Certain Underwriters at Lloyd' v. Max Cohen

Filing

PUBLISHED AUTHORED OPINION filed. Originating case number: 8:13-cv-00311-JKS. [999577678]. [14-1227]

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PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 14-1227

CERTAIN UNDERWRITERS AT LLOYD’S, LONDON, Subscribing
Certificate Nos. 1149760, 1149761, and 1149763,

to

Plaintiff - Appellee,
v.
MAX HARRY COHEN, M.D.; MAX HARRY COHEN, M.D., CHTD.,
Defendants - Appellants.

Appeal from the United States District Court for the District of
Maryland, at Greenbelt.
Jillyn K. Schulze, Magistrate Judge.
(8:13-cv-00311-JKS)

Argued:

March 25, 2015

Decided:

May 5, 2015

Before MOTZ and GREGORY, Circuit Judges, and Mary G. LEWIS,
United States District Judge for the District of South Carolina,
sitting by designation.

Reversed and remanded by published opinion.
Judge Motz wrote
the opinion, in which Judge Gregory and Judge Lewis joined.

ARGUED:
Erik
David
Frye,
Upper
Marlboro,
Maryland,
for
Appellants.
Neal Richard Novak, NOVAK LAW OFFICES, Chicago,
Illinois, for Appellee. ON BRIEF: Steven E. Leder, Julie Furst
Maloney, LEDER LAW GROUP, PC, Baltimore, Maryland, for Appellee.

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DIANA GRIBBON MOTZ, Circuit Judge:
Certain Underwriters at Lloyd’s of London brought this suit
against Dr. Max Harry Cohen, a general surgeon, and Max Harry
Cohen,

M.D.,

practice

Chtd.,

operated

declaration

the

corporate

(collectively,

that

they

insurance policies.

entity

“Dr.

properly

under

Cohen”),

rescinded

which
seeking

his

his
a

disability

The magistrate judge held that Dr. Cohen

made material misrepresentations on his policy applications and
so

granted

reasons

summary

that

judgment

follow,

we

to

the

reverse

Underwriters.
and

remand

For

for

the

further

proceedings consistent with this opinion.

I.
On

April

1,

2011,

Dr.

Cohen

submitted

several

initial

applications for disability insurance to Petersen International
Underwriters,

a

surplus-lines

broker

authorized

by

the

Underwriters to enter into insurance contracts on their behalf.
Each

four-page

insurance

application

consists

of

questions

pertaining to an applicant’s personal, financial, and medical
information.
At issue here are Dr. Cohen’s responses to three of those
questions.

When asked “Are you actively at work?,” Dr. Cohen

checked the “Yes” box.

In response to the question “Are you

aware of any fact that could change your occupation or financial
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stability?,” Dr. Cohen checked the “No” box.

When asked “Are

you party to any legal proceeding at this time?,” Dr. Cohen
again checked the “No” box.

Dr. Cohen signed final applications

with these answers on August 8, 2011, and the policies became
effective on that date.
On April 12, 2011, shortly after submission of his initial
applications and prior to submission of his final applications,
Dr. Cohen signed a Consent Order with the Maryland State Board
of

Physicians

(the

“Board”),

which

practice medicine in Maryland.
Dr.

Cohen’s

suspension

would

suspended

his

license

to

The Consent Order provided that
begin

on

continue for a period of three months.

August

2,

2011,

and

Dr. Cohen agreed in the

Consent Order to wind down his practice and refer all patients
to

other doctors

during

the

three-month

period

prior

to

his

suspension, and supply the Board with sixty days’ notice of his
intent

to

become

clinically

active

following

his

suspension.

The Consent Order further provided that if Dr. Cohen returned to
active practice, he would be on probation for five years, and
would be supervised for the first year. 1
On

September

8,

2011,

one

month

after

the

disability

policies went into effect, Dr. Cohen sought medical treatment
1

On December 19, 2012, the District of Columbia Board of
Medicine also issued an order placing Dr. Cohen on probation for
five
years.
It,
too,
imposed
various
limitations
and
restrictions on his ability to practice medicine.
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for injuries to his thumb and leg resulting from a fall.
that

month,

Dr.

Cohen’s

insurance

agent

Underwriters with notice of a possible claim.

