Justofin v. Metropolitan Life Insurance

Opinions of the United
2004 Decisions States Court of Appeals
for the Third Circuit

6-25-2004

Justofin v. Metro Life Ins Co
Precedential or Non-Precedential: Precedential

Docket No. 02-4264

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 PRECEDENTIAL 225 North Flowers Mill Road
Langhorne, PA 19047
UNITED STATES
COURT OF APPEALS Attorneys for Appellants
FOR THE THIRD CIRCUIT

Alvin Pasternak, Esquire
No. 02-4264 Anthony J. Tomari, Esquire
Metropolitan Life Insurance Company
Law Department
JEFFREY JUSTOFIN, CHRISTOPHER One Madison Avenue
JUSTOFIN; DAMIAN JUSTOFIN; New York, NY 10010-3690
ROBERT JUSTOFIN; IVAN
JUSTOFIN, (Beneficiaries of Loretta K. Veronica W. Saltz, Esquire (Argued)
Justofin, Deceased), Saltz Polisher
993 Old Eagle School Road
Appellants Suite 412
Wayne, PA 19087
v.
Attorneys for Appellee
METROPOLITAN LIFE
INSURANCE CO.
OPINION OF THE COURT

On Appeal from the
AM BRO, Circuit Judge
United States District Court
for the Eastern District of Pennsylvania The Justofins, beneficiaries under
D.C. Civil Action No. 01-cv-06266 the life insurance policy of their mother
(Honorable John R. Padova) Loretta K. Justofin (“Loretta”), sued
Metropolitan Life Insurance Company
(“MetLife”) for denying a portion of death
Argued October 27, 2003 benefit proceeds. The District Court
granted summary judgment in favor of
B e f o r e : S CIR ICA , C hief J udge, MetLife by finding the amendment to the
NYGAARD and AMBRO, Circuit Judges life insurance policy increasing the benefit
void because of Loretta’s failure to
(Opinion filed: June 25, 2004) disclose fully her medical history. The
issues before us are: (1) whether MetLife
Timothy M. Kolman, Esquire established that the amended policy was
Wayne A. Ely, Esquire (Argued) void as a matter of law because of
Timothy M. Kolman & Associates Loretta’s false representations, thus
warranting summary judgment against the son, Dr. Christopher Justofin,1 as her
Justofins on their breach of contract claim; personal physician, mentioning that Dr.
(2) whether M etLife waived its right to Justofin treated her for occasional arthritis
contest the validity of the amended policy of her hands and feet. MetLife issued the
because it failed to investigate Loretta’s life insurance policy to Loretta in the
representation before issuing the policy; amount of $100,000.
(3) whether the District Court properly
Five years later, at the age of sixty-
disposed of the Justofins’ bad faith claim
four, Loretta applied to increase the policy
against MetLife by finding the amended
amount, from $100,000 to $300,000, by
policy void; (4) whether the District Court
completing an “Application for Change of
erroneously granted MetLife’s motion to
Placed Personal Life Insurance” form. It
amend its pleading; and (5) whether the
contained the following pertinent
District Court erred in not addressing the
questions and answers.
Justofins’ motions for discovery and
sanctions. 11. Has any person EVER received
treatment, attention, or advice from any
We vacate the District Court’s
physician, practitioner or health facility
summary judgment in favor of MetLife
for, or been told by any physician,
and remand this case for further
practitioner or health facility that such
proceedings. Specifically, we conclude
person had:
that the amended life insurance policy
issued by MetLife was not void as a matter (j) Arthritis, paralysis, or
of law; that MetLife did not waive its disease or deformity of the
challenge to the validity of the amended bones, muscles or joints?
policy; that whether MetLife acted in bad Yes
faith should be dealt with separately from
....
the contract claim; and that the District
Court properly exercised its discretion in 15. In past 5 years, has any
allowing MetLife to amend its pleading. physician, practitioner or health facility
As for the Justofins’ motions for discovery examined, advised or treated any person?
and sanctions, we leave them to the Yes
District Court’s discretion on remand.
I. Background
The application instructed Loretta to
In April 1994 Loretta initially provide the details about her “yes” answers
applied for a life insurance policy from in questions 11 and 15, including the name
MetLife. In the application, she listed her

