REVISED - February 26, 1999
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
__________________________
No. 97-60846
__________________________
RACHEL B. CARROLL; CYNTHIA B. FASANO
Plaintiffs-Counter Defendants-Appellants,
versus
METROPOLITAN INSURANCE AND ANNUITY CO
Defendant-Counter Claimant-Appellee.
___________________________________________________
Appeal from the United States District Court
for the Southern District of Mississippi
___________________________________________________
February 15, 1999
Before DAVIS, SMITH, and WIENER, Circuit Judges.
WIENER, Circuit Judge:
Plaintiffs-Counter Defendants-Appellants, Rachel B. Carroll
and Cynthia B. Fasano (“Beneficiaries”), appeal the district
court’s grant of summary judgment in favor of Defendant-Counter
Claimant-Appellee, Metropolitan Insurance and Annuity Co. (“MIAC”).
The court denied the Beneficiaries’ claims under a $500,000 life
insurance policy, reasoning that the insured, Ray T. Bracken, had
made material misrepresentations in his application for insurance.
The district court concluded that, as a matter of law, (1) Bracken
misrepresented his medical condition on his insurance application
by omitting prior diagnoses and treatments for skin cancer, (2)
MIAC was never put on notice of Bracken’s skin cancer history, such
that it would be precluded from rescinding the policy on the basis
of Bracken’s failure to disclose that history, and (3) the
misrepresentation was material to the risk assumed by MIAC, such
that MIAC would have either declined to issue the policy or would
have issued the policy only at an increased premium. Perceiving
the existence of genuine factual disputes surrounding the
materiality of the information that Bracken omitted from his
application —— specifically, the question whether MIAC, with full
knowledge of Bracken’s skin cancer history, would have issued the
policy without increasing the premium —— we reverse the district
court’s grant of summary judgment and remand the case for trial.
I.
FACTS AND PROCEEDINGS
Early in 1993, Bracken contacted an insurance agent-broker to
assist him in securing life insurance coverage. As Bracken had an
extensive history of medical problems, including a young-age heart
attack, quadruple bypass surgery, hypertension, renal failure, and
gout, he had difficulty obtaining coverage. Bracken’s insurance
agent contacted Leibovitz Associates, Inc., a company that
specializes in locating carriers for substandard cases such as
Bracken’s. Through Leibovitz, Bracken sent inquiries to several
potential insurance carriers, one of which —— MIAC —— responded,
inviting him to submit a formal application for insurance. Toward
that end, Bracken met with the insurance agent who reviewed with
Bracken the questions posed on MIAC’s application form and recorded
Bracken’s responses. The following questions and answers appeared
on Bracken’s application:
2
Part A, Section II, Question 29(c)
Have you received treatment, attention, or advice from
any physician, practitioner or health facility for, or
had any known indication of: (c) cancer, tumor or polyp?
Answer: No.
Part A, Section II, Question 29(g)
Have you received treatment, attention, or advice from
any physician, practitioner or health facility for, or
had any known indication of: (g) any other impairment of
health, hospitalization, surgery, x-ray, EKG or special
tests within the past 5 years, or contemplated in the
future?
Answer: No.
Part A, Section II, Question 30
In the last 5 years, have you ever been treated,
examined, or advised by any physician, licensed
practitioner, or health facility? (Do not include colds,
minor viruses or injuries which prevented normal
activities for less than 5 days).
Answer: No.
At the end of the application, Bracken signed an attestation that
all answers were true and complete to the best of his knowledge.
The application was then sent to MIAC.
On receipt of the application, MIAC sought to obtain medical
records from physicians identified in the application. The medical
records of Charles McCollum, M.D., Bracken’s personal physician for
over twenty years, reflected —— among other things —— that Bracken
had no abnormality of the skin. In a written report in January of
1993, Dr. McCollum had indicated that he was aware of nothing
concerning Bracken’s health “which might unfavorably affect [his]
insurability.”
MIAC required Bracken to be examined by Arthur Jones, M.D., a
physician retained by MIAC. The results of this examination
3
disclosed a skin abnormality known as keratosis,1 but gave no
indication that Bracken had ever been positively diagnosed with
skin cancer.2 Finally, MIAC obtained a report from Equifax, Inc.,
an independent reporting company that gathers medical information
on prospective insureds, which report contained no additional
facts.
