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Blue Shield of California Life & Health Insurance v. the Superior Court

February 9, 2011


(Los Angeles County Supr. Ct. No. BC417371)

The opinion of the court was delivered by: Rubin, Acting P. J.


ORIGINAL PROCEEDING in mandate. Richard Rico, Judge. The petition is denied.

Blue Shield of California Life & Health Insurance Co. seeks a peremptory writ of mandate directing the trial court to reverse its order denying Blue Shield's motion for summary adjudication of plaintiff and real party in interest Myrna Kawakita's tort cause of action for bad faith breach of a health insurance policy she obtained from Blue Shield. Blue Shield contends the cause of action is barred by the two-year limitations period for such claims, and was not extended to three years by the policy's statutorily-mandated limitations provision. Assuming that Blue Shield's interpretation of the statutorily-mandated limitation provision is correct, we hold that Blue Shield, as permitted by law, drafted a more favorable provision that gave Kawakita three years to sue for a tortious breach of the implied covenant of good faith and fair dealing. Accordingly, we deny the petition.


In July 2009, Myrna Kawakita sued Blue Shield of California Life & Health Insurance Co., stating causes of action for breach of contract and tortious breach of the duty of good faith and fair dealing based on Blue Shield's August 2006 decision to rescind Kawakita's health insurance policy shortly after she received approval for, and then underwent, gastric bypass surgery. After her medical providers submitted claim forms for the procedure, Blue Shield looked at Kawakita's medical records and learned that Kawakita's application for coverage painted an inaccurate picture of her health.

The application said Kawakita was 5-feet, 8-inches tall and weighed 140 pounds. It also answered "no" to questions about the existence of certain medical conditions as part of her medical history. In fact, Kawakita was 5-feet, 6-inches tall and weighed 307 pounds. Her medical records showed the existence of numerous ailments that were not listed on her application, including hypothyroidism, high cholesterol, insomnia, depression, and obesity, along with a physician's recommendation that she undergo a psychiatric evaluation and attend weight loss classes. Blue Shield rescinded primarily because of the height and weight discrepancies, but its rescission letter also noted the existence of Kawakita's various health problems.

Kawakita bought her policy through Blue Shield's alleged agent Steven M. Stendel, and claimed that Stendel was responsible for the misstatements in her application. She sued Blue Shield for breach of contract, tortious breach of the implied covenant of good faith and fair dealing, and declaratory relief.*fn1 At the heart of her allegations was the contention that Blue Shield had initially authorized the gastric bypass procedure and its decision to rescind the contract and therefore not pay for the surgery was improper.*fn2

Blue Shield brought a motion for summary adjudication of the tortious bad faith cause of action, contending it was barred by the two-year statute of limitations for such claims. (Code Civ. Proc., § 339, subd. (1); Love v. Fire Ins. Exchange (1990) 221 Cal.App.3d 1136, 1144, fn. 4.) Insurance Code section 10350.11 requires that all health insurance policies include a provision stating, in essence, that all actions on a policy must be brought within three years of the date on which written proofs of loss must be furnished.*fn3 Anticipating that Kawakita might rely on section 10350.11 to contend the statute extended the two-year limitations period for bad faith claims to three years, Blue Shield's motion argued that the three-year provision applied to only breach of contract and contractual bad faith claims, which are otherwise governed by a four-year statute of limitations (Code Civ. Proc., § 337), while tortious bad faith claims were still subject to the shorter two-year period.

Although section 10350.11 prescribes the language to be used in a health insurance policy's provision concerning the time in which to sue on the policy, insurers are permitted to use different language that is not less favorable to an insured. (§ 10350.) Kawakita's opposition to the motion pointed out key differences between the statutorily required limitations provision and the language actually used by Blue Shield. Under the policy issued to Kawakita, the time to sue for any matters arising out of the policy could be brought within three years of the date when coverage for benefits was denied.*fn4 Kawakita argued that the broader language used by Blue Shield applied to her tortious bad faith claim.

The trial court denied Blue Shield's summary adjudication motion. According to the trial court, the language in Blue Shield's limitation provision was "exactly the same" as that in section 10350.11. Because tortious bad faith claims were considered to be actions "on the policy" for purposes of the catch-all, one-year limitations provision mandated by statute for fire insurance policies (§ 2071), the trial court reasoned that such claims were also on the policy for purposes of health insurance policies under section 10350.11. By parity of reasoning, the trial court found that bad faith tort actions against health insurers must be subject to a three-year limitations period under section 10350.11.

Blue Shield filed a petition for a peremptory writ asking us to reverse the trial court's order. (Code Civ. Proc., § 437c, subd. (m)(1).) We issued an order to show cause why that petition should not be granted.


In addition to moving for summary adjudication, parties may move for summary adjudication of individual causes of action on the ground that they lack merit. (Code Civ. Proc., § 437c, subd. (f)(1).) The rules applicable to summary judgments apply equally to motions for summary adjudication. (Lunardi v. Great-West Life Assurance Co. (1995) 37 Cal.App.4th 807, 819.) Summary judgment is granted when a moving party establishes the right to the entry of judgment as a matter of law. (Code Civ. Proc., § 437c, subd. (c).) In reviewing an order granting summary judgment, we must assume the role of the trial court and redetermine the merits of the motion. In doing so, we must strictly scrutinize the moving party's papers. The declarations of the party opposing summary judgment, however, are liberally construed to determine the existence of triable issues of fact. All doubts as to whether any material, triable issues of fact exist are to be resolved in favor of the party opposing summary judgment. While the appellate court must review a summary judgment motion by the same standards as the trial court, it must independently determine as a matter of law the construction ...

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