## Facts

- Marco A. Gonzalez and Theresa Gonzalez obtained coverage under the Alfa Health Plan, with Blue Cross/Blue Shield of Alabama serving as claims administrator.
- Blue Cross issued a certificate stating maternity benefits were subject to a 365-day waiting period, with a limited waiver tied to the expected delivery timing.
- Theresa Gonzalez became pregnant; records listed differing expected delivery dates (including February 26 and February 27).
- The maternity waiting period was set to expire on February 28, but Theresa delivered four days before expiration.
- Blue Cross denied the hospital-admission claim for delivery-related maternity benefits, concluding the waiting period had not expired, and later treated certain payments as made in error.
- Marco Gonzalez submitted additional physician documentation suggesting an expected delivery date after February 28; Blue Cross noted conflicts with other medical records and stated it would reconsider.
- The Gonzalezes sued Blue Cross and an Alfa-related entity for breach of contract and bad-faith failure to pay; they also alleged fraud against Alfa Mutual.
- The trial court granted summary judgment for Blue Cross on bad faith and for Alfa Mutual on all claims, and certified the judgments as final under Rule 54(b).

## Issues

1. Whether Blue Cross committed bad-faith failure to pay by denying maternity benefits where medical documentation conflicted on the expected delivery date relevant to the waiting-period provision.
2. Whether Alfa Mutual could be held liable for breach of contract, bad faith, or fraud where the record did not sufficiently connect Alfa Mutual to the coverage contract and the plaintiffs’ pleadings reflected confusion among related Alfa entities.

## Decision

- The Alabama Supreme Court affirmed summary judgment for Blue Cross on the bad-faith claim.
- The court held Blue Cross had a reasonably legitimate or arguable reason to deny coverage given contemporaneous medical records supporting an expected delivery date within the waiting period.
- The court affirmed summary judgment for Alfa Mutual on all claims because the plaintiffs failed to present sufficient evidence that Alfa Mutual was the contracting party or otherwise responsible for the alleged misconduct.

## Legal Principles

- Under Alabama law, an insurer is not liable for bad-faith failure to pay if it has a reasonably legitimate or arguable reason for denying the claim.
- Conflicting evidence creating a bona fide dispute over coverage defeats a bad-faith claim and supports summary judgment on that tort claim.
- A plaintiff must identify and prove that the correct corporate entity is bound by the insurance contract or made actionable misrepresentations; failure to link the defendant to the contract or alleged wrongdoing is fatal to contract and tort theories.

## Conclusion

The court affirmed summary judgment because Blue Cross’s denial rested on a debatable coverage basis arising from conflicting medical records about the expected delivery date under a maternity waiting-period clause, and because the plaintiffs did not establish contractual responsibility or actionable conduct by Alfa Mutual amid confusion about which Alfa entity was involved.


Gonzalez v. Blue Cross/Blue Shield of Ala., 689 So. 2d 812 (Ala. 1997)