1
At the time, Dr. Justofin had just begun
his residency in family medicine, which he
finished in February 1996.

2
of each physician, nature and severity of of Pennsylvania,3 claiming breach of
condition, frequency of attacks, specific contract, bad faith, and negligence.
diagnosis, and treatment. She provided MetLife counterclaimed, seeking a
names of several doctors and the details of declaration that the policy increase was
surgeries and treatment, including her foot void ab initio, and moved for summary
surgery for arthritis. Although Loretta judgment. The District Court granted
listed several doctors who treated her, MetLife’s summary judgment motion on
including Dr. Eugene Jacobs (her then the negligence issue but denied it as to the
personal physician), she did not mention other issues.
Dr. Justofin in this 1999 change
MetLife then filed a motion for
application. In Part B of the application,
reconsideration based on the evidence that
Loretta again noted that she had arthritis
Loretta used Prednisone, a drug used to
and that she self-medicated Prednisone in
treat Lupus. MetLife deposed Dr. Justofin
1969 for her arthritis when she owned a
regarding this matter. He testified that he
pharmacy. Part C, the “Paramedical
was a personal physician of his mother
Evaluation,” shows that Loretta disclosed
from 1994 until sometime in 1998. During
that she had an “unknown type” of arthritis
this period, Dr. Justofin visited Loretta
that caused noticeable hand swelling.
weekly at her home to examine her and
Effective May 1999, MetLife issued the
also to pick up his mail. 4 Dr. Justofin
increase in death benefit coverage.
asserted that, although he treated his
Loretta died on December 7, 1999. mother for arthritis, she never had Lupus.
MetLife paid the Justofins $100,000 based Although Dr. Justofin was not sure what
on the original 1994 policy but informed kind of arthritis Loretta had, he speculated
them that it was voiding the amended that she had rheumatoid arthritis,
policy’s $200,000 increase. Initially, osteoarthritis, or both.5 Dr. Justofin also
MetLife’s stated reason for voiding the mentioned that he used to write a six-
increase was that Loretta failed to disclose month supply of Prednisone for Loretta’s
that she had Lupus.2 The Justofins brought
suit against MetLife in the Eastern District
3
The District Court had jurisdiction
under 28 U.S.C. § 1332.
2
Systemic Lupus Erythematosus, a 4
Dr. Justofin explained that he used his
slowly progressive systemic disease mother’s address as his permanent address.
marked by, among other things, arthritic
5
changes. Whether Loretta in fact had Dr. Justofin testified that he never
Lupus is disputed but is not relevant to our performed any tests to determine what
decision. We note, however, that the kind of arthritis his mother had, partly
record does not show any evidence that because she did not want to make a trip to
Loretta’s death was related to Lupus. his office.

3
arthritis and she would adjust the dose Hosp., Inc., 283 F.3d 561, 566 n.3 (3d Cir.
depending on her condition.6 Dr. Justofin 2002)). We therefore apply the same
also opined that Prednisone is a standard the District Court employed
medication routinely prescribed for under Federal Rule of Civil Procedure
rheu mato id arth ritis, r ather than 56(c). We should affirm the District
osteoarthritis. Court’s summary judgment if “there is no
genuine issue as to any material fact and
MetLife thereupon motioned for
. . . the moving party is entitled to a
leave to file a supplemental counterclaim,
judgment as a matter of law.” Fed. R. Civ.
seeking a declaration that the policy
P. 56(c). A fact is material when its
increase was void based on Loretta’s
resolution “might affect the outcome of the
failure to disclose that her son had treated
suit under the governing law,” and a
her and prescribed Prednisone for her. 7
dispute about a material fact is genuine “if
The District Court granted the motion.
the evidence is such that a reasonable jury
MetLife then sought summary judgment
could return a verdict for the nonmoving
on its new counterclaim and on the
party.” Anderson v. Liberty Lobby, Inc.,
Justofins’ breach of contract and bad faith
477 U.S. 242, 248 (1986). In reviewing
claims. The District Court entered
the record, we draw all justifiable
summary judgment in favor of MetLife on
inferences in favor of the nonmoving
all claims. The Justofins appealed. We
party. Id. at 255.
have appellate jurisdiction under 28 U.S.C.
§ 1291. III. Discussion
II. Standard of Review A. Breach of Contract Claim
“We review the District Court’s 1. Is the 1999 Policy Amendment
grant of summary judgment de novo.” void as a matter of law because of
Fakete v. Aetna, Inc., 308 F.3d 335, 337 allegedly false material
(3d Cir. 2002) (citing Fogleman v. Mercy misrepresentations?
We first determine whether the
policy amount increase was void as a
6
It is not clear from the record when Dr. matter of law. If so, we shall affirm the
Justofin started prescribing Prednisone and District Court’s summary judgment in
when he stopped. He recalled that the favor of MetLife on the Justofins’ breach
prescription began sometime in 1994 or of contract claim.
the beginning of 1995 and ended sometime
between 1997 and 1998. To void an insurance policy under
the law of Pennsylvania,8 the insurer has
7
MetLife does not claim, however, that
Loretta’s death was in any way related to
8
her arthritic condition or the medication The parties agree that the substantive
for that condition. law of Pennsylvania applies.

