## Facts

- Berry purchased a nursing home insurance policy issued by Time Insurance Company and administered by Hancock.
- The policy provided for payment of “alternate care” if an alternate care plan was agreed to by Berry, Berry’s physician, and Time.
- In September 2008, Berry suffered an accident and needed home healthcare assistance to remain at home.
- Hancock told Berry that alternate care would be covered only if provided by a “licensed” home healthcare provider.
- South Dakota did not license home healthcare providers, making the asserted licensing requirement impossible to satisfy.
- Berry found a home healthcare provider and, with her physician, requested coverage for home-based alternate care.
- Hancock, acting for Time, refused coverage; Berry alleged the written policy did not require provider licensing.
- Berry sued Time and Hancock for breach of contract (and related good-faith theories as pleaded).

## Issues

1. Whether the alternate-care clause created a condition precedent (Time’s agreement) that barred a breach of contract claim when Time refused to agree.
2. Whether an insurer/administrator may refuse to agree to an alternate-care plan based on an extra-contractual “licensing” requirement absent from the policy and impossible under state law.
3. Whether the complaint plausibly alleged that defendants wrongfully prevented satisfaction of a condition precedent, precluding reliance on the condition’s non-occurrence at the pleading stage.

## Decision

- The court denied defendants’ Rule 12(b)(6) motion to dismiss.
- Accepting the allegations as true, the court held Berry plausibly alleged breach because Time/Hancock refused to agree to alternate care on arbitrary, extra-contractual grounds.
- The court concluded defendants could not defeat the claim at the pleading stage by invoking a condition precedent they allegedly prevented from occurring through wrongful conduct.

## Legal Principles

- A party may not wrongfully hinder or prevent the occurrence of a condition precedent and then rely on the condition’s failure to avoid performance.
- In insurance contracts, an insurer’s contractual discretion (including approval of a benefits plan) is constrained by the implied covenant of good faith and fair dealing.
- At the motion-to-dismiss stage, a plaintiff states a claim by alleging facts plausibly showing the insurer denied benefits based on conditions not contained in the policy.

## Conclusion

The court allowed Berry’s contract claim to proceed because the complaint plausibly alleged that Time and its administrator blocked the policy’s alternate-care approval condition by insisting on an unstated, impossible licensing requirement, and then attempted to use the resulting lack of insurer consent as a bar to liability.


Berry v. Time Ins. Co., 798 F. Supp. 2d 1015 (D.S.D. 2011)