Pacific Mutual Life Insurance Company v. American Guaranty Life Insurance Company

American Guaranty Life Insurance Company appeals the granting of Pacific Mutual Life Insurance Company’s motion for summary judgment. The district court, finding no genuine issue as to any material fact, construed relevant provisions of the California Insurance Code to permit a prior carrier of group medical coverage to terminate an extension of benefits to a totally disabled insured when replacement insurance becomes effective, shifting responsibility for payment of benefits to the replacement insurer. We affirm.

I. BACKGROUND

On October 14, 1977, Pacific Mutual Life Insurance Company (Pacific Mutual) provided medical expense benefits to the eligible employees of Petrocon Engineering Company (Petrocon) pursuant to Pacific Mutual’s Group Policy No. GQ-14049. Subsequently, American Guaranty Mutual Life Insurance Company (American Guaranty) agreed with Petrocon to provide group medical benefits upon termination of the Pacific policy. This replacement coverage, pursuant to American Guaranty’s Group Policy No. TG-418, became effective on January 1, 1981.

In May of 1980, during Pacific Mutual’s policy period, Helen Moss became totally disabled. Mrs. Moss was the dependent of a…