4
the burden to prove that: (1) the insured But if the evidence is such that a
made a false representation; (2) the insured reasonable jury could find that MetLife
knew the representation was false when it has not shown all the elements by clear
was made or the insured made the and convincing evidence, we shall reverse.
representation in bad faith; and (3) the
(a) Did Loretta make false
representation was material to the risk
representations?
being insured. Coolspring Stone Supply,
Inc. v Am. States Life Ins. Co., 10 F.3d In this context, we first decide
144, 148 (3d Cir. 1993) (citing Shafer v. whether a rational jury must find that
John Hancock M ut. Life Ins. Co., 189 A.2d MetLife has shown that Loretta made
234, 236 (Pa. 1963)). The insurer has the false representations. The District Court
burden to prove all three elements by clear found that her failure to list Dr. Justofin’s
and convincing evidence. Batka v. Liberty treatment, along with his prescription of
Mut. Fire Ins. Co., 704 F.2d 684, 687 (3d Prednisone, in her 1999 application so
Cir. 1983) (“Pennsylvania requires that an qualified.
insurer establish the defense of fraud in the
In Pe nns y lv a n i a , a f alse
application by ‘clear, precise and
representation includes omission of an
indubitable’ evidence . . . [and] that the
insured’s medical information. See
factfinder be satisfied of the elements of
Grimes v. Prudential Ins. Co. of Am., 585
the defense by clear and convincing
A.2d 29, 31-32 (Pa. Super. Ct. 1991)
evidence.”) (citations omitted).
(using the term “a misstatement of fact” to
This heightened burden of proof refer to an insured’s failure to disclose
should be taken into account in ruling on fully her medical history). The Justofins
summary judgment. Anderson, 477 U.S. at correctly point out that their mother indeed
255 (“[T]he determination of whether a disclosed in her initial 1994 application
given factual dispute requires submission that Dr. Justofin was her personal
to a jury must be guided by the substantive physician.9 But Loretta failed to inform
evidentiary standards that apply to the MetLife about her son’s prescription of
case.”). Consequently, where the clear and Prednisone. Although the Justofins claim
convincing evidence standard applies, the that Loretta disclosed that she took
trial judge must inquire whether the Prednisone for her arthritis, the record
evidence presented is such that a jury
applying that evidentiary standard could
9
find only for one side. In this case, if the We agree with the Justofins that the
evidence in the record reasonably supports 1994 and 1999 applications must be read
the inescapable conclusion that MetLife together for the purpose of this litigation
has shown all three elements to void the because the 1999 application was
policy by clear and convincing evidence, completed only for the purpose of
we shall affirm the summary judgment. increasing the face amount of the 1994
policy.

