Opinion
Case No. 5:00-CV-121.
December 19, 2001
JUDGMENT
In accordance with an Opinion filed this day,
IT IS HEREBY ORDERED that Plaintiff/Counter-Defendant Monumental Life Insurance Company's Motion for Summary Judgment (Dkt. No. 31) is GRANTED.
IT IS FURTHER ORDERED that this case is dismissed with prejudice.
OPINION
This matter is before the Court on Plaintiff/Counter-Defendant Monumental Life Insurance Company's Motion for Summary Judgment. The Court will grant Monumental Life Insurance Company's Motion
I. Standard of Review and Applicable Federal Rules
Monumental Life Insurance Company's Motion is brought pursuant to Federal Rule of Civil Procedure 56. Under the language of Rule 56(c), summary judgment is proper if the pleadings, depositions, answers to interrogatories and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. The initial burden is on the movant to specify the basis upon which summary judgment should be granted and to identify portions of the record which demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The burden then shifts to the non-movant to come forward with specific facts, supported by the evidence in the record, upon which a reasonable jury could find there to be a genuine fact issue for trial. Anderson v. Liberty Lobby, 477 U.S. 242, 248 (1986). If, after adequate time for discovery on material matters at issue, the non-movant fails to make a showing sufficient to establish the existence of a material disputed fact, summary judgment is appropriate. Celotex Corp., 477 U.S. at 323.
Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences are jury functions. Adams v. Metiva, 31 F.3d 375, 382 (6th Cir. 1994). The evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in the non-movant's favor. Celotex Corp., 477 U.S. at 323 (quoting Anderson, 477 U.S. at 255). The factual record presented must be interpreted in a light most favorable to the non-movant. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
Rule 56 limits the materials the Court may consider to deciding a motion under the rule: "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits." Federal Rule of Civil procedure 56(c)). Moreover, affidavits must meet certain requirements:
[A]ffidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein. Sworn or certified copies of all papers or parts thereof referred to in an affidavit shall be attached thereto or served therewith.
Fed.R.Civ.P. 56(e). The Sixth Circuit has held "that documents submitted in support of a motion for summary judgment must satisfy the requirements of Rule 56(e); otherwise, they must be disregarded." Moore v. Holbrook, 2 F.3d 697, 699 (6th Cir 1993) (citations omitted). Thus, in resolving a motion for summary judgment, the Court should not consider unsworn or uncertified documents, Id.; unsworn statements, Dole v. Elliott Travel Tours, Inc., 942 F.2d 962, 968-969 (6th Cir. 1991); inadmissible expert testimony, North American Specialty Ins. Co. v. Myers, 111 F.3d 1273, 1280 (6th Cir. 1997); or hearsay evidence, Hartsel v. Keys, 87 F.3d 795, 799 (6th Cir. 1996); Wiley v. United States, 20 F.3d 222, 225-226 (6th Cir. 1994).
II. Facts
Monumental Life Insurance Company (Monumental) has denied benefits to Defendant Juanita Galbreth, the named beneficiary on a life insurance policy issued to her now-deceased husband, Joseph Galbreth. Monumental's refusal in pay stems from what it alleges were the material misrepresentations of Mr. Galbreth regarding his medical history.
Mr. Galbreth applied for life insurance with Monumental on August 3, 1998 when he obtained a mortgage loan. A loan officer at the bank, First Source Bank, asked Mr. Galbreth medical history questions and filled out his application. In the application, the loan officer recorded that Mr. Galbreth indicated that he had used tobacco products within the past twelve months; that he had not been "diagnosed with or treated for: any disease or disorder of the blood "; and that he had not within the past three years" had an examination that was caused by an illness, injury, or abnormal physical condition, or a follow-up of a diagnosed condition." (Application, Plaintiff's Brief, Dkt. No 31, at Exh. A.) Mr. Galbreth apparently signed the application, indicating that those answers were true and complete to the best of his knowledge. ( Id.)
After the application was submitted, Mr. Galbreth was medically examined by an employee of a company called Portamedic, of Lansing, where Mr. Galbreth had a blood profile and answered additional questions. The medical questionnaire submitted by Portamedic contains answers that indicate that Mr. Galbreth reported having no problems of the circulatory system, the nervous system, or with drug or alcohol abuse. (Medical Exam, Plaintiff's Brief, Dkt. No. 31, at Exh. B.) Again, Mr. Galbreth apparently signed the exam and indicated that the answers reported were true and correct to the best of his knowledge and belief.