Later

provided

the

The Underwriters

retained Disability Management Services, Inc. to investigate and
adjust the potential claim.
Consent Order.
they

intended

That investigation uncovered the

The Underwriters then notified Dr. Cohen that
to

rescind

the

policies,

and

issued

a

check

refunding his premium payments.
Dr.
under

Cohen

which

informal

initiated

the

review,

the

rescission
and

the

policies’
was

grievance

affirmed.

rescission

was

He

procedures,

requested

again

upheld.

an
The

Underwriters, which are incorporated under the laws of England
and

Wales,

London,

and

have

their

subsequently

principal

brought

this

Dr. Cohen, a Maryland citizen.

places

of

diversity

business

action

in

against

The Underwriters asserted that

Dr. Cohen made material misrepresentations on his applications
for

insurance

and

sought

rescinded his policies.

a

declaration

that

they

properly

The parties agreed to proceed before a

magistrate judge.
Dr.

Cohen

filed

a

motion

in

limine

to

exclude

all

references to any proceedings, records, files, or orders by the
Board.

After a telephonic hearing, the magistrate judge orally

denied

the

admissible.

motion,

concluding

that

the

Consent

Order

was

The parties then filed cross-motions for summary
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judgment.
summary

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In a memorandum opinion, the magistrate judge granted

judgment

cross-motion.

to

the

Underwriters

and

denied

Dr.

Cohen’s

The court concluded that the Underwriters validly

rescinded the insurance policies because Dr. Cohen made material
misrepresentations in his applications.
Dr. Cohen timely noted this appeal, challenging both the
magistrate judge’s grant of summary judgment to the Underwriters
and denial of his motion in limine to exclude all references to
the Consent Order.

II.
We first address the court’s grant of summary judgment to
the Underwriters, which we review de novo.
730 F.3d 368, 373 (4th Cir. 2013).

Bland v. Roberts,

In doing so, we “apply[] the

same legal standards as the district court,” and “view[] all
facts . . . in the light most favorable to the nonmoving party.”
T-Mobile Ne. LLC v. City Council of City of Newport News, Va.,
674 F.3d 380, 385 (4th Cir. 2012) (internal quotations marks and
citation omitted).

We can affirm a grant of summary judgment

only where there is “no genuine dispute as to any material fact
and the movant is entitled to judgment as a matter of law.”
Young v. United Parcel Serv., Inc., 135 S. Ct. 1338, 1355 (2015)
(citing Fed. R. Civ. P. 56(a)).

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The Underwriters contend that Dr. Cohen provided materially
false answers to three questions on his policy applications:
“Are you actively at work?” (to which he answered “Yes”); “Are
you

aware

of

any

fact

that

could

change

your

occupation

or

financial stability?” (to which he answered “No”); and “Are you
a party to any legal proceeding at this time?” (to which he
answered “No”).
Under Maryland law, which the parties agree applies here, a
material

misrepresentation

on

an

insurance

policy

application

justifies the rescission of a policy issued on the basis of that
application.

Stumpf v. State Farm Mut. Auto. Ins. Co., 251 A.2d

362, 367 (Md. 1969).

To decide whether an insurer has validly

rescinded a policy, a court must first determine whether the
policyholder
Monumental
1957).

made

Life

If

a

false

Ins.

Co.

a

court

so,

v.

statement
Taylor,

then

on

129

considers

the

A.2d

application.
103,

whether

106
the

statement was material to the risk assumed by the insurer.

(Md.
false
Id.

“Ordinarily and generally, whether a representation is true or
false, or material to the risk, is for the jury to determine,”
but when the insurer demonstrates falsity and materiality “by
uncontradicted or clear and convincing evidence[,] the question
may be one of law.”

Id. at 106-07 (internal quotation marks and

citations omitted).

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Insurance policies, like other contracts, must be construed
“as a whole to determine the parties’ intention.”
Nat’l

Lawyers

Ins.

Reciprocal,

843

A.2d

78,

Beale v. Am.

89

(internal quotation marks and citation omitted).

(Md.

2004)

A court will

“examine the character of the contract, its purpose, and the
facts

and

execution.”
A.2d

486,

circumstances

of

the

parties

at

the

time

of

Pac. Indem. Co. v. Interstate Fire & Cas. Co., 488
488

(Md.

1985).

Policy

terms

are

given

“their

ordinary and accepted meanings,” and “[t]he test is what meaning
a reasonably prudent layperson would attach to the term.”

Id.

Policy language is ambiguous if it is “general” and “suggest[s]
two meanings to a reasonably prudent layperson.”