5
shows that she listed only her self- v. Plumer, 380 U.S. 460, 473-74 (1965).
medication of Prednisone in 1969 but not W hen “the [Federal] Rule speaks to the
her more recent use of the drug between point in dispute and is valid, it is
1994 and 1998. Because there is no controlling,” and we need not pay any
evidence to contradict that Loretta failed to regard to state provisions, regardless
disclose this information, no genuine whether they are in conflict with the
dispute exists as to whether her Federal Rule. 19 Charles Alan Wright,
representations were false. Arthur R. Miller, & Edward H. Cooper,
Federal Practice and Procedure § 4508 (2d
(b) Did Loretta know that
ed. 1996). Only if there is no Federal Rule
her representations were false or did she
covering the point in dispute, or the scope
make them in bad faith?
of the Federal Rule is not sufficiently
Next, MetLife must show that broad to control the issue before us, do we
Loretta knew her representations were ask whether to apply the state law. Walker
false or she made them in bad faith. While v. Armco Steel Corp., 446 U.S. 740, 750-
both involve state of mind, our discussion 53 (1980); see also McEwen v. Delta Air
focuses primarily on bad faith, which was Lines, Inc., 919 F.2d 58, 60 (7th Cir.
also the focus of the District Court. 1990) (“Only when the federal rules are
silent need the federal court ask whether to
The Justofins assert that a genuine
use state rules as templates.” (citing
issue of material fact exists whether
Walker)). Even then, a federal court
Loretta’s omissions were innocent,
“must apply the federal rule within its
inadvertent mistakes rather than bad faith
sphere of coverage.” Wright, Miller &
misrepresentations. If so, the District
Cooper, supra, § 4508.
Court erred in determining Loretta’s bad
faith as a matter of law. Rule 56(c) directly speaks to and
thus controls the process pertaining to
MetLife argues that we should
Loretta’s intent in this case. MetLife in
adopt the summary judgment standard that
fact concedes that Rule 56(c) is
Pennsylvania courts apply to insurance
sufficiently broad enough to cover the
fraud cases. It contends that this case falls
point in dispute. Appellee’s Letter Brief at
into one of the rare instances in which
6. Nevertheless, it argues that we are
Pennsylvania courts would infer bad faith
compelled to adopt the Pennsylvania law
as a matter of law when considering
because, it claims, there is no conflict
summary judgment, and therefore we must
between the federal and state law in this
also do so. We disagree for the following
case. Contrary to MetLife’s argument,
reasons.
however, when a Federal Rule is clearly
A federal court sitting in diversity applicable (as is the case here), the
jurisdiction follows a Federal Rule of Civil absence of conflicting state law is all the
Procedure when one of the Federal Rules more reason to adopt the controlling
is controlling the point in dispute. Hanna

6
Federal Rule. Walker, 446 U.S. at 747. Generally an insured’s state of mind
Accordingly, by applying Pennsylvania’s is an issue of fact for the jury. Coolspring,
substantive law, we do not impress a 10 F.3d at 148. The issue of intent is
different procedural requirement on Rule “particularly inappropriate for resolution
56.10 by summary judgment” because evaluating

10
In contending that Pennsylvania law bad faith as a matter of law must be
compels us to find bad faith as a matter of confined to the cases where “the insured
law, the dissent relies on a Pennsylvania [falsely] denies in his answer that any
Supreme Court case from 1941 that physician has been consulted, or any
entered judgment for the insurance medical or surgical treatment has been
company notwithstanding a contrary received during the period of inquiry.” Id.
verdict. Freedman v. Mutual Life Ins. Co. at 84. In this case, Loretta did inform
of New York, 21 A.2d 81 (Pa. 1941). We MetLife that: (a) she had arthritis; (b) Dr.
note that we would still reverse the District Justofin treated her for this condition at
Court on this issue even under Freedman. some point; (c) she had surgery on her foot
There, the insured flatly denied having for arthritis; (d) she suffered noticeable
consulted any physician or having had any hand swelling because of her arthritis; and
kind of treatment for any ailment in his (e) she tried different types of drugs to
insurance application form. Id. at 83. To alleviate this ailment. Whether Loretta’s
the contrary, the insured consulted or failure to provide further details (such as
visited five physicians more than twenty the use of a particular drug) establishes her
times over the period. Id. He also bad faith is an issue for the jury.
complained of pains in his chest, a nervous Moreover, we do not believe that our
disorder, and dizziness to his physician, Court in Burket v. Equitable Life
was prescribed a heart stimulant, and had Assurance Society of America, 287 F.3d
his heart examined by three different 293 (3d Cir. 2002), adopted a rule that
physicians (all of whom spotted heart infers bad faith as a matter of law under
irregularities). Id. The only (and Freedman. The Burket panel merely cited
decidedly weak) evidence the plaintiff the dicta portion of Grimes, a
offered in rebuttal was the testimony of the Pennsylvania Superior Court case.
insured’s secretary that she thought he was Though the Court in Grimes referred to
in good health and had no knowledge of Freedman, it did not deem Freedman to
his visits to physicians. Id. The Court apply to the facts in Grimes, where the
concluded that, under the circumstances, insured had disclosed her medical history
“[t]he only reasonable assumption that can but omitted material facts. 585 A.2d at 33.
be drawn . . . is that the insured knowingly Grimes therefore held that the insured’s
and fraudulently gave false answers.” Id. intent and bad faith were for a jury to
at 85. We believe Freedman’s finding of decide. Id.

