Material Misrepresentation Life Insurance Claim
By GNGF on August 21st, 2023 in
Life Insurance Denial Attorney Peter Diiorio’s Success Against Insurance
This material misrepresentation life insurance claim involved a claim and lawsuit for life insurance proceeds, penalties, and attorney’s fees, by the beneficiary against the life insurance company, the life insurance agent, and the life insurance agent’s errors and omissions insurance policy. The beneficiary in this case initially was unsure if he even had a case worth pursuing.
The beneficiary, in this case, was the husband of the deceased, who left behind three young children. Three weeks after her final child-birth, the deceased complained of abdominal pains, was admitted to Touro Infirmary, and received an ultrasound report identifying gallstones, hepatomegaly, a cyst, and fluid, all of which the life insurance company would later use as a basis to deny the claim, but none of ever received any treatment or were ever once noted in any other medical records. Weeks later, the deceased had her gallbladder removed laparoscopically, and a final surgical pathology report noted a tumor with adenocarcinoma on the gallbladder, but noted that “the margin of excision is free from involvement.” The deceased visited an oncologist numerous times and had a Cat Scan performed before completing her life insurance application.
Soon after, though, the deceased completed a life insurance application with a life insurance agent and followed up with a medical examination. However, both the life insurance application and the medical examiner’s report were rife with material errors and inconsistencies known to the life insurance agent at the time of the completion of the application. For example, the life insurance agent knew that the deceased had given birth in a hospital within the prior twelve months, and received related treatments and tests, but nonetheless knowingly answered “no” to the application question “In the past ten years has the person named above received or been advised to receive any medical or surgical treatment or test?”.
At her life insurance medical examination, the deceased provided a list of seven medical providers and procedures, all of which were directly inconsistent with and contradictory to the deceased’s life insurance application and directly inconsistent with and contradictory to other parts of the medical examiner’s report itself, such as the deceased’s “no” answer to medical examiner’s report question (“Has the Proposed Insured within the past five years had a checkup, consultation, illness, injury, or surgery?”), and her “no” answer to the medical examiner’s report question (“Has the Proposed Insured within the past five years had an electrocardiogram, X-ray, or other diagnostic tests?”). Nonetheless, no further questioning of the deceased or follow-up was performed by either the life insurance company or the life insurance agent. Despite all the errors and inconsistencies in the application and medical examination that were known to the agent, and all the errors and inconsistencies apparent on the face of the application and medical examination, the life insurance agent (and thus the life insurance company) failed to ask any further questions of the deceased, or to conduct any “field underwriting,” even though the life insurance company identified filed underwriting as a best practice of its life insurance agents.
At its corporate representative deposition, the life insurance company testified that its underwriters are required to exercise due diligence and do, in fact, conduct a review to confirm that the answers provided in the application are complete and true. The life insurance company testified that its underwriters would have a life insurance applicant re-questioned if there were inconsistencies in an application and if there were errors, ambiguity, or incompleteness. Regarding inconsistencies in life insurance applications, the life insurance company testified that it reviewed applications for inconsistencies, and would inquire further if it found an inconsistency, and had a duty to inquire further if they found an inconsistency. The life insurance company also testified that if it found an inconsistency between an application and a medical examination, but chose not to inquire further regarding the inconsistency, then it assumes and accepts the risk related to that inconsistency.
The life insurance company testified that during the underwriting process, in this case, its underwriter discovered inconsistencies between the deceased policyholder’s medical examiner’s report and the application medical information but failed to conduct any further inquiry based on those inconsistencies. The life insurance company also testified that its underwriter was aware of numerous errors on the decedent’s application, with numerous mis-spellings (including the misspelling of both beneficiaries’ names). The life insurance company also testified that during the underwriting process, and for two full years after the decedent’s application, its underwriters had full authorization to request the policyholder’s medical records but chose not to do so.
The life insurance company initially denied this claim for death benefits on the basis that the decedent had made material misrepresentations regarding her medical history. The life insurance company’s primary basis for the purported material misrepresentation was that the decedent had her gallbladder removed four months before purchasing the policy in question, and the removed gallbladder showed signs of cancer, but the decedent did not list this information on her life insurance application. The life insurance company also denied the claim on the basis of a postpartum ultrasound identifying gallstones, hepatomegaly, a cyst, and fluid, even though the decedent did not receive any treatment for these conditions, and even though it aware at the time of denial that the decedent had given birth just weeks before these abdominal pains and postpartum ultrasound.
Despite the significant evidence in favor of the life insurance company, in this case, Gulf Coast Insurance Attorneys and Mr. Diiorio were able to make a significant recovery. First, following an exhaustive investigation of all the facts and evidence, Gulf Coast Insurance Attorneys was able to demonstrate that the life insurance company could not prove that the decedent intended to deceive or defraud the insurance company, which is a requirement that the life insurance company must meet. In short, there may have been errors or inconsistencies, but these were not made with an intent to deceive. Second, following extensive depositions of the life insurance agent and three corporate representatives of the life insurance company, including two underwriters, Gulf Coast Insurance Attorneys was able to demonstrate that the life insurance company was prohibited from denying this claim because of its failure to investigate the decedent’s medical records, or to conduct any further inquiry whatsoever until after a claim was filed. In other words, the life insurance company chose not to investigate whatsoever the erroneous and contradictory medical history in the decedent’s application and medical examiner’s report, and thus waived its right to deny a claim for material misrepresentation on the basis of anything which a reasonable investigation would have uncovered, which included the decedent’s medical procedures for which the life insurance company used to deny this claim.