Id. at 489

(internal quotation marks and citation omitted).
Applying these principles, 2 we can only conclude that each
of the questions to which Dr. Cohen allegedly gave false answers
is subject to more than one reasonable interpretation, and so is
ambiguous.

First, the question “[a]re you actively at work?” is

ambiguous because there are several possible interpretations of
what

it

means

to

be

“actively

2

at

work.”

The

Underwriters

The parties do not dispute that the same rules apply to
ambiguities in a policy application, like that at issue here,
prepared by an insurer and made part of the insurance contract.
Peoples Life Ins. Co. v. Jerrell, 318 A.2d 519, 522 (Md. 1974).
Each policy certificate sent to Dr. Cohen specified that “[t]his
certificate” and “any attached endorsements or other papers make
up the entire contract,” and Dr. Cohen’s policy application was
attached to each certificate.
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contend that by answering “Yes,” Dr. Cohen represented that he
was “perform[ing] surgery on a daily basis when he was, in fact,
prohibited

from

performing

surgery.”

Appellees’

Dr. Cohen’s interpretation is more expansive.

Br.

26.

He maintains that

he was “actively at work” during the suspension both because he
was a licensed surgeon in the District of Columbia, and because
he continued to perform various duties related to his Maryland
practice,

including

professional

administrative

development.

He

work,

asserts

research,

that,

during

and
his

suspension, he often arrived home from being “at work” in the
office after midnight.
Neither of these interpretations is unreasonable; both find
support in the insurance policies.

As the Underwriters point

out, on another portion of the application, Dr. Cohen indicated
that his occupation was “surgeon” and his “daily duties” were
“surgery,” possibly suggesting that this was his only “work” -“work” he lacked the authority to perform in Maryland during his
suspension.
phrase

Maybe so.

Maryland

“actively
work,

at

and

But the application does not define the
work,”

does

not

does

not

provide

limit
that

its

being

inquiry

to

“actively

at

work” requires performance of the specific “daily duties” an
applicant may have listed in the limited space available for
that response.

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The second question to which the magistrate judge found
Dr. Cohen had provided a false response -- “[a]re you aware of
any

fact

that

could

change

your

stability?” -- is also ambiguous.

occupation

or

financial

The Underwriters contend that

“financial stability” refers to an applicant’s active income,
not net worth, since disability insurance protects only active
income.
daily

Because Dr. Cohen was suspended from performing his
duties

of

“surgery”

in

Maryland,

according

to

the

Underwriters, he was no longer a “surgeon” and so lacked “active
income.”
As Dr. Cohen notes, however, his Maryland suspension was
temporary, and because he could still practice in the District
of Columbia while suspended in Maryland, his “occupation” as a
“surgeon”

was

not

in

danger

of

changing.

Furthermore,

the

application does not define “financial stability,” or provide
any guidance on how an applicant would determine whether his
financial stability could “change.”
broad

term

that

could

refer

to

“Financial stability” is a
net

worth

and

the

record

indicates that Dr. Cohen’s net worth apparently increased during
his suspension.
Finally, the Underwriters maintain Dr. Cohen’s answer of
“No” to a third question -- “[A]re you a party to any legal
proceeding at this time?” -- was also materially false.
magistrate

judge

did

not

address
9

whether

Dr.

Cohen

The

falsely

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answered

this

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question

because

question was ambiguous.

supporting

the

We agree.

define “legal proceeding.”
authority

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its

judge

concluded

that

the

The application does not

And although each party cites to
position

as

to

whether

the

Board

proceeding is or is not a “legal proceeding,” the standard is
“what meaning a reasonably prudent layperson would attach to the
term.”

Pac. Indem. Co., 488 A.2d at 488.

The Underwriters note that in executing the Consent Order,
Dr. Cohen acknowledged representation by counsel and the “legal
authority and jurisdiction of the Board.”

Moreover, the Consent

Order seems, on its face, to be a legal document because it
contains findings of fact and conclusions of law.

But the Board

proceeding did not involve a court, and a person subject to a
Board proceeding might well conclude, as Dr. Cohen asserts he
did, that by agreeing to the suspension of his medical license,
he would avoid a legal proceeding.

Furthermore, at the time

Dr. Cohen submitted his final application, the Board proceeding
was over:

he was not then a party to a Board proceeding, legal

or not, at that time.

Thus, this question, too, is susceptible

to several interpretations.
In sum, the language of each question at issue here is
ambiguous.