7
state of mind often requires the drawing of rheumatoid arthritis and in bad faith
inferences from the conduct of parties concealed this information from MetLife
about which reasonable persons might by omitting her son’s treatment visits and
differ. Riehl v. Travelers Ins. Co., 772 prescription of Prednisone. As this case
F.2d 19, 24 (3d Cir. 1985) (citing Ness v. came to us on summary judgment, all
Marshall, 660 F.2d 517, 519 (3d Cir. permissible inferences are to be drawn in
1981)). the Justofins’ favor. Anderson, 477 U.S.
at 255. A jury might conclude that Loretta
Contrary to the District Co urt’s
did not think that her son’s casual visits
finding, we are not satisfied that Dr.
were so important to report in her new
Justofin’s testimony and Loretta’s answers
application in great detail, especially when
in her policy applications incontrovertibly
she had already disclosed that he was her
established her bad faith. Dr. Justofin
personal physician and treating her for
merely testified that she suffered from
arthritis in her initial application, and when
arthritis of an unknown type, which she
he had discontinued his weekly visits a
disclosed. The testimony also showed that
year or two before the time of her new
Loretta saw her son on a weekly basis for
application. Furthermore, a jury might
a few years and he prescribed Prednisone
determine that Loretta not only was
for her during that period. She did not
unaware of the type of arthritis she was
disclose this information in her 1999
suffering but also believed that further
application. With respect to Dr. Justofin’s
detail on the application, such as taking a
treatment, the District Court noted
particular drug, was unnecessary when she
Loretta’s disclosure of Dr. Justofin’s
already stated that she had arthritis that
treatment of her arthritis in her initial 1994
was treated, inter alia, by a surgery.
application. This shows, the Court
concluded, that Loretta in bad faith did not We again emphasize that MetLife
disclose Dr. Justofin’s treatment in the has the burden to prove Loretta’s state of
1999 application. The District Court also mind, a difficult task nearly always and
referred to Loretta’s omission of Dr. especially when she is dead. In the context
Justofin’s prescription of Prednisone and of this case, Loretta’s knowledge of
contrasted it with her disclosure of taking misrepresentations and bad faith may not
self-medicated Prednisone from many be inferred as a matter of law, as they are
years before. genuine issues of material fact to be
decided by a jury.
It is possible that a jury could find
it suspicious that Loretta somehow thought ( c ) W e r e t h e
it unnecessary to reveal this information. misrepresentations material?
But we do not believe that the only
The third issue we consider is
reasonable inference from this evidence is
whether the information Loretta failed to
that Loretta must have had (or, at least,
disclose was material. Information is
must have believed that she had)
material if it would have influenced the

