Plaintiffs Michael L. Levine and Victoria Levine, husband and wife, (collectively, "the Levines") brought a putative class action lawsuit against Blue Shield of California ("Blue Shield"). The Levines alleged fraudulent concealment, negligent misrepresentation, breach of the implied covenant of good faith and fair dealing, unjust enrichment, and unfair competition (California Bus. & Prof. Code § 17200 et seq.).
The Levines' causes of action were based on their contention that Blue Shield had a duty to disclose the Levines' monthly health care premium would have been lower had the Levines designated Victoria, rather then Michael, as the primary insured, and had added Michael's two minor dependents to a single family plan, rather than having one dependent covered under a separate health care plan and the second dependent covered under a separate health insurance policy.
Blue Shield filed a joint demurrer and motion to strike the class action allegations. In its brief, Blue Shield maintained that all of the Levines' claims failed because Blue Shield had no duty to disclose information concerning how the Levines could have structured their health care coverage so as to lower their monthly health care premiums. The trial court granted the demurrer, and the Court of Appeal affirmed.
Following California Service Station etc. Assn. v. American Home Assurance Co. (1998) 62 Cal.App.4th 1166, the Court of Appeal rejected the Levines' contention that Blue Shield was required to disclose to them the lowest price it would accept for the particular health care coverage the Levines requested. The court explained, "[t]here is no special duty in the relationship between an insurer and a potential insured. The relationship between an insurer and a prospective insured is not a fiduciary relationship." Thus, "an insurer does not owe a purchaser of insurance any 'special duty' in 'negotiating the price of an insurance contract.'"
Love v. Fire Ins. Exchange (1990) 221 Cal.App.3d 1136 supported this conclusion, the court explained. In Love, the court held an insurer does not stand in a true fiduciary relationship with an insured. Courts have imposed "special obligations" on insurers only where those obligations foster the unique purposes of an insurance contract, namely, bringing an insured peace of mind and security from loss. However, the amount of money an insurer is willing to accept in exchange for coverage is not information that implicates the special relationship between an insurer and its insured because it does not relate to coverage or the processing of claims.
The court also rejected the Levines' claim that Blue Shield had a statutory duty of disclosure under Insurance Code § 332. Without accepting the Levines' contention that Section 332 applied to Blue Shield, the court concluded the statute did not require an insurer to disclose the lowest hypothetical price it would accept in exchange for coverage.
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