BRENDA BUSH, INDIVIDUALLY AND AS ADMINISTRATRIX OF THE ESTATE OF GLENN E. BUSH v. SOUTHERN FINANCIAL LIFE INSURANCE COMPANY; LIFE OF THE SOUTH SERVICE COMPANY
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RENDERED:
FEBRUARY 25, 2005; 2:00 p.m.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2004-CA-000344-MR
BRENDA BUSH, INDIVIDUALLY
AND AS ADMINISTRATRIX OF
THE ESTATE OF GLENN E. BUSH
v.
APPELLANT
APPEAL FROM CARTER CIRCUIT COURT
HONORABLE SAMUEL C. LONG, JUDGE
ACTION NO. 01-CI-00191
SOUTHERN FINANCIAL LIFE
INSURANCE COMPANY; LIFE
OF THE SOUTH SERVICE
COMPANY
APPELLEES
OPINION
AFFIRMING
** ** **
BEFORE: HENRY AND VANMETER, JUDGES; MILLER, SENIOR JUDGE.1
VANMETER, JUDGE:
Brenda Bush, individually and as
administratrix of the estate of Glenn E. Bush, appeals from an
order of the Carter Circuit Court granting summary judgment in
1
Senior Judge John D. Miller sitting as Special Judge by assignment of the
Chief Justice pursuant to Section 110.(5)(b) of the Kentucky Constitution and
KRS 21.580.
favor of Southern Financial Life Insurance Company (Southern
Financial) and Life of the South Service Company pursuant to CR
56.03.
Brenda contends that the circuit court erred in granting
summary judgment because there are genuine issues of material
fact concerning whether Glenn misrepresented his health in his
application for credit life insurance.
We disagree and affirm
the decision of the Carter Circuit Court.
On November 19, 1999, Glenn purchased a truck from
McFarland Murray Chevrolet, Inc., in Grayson, Kentucky.
Glenn
financed the purchase through the First National Bank of
Grayson.
In connection with his purchase and financing of the
vehicle, Glenn applied to purchase a credit life insurance
policy from Southern Financial.
A section of the application
which was captioned “Statement of Debtor’s Physical Condition”
required Glenn to attest that he had not been “diagnosed,
treated (including medication), consulted or received advice
from a physician” for various listed physical conditions,
illnesses, or ailments, including “a heart disease, condition or
disorder,”
within the previous year.
Glenn signed this section
and submitted the application for approval.
With the application in hand, Southern Financial
issued its credit life insurance policy which required Southern
Financial to pay off Glenn’s debt to First National Bank in the
event of his death during the term of the policy.
2
However,
under the provisions of the policy, Southern Financial reserved
the right to contest any claim filed within one year of the date
on which the policy was issued.
It was entitled to rescind the
policy, refund the premiums paid, and deny the claim if, after
investigation, it determined that the applicant had made a
material misrepresentation in applying for the policy.
Glenn died of a myocardial infarction (heart attack)
on June 5, 2000, approximately six months after the policy was
issued.
Brenda subsequently filed a claim for benefits under
the policy.
Following an investigation as permitted under the
terms of the policy, Southern Financial determined that Glenn
had misrepresented the condition of his health on his credit
life insurance application and denied the claim.
On June 5, 2001, Brenda filed a complaint in Carter
Circuit Court seeking a judgment for payment of the benefits due
under the credit life insurance policy and asserting a claim
pursuant to the Unfair Claims Settlement Practices Act.2
On
December 1, 2003, the circuit court entered an order granting
summary judgment to the appellees.
The court subsequently
denied Brenda’s motion to vacate the award of summary judgment.
This appeal followed.
Summary judgment "shall be rendered forthwith if the
pleadings, depositions, answers to interrogatories,
2
KRS 304.12-220, et seq.
3
stipulations, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to
any material fact and that the moving party is entitled to a
judgment as a matter of law."3
It is axiomatic that "[t]he
record must be viewed in a light most favorable to the party
opposing the motion for summary judgment and all doubts are to
be resolved in his favor."4
On appeal, "[t]he standard of review
. . . of a summary judgment is whether the trial court correctly
found that there were no genuine issues as to any material fact
and that the moving party was entitled to judgment as a matter
of law."5
A policy of insurance is to be construed liberally in
favor of the insured and if, from the language, there is doubt
or uncertainty as to its meaning, and it is susceptible to two
interpretations, one favorable to the insured and the other
favorable to the insurer, the former will be adopted.6
Under the
doctrine of reasonable expectations, an insured is entitled to
all the coverage he may reasonably expect to be provided
3
CR 56.03.
4
Steelvest, Inc. v. Scansteel Serv. Ctr., Inc., 807 S.W.2d 476, 480 (Ky.
