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Pruitt v. South Carolina Medical Malpractice Liability Joint Underwriting Association3/15/1999
Pruitt, et al., v. South Carolina Medical Malpractice Liability Joint Underwriting Association
Appeal From Marlboro County James E. Lockemy, Circuit Court Judge
Heard February 10, 1999
REVERSED
Roy A. Pruitt, R. Anthony Pruitt, and Pamela Hatcher (Respondents) sought a declaratory judgment against the South Carolina Medical Malpractice Liability Joint Underwriting Association (JUA) that it remained obligated to the Respondents under the terms of a structured settlement agreement. The trial court found JUA was obligated, but credited JUA with amounts received by the Respondents when they opted-out of their annuity contracts. JUA appeals. We reverse.
On December 17, 1984, the Respondents entered into a release and structured settlement agreement as a result of a medical malpractice suit. The consideration consisted of an immediate cash payment and monthly payments. The release provided:
"All of the [monthly] payments . . . are to be guaranteed by the Executive Life Insurance Company throught its issuance of appropriate companion instruments in the form of a single premium annuity policy, the original of such policy to be owned and retained by Underwriters Adjustment Company . . . ."
The annuities were issued December 10, 1984. In early 1991, JUA was informed that Executive Life was placed in a conservatorship in California. In the fall of 1993, the California Insurance Commissioner announced the sale of Executive Life's assets to Aurora National Life Insurance Company. Pursuant to a court-approved resolution, Aurora sent each policy owner and payee a document offering the choice of cashing in the annuity or continuing to receive his or her annuity payments from Aurora.
Aurora included an opt-out form for those who desired to surrender their policy and receive a lump sum. The Opt-Out form provided:
"I elect NOT to participate in the Rehabilitation Plan of Executive Life Insurance Company. Therefore, I surrender my contract as of 2/27/94 and elect to receive the first cash payment which will be paid following 3/29/94. . . . I understand that once I elect to opt out and this form is received by ELIC, my decision is irrevocable, and that all benefits associated with my present contract other than future Opt-Out Payments . . . will cease as of 2/27/94." (emphasis in original).
On January 7, 1994, the Respondents' counsel wrote Samuel McEwen, JUA's Claims Manager, noting that notwithstanding JUA's election, the Respondents "continue to look to you for payment of the sums promised them. . . . They will, however, not accept any modification of your obligation to them and their actions should not be taken by you as any agreement to any modification of the obligation of the JUA to them."
On January 11, 1994, McEwen responded:
"The JUA has no obligation to make an election for your clients; however we will endorse either of the options chosen by your clients in the election package. . . . e advised that we have worked very hard to be sure that your clients have received their benefits as promised."
Each Respondent signed the Opt-Out form and sent it to JUA for its signature. JUA then forwarded the executed forms to Executive Life. Executive Life acknowledged receipt of the timely executed forms. Respondents, however, changed their minds and on February 25, 1994, attempted to revoke their election by letter, stating: "In all the confusion of the rehabilitation of [Executive Life], we feel that we made a wrong decision by electing to opt out of our annuities." This request to revoke their decisions was denied.
The Respondents receiv
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