Shields, A.c.j. Munson and Thompson, JJ., concur.
Summary judgment was granted in favor of Washington Public Power Supply System and John Hancock Mutual Life Insurance Company, denying certain life insurance benefits to Evelyn McCann, the beneficiary of her husband's life insurance policies. Ms. McCann appeals, contending summary judgment should not have been granted because there were genuine issues of material fact concerning: (1) what terms controlled the optional life insurance program at the time Mr. McCann enrolled in November 1988; (2) the meaning of the phrase "actively at work" as that term was used in the basic life insurance policy; (3) whether the Supply System was an agent of John Hancock; and (4) whether the Supply System and John Hancock violated the Consumer Protection Act. We reverse and remand for trial.
William M. McCann was employed as an engineer for the Supply System. On September 14, 1988, Mr. McCann went on "short-term disability" status due to cancer. On September 17, 1988, Mr. McCann was promoted from lead designer to design group supervisor. At the time of the promotion, Mr. McCann was listed as an "active" employee. Mr. McCann continued to be paid his salary throughout his "short-term disability". Judy Amacker, administrator of
employee benefits,*fn1 told Mr. McCann's supervisor to continue noting Mr. McCann as sick or on vacation until Mr. McCann returned to work.
One of Mr. McCann's benefits as an employee of the Supply System was "basic" life insurance underwritten by John Hancock, premiums for which were paid by the Supply System. Each employee received life insurance in the face amount of twice his annual salary. When Mr. McCann received his promotion, his annual salary increased from $44,560 to $47,847. His insurance eligibility increased by $7,000, from $89,000 to $96,000. However, an employee's benefit handbook which each employee was issued described the basic insurance program; it provided on page D/1:
Should you be disabled and not actively at work when your coverage would otherwise be effective, your coverage will begin on the first day you are actively at work.
If your salary increases or decreases, the coverage amount will change automatically effective on the date of such salary action. However, if you are not actively at work when your salary changes, there will be no change in your insurance amount until you return to work.
In October 1988, "Comp Talk", the intracompany newsletter on employee benefits and compensation, announced the availability of an optional life insurance program, under which the employee was to pay the premium. Optional insurance in the amount of one or two times base annual salary could be obtained. The publication stated, "This added insurance has only one exclusion -- death as a result of suicide." In November 1988, "Comp Talk" again
announced the optional life insurance program, indicating it would become effective December 24, 1988. The front page of that issue of "Comp Talk" stated in boldface print:
Secretaries, supervisors and managers --
We appreciate your extra efforts in making sure all your employees get new enrollment forms as early as possible during the open enrollment period. Please remember those employees on medical and personal leaves.
(Italics ours.) Sometime in November 1988, Mr. McCann applied for $48,000 optional life insurance. Premiums for this optional life insurance were immediately deducted from his paycheck. During the open enrollment period, Ms. Amacker was given no addendum to the basic life insurance policy which covered optional life insurance, nor any correspondence which specified requirements for optional life insurance from John Hancock.
On January 3, 1989, Mr. McCann died. Although he never returned to work, he had never been placed on "long-term disability" status, nor had he ever been terminated. On January 13, Ms. Amacker wrote a letter to Ms. McCann indicating Mr. McCann had $96,000 basic life insurance, and $48,000 optional life insurance. That same day, Ms. Amacker filed a death claim with John Hancock, again indicating Mr. McCann had $96,000 basic life insurance, effective September 17, 1988, and $48,000 optional life insurance, effective December 24, 1988. On March 24, 1989, John Hancock informed the Supply System it would only pay $89,000, citing employee handbook pages D/1 and D/3, above, as the reasons for denying the extra $7,000 basic life insurance and the full $48,000 optional life insurance. On April 4, 1989, the Supply System submitted a second death claim to John Hancock, making a claim for only $89,000. On April 25, the Supply System sent Ms. McCann a refund of the premiums for ...