Based on the answers contained in Bracken’s application, in
the subsequent physical examination, and in the medical records
check that it conducted, MIAC issued Bracken a $500,000 policy at
an annual premium of $16,000. Following his death by heart attack
not quite two years later, MIAC performed a post-claim
investigation of Bracken’s medical history, which revealed that
Bracken had an extensive history of skin cancer prior to applying
for MIAC coverage.3 MIAC learned that Bracken had been diagnosed
and treated for basal cell and squamous cell carcinomas during
1
According to the opinions of both the Beneficiaries and
MIAC’s experts, keratosis is a premalignant, superficial lesion on
the skin that is common in older persons.
2
During the medical examination, Bracken was required to
answer additional questions concerning his medical history, some of
which mirrored the questions on the written application. Bracken
was asked if he ever received treatment, attention, or advice for
cancer, tumor, or polyp, to which he responded no. He was also
asked if he had ever undergone a surgical operation that he did not
reveal in the written application, or visited a hospital, clinic,
dispensary or sanatorium for observation, examination, or treatment
that he did not reveal in the written application, to which he
responded yes. In the “provide details” section below, Bracken
only mentioned a repaired hernia in 1985. Bracken again signed an
attestation statement.
3
Had Bracken died more than 2 years after the policy was
issued, it would have been incontestable, and this litigation
probably would not have occurred.
4
1991, 1992, and 1993, during which time approximately eleven
biopsies had been performed. In fact, MIAC learned that in May of
1993, one month before Bracken applied to MIAC for coverage, a
biopsy had been performed by William Burrow, M.D., Bracken’s
dermatologist, which revealed an invasive squamous cell carcinoma.
Armed with this information, MIAC denied the Beneficiaries’ claim
for payment under the policy and rescinded the policy, maintaining
that in his application, Bracken had made material
misrepresentations regarding his several diagnoses of and
treatments for skin cancers.
The Beneficiaries brought suit seeking $500,000 in
compensatory damages and $10,000,000 in punitive damages for MIAC’s
alleged bad faith failure to pay them the policy benefits. MIAC
responded by filing a counterclaim for rescission of the policy and
interpleading all premiums that Bracken had paid on the policy.
MIAC then filed a motion for summary judgment, advancing that, as
a matter of law, Bracken had made misrepresentations on his
application for life insurance that were material to the risk
assumed by MIAC in underwriting his policy. The district court
granted the motion, finding that no genuine issue of material fact
existed to sustain the Beneficiaries’ claims and dismissing their
suit with prejudice. The Beneficiaries timely filed this appeal.
On appeal, the Beneficiaries submit that the district court
erred when it decided conflicting factual questions and drew
inferences in favor of the moving party, MIAC, urging that such
error mandates reversal of the summary judgment. Specifically, the
5
Beneficiaries contend that there are genuine factual disputes as to
(1) whether Bracken misrepresented his medical history on his life
insurance application, (2) whether, even if Bracken misrepresented
his condition on the application, MIAC had notice of Bracken’s skin
cancer, and (3) whether Bracken’s undisclosed history of skin
cancer was material, i.e. whether MIAC would have denied Bracken
insurance, or issued it only for an increased premium if that
history had been disclosed on the application. When we view the
Beneficiaries’ position in the light most favorable to them, we
discern summary judgment evidence supporting their position that
Bracken’s undisclosed history of skin cancer was immaterial to the
risk assumed by MIAC in underwriting the policy sufficient to
establish the existence of a genuine dispute of material fact. We
hold, therefore, that summary judgment was inappropriate.4
II.
ANALYSIS
A. Standard of Review
We review a grant of summary judgment de novo, applying the
same standard as the district court.5 In examining the record, we
4
We recognize that the Beneficiaries have presented evidence
both to refute MIAC’s claim that Bracken misrepresented his medical
history on the application and to demonstrate that MIAC had notice
of Bracken’s condition. As we conclude that there are genuine
issues of fact surrounding the materiality of Bracken’s undisclosed
condition sufficient to send the entire case to a finder of fact,
we do not express any opinion on the merits of the issues of
misrepresentation and notice.
5
Odom v. Frank, 3 F.3d 839, 843 (5th Cir. 1993); Southern
Pacific Transp. Co. v. Chabert, 973 F.2d 441, 444 (5th Cir. 1992),
cert. denied, 507 U.S. 987 (1993).