Following this process, Monumental issued Mr. Galbreth a life insurance policy. Mr. Galbreth then died of lung cancer on February 23, 2000. After Mrs. Galbreth submitted a claim for benefits, Monumental through Claims Examiner Charlene H. Keogh sent a denial of benefits letter dated August 23, 2000, stating that it was refusing to pay benefits because Mr. Galbreth materially misrepresented that he did not have a history of alcohol abuse on the application for life insurance. In her affidavit, Theresa Morfe, a Monumental manager in Individual Underwriting, stated that had Monumental known that Mr. Galbreth had a history of what Monumental alleges was "excessive alcohol use" and that Mr. Galbreth had previous doctor visits for examination and treatment for anxiety and depression, Monumental would have denied life insurance coverage.
Mr. Galbreth saw two physicians, Dr. Kurtis DeJong and Dr. Matthew Christ, at Granger Family Medicine Clinic in South Bend, Indiana in six visits in the year prior to his application with Monumental. The last of these six visits was on the same day that Mr. Galbreth applied for life insurance at the bank, August 3, 1998.
Dr. DeJong reported at his deposition that he was treating Mr. Galbreth for anxiety-related complaints, but that he was not treating him for alcohol addiction. (K. DeJong Transcript, 7:9-14, 17-18, Plaintiff's Brief, Dkt. No. 31, at Exh. D.) Dr. DeJong, however, diagnosed Mr. Galbreth with "alcoholism" in his treating notes of January 6, 1998, even though he now asserts that Mr. Galbreth does not meet applicable psychiatric criteria for alcoholism. (DeJong treating notes, 1/6/98, Plaintiff's Brief, Dkt. No. 31, at Exh. E; K. DeJong Tr. at 39:18-20. See also Affidavit of DeJong, Dkt. No. 39.) Dr. DeJong also told Mr. Galbreth that he would need to discontinue drinking alcohol in conjunction with quitting smoking. (K. DeJong Tr. at 36:17-37:11.) Dr. DeJong testified that he discussed diagnoses with Mr. Galbreth during their visits. ( Id. at 17:17-25.)
These diagnoses also included "[d]epression with significant anxiety-related symptoms," for which Mr. Galbreth was taking Prozac when he began seeing Dr. DeJong (K. DeJong Tr. at 17:4-6); macrocytosis, which is abnormally large blood cells ( Id. at 18:11-25, 39:6-21, and 42:23-43:2); and an enlarged liver ( Id. at 10, 43:5-6). Mr. Galbreth's macrocytosis was likely caused by a "folate deficiency, secondary to heavy alcohol use." ( Id. at 18:12-16.) Dr. DeJong advised Mr. Galbreth to attend Alcoholics Anonymous meetings to help him quit drinking, told him to "throw away [his] alcohol and cigarettes," and prescribed folate vitamins to combat the effects of alcohol drinking. ( Id. at 34:21-37:1, 40:11-23) Dr. DeJong testified that it was his impression that Mr. Galbreth understood that there was a medical necessity for him to stop drinking. ( Id. at 43:14-18.) But Mrs. Galbreth, who asserts that she was present during all of Mr. Galbreth's medical examinations, argues that they were not told that Mr. Galbreth was an "alcoholic," and that alcohol use was only discussed in conjunction with Mr. Galbreth's attempts to quit smoking. ( See Affidavit of Juanita Galbreth, Dkt. No 39.)
Dr. DeJong testified that he was not sure whether he actually discussed the enlarged liver with Mr. Galbreth, despite Dr. DeJong's testimony that he usually discussed diagnoses with patients.
Dr. DeJong also prescribed Paxil to treat Mr. Galbreth's anxiety and depression as a replacement for Prozac, which Mr. Galbreth was then taking. In his treatment of Mr. Galbreth's depression and anxiety, Dr. DeJong also recommended to Mr. Galbreth that he stop drinking, since Dr. DeJong felt that alcohol use could have contributed to Mr. Galbreth's anxiety. (K. DeJong Tr. at 43:16-22.)
III. Analysis
The Court has reviewed the pleadings filed by the parties and does not believe that oral argument is necessary. L. Civ.R. 72(d). Jurisdiction in this matter is based on the diversity of citizenship of the parties. The Court will assume, without deciding, that Michigan law applies in this matter, since both parties have represented that Michigan law applies.