8
judgment of the insurer in making the 2. Did MetLife waive its right to
contract or in fixing a premium. Piccinini contest the validity of the amended
v. Teachers Protective Mut. Life Ins. Co., policy by failing to investigate?
463 A.2d 1017, 1024 (Pa. Super. Ct.
We do not agree with the Justofins,
1983). The District Court found that
however, that MetLife waived its right to
Loretta was treated for rheumatoid arthritis
contest the validity of the amended policy
and that as a matter of law the information
by failing to investigate. True, “the law of
was material since MetLife’s guidelines
Pennsylvania is . . . that when a policy is
showed that rheumatoid arthritis, a more
issued on an application containing an
serious type of arthritis than osteoarthritis,
ambiguous, unresponsive or incomplete
was an important factor in determining the
answer[,] the insurer waives the right to
insurance risk. But it is not at all obvious
assert the falseness or materiality of the
from the record that MetLife would have
question and answer.” Franklin Life Ins.
cancelled the policy (or even demanded a
Co. v. Bieniek, 312 F.2d 365, 373 (3d Cir.
higher premium) had it known that Dr.
1962). From this, the Justofins argue that
Justofin was prescribing Prednisone. This
when their mother mentioned that she had
is because MetLife adjusts its premiums
an “unknown type arthritis,” her answer
based on the severity of an insured’s
was ambiguous on its face and, therefore,
rheumatoid arthritis, not the type of
MetLife should have investigated further.
prescription drugs involved. MetLife
We need not decide here whether
argues that had Loretta disclosed her use
“unknown type arthritis” was ambiguous
of Prednisone for either moderate or
on its face for, even if so, an insurer
severe rheumatoid arthritis, there could
waives only the right to contest the validity
have been a decline of the increase in
of those particular responses while
coverage. The record before us, however,
retaining the right to contest the validity of
does not clearly establish that Loretta even
any other misrepresentations (such as, in
had rheumatoid arthritis or that her use of
this case, Loretta’s omission of her son’s
Prednisone was to treat her presumably
treatment and drug prescription). Id. at
rheumatoid condition.11 Therefore, a jury
375.
must determine whether the undisclosed
information was material. B. Bad Faith Claim
The Justofins argue that finding the
amended policy void should not have
11
Again we emphasize that no record resulted in the summary disposition of
evidence indicates that Loretta’s death was their bad faith claim against MetLife.
related to any form of arthritic condition or Case law treats contract and bad faith
the medication for it. Indeed, as noted claims as separate in insurance cases.
above, MetLife initially asserted that Margolies v. State Farm Fire & Cas. Co.,
Loretta used Prednisone to treat her Lupus. 810 F. Supp. 637, 641-42 (E.D. Pa. 1992)
(rejecting the insurer’s contention that bad

9
faith assertion was contingent to a contract should have denied the amendment
claim because the bad faith claim was because MetLife’s claims are meritless and
essentially a claim on the policy itself).12 in bad faith. We disagree. First, we have
The Justofins have not pointed to much (if concluded that the merit of the parties’
any) evidence in support of their bad faith claims relating to the policy amendment
claim. But because the claim survived the should be decided by a jury. Moreover,
first summary judgment motion, the the case the Justofins rely on, Heyl &
District Court should have given a reason Patterson Int’l, Inc. v. F.D. Rich Housing
why it failed the second time. On remand, of the Virgin Islands, Inc., 663 F.2d 419
the District Court should treat the bad faith (3d Cir. 1981), does not help their
claim against MetLife separately from the position.
contract claim, though we note that we
[L]eave to amend “shall be
voice no opinion whether the bad faith
freely given when justice so
claim should yet again survive summary
requires”; this mandate is to
judgment.
be heeded . . . . Of course,
C. Leave to Amend MetLife’s Pleading the grant or denial of an
opportunity to amend is
The Justofins argue that the District
within the discretion of the
Court abused its discretion when it granted
District Court, but outright
MetLife leave to amend its pleading to add
refusal to grant the leave
a counterclaim. See Fed. R. Civ. P.
without an y justifying
15(a). 13 They assert that the District Court
reason appearing for the
denial is not an exercise of
12
Although Pennsylvania’s statute under discretion; it is merely abuse
which the plaintiff in Margolies brought a of that discretion and
bad faith claim was later preempted, that inconsistent with the spirit
does not change that a bad faith claim is a of the Federal Rules. The
separate and independent cause of action. trial court’s discretion under
Rule 15, however, must be
13
The Rule provides: tempered by considerations
of prejudice to the non-
A party may amend the party’s pleading moving party, for undue
once as a matter of course at any time prejudice is “the touchstone
before a responsive pleading is served . . . for the denial of leave to
. Otherwise a party may amend the party’s amend.” In the absence of
pleading only by leave of court or by substantial or undue
written consent of the adverse party; and prejudice, denial must be
leave shall be freely given when justice so grounded in bad faith or
requires. dilatory motives, truly