6
resolve all reasonable doubts and draw all reasonable inferences in
favor of the non-moving party, the Beneficiaries in this case.6 If
we conclude that they have presented specific, probative facts in
support of allegations essential to their claim, a genuine issue of
material fact exists and summary judgment is not appropriate.7
Neither we nor the district court should weigh the evidence or make
credibility determinations when evaluating depositions, affidavits,
or other summary judgment evidence.8
B. Applicable Law
Under Mississippi law, if an applicant for insurance is found
to have made a misstatement of material fact in the application,
the insurer that issued a policy based on the false application is
entitled to void or rescind the policy.9 To establish that, as a
matter of law, a material misrepresentation has been made in an
insurance application, (1) it must contain answers that are false,
incomplete, or misleading, and (2) the false, incomplete, or
6
FED. R. CIV. P. 56(c); Brothers v. Klevenhagen, 28 F.3d 452,
455 (5th Cir.), cert. denied, 513 U.S. 1045 (1994); FDIC v.
Hamilton, 939 F.2d 1225, 1227 (5th Cir. 1991).
7
Brothers, 28 F.3d at 455; Suggs v. Pan American Life Ins.
Co., 847 F. Supp. 1324, 1329 (S.D. Miss. 1994) (citing Anderson v.
Liberty Lobby, Inc., 477 U.S. 242 (1986)).
8
Richardson v. Oldham, 12 F.3d 1373, 1379 (5th Cir. 1994);
Berry v. Armstrong Rubber Co., 989 F.2d 822, 824 (5th Cir. 1993),
cert. denied, 510 U.S. 1117 (1994).
9
Prudential Ins. Co. v. Russell, 274 So. 2d 113, 116 (Miss.
1973); Coffey v. Standard Life Ins. Co., 120 So. 2d 143, 149 (Miss.
1960); Wesley v. Union Nat’l Life, 919 F. Supp. 232, 234 (S.D.
Miss. 1995); Pedersen v. Chrysler Life Ins. Co., 677 F. Supp. 472,
474 (N.D. Miss. 1988); Dukes v. South Carolina Ins. Co., 590 F.
Supp. 1166, 1168-69 (S.D. Miss. 1984), aff’d, 770 F.2d 545 (5th
Cir. 1985).
7
misleading answers must be material to the risk insured against or
contemplated by the policy.10 The party seeking to void the
insurance contract —— here, MIAC —— must establish the existence of
a factual misrepresentation and its materiality by clear and
convincing evidence.11 Whether the misrepresentation was
intentional, negligent, or the result of mistake or oversight is of
no consequence.12
A misrepresentation in an insurance application is material if
knowledge of the true facts would have influenced a prudent insurer
in determining whether to accept the risk.13 Stated differently,
a fact is material if it might have led a prudent insurer to
decline the risk, accept the risk only for an increased premium, or
otherwise refuse to issue the exact policy requested by the
applicant.14 In making these kinds of underwriting decisions,
insurers have the right to rely on the information supplied in the
application.15 Even if a misrepresentation exists, however, an
10
MISS. CODE ANN. § 83-9-11(3) (1998); Prudential, 274 So. 2d at
116.
11
Pederson, 677 F. Supp. at 474.
12
Prudential, 274 So. 2d at 116; see also Pederson, 677 F.
Supp. at 475 (noting that an insurer is not required to show the
insured’s intent to deceive in order to void a policy based on
misrepresentations); Dukes, 590 F. Supp. at 1168-70 (noting that it
is irrelevant that the insured does not know of the falsity of his
statements in the application).
13
Massachusetts Mut. Life Ins. Co. v. Nicholson, 775 F. Supp.
954, 959 (N.D. Miss. 1991).
14
Nicholson, 775 F. Supp. at 959.
15
Id.; Mattox v. Western Fidelity Ins. Co., 694 F. Supp. 210,
216 (N.D. Miss. 1988).
8
insurance company cannot rely on it to rescind the policy if facts
were known that would cause a prudent insurer “to start an inquiry,
which, if carried out with reasonable thoroughness, would reveal
the truth.”16
C. Materiality
The Beneficiaries argue that, assuming without admitting that
Bracken did misrepresent his medical history on the application,
such a misrepresentation was not material to the risk assumed by
MIAC. The Beneficiaries insist that in light of Bracken’s numerous
and significantly more severe medical ailments that were disclosed
—— heart attack, bypass surgery, aneurysm, hypertension, renal
failure, and gout —— the presence of non-melanoma skin cancer would
not have affected either his insurability vel non or the premium
MIAC charged for the policy. In other words, because MIAC was
willing to underwrite Bracken with full knowledge of his serious,
life-threatening medical conditions, contend the Beneficiaries,
MIAC would not have declined the application or required a greater
premium on the basis of his history of non-life-threatening skin
cancers, each of which had been completely removed without
reoccurrence or metastasis as of the times of Bracken’s application
and MIAC’s issuance of the policy.
