Regional Care Services, Corp. v. Companion Life Insurance

MEMORANDUM

Companion Life Insurance Company appeals the district court’s grant of summary judgment to Regional Care Services Corporation and Regional Care Services Corporation Health and Welfare Employee Benefit Plan (“the Plan”) in their action on a stop-loss contract between Companion and the Plan. We affirm in part, reverse in part and remand.

(1) Regional Care created the Plan, which provided medical benefits to covered employees and their eligible dependents. The Plan was self-insured, but it entered into a stop-loss insurance contract (“the Contract”) with Companion, wherein Companion would reimburse the Plan for benefit amounts paid to an eligible dependent which were over $150,000. In this diversity action, the substantive law of the State of Arizona applies to the interpretation of the Contract, which incorporated the terms of the Plan. Under that law, where the provisions of an insurance contract are “plain and unambiguous upon their face,” they control as a matter of law, but if they ultimately are ambiguous, they are construed against the insurer. Here, the Plan gave the Plan’s administrator the “maximum legal discretionary authority to construe and interpret the…