DE GREZIA v. Superior Court

131 Cal.Rptr.2d 443 (2003) 106 Cal.App.4th 1278 Malynda A. De GREZIA et al., Petitioners,

v.

The SUPERIOR COURT of Los Angeles County, Respondent.

Blue Cross of California, Real Party in Interest.

No. B157914. Court of Appeal, Second District, Division Eight.

March 12, 2003. Review Granted May 21, 2003. Haight, Brown & Bonesteel, and Roy G. Weatherup and J. Alan Warfield, Los Angeles; and Marshack, Shulman, Hodges & Bastian and Ronald S. Hodges, Irvine, J. Ronald Ignatuk, Foothill Ranch, and Michael S. Kelly for Petitioners.

No appearance for Respondent.

Craig A. Laidig, Woodland Hills; and Musick, Peeler & Garrett, and Cheryl A. Orr, Los Angeles, for Real Party in Interest.

RUBIN, J.

Petitioners Malynda A. De Grezia, Alfonso G. De Grezia, and their minor children, Mia De Grezia, Isabella De Grezia, and Raquel De Grezia, seek a writ of mandate directing respondent Los Angeles Superior Court to vacate its order granting the motion filed by real party in interest Blue Cross of California to compel [444] arbitration. A writ shall issue directing the trial court to modify its order.

PROCEDURAL AND FACTUAL BACKGROUND

On January 1, 2001, Malynda De Grezia obtained a health insurance policy from real party in interest Blue Cross of California. Shortly after Blue Cross issued the policy, she became pregnant with triplets: the minor petitioners Mia, Isabella, and Raquel De Grezia. The girls were born 13 weeks premature in August 2001, weighing between one and two pounds each. Because of complications from their prematurity, they remained hospitalized until November 2001, and have to date incurred more than $1,000,000 in medical bills.

Within a day or two of giving birth, De Grezia asked Blue Cross to add her husband and her daughters to her health policy effective the day of the girls' birth, which Blue Cross did on September 10, 2001. One week later, however, Blue Cross sent her a letter rescinding the policy. Claiming she had not disclosed certain fertility problems in her insurance policy application, Blue Cross wrote it would not have issued the policy if it had it known about her problems. The letter stated, "Based on the medical history, you would not have been eligible for any of our medically underwritten plans. . . . [¶] Because of this omitted pre-existing medical history, your Blue Cross Agreement . . . will be retroactively canceled to the original effective date." (See Imperial Casualty & Indemnity Co. v. Sogomonian (1988) 198 Cal.App.3d 169,182, 243 Cal.Rptr. 639 [under insurance law, rescission is retroactive termination of policy resulting in no coverage or benefits; cancellation is prospective termination of policy].) Although De Grezia denied knowing of any infertility problems, Blue Cross nevertheless purported to completely unwind the policy. It stated its intention to refund all of her premiums minus whatever claims it had already paid, thus restoring Blue Cross and the De Grezias to their original positions. Its letter stated, "All suspended claims will be declined. All claims paid in error will be adjusted. A full dues refund, less paid claims will be processed."