The district court agreed that a genuine factual dispute may
exist as to whether MIAC would have declined to cover Bracken had
it known of his skin cancer history, but the court ultimately
deemed this dispute inconsequential. Instead, it stated that
16
Nicholson, 775 F. Supp. at 959 n.13.
9
“there is significant unrefuted evidence that even had MIAC issued
the policy, it would have charged a higher premium for the coverage
had it known of this aspect [skin cancer] of Bracken’s medical
history.”17 It is this purportedly undisputed “finding” —— that
MIAC would have increased Bracken’s premium had it known of his
prior treatment for skin cancer —— with which we disagree.
The Beneficiaries presented probative, summary judgment
evidence of contrary facts to demonstrate that MIAC, even with full
knowledge of Bracken’s history of skin cancer, might well have
issued the policy without increasing the premium. According to
MIAC’s Underwriting Guide, applicants who have been diagnosed with
“malignant neoplasms” (such as the non-melanoma basal cell and
squamous cell carcinomas removed from Bracken), which do not exceed
2 centimeters and which have not metastasized, receive a medical
rating of “+0" —— a rating that produces no additional premium.
The Underwriting Guide specifies, however, that if the non-melanoma
skin cancer exceeds 2 centimeters, the application must be denied
or assigned an extra premium of $7.50 per $1000 of insurance for a
four year period if the tumor had been present “0 to 1 year ago.”
In support of its motion for summary judgment, MIAC produced
the pathology report of Billy Walker, M.D., Bracken’s
dermapathologist, who tested a tissue specimen from Bracken
measuring “5.6 cm in length and 1.8 cm in greatest width” less than
one year before Bracken’s application. MIAC contends that, based
on the size of this tissue specimen (not, we note, the size of the
17
Emphasis added.
10
lesion), Bracken’s policy, if not declined outright, would have
incurred an increased premium of $3500 for each of the first four
years of the policy. MIAC substantiated its position with the
testimony of Charles Jones, M.D., MIAC’s Vice President of Medical
Services, and George McCarthy, the underwriter on Bracken’s
application, both of whom maintained that if Bracken had disclosed
his prior skin cancers during the underwriting process, the company
would have, at the very least, postponed issuance of the policy
until Bracken provided proof that he was cured. As this proof
would never have been forthcoming because Bracken’s cancer had
metastasized into his lymph nodes by September of 1993, claims
MIAC, coverage would have been declined.18
The Beneficiaries, however, presented particularized,
probative evidence to the contrary —— evidence that apparently was
disregarded by the district court —— which we conclude raises a
genuine issue of fact. Our conclusion is bolstered by the
knowledge that MIAC, not the Beneficiaries, must meet the
heightened clear and convincing burden of proof. First, the
Beneficiaries presented the affidavit of Bracken’s dermatologist,
18
Bracken’s application for insurance was underwritten by MIAC
in June and July of 1993 and was ultimately issued in August of
1993. Bracken was diagnosed with cancer in his lymph nodes on
September 27, 1993, after the physical examination and medical
checks had been completed. Both parties dispute whether the
presence of cancer contributed to Bracken’s death. These
arguments, however, do not affect the materiality issue because
“there is no requirement under Mississippi law that the actual
cause of death be related to risks concealed by an insurance
applicant in order for the concealed facts to be material.”
Wesley, 919 F. Supp. at 234 (citing Golden Rule Ins. Co. v.
Hopkins, 788 F. Supp. 295, 303 (S.D. Miss. 1991)).