10
 u n d u e o r deny summarily the Justofins’ claim of bad
unexplained delay, faith against Metlife, needs to set out these
repeated failure to reasons; the District Court did not abuse its
cure deficiency by discretion in granting MetLife’s motion to
a m e n d m e n t s amend its pleadings to add a counterclaim;
previously allowed and, on remand, the District Court retains
or futility of discretion to address the Justofins’
amendment. allegations of discovery abuse and motions
for sanctions and additional discovery. In
Id. at 425 (citations omitted). In this case
this context, we vacate the District Court’s
the Justofins do not show that they are
grant of summary judgment and remand
unduly prejudiced by the District Court’s
for further proceedings consistent with this
grant of the amendment. Hence the
opinion.
District Court did not abuse its discretion
in doing so.
D. Motions for Sanctions and Additional
Discovery
The Justofins also argue that the
District Court abused its discretion when it
did not rule on their motions for sanctions
and additional discovery before it entered
a summary judgment. We leave to the
District Court’s discretion to address them
on remand.
IV. Conclusion
Contrary to the decision of the
District Court, we conclude that the 1999
amendment to Loretta Justofin’s life
insurance policy was not void as a matter
of law, as it is for a jury to decide whether
the misrepresentations in the application
for the policy amendment were made
knowingly or in bad faith and whether they
were material. As to the other issues
appealed: MetLife did not waive its right
to contest the amended policy’s validity by
failing to investigate Loretta’s statements
pertaining to her arthritis; the District
Court, while it may have good reasons to

11
 56(c), regardless whether Pennsylvania
courts would infer in certain instances bad
Justofin v. Metropolitan Life Insurance
faith as a matter of law when considering
Company, No. 02-4264
summary judgment. I disagree.
Federal courts must apply the
NYGAARD, J., dissenting. properly enacted Federal Rules of Civil
Procedure in place of any state rule that
I believe that Pennsylvania’s bad
directly collides with those rules.
faith inference, as explained in Freedman
Chamberlain v. Giampapa, 210 F.3d 154,
v. Mut. Life Ins. Co. of N.Y., 21 A.2d 81,
159 (3d Cir. 2000) (citing Hanna v.
84 (Pa. 1941), is not in conflict with Rule
Plumer, 380 U.S. 460, 470-74 (1965)). I
56 of the Federal Rules of Civil Procedure
do not believe that Pennsylvania’s bad
and, therefore, should be applied by this
faith inference directly collides with Rule
Court to analyze MetLife’s motion for
56(c). In Anderson v. Liberty Lobby, Inc.,
summary judgment. Under that analysis, I
the Supreme Court stated that under Rule
believe Loretta Justofin’s failure to
56(c), “the substantive law will identify
disclose her weekly medical examinations
which facts are material.” 477 U.S. 242,
with her son and the Prednisone
248 (1986). Further, “only disputes over
prescriptions she received as a result of
facts that might affect the outcome of the
those examinations were ma terial
suit under the governing law will properly
omissions from which bad faith must be
preclude the entry of summary judgment.”
inferred. Accordingly, I do not believe the
Id. As the majority acknowledges, there is
District Court erred by granting MetLife’s
no dispute that Pennsylvania’s substantive
motion for summary judgment on the
law applies to this case. Under Anderson,
Appellants’ breach of contract claim, and
I see no conflict between Pennsylvania’s
so dissent from the majority on this point.
bad faith inference and Rule 56(c);
Pennsylvania’s law simply identifies what
is and is not material under the Federal
Pennsylvania courts will infer bad
Rule. Specifically, if Loretta Justofin
faith as a matter of law when an insured
failed to disclose medical treatment on her
fails, in the face of a direct and pointed
insurance application that “a person of
question, to disclose medical treatment that
ordinary intelligence could not have
a person of reasonable intelligence could
forgotten,” then facts about whether or not
not have forgotten. Id.; Grimes v.
she actually knew about that treatment or
Prudential Ins. Co. of Am., 585 A.2d 29,
actually engaged in bad faith conduct are
31-33 (Pa. Super. Ct. 1991) (applying this
immaterial, because judgment can be
bad faith inference in the summary
entered in favor of MetLife on this issue
judgment context). The majority,
even in the face of a contrary conclusion
however, does not apply the inference and,
by the jury. Freedman, 21 A.2d at 84-85
instead, decides this issue under Rule