Michigan law says that, "No misrepresentation shall avoid any contract of insurance or defeat recovery thereunder unless the misrepresentation was material. No misrepresentation shall be deemed material unless knowledge by the insurer of the facts misrepresented would have led to a refusal by the insurer to make the contract." Mich. Comp. Laws § 500.2218(1) (2001).
This was the applicable Michigan law at all times relevant to this litigation.
A. Mr. Galbreth Made "Misrepresentations" In His Insurance Application
A "misrepresentation" is defined as a false statement as to past or present fact, made to the usurer by or by the authority of the applicant for insurance or the prospective insured, at or before the making of the insurance contract as an inducement to the making thereof. Mich. Comp. Laws § 500.2218(2) (2001). Whether a representation made in an application for life insurance was false is a question for the jury, unless the facts are such that no reasonable jury could find that a statement made was not false. Cf. Continental Assur. Co v. Shaffer, 157 F. Supp. 829, 833-34 (W.D.Mich. 1957) (granting summary judgment where there was clear evidence that decedent had sought treatment within five years prior to application even though decedent reported on application that he had not seen a doctor).
Mrs. Galbreth asserts that her husband did not make "misrepresentations" on his application for life insurance, since it is unclear from the evidence before the Court whether Mr. Galbreth was ever "officially" diagnosed with alcoholism as opposed to problem or excessive drinking, and whether he was told about that diagnosis. Even if a finder of fact were to find that Mr. Galbreth was never diagnosed as an "alcoholic" or that he did not know of this diagnosis, any reasonable jury would have to find that he saw a doctor and that the doctor diagnosed a health condition, macrocytosis. As a result of this diagnosis, the doctor prescribed folate pills and told Mr. Galbreth to quit drinking and went so far as to suggest attending Alcoholics Anonymous to help him stop. Moreover, Defendant's husband clearly knew that he had depression and anxiety-related health problems, knew that he was seeing a physician for those problems, and knew that he was taking medication for those problems. Based on the evidence now before the Court, no reasonable jury could find that Mr. Galbreth truthfully answered many or all of the answers at issue that were provided to the health questions, even if there is an open question regarding whether Mr. Galbreth's responses to the inquiries about alcohol abuse and addiction were truthful or not.
B. Mr. Galbreth's "Misrepresentations" were "Material"
A misrepresentation is "material" if the insurance company would not have issued the same policy had the true facts been revealed. Mich. Comp. Laws § 500.2218(1) (2001). The insurer does not need to demonstrate that a causal relationship exists between the misrepresentation and the insured's death Wickersham v John Hancock Mut. Life Ins. Co., 413 Mich. 57, 60 (1999). But an insurer need not prove that it actually relied on the misrepresentation in issuing the insurance policy if a causal connection exists between the misrepresentation and the cause of death. Smith v. Globe Life Ins. Co., 460 Mich. 446, 460-61 (1999).
Monumental is not asserting that the cause of Mr. Galbreth's death was causally related to the health information about which Plaintiff was misinformed. As a result, Monumental acknowledges that it bears the burden of proof on the issue of whether it relied on the misrepresentations such that it would not have issued the life insurance policy had it known the true information.
Mrs. Galbreth asserts that there is a question of material fact with regard to the information on which Monumental relied when it accepted the risk, since the denial of benefits letter sent to Mrs. Galbreth does not include all of the misrepresentations as bases for rescinding the contract that the affidavit of Ms. Morfe, Monumental's manager of individual underwriting, contains as bases for reasons why Monumental would not have issued the coverage if it had known the truth. However, the Court does not find this issue to be relevant. The relevant question to determining whether Mr. Galbreth's misrepresentations were "material" is whether Monumental would have issued insurance to an individual known to have Mr. Galbreth's medical history. Thus, the information upon which Monumental actually relied when it reviewed the application is not relevant to the extent that the finder of fact would be asked to evaluate the information now known to Monumental and to determine whether Monumental would now issue the same policy.
To that end, there are a number of cases applying Michigan law where summary judgment has been granted in similar situations to this case where an insured misinformed the company in an application about having seen a doctor for medical conditions. For example, summary judgment was granted to the insurance company where the insured answered that neither he nor any of his covered family members had "been hospitalized, consulted or been treated by a physician for any reason during the past five years," when in fact the insured had been seen by a doctor for heart problems and was taking medication. Wiedmayer v Midland Mut. Life Ins. Co., 414 Mich. 369, 370-72 (1982).