11
Dr. Burrow, who stated that he had never removed a lesion larger
than 2 centimeters from Bracken’s skin. According to this
testimony and the unambiguous language in the Underwriting Guide,
Bracken clearly would not have received an increase in premium
based on the smaller size tumor.19 To buttress their position, the
Beneficiaries point out that even though Dr. Walker’s pathology
report indicated that he had tested a tissue specimen in excess of
5 centimeters, he clarified this point in later testimony to the
effect that the size of the specimen “should not be interpreted to
mean the tumor was that size inasmuch as physicians often remove a
great deal more tissue than tumor to make certain the entire tumor
is removed, and for cosmetic purposes.” At the summary judgment
stage, neither we nor the district court can reconcile the
differences between Dr. Walker’s pathology report and Dr. Burrow’s
testimony, or ascertain whether the size of the tumor was greater
than 5 centimeters or less than 2 centimeters. And, this
determination is critical when calculating a premium increase, if
any, in Bracken’s policy. We therefore conclude that this
19
This conclusion was confirmed by the Beneficiaries’ expert
underwriter, Waldemar Luehlfing, who ventured that “MetLife would
not have increased Mr. Bracken’s premium or changed his rating
according to MetLife’s Medical Underwriting Guide.” The district
court disregarded Luehlfing’s affidavit because it believed his
testimony was contrary to his opinion made in deposition.
Luehlfing, however, stated in his deposition that he had been
unaware of MIAC’s underwriting guidelines at that time and thus was
unable to make a determination of an applicant’s premium; but that
he was able to express his opinion in the affidavit after being
aware of those guidelines. We do not perceive these statements as
being inconsistent or self-contradictory and therefore consider the
affidavit to be probative evidence at the summary judgment stage of
these proceedings.
12
conflicting —— or at least ambiguous —— testimony raises issues of
material fact, which must be resolved by a trier of fact, as to the
actual size of the tumor and the resulting effect that this would
have had on Bracken’s premium.
The Beneficiaries have also highlighted the testimony of
MIAC’s Vice President of Medical Services and designated corporate
representative, Dr. Jones, who stated that MIAC would assess “no
rating” —— and therefore no premium increase —— because of squamous
cell or basal cell carcinomas that are removed without
complications and result in the patient’s being “cured” of that
particular skin cancer. He further indicated in a letter to a
claims reference advisor that because Bracken was not advised to
seek additional medical attention after his skin lesions were
removed, Bracken justifiably presumed that he was cured.20 These
statements, claim the Beneficiaries, are in direct contradiction to
the size requirements in the Underwriting Guide and indicate that,
notwithstanding the words of the guidelines, MIAC does not
automatically increase premiums for non-life-threatening, cured
skin cancers. The Beneficiaries note that had MIAC contacted Dr.
Burrow between June and August of 1993, when Bracken’s application
was submitted, considered, and ultimately accepted, he would have
confirmed that Bracken’s last lesion was removed without
complications, and that he considered Bracken cured of that cancer.
This, the Beneficiaries submit, would have provided the proof
20
Bracken’s lack of intentional deceit is not a defense,
however. See supra n. 12 and accompanying text.
13
necessary to proceed with policy issuance. Accordingly, MIAC might
well have proceeded to issue the policy without any premium
adjustment.
Despite Dr. Jones’s credentials and his designation by MIAC as
its corporate witness, the district court discounted his testimony.
The court reasoned that Dr. Jones was not necessarily familiar with
all of the factors considered in the underwriting process and, when
he stated that Bracken believed he was cured, made legal
conclusions that the witness was never qualified to make. We
disagree. At a minimum, this testimony ellicits the presence of
arguable factual contradictions that must be resolved by a fact
finder, an exercise proscribed at the summary judgment stage of the
case. Dr. Jones was designated by MIAC as its corporate
representative to give deposition testimony concerning underwriting
issues. Even though this was summary judgment evidence, which is
not to be weighed or tested for credibility, the district court
proceeded to trivialize Dr. Jones’s comprehension of the
underwriting process, which MIAC had designated him to present. If
the weight of the testimony of such a witness is to be discounted,
though, it must be done by a finder of fact in a full-blown trial.
III.
CONCLUSION
The Beneficiaries have adduced specific, probative facts to
support their side of the argument whether knowledge of Bracken’s
history of non-melanoma skin cancer was material to the risk MIAC
assumed when it chose to issue Bracken insurance without further
14
premium increase. For example, the actual sizes of the tumors
removed from Bracken’s skin are not only unclear, but one of MIAC’s
own representatives has stated —— on more than one occasion —— that
if the lesion in fact had been removed without complications,
Bracken’s policy would have been approved and issued as it was, and
for the same premium. As our summary judgment practice mandates,
neither we nor the district court should purport to resolve
disputes of this nature at this stage of the litigation; findings
involving material facts genuinely in dispute are reserved to the
finder of fact, whether judge or jury, at the trial stage of such
proceedings. Accordingly, we reverse the district court’s grant of
summary judgment in favor of MIAC and remand for trial.
REVERSED and REMANDED.
15