1991).
5
Scifres v. Kraft, 916 S.W.2d 779, 781 (Ky. App. 1996).
6
St. Paul Fire & Marine Ins. Co. v. Powell-Walton-Milward, Inc., 870 S.W.2d
223, 227 (Ky. 1994).
4
according to the terms of the policy.7
Unless the terms
contained in an insurance policy have acquired a technical
meaning in law, they "must be interpreted according to the usage
of the average man and as they would be read and understood by
him in the light of the prevailing rule that uncertainties and
ambiguities must be resolved in favor of the insured."8
Under Kentucky law, a misrepresentation, omission, or
incorrect statement on an application for an insurance policy
will prevent recovery under the policy in three situations.
First, there can be no recovery if the misrepresentation,
omission, or incorrect statement is fraudulent.
Second, there
can be no recovery if the misrepresentation, omission, or
incorrect statement is material to the acceptance of the risk
or hazard assumed by the insurer.
Third, there can be no
recovery under the policy if the insurer in good faith either
would not have issued the policy or contract, would not have
issued it at the same premium rate, would not have issued it in
as large an amount, or would not have provided coverage with
respect to the hazard resulting in the loss, if the true facts
had been made known to the insurer as required by the policy
7
Woodson v. Manhattan Life Ins. Co., 743 S.W.2d 835, 839 (Ky. 1987); Hendrix
v. Fireman's Fund Ins. Co., 823 S.W.2d 937, 938 (Ky. App. 1991);
8
Fryman v. Pilot Life Insurance Co., 704 S.W.2d 205, 206 (Ky. 1986); Stone
v. Kentucky Farm Bureau Mut. Ins. Co., 34 S.W.3d 809, 811 (Ky. App. 2000).
5
application, contract or otherwise.9
KRS 304.14-110 reflects a
public policy requiring “those who apply for insurance [to] be
honest and forthright in their representations.”10
The first page of the application contained a
section captioned “Statement of Debtor’s Physical Condition,”
which stated in relevant part as follows:
1. In applying for life coverage, I (we)
hereby represent that I (we) have not been
diagnosed, treated (including medication),
consulted or received advice from a
physician within the past one (1) year for
any of the following: a heart disease,
condition or disorder; cancer (excluding
basal cell carcinoma); stroke; a condition
of the liver or kidney; diabetes;
respiratory illness, with the exception of
bronchitis; drug or alcohol abuse; Acquired
Immune Deficiency Syndrome (AIDS) or Aids
Related Complex (ARC); or tested positive
for HIV.
. . . .
I (We) understand that the Company may void
this certificate or deny a claim if, the
Company finds at any time, even when a claim
occurs, that I (we) have concealed or
misrepresented any material fact in the
application of proof of loss, or am (are)
guilty of fraud, attempted fraud, or false
swearing relating to any matter of this
insurance.11
9
KRS 304.14-110; State Farm Mut. Auto. Ins. Co. v. Crouch, 706 S.W.2d 203
(Ky. App. 1986).
10
Crouch, 706 SW 2d at 207.
11
The policy also contained a provision under the “Life Insurance Benefit”
section which stated as follows:
SOUND HEALTH PROVISION: Death claims may be
denied for conditions resulting from pre-existing
illness, disease or physical condition for which
6
It is undisputed that Glenn suffered heart attacks in
1986 and 1994; that he was under a physician’s care for coronary
artery disease12 during the 12 months preceding his application
for the credit life policy; that he had appointments with a
cardiologist on March 8, 1999, and on December 13, 1999; and
that during the relevant period of time he was taking Dilacor
and Scripten for coronary artery disease, as well as Lipitor and
Colestid for hyperlipoproteinemia.13
In addition, Brenda is a
registered nurse who accompanied him during his appointments
with his cardiologist.
Even viewed in the light most favorable to Brenda,
however, we believe that no jury could reach a conclusion other
than that Glenn misrepresented his health condition by signing
the “Statement of Debtor’s Physical Condition” section of the
application.
Clearly, a person who has had two heart attacks
the Insured Debtor received medical or surgical
treatment, consultation or advice within the twelve
(12) months preceding the effective date shown on
the Schedule, and which would ordinarily be expected
to materially affect the Insured Debtor’s health
during the period of coverage, however, after the
coverage has been in force for six (6) months
(twelve (12) months for contracts for more than
three (3) years), this pre-existing clause shall
not be valid.
12
“Coronary artery disease” is defined as “[n]arrowing of the coronary
arteries sufficiently to prevent adequate blood supply to the myocardium.”