Other cases have similarly held that failure to report doctor visits or other medical treatment for a specific condition was a material misrepresentation such that coverage could be rescinded. See, e.g., Wickersham, 413 Mich. 57, 60 (insured failed to report having paroxysmal tachycardia); General Am. Life Ins. Co. v. Wojciechowski, 314 Mich. 275, 280-81 (1946) (beneficiary offered no evidence at trial that decedent's sixty-four doctor visits were for minor ailments or conditions); Dorsey v. Mutual of Omaha Ins. Co., 991 F. Supp. 868, 874 (E.D.Mich. 1998) (insured failed to report treatment sought for chronic drug and alcohol abuse).
Monumental has offered the affidavit of its manager of individual underwriting, Ms. Morfe, as evidence that it would not have issued Mr. Galbreth's insurance policy had it known about his doctor visits and medical history. First, Mrs. Galbreth argues that the Court may not consider Ms. Morfe's affidavit because there is no indication that Ms. Morfe was the underwriter who approved Mr. Galbreth's application. But that is of no consequence. The inquiry is whether Monumental would have issued the policy if the facts were known, not whether the particular underwriter who happened upon Mr. Galbreth's original application would have approved it. This inquiry is necessarily based on the company policies of the insurance company, and not the individual preferences of the individual underwriter, since that is not how the insurance business works. Cf. Oade v. Jackson Nat'l Life Ins. Co. of Michigan, 465 Mich. 244, 255 (2001) ("the focus of inquiry under the statutory `materiality' test is whether a reasonable underwriter would have regarded Mr. Oade's updated answers regarding his hospitalization for chest pains as sufficient grounds for rejecting the risk or charging an increased premium") (emphasis added).
Mrs. Galbreth further asserts that there is no evidence establishing what criteria Ms. Morfe used to arrive at the conclusion that Monumental would have denied coverage to Mr. Galbreth, and thus her affidavit lacks foundation. But as the manager of underwriting for Monumental, Ms. Morfe has sufficient knowledge of how policy applications are approved to competently testify. As someone who has reviewed the application, the claim file, and the depositions providing information about Mr. Galbreth's medical history, Ms. Morfe has sufficient knowledge to draw a conclusion as to whether Monumental would have issued a policy to Mr. Galbreth. It is true that Michigan law makes evidence of the insurance company's practice in accepting or rejecting similar risks to the misrepresented risks admissible. Mich. Comp. Laws § 500.2218(3) (2001). But the statute does not affirmatively require such evidence to find a misrepresentation "material." Cf. id. In addition, an affidavit by an insurance company employee that concludes that the company would not have otherwise issued the policy appears to be sufficient for summary judgment in the face of absolutely no contrary evidence by the insured's beneficiary that the insurance company would still have issued the policy.
Ms. Morfe's affidavit would indeed be much stronger evidence if it contained an explanation in the form of calculations or some other additional explanation why Mr. Galbreth's policy application would have been rejected had Monumental known the truth about his medical history. Even in the face of no contrary evidence, there are some merely conclusory insurance company affidavits that would not be enough to warrant summary judgment for the insurance company if the conclusion was so ridiculous or far-fetched that a reasonable jury might still believe the beneficiary's assertion that the insurance company would have in fact still issued the policy. See Michigan Supreme Court Justice Marilyn J. Kelly's dissent in Oade, 465 Mich. at 264-65 (if insured answered truthfully that he was a non-smoker, but then smoked a cigar once to celebrate arrival of a new baby and did not report one-time cigar to insurance company, even an unrefuted conclusory affidavit by underwriter that insurance company would not have issued life insurance to insured because of undisclosed cigar would be laughable).
However, the facts of this case do not present that situation. With no evidence whatsoever from Mrs. Galbreth that Monumental still would have issued this policy given her husband's extensive medical history, Ms. Morfe's unrefuted conclusion warrants summary judgment for Monumental.
But see Colley v. Conseco Medico Ins. Co., 2001 WL 599712 at *5 (6th Cir. May 23, 2001) (finding that insurance company satisfied its burden by providing affidavit and excerpts from the company's Underwriting Guide to back its conclusions); Clark v. John Hancock Mut Life Ins. Co., 180 Mich. App. 695, 699 (1989) (affiant described company's manual for underwriters and why insured's epilepsy would have led to denial of application, but insured also presented affidavit of independent underwriter to suggest that other companies in the industry would have issued insurance to an epileptic).
