Robert Watson appeals from a summary judgment entered by the Etowah Circuit Court ("the trial court") on his claim of bad faith and on his request for damages for mental anguish against Life Insurance Company of Alabama ("LICOA"). We dismiss the appeal.
On June 4, 2009, Watson filed a complaint alleging claims of breach of contract and bad faith against LICOA. Specifically, he alleged, in pertinent part:
Watson asserted that the breach of contract had caused him to suffer mental anguish and emotional distress. He requested compensatory damages for the breach of contract and punitive damages for the bad faith failure to pay.
On July 2, 2009, LICOA answered the complaint, and, on September 8, 2010, LICOA filed a motion for a summary judgment on all claims asserted by Watson, along with evidentiary materials in support thereof. On November 5, 2010, Watson filed a brief and evidentiary materials in opposition to the summary-judgment motion. On November 12, 2010, the trial
Pritchett v. ICN Med. Alliance, Inc., 938 So.2d 933, 935 (Ala.2006).
The facts of this case are undisputed. In 1997, Watson and his wife, Lavonne Watson, purchased from LICOA the "Cancer Ultimate" policy, including a radiation and chemotherapy rider, and LICOA issued the Watsons policy number H680040 ("the policy"). Hoyt Casey, the vice president over claims and reinsurance for LICOA, testified by deposition. Casey testified that the policy is a supplemental policy, which means that the benefits are paid directly to the insured regardless of whether the covered individual has health insurance. Lavonne Watson testified by deposition that, at the time they purchased the policy, a LICOA agent discussed the policy with her and used a handout to describe the policy. That handout provided, in pertinent part:
The "RADIATION AND CHEMOTHERAPY BENEFIT RIDER" to the policy provided, in pertinent part:
The policy defined the term "actual charges" as: "The actual charges made by a person or entity furnishing the services, treatment, or material."
On September 22, 2004, LICOA sent Lavonne Watson a letter stating, in pertinent part:
The brochure for the Ultimate III policy states, in pertinent part:
The brochure defined "usual and customary charges" as
The Watsons declined to change policies.
On May 12, 2008, Watson underwent a biopsy. On May 14, 2008, LICOA sent a letter to Lavonne Watson stating, in pertinent part:
On May 15, 2008, based on the May 12, 2008, biopsy, Watson was diagnosed with large B-cell lymphoma. He subsequently underwent treatment for lymphoma, including chemotherapy treatments, and submitted several claims to LICOA. LICOA refused to pay the amount included on the bills from the medical providers, but, instead, paid Watson the amount that the medical providers had accepted as payment from Blue Cross and Blue Shield of Alabama, Watson's health-insurance provider. Additionally, LICOA denied payment of Watson's claims for benefits for certain "blood-builder" drugs that he was required to take subsequent to his chemotherapy treatments.
Casey testified that, at one point in time, the amounts stated on a medical provider's bill and the amount that the provider actually charged and accepted as full payment were the same. He testified, however, that in 2001 LICOA discovered that the medical industry had changed its accounting practices so that a medical provider's bill was actually greater than the amount that was actually charged and accepted as full payment. He testified that before it made that discovery in 2001, LICOA had required an insured to submit only the bill from the medical provider in support of a claim and that LICOA had paid the insured the amount billed. According to Casey, after 2001, LICOA began requiring additional documentation and would pay only the amount the medical provider accepted as full payment for its services. He testified that, before 2001, LICOA was overpaying benefits. Thus, the amount of benefits that LICOA paid decreased after 2001. He testified that, although the amount of benefits paid are tied to the amount of the premiums charged, the premiums on LICOA's policies were not reduced in 2001. He testified that when the policies were developed, the premiums were based on what a person was actually being charged, not on an inflated amount that no one is expected to pay.
Casey testified that the policy was not amended in 2001, and LICOA did not send notice of the additional documentation requirements to its insureds. Casey testified that there was some confusion on the part of certain claimants when the change took place. He testified that LICOA dealt with those claimants on a case-by-case basis. He testified, however, that most people understand that it is commonplace in the medical industry that the amount billed and the amount that the provider is actually paid or charged are different. Casey testified that LICOA's position is
Casey testified that the first lawsuit against LICOA regarding the issue of the interpretation of the term "actual charges" was filed in 2004 in Alabama. He testified that that lawsuit was resolved out of court. He testified that he had given several depositions in cases on the issue of the interpretation of the term "actual charges." Casey testified at his deposition that two other cases were currently pending against LICOA in Alabama concerning the issue and that no court had entered a judgment as a matter of law in favor of LICOA. He testified that most of the cases had been resolved out of court. Casey testified that the United States District Court for the Middle District of Alabama had determined that the term "actual charges" was not ambiguous in Claybrook v. Central United Life Ins. Co., 387 F.Supp.2d 1199 (M.D.Ala.2005). Casey also testified that the Alabama Department of Insurance had made an inquiry about LICOA's interpretation of the term "actual charges" but that no action was taken.