Each of these general questions contains undefined

terms susceptible to more than one reasonable interpretation,
making

them

ill-suited

to

elicit
10

the

specific

type

of

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information the Underwriters claim to have requested.
of

Appeals

insurance

of

Maryland

application,

has
as

repeatedly
“a

made

condition

The Court

clear

that

an

to

an

precedent”

insurer’s reliance on it, “must be reasonably designed to elicit
from

[the

material

applicant]

to

the

the

risk.”

information

Stumpf,

251

which

A.2d

he

at

possesses,

367;

see

also

Jerrell, 318 A.2d at 522 (noting same).
Because

of

application,

the

we

inappropriate.

ambiguity
conclude

We

therefore

in

the

that

language
summary

reverse

of

the

policy

the

judgment
grant

of

was

summary

judgment to the Underwriters and remand the case to the district
court.

On remand, the court may consider whether extrinsic or

parol evidence can cure the ambiguity.

Cheney v. Bell Nat’l

Life Ins. Co., 556 A.2d 1135, 1138 (Md. 1989) (“[i]n the event
of

an

ambiguity

considered”).
that

the

.

.

.

extrinsic

parol

evidence

may

be

If the court determines, based on such evidence,

language

misrepresentations,

is
it

unambiguous
must

and

then

misrepresentations were material.
question.

and

that
assess

Dr.

Cohen

whether

made
such

We express no opinion on that

If, on the other hand, extrinsic evidence does not

cure the ambiguity, that ambiguity must be construed against the
insurer as the drafter of the instrument.

Id. at 1138.

We note

that it is of course within the court’s discretion, on remand,

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to conduct any further proceedings that it finds appropriate,
including further consideration of summary judgment.

III.
On

remand,

opportunity

the

to

district

consider

misrepresentations

by

Dr.

court

will

evidence

of

Cohen.

have

the

alleged

Thus,

we

turn

renewed
material
to

the

magistrate judge’s denial of Dr. Cohen’s motion in limine.

The

judge concluded that the Consent Order suspending Dr. Cohen’s
Maryland medical license was admissible in this case.

Dr. Cohen

contends that this conclusion is contrary to Maryland law, which
requires express consent of all parties before such an Order can
be admitted in any civil proceeding.
Generally, “[w]e review rulings concerning the admission of
evidence for abuse of discretion.”
F.3d 208, 212 (4th Cir. 2005).
judge

based

her

decision

to

United States v. White, 405

However, because the magistrate
admit

the

Consent

Order

on

a

question of statutory construction, we review her interpretation
of the statute de novo.

Clark v. Absolute Collection Serv.,

Inc., 741 F.3d 487, 489 (4th Cir. 2014) (per curiam).
Whether

a

consent

order

rendered

by

the

Maryland

State

Board of Physicians is admissible in a case like this one is an
issue of first impression.

In this diversity case, we consider

this question “as the state court would do if confronted with
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the same fact pattern.”
1994).

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Roe v. Doe, 28 F.3d 404, 407 (4th Cir.

Accordingly, we begin by examining the language of the

statute.

Jones v. State, 647 A.2d 1204, 1206 (Md. 1994).

Maryland

law,

as

elsewhere,

“[i]f

the

words

of

the

Under

statute,

construed according to their common and everyday meaning, are
clear

and

unambiguous

and

express

a

plain

meaning,

must] give effect to the statute as it is written.”

[a

court
Id. at

1206-07.
Title 14 of the Maryland Code, Health Occupations Article
establishes the State Board of Physicians as a state agency with
the authority to license, investigate, and discipline physicians
and other health care providers.
§ 14-201

et

seq.

(2014);

What

Md. Code Ann., Health Occ.
is

the

Maryland

Board

of

Physicians?, Department of Health and Mental Hygiene: Maryland
Board

of

Physicians

(last

visited

http://www.mbp.state.md.us/pages/whatis.html.

Apr.

20,

2015),

The provision in

question here, Health Occupations § 14-410, states:
(a) Except by the express stipulation and consent of
all parties to a proceeding before the Board, a
disciplinary panel, or any of its other investigatory
bodies, in a civil or criminal action:
(1) The proceedings, records, or files of the
Board, a disciplinary panel, or any of its other
investigatory bodies are not discoverable and are
not admissible in evidence; and
(2) Any order passed by the Board or disciplinary
panel is not admissible in evidence.
(b) This section does not apply to a civil action
brought by a party to a proceeding before the Board or

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disciplinary panel who claims to