Taber’s Cyclopedic Medical Dictionary 416 (16th ed. 1989). The myocardium is
the middle layer of the walls of the heart. Id. at 1170.
13
The record shows that in Glenn’s case, the diagnosis of
hyperlipoproteinemia was essentially a diagnosis of elevated cholesterol.
7
(albeit outside the one-year period dictated by the policy
terms), who is actively consulting with a cardiologist, who is
taking medication for coronary artery disease and high
cholesterol, and who is married to a registered nurse, knows
that he is being treated for a “heart disease, condition or
disorder.”
Under the facts of this case, there are no genuine
issues as to any material facts, and the appellees were entitled
to summary judgment as a matter of law.
As we have concluded that the appellees were entitled
to summary judgment on their claim of misrepresentation, we
likewise conclude that they were entitled to summary judgment on
the claim Brenda made pursuant to the Unfair Claims Settlement
Practices Act.
For the foregoing reasons, we affirm the decision of
the Carter Circuit Court.
HENRY, JUDGE, CONCURS.
MILLER, SENIOR JUDGE, DISSENTS AND FILES SEPARATE
OPINION.
MILLER, SENIOR JUDGE, DISSENTING:
Because I believe
there are genuine issues of material fact in this action and
that the appellant could prevail in her claims in a trial before
a jury, I respectfully dissent.
Initially, I observe: this policy was not a
traditional life or medical insurance policy, but, rather, was a
8
Credit Life Insurance Contract.
Perforce, the focus was not on
the applicant’s health, but, rather, his credit worthiness in
obtaining the bank loan.
To the consuming public, this is a
significant distinction.
On the merits, Southern Financial contends that Glenn
misrepresented his health condition in his response to the
section of the application captioned “Statement of Debtor’s
Physical Condition” because he suffered a heart attack in 1986
and in 1994; because he was under a physicians care for coronary
artery disease during the 12 months preceding his application
for the credit life policy; because he had appointments with
Ashland-Bellefonte Hospital Cardiologist Dr. Charles M. Rhodes
on March 8, 1999, and on December 13, 1999; and because he was
taking four drugs during the relevant period of time:
Dilacor
and Scripten for coronary artery disease,14 and Lipitor and
Colestid for Hyperlipoproteinemia.15
Viewed in the light most favorable to the appellant, I
believe that a jury could conclude that Glenn did not
misrepresent his health condition by signing the “Statement of
Debtor’s Physical Condition” section of the application.
14
In layman’s terms, this diagnosis could be construed as a diagnosis of
hardening of the arteries.
15
In Glenn’s case, his diagnosis of Hyperlipoproteinemia was essentially a
diagnosis of elevated cholesterol.
9
Most notably, viewed in the light most favorable to
the appellant, the drugs Glenn was taking were not specifically
for treatment of his heart, but, rather, were for the treatment
of hardening of the arteries and elevated cholesterol.
The
application did not specifically require disclosure for these
conditions; perforce a jury could conclude that a reasonable
person would interpret the section as not requiring such
disclosure.
The December 13, 1999, visit to Dr. Rhodes occurred
after the completion of the application and is irrelevant in
this case.16
Further, the heart attacks Glenn suffered in 1986
and 1994 were outside of the relevant time period and he need
not have considered those events in completing the application.
With regard to the March 8, 1999, appointment with Dr.
Rhodes, a jury could reasonably conclude that Glenn’s visit on
this occasion was for the purpose of his arterial and elevated
cholesterol condition rather than for diagnosis, treatment, or
advice concerning his heart.17
The appellants do not provide a
citation to confirmation that the visit was related to the
latter, and as the evidence must be viewed in the light most
favorable to the appellant, it must be presumed that it was not.
16
The application did not require an applicant to provide updates based upon
subsequent events.
17
We note that any annual physical check-up will involve, at minimum, a
review of the patient’s heart by stethoscope with attendant routine comments
by the physician. We do not construe the application to require disclosure
of same, as such a broad interpretation would serve to permit the appellee to
disqualify the majority of claimants as having made a misrepresentation on
the application.
10
As the appellees were not entitled to summary judgment
on their claim of misrepresentation, likewise, the appellees are
not entitled to summary judgment on the claim pursuant to the
Unfair Claims Settlement Practices Act.
A jury could reasonably
conclude that Southern Financial attempted to unreasonably
characterize Glenn’s medical condition as being related to heart
disease, conditions, and disorders.
For the foregoing reasons, I believe the decision of
the Carter Circuit Court should be reversed and remanded for
trial.
BRIEF FOR APPELLANT:
BRIEF FOR APPELLEES:
Robert W. Miller
Grayson, Kentucky
Jeffrey C. Mando
Jennifer L. Langen
Covington, Kentucky
11
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