On appeal, Watson first argues that the trial court erred in entering a summary judgment in favor of LICOA on the bad-faith-failure-to-pay claim because, he says, he submitted substantial evidence indicating that LICOA's failure to pay 100% of his claims under the policy for the actual charges made by his health-care providers established both a "normal" and an "abnormal" case of bad faith.
Jones v. Alfa Mut. Ins. Co., 1 So.3d 23, 31-32 (Ala.2008).
With regard to the "normal" claim of bad faith, Watson argues that LICOA had no "reasonably legitimate or arguable reason for denial of [his] claim." Before we address the merits of Watson's argument, however, we must first determine whether the trial court properly certified the judgment as final. "An appellate court may raise the impropriety of a Rule 54(b), Ala. R. Civ. P., certification ex mero motu." Allen v. Briggs, 60 So.3d 899, 903 (Ala.Civ.App.2010). "[A] Rule 54(b)[, Ala. R. Civ. P.,] certification should not be entered if the issues in the claim being certified and a claim that will remain pending in the trial court `"are so closely intertwined that separate adjudication would pose an unreasonable risk of inconsistent results."'" Schlarb v. Lee, 955 So.2d 418, 419-20 (Ala.2006) (quoting Clarke-Mobile Counties Gas Dist. v. Prior Energy Corp., 834 So.2d 88, 95 (Ala.2002), quoting in turn Branch v. SouthTrust Bank of Dothan, N.A., 514 So.2d 1373, 1374 (Ala.1987)). "`Breach of an insurance contract is an element of a bad-faith-failure-to-pay claim.'" Ex parte Safeway Ins. Co. of Alabama, Inc., 990 So.2d 344, 351 (Ala. 2008) (quoting Pontius v. State Farm Mut. Auto. Ins. Co., 915 So.2d 557, 564 (Ala. 2005)). Therefore, in order for this court to determine whether the trial court properly entered a summary judgment on the "normal" claim of bad faith failure to pay, we would necessarily have to determine the merits of the breach-of-contract claim that is still pending before the trial court. Accordingly, we conclude that the "normal" bad-faith claim and the breach-of-contract claim "`"are so closely intertwined that separate adjudication would pose an unreasonable risk of inconsistent results."'" Schlarb, 955 So.2d at 419-20.
Watson also argues that he established an "abnormal" bad-faith claim because, he says, LICOA is relying on an ambiguous term in the policy — "actual charges" — as a lawful basis for its refusal to pay his full claim. See White v. State Farm Fire & Cas. Co., 953 So.2d 340, 349 (Ala.2006) ("[I]n an `abnormal' case [of bad faith], [an insurance company] cannot use ambiguity in the contract as a basis for claiming a legitimate or arguable reason for not paying the claim."). We note, however, that, whether a contract is ambiguous is the threshold issue in a breach-of-contract claim. Avis Rent A Car Systems, Inc. v. Heilman, 876 So.2d 1111, 1121 (Ala.2003). Thus, in order to determine whether the term "actual charges" is ambiguous, this court would have to determine the threshold issue in a claim that is still pending before the trial court. Accordingly, we also conclude that the "abnormal" bad-faith claim and the breach-of-contract claim "`"are so closely intertwined that separate adjudication would pose an unreasonable risk of inconsistent results."'" Schlarb, 955 So.2d at 419-20.
Based on the foregoing, we conclude that the trial court erred to the extent that it certified its summary judgment on Watson's claim of bad faith failure to pay as final.
Watson also argues that the trial court erred in entering a summary judgment
Hurst v. Cook, 981 So.2d 1143, 1150 (Ala. Civ.App.2007). Because the trial court denied LICOA's summary-judgment motion as to Watson's breach-of-contract claim and granted the motion as to Watson's request for damages for mental anguish based on LICOA's breach of the contract, the summary judgment does not dispose of the entirety of Watson's breach-of-contract claim. Accordingly, we conclude that the trial court also erred in certifying its summary judgment on Watson's request for mental-anguish damages as final. Hurst, 981 So.2d at 1158.
Based on the foregoing, we conclude that the trial court "exceeded its discretion in certifying the partial summary judgment as final. `A nonfinal judgment will not support an appeal.'" Schlarb, 955 So.2d at 420 (quoting Dzwonkowski v. Sonitrol of Mobile, Inc., 892 So.2d 354, 363 (Ala.2004)). Consequently, we dismiss the appeal as being from a nonfinal judgment. Schlarb, supra.
THOMPSON, P.J., and PITTMAN, BRYAN, and THOMAS, JJ., concur.