In Oade, the insurance company submitted an affidavit from an insurance company employee stating that the company would have charged a higher premium had it known of the insured's hospitalization. Oade, 465 Mich. at 261-62 (Kelly, J., dissenting). There is no mention of whether the affidavit contained the applicable calculations explaining the higher premium. Cf. id. There, in an effort to undermine the affiant's credibility, the beneficiaries presented evidence that despite the undisclosed hospitalization, the insured's health had not deteriorated. Id. at 255. The beneficiaries concluded from this information, and wanted to ask a finder of fact to conclude, that the company would have issued the same policy. Id. The Michigan Supreme Court held that this was not enough to create a genuine issue of material fact on the issue of whether the insurance company still would have issued the same insurance policy because the Court found that this was not evidence that brought into question the underwriter's testimony in the affidavit. See id. at 255.
In Wiedmayer, the insurance company submitted an affidavit from the company's director of group claims that stated that the policy would not have been written had Mr. Wiedmayer's health history been known. Wiedmayer, 414 Mich. at 372. There was no indication that the affidavit contained calculations showing how the insurance company reached the conclusion that it would not have otherwise issued the policy. Cf. id. The Court reinstated the trial court's ruling, which found that omitting doctor care and medications taken for a heart condition were material misrepresentations and granted summary judgment to the insurer. Id. at 375.
The Michigan Supreme Court said, "After completion of discovery, the defendant moved for summary judgment, alleging that no genuine issue of material fact existed and attaching, among other things, the affidavit of the defendant's director of group claims to the effect that no policy would have been written at any price if the facts were known." While this language is ambiguous as to whether the insurance company in that case included the actuarial calculations indicating that coverage would have been rejected, the Michigan Supreme Court probably would have noted it if the calculations were included in the affidavit. Certainly the Michigan Supreme Court would have noted it if Michigan law required the calculations themselves, above and beyond an affidavit sworn under penalty of perjury, as sufficient evidence to grant summary judgment even where the plaintiff has not made any showing that the insurance company's decision would have been otherwise had it known the truth.
In Mannino v. Dominion Life Assur. Co., the insured also represented that he had not been hospitalized nor had he been seen by a physician for the three previous years, when in fact, he had been seen by a doctor. Mannino, 539 F. Supp. 323, 325 (E.D.Mich. 1982). The insurance company filed affdavits that it would not have issued the policy if the misrepresentations had not been made because the insured's depression raised his risk by 100 percent and chronic obstructive pulmonary disease raised it by 30 percent, exceeding acceptable risk for the policy. Id. at 325.
The assertions in the affidavit entitled the insurance company to summary judgment since the beneficiary presented no evidence to refute the insurance company's affidavit that suggested that the company would have provided coverage had the misrepresentations not been made. Mannino, 539 F. Supp. at 325. In Mannino, the Michigan Supreme Court said,
This Court is aware of the difficult burden that is placed upon an individual who seeks to recover on a policy of insurance in a case such as the present one. However, inasmuch as Michigan has made the meaning of "materiality" turn on subjective considerations, a Plaintiff must produce evidence, in the form of affidavits or otherwise, which suggests that the insurance company would have issued the policy had the correct information been provided. In the present case, Plaintiff might have elected to determine whether Minnesota Mutual had ever issued a policy, which was similar to the subject contract, under similar factual circumstances. But having elected not to seek that discovery, and, instead, having insisted on proceeding as though an objective standard governed the meaning of "materiality" (i.e., whether any insurance company would have issued any coverage to Mannino), Plaintiff cannot survive Minnesota Mutual's Motion for Summary Judgment.Id. While Mannino presents a situation where the insurance company explained in its affidavit how it came to the conclusion that it would not have issued the policy, the affidavit entitled the insurance company to summary judgment on this issue because the affidavit's conclusion was not at all refuted by the beneficiary. The situation here is the same. Without any contrary evidence whatsoever from Mrs. Galbreth that Monumental still would have issued a policy to an individual with Mr. Galbreth's medical history, Mrs. Galbreth cannot avoid summary judgment.
VII. Conclusion
Therefore, since Mr. Galbreth made "material misrepresentations" when applying for life insurance with Monumental, as those terms are defined in Michigan law, Monumental is entitled to rescind the insurance contract. The Court will grant Plaintiff Monumental Life Insurance Company's Motion. Final judgment consistent with this Opinion will be entered.