12
(affirming the trial court’s decision to set I also believe the District Court
aside a jury verdict in favor of the plaintiff properly found the medical treatment
where the un contradicted evidence omitted by Loretta Justofin was of such a
established that the plaintiff’s history of nature that bad faith was properly inferred.
medical treatments was such that no It is undisputed that she did not disclose on
person of ordinary intelligence could have either of the rele vant insurance
forgotten those treatments). applications that from 1994 until some
point in 1998 she was examined by her
son, Dr. Justofin, on a weekly basis and
We have recently applied this rule that, as part of those examinations, Dr.
in a case similar to this case. In Burkert v. Justofin prescribed Prednisone to treat her
Equitable Life Assurance Soc’y of Am., arthritis.
287 F.3d 293, 297-98 (3d Cir. 2002), we
had to determine whether summary
judgment was properly entered against an There is no question that for
insured who failed to fully disclose on his between three and four years Dr. Justofin
insurance application the extent of his drug examined Loretta Justofin on a weekly
abuse and related treatment. We held that basis and treated her arthritis. He began
the District Court acted appropriately by that treatment with over-the-counter drugs
“not[ing] that cour ts app lying and then switched to the prescription drug
Pennsylvania law have routinely held that Voltran. Finally, he prescribed Prednisone
misrepresentations regarding alcohol abuse to treat what he believed to be a
are deemed to be made in bad faith as a combination of osteoarthritis and
matter of law and extend[ing] this holding rheumatoid arthritis. In 1994, when
to include misrepresentations regarding Loretta Justofin initially applied for
drug use.” Id. We cited Grimes, among insurance with MetLife, she indicated that
other cases, for the proposition that fraud she was being seen by her son and was
can be properly inferred in these types of taking Voltran. However, on her change
situations. Id. at 298. of insurance application, she never
indicated that she continued to see her son
after 1994 and that he changed her
I see no material difference between treatment to Prednisone.14 Loretta
Pennsylvania’s inference of bad faith for Justofin was still taking Prednisone when
failing to disclose alcohol abuse and its
same inference for failing to disclose
s u b s t a n ti a l m e d i c a l t r e a t m e n t. 14
It should also be noted that the record
Accordingly, based on Burkert and
shows that Loretta Justofin was familiar
Anderson, I believe the District Court
with Prednisone because she had self-
properly applied Pennsylvania’s bad faith
medicated with it in 1969 to treat her
inference.
arthritis.

13
she completed this change of insurance For these reasons I would not
application. reverse the District Court’s grant of
summary judgment in favor of MetLife
and respectfully dissent on this point. I
The question that must be asked in agree with the majority on the remaining
order to determine whether an inference of issues addressed in its opinion.
bad faith arises from Loretta Justofin’s
failure to disclose is whether “a person of
ordinary intelligence could not have
forgotten these [treatments] in answering
a direct and pointed question in an
application for insurance.” Freedman, 21
A.2d at 84. Based on the frequency of Dr.
Justofin’s examinations and the fact that
Loretta Justofin took Prednisone for at
least three years to treat a symptomatic
disease, I do not believe a person of
ordinary intelligence could have forgotten
these treatments when filling out the
relevant insurance application.

This omission was also material.
The unrebutted affidavit of a MetLife
representative establishes that Dr.
Justofin’s treatment of his mother with a
steroid prescription drug for arthritis
would result in MetLife increasing her
premium to take into account moderate
rheumatoid arthritis. See New York Life
Ins. Co. v. Johnson, 923 F.2d 279, 281 (3d
Cir. 1991) (“A misrepresented fact is
material if being disclosed to the insurer it
would have caused it . . . to demand a
higher premium.”). This statement is
supported by MetLife’s underwriting
guidelines.

14