Summary
The United States Court of Appeals for the Seventh Circuit affirmed summary judgment for Jackson National Life Insurance Company in a dispute over coverage for home health care under a nursing care long-term care insurance policy. The majority held that the policy did not provide a home health care benefit and that its alternative plan of care provision did not trigger Illinois regulatory protections because the insured was not already receiving policy benefits. Judge Ripple dissented in part, arguing that the court should certify the unsettled state-law question to the Illinois Supreme Court.
Topics
Practice areas
Questions Presented
- Whether the Nursing Care Policy provided benefits for home health care within the meaning of Illinois Administrative Code title 50, section 2012.70(a)(2), such that the policy's conformity-with-state-statutes provision incorporated that regulation.
- Whether Jackson National breached the policy by denying Hartnett's request for home health care under the alternative plan of care provision.
- Whether Jackson National's denial of coverage breached the implied covenant of good faith and fair dealing.
- Whether the Seventh Circuit should certify the interpretation of Illinois Administrative Code title 50, section 2012.70(a)(2), to the Supreme Court of Illinois.
Holdings
- The Nursing Care Policy did not provide a home health care benefit within the meaning of Illinois Administrative Code title 50, section 2012.70(a)(2), because its alternative plan of care provision offered only discretionary coverage outside the policy's normal scope and did not guarantee home health care benefits.
- Jackson National did not breach the insurance policy by denying Hartnett's home health care claim because the policy's conditions for the alternative plan of care benefit were not satisfied.
- The implied covenant of good faith and fair dealing could not override or modify the policy's express terms, and Jackson National did not violate the covenant by enforcing the policy's unmet precondition.
- The majority declined to certify the question because it found the Illinois regulation unambiguous and the policy did not provide home health care benefits.
Key quotations
“Contracts contain an implied covenant of good faith and fair dealing, but parties “are entitled to enforce the terms of the contract to the letter and an implied covenant of good faith cannot overrule or modify the express terms of a contract.”” (6)
“Interpreting Hartnett’s policy as affirmatively providing benefits for home health care would be “inconsistent with the flexibility inherent in the concept of an alternate plan of care.”” (5)
Factual background
Lorrayne Hartnett purchased a Nursing Care Policy in 1998 that primarily provided benefits for care in nursing or assisted living facilities, with an alternative plan of care provision allowing other arrangements under specified conditions. During the COVID-19 pandemic, at age 94, Hartnett fractured her hip and underwent surgery. Her physician prescribed home care because her age and health conditions made institutional care especially risky, but Jackson National denied her claim for home health care expenses because she was not receiving policy benefits in a nursing or assisted living facility and the policy did not provide a guaranteed home health care benefit.
Procedural history
Lorrayne Hartnett's trustees sued Jackson National in the United States District Court for the Northern District of Illinois after the insurer denied coverage for home health care costs. The parties filed cross-motions for summary judgment, and the district court granted Jackson National's motion, concluding that the policy did not provide home health care benefits and that denial of coverage under the alternative plan of care provision was not bad faith. The Seventh Circuit affirmed.