument might have some relevance if Mrs. Haisch were seeking a declaration of coverage, but she is not.8 What she is seeking is return of the unfair premium she paid because of Allstate’s unlawful failure to disclose. But even if “double recovery” were involved, such a concept is not unknown in our jurisprudence. Witness the collateral source rule which, in the event of a windfall, assigns the windfall to an accident victim over a tortfeasor. See Michael v. Cole, 122 Ariz. 450, 452, 595 P.2d 995, 997 (1979). This is consistent with the law’s effort, where possible, to choose the blameless over the culpable.

¶33 In this case, however, the majority reverses this approach. Here, we have a sophisticated insurance company extracting from an uninformed consumer a premium purportedly purchasing full medical payments coverage, and, in fact, actually pur*614chasing full coverage if the consumer is fortunate enough not to enroll in an HMO. I presume that the premium for this coverage is calculated based on the company’s expectation that it mil have to pay full benefits if its insured is injured. Such a presumption is logical because the company cannot control what type of health insurance will be purchased by its insureds, and the company must set its rates on the assumption that all of its insureds will have either indemnity type health insurance or no insurance at all. Thus, when an insured is injured but happens to be enrolled in an HMO, a windfall situation arises. Here, the majority assigns the windfall to Allstate, which gets to pocket what in effect is an excessive premium that was obtained by unlawful silence. What the majority does not explain is why Allstate should benefit in this way.

¶ 34 I would find that Mrs. Haisch has established a genuine issue of material fact whether Allstate is guilty of consumer fraud and remand for trial on that issue.

. If this were a coverage issue, Allstate would have a difficult time defeating coverage. See Gordinier v. Aetna Casualty & Surety Co., 154 Ariz. 266, 272-73, 742 P.2d 277, 283-84 (1987) (even where an insurance contract term is unambiguous to the court, if it cannot be understood by the reasonably intelligent consumer, the term will be interpreted in light of the reasonable expectations of the average insured). Mrs. Haisch’s expectation of full coverage is certainly reasonable, and this policy's taking away of the coverage is certainly not apparent to ordinary consumers who might check on their rights.