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LESSARD v. METROPOLITAN LIFE INS. CO.12/28/1989
gal process. In support of their argument, plaintiffs contend that prior to the litigation Equitable had withheld benefits concededly due the insured in satisfaction of its claimed overpayment and that the Wilkes court specifically held that such offsets were impermissible under § 3212(c). Plaintiffs further contend that their reading of Wilkes is supported by the statute's definition of "execution," which they read as including a non-judicial self-help offset.
Plaintiffs fail to appreciate that what the New York Court of Appeals had before it was not an order declaring that Equitable's practice of withholding benefits in satisfaction of its claimed overpayment was permissible; rather, it had before it a judgment in favor of Equitable for a sum certain, and a judicially ordered offset as a means of executing that judgment. It was that judicially ordered offset that the Wilkes court held was in violation of § 3212. See Stuart v. Metropolitan Life Ins. Co., 664 F. Supp. 619, 626 n. 18 (D.Me. 1987). Thus, plaintiffs' argument is without merit.
Counts VI, VII & VIII
Counts VI, VII & VIII allege causes of action that arose prior to January 1, 1975 and therefore are not governed by ERISA. Because plaintiffs assign no error in the Superior Court's ruling respecting counts VII & VIII, these claims are not before this Court on appeal. Count VI is a claim for breach of the group insurance contract. It alleges that there is no contractual language creating an overpayment of Plan benefits upon receipt of a retroactive SSDIB award, and also that there is no language authorizing Metropolitan to withhold Plan benefits to satisfy an overpayment; thus, under familiar rules of contract construction, summary judgment should be granted in their favor. As mentioned above, New York law controls this claim.
The Superior Court declined to apply a contra proferentem construction, asserting that "under New York law a group insurance policy is considered a contract between the employer and the insurer, with the employees as third-party beneficiaries." See Blue Cross of Northeastern New York, Inc. v. Ayotte, 35 A.D.2d 258, 315 N.Y.S.2d 998 (1970) (declining to apply a contra proferentem construction to an employer-funded group hospitalization policy). Instead, the court looked to the "actual language of the contract, and to the intent of the parties to the contract," finding that "the original and continuing intent and interpretation of both Metropolitan and Borden" was that a retroactive award of SSDIB created an overpayment of Plan benefits and that such overpayment could be recouped by withholding future benefits.
We conclude that the Superior Court erred by failing to apply a
contra proferentem construction to the Borden policy. In Danzig
v. Dikman, 53 N.Y.2d 926, 440 N.Y.S.2d 925, 423 N.E.2d 402
(1981), the New York Court of Appeals upheld the Appellate
Division's application of a contra proferentem construction to a
group health policy purchased by the plaintiff subscriber through
his association in the Queens County and Nassau County Bar
Associations. See Danzig v. Dikman, 78 A.D.2d 303, 434 N.Y.S.2d 217
(1980). While the Borden policy was not entirely
employee-funded, the fact that employee contributions accounted
for 85% of the premiums brings this case much closer to Danzig
than to Ayotte. Moreover, as a Court of Appeals decision, we
recognize Danzig as more authoritative.
The expression "contra proferentem" signifies the familiar principle that "terms in an insurance policy which are ambiguous, equivocal, or uncertain . . . are to be construed strictly and most strongly In addition to the integration of benefits provisions discus
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