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Nationwide Life Insurance Co. v. Northwestern National Insurance Co.

February 23, 1973

NATIONWIDE LIFE INSURANCE CO., RESPONDENT,
v.
NORTHWESTERN NATIONAL INSURANCE COMPANY, APPELLANT



Appeal from Circuit Court, Multnomah County. William M. Dale, Jr., Judge.

Robert D. Rankin, Portland, argued the cause for appellant. With him on the briefs were Cake, Jaureguy, Hardy, Buttler & McEwen and John R. Faust, Jr.

Ridgway K. Foley, Jr., Portland, argued the cause for respondent. With him on the brief were Souther, Spaulding, Kinsey, Williamson & Schwabe.

McAllister, Justice. O'Connell, Chief Justice, and Denecke, Holman, Howell and Bryson, Justices.

Mcallister

This is an action at law tried by the court in which plaintiff Nationwide Life Insurance Co. recovered judgment against defendant Northwestern National Insurance Company for $5,982.80. Defendant appeals. We affirm.

In 1962 defendant Northwestern issued a group health insurance policy covering the employees of McCall Oil and Chemical Co. which continued in effect until October 1, 1968. While defendant's policy was in effect Frances Abrams, the wife of a McCall employe, became entitled to benefits under defendant's policy. Defendant paid benefits on account of Mrs. Abrams' illness from April 1968 to October 1, 1968.

On October 1, 1968, defendant's policy was replaced by a similar policy issued to McCall by plaintiff Nationwide.

Defendant's policy contained an extended coverage provision which required defendant to continue to pay benefits to dependents in the event of continued disability upon termination of the policy or takeover by another carrier. In spite of that provision, defendant refused to make any further payments to Frances

Abrams after October 1, 1968, even though on that date Mrs. Abrams was completely and totally disabled by multiple sclerosis and under the care and treatment of a physician.

Plaintiff's policy provided that, in the event of a takeover, responsibility for continuing disability cases remained with the prior carrier, in this case defendant Northwestern. Nevertheless, plaintiff paid Mrs. Abrams the losses incurred in medical expenses and treatment and care after October 1, 1968. In May 1970 the Abramses assigned all of their rights and interest against defendant to plaintiff.

The sole issue in this case is whether the defendant's liability to continue to pay Mrs. Abrams benefits due her under the terms of its policy was abrogated on October 1, 1968, by a rule promulgated by the insurance commissioner purporting to shift the liability for continuing benefits in the event of a takeover to the succeeding carrier. We hold that the insurance commissioner had no such authority. The commissioner's rulemaking power*fn1 does not include the power to set aside the terms of insurance policies ...


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