The opinion of the court was delivered by: Roszkowski, District Judge.
Before the court are cross-motions for summary judgment filed
by the plaintiff, Herbert E. Martz, and the defendant, The Union
Labor Life Insurance Company. For the reasons stated herein, the
plaintiff's motion for summary judgment is granted and the
defendant's motion for summary judgment is denied.
Jurisdiction is invoked pursuant to 28 U.S.C. § 1332. Plaintiff
is a resident of Illinois, and the defendant is a Maryland
corporation authorized to do business in Illinois. The matter in
controversy, exclusive of interest and costs, exceeds the sum of
Ten Thousand Dollars ($10,000).
The undisputed facts are as follows.
The plaintiff, Herbert E. Martz, was a member of the Central
Laborers Union. As a union member, plaintiff was insured by the
Union Labor Life Insurance Company under a group policy. The
policy covered medical and hospital bills up to a maximum of
$100,000 per calendar year.
Termination or modification of the policy was provided for
under the policy terms, which stated:
TERMINATION AND CHANGE OF POLICY . . .
On any premium due date the Policyholder may
terminate this Policy or, subject to the Company's
approval, may modify, amend or change the provisions,
terms and conditions of this Policy. The Company's
written consent shall be required to make any such
modification, amendment or change, but the consent of
any insured Person or any other Person referred to in
this Policy shall not be required to effect such
termination or any modification, amendment or change
of this Policy.
SUBROGATION. The Company shall be subrogated to the
extent of any benefits paid under this Contract, to
the proceeds of any settlement or judgment effected
against a third party and resulting from the exercise
of any rights of recovery which the Person may have
against any person or organization. The Person
claiming benefits under this Policy shall execute and
deliver such instruments and take such other action
as the Company may require to implement this
provision. The Person shall do nothing to prejudice
the rights given the Company by this provision
without its consent.
The Trustees of the Central Laborers Union Welfare Fund met on
October 28, 1980 to consider the subrogation provision. At this
meeting the trustees reviewed and unanimously voted to amend the
policy to include the subrogation provision. The Rider adopted
stated that the subrogation provision was to be effective on and
after October 28, 1980.
A little less than a month later, a freight train struck the
plaintiff as he was driving his pick-up truck near Lena,
Illinois. He suffered severe injuries, was hospitalized, and was
treated by various doctors.
After the plaintiff was injured, two actions were taken
regarding the insurance policy. First, on December 9, 1980, the
trustees of the union's fund formally signed the subrogation
rider which was approved in the October 28, 1980 meeting. Second,
in mid-December, union members were given notice that the
insurance policy had been modified through the addition of the
subrogation provision. It is undisputed that the plaintiff
received his notice on December 18, 1980.
After incurring medical and hospital costs, the plaintiff filed
claims with the insurer. The insurer paid claims amounting to
approximately $44,750.00. The insurer then requested the
plaintiff to sign a subrogation agreement, authorizing them to
proceed against the railroad involved in the accident. Plaintiff
refused, contending that the insurer had no right to subrogation.
Upon plaintiff's refusal, the insurer immediately ceased paying
plaintiff's medical and hospital bills.
Plaintiff then commenced this action seeking a declaratory
judgment that the subrogation provision has no binding legal
effect upon him. Plaintiff raises four contentions: 1) that the
subrogation provision was not adopted in accordance with the
Master Plan's procedures for amending the policy; 2) the
modification, if valid, did not take effect until December 9,
1980, the day the rider was signed; 3) prior notice of any change
to the insured is required by law and plaintiff did not receive
notice of the modification until December 18, 1980; and 4) The
Rider's subrogation language had not been approved by the
Illinois Department of Insurance and is therefore invalid.
Plaintiff seeks a declaration that the subrogation provision
has no binding effect upon him and a ruling that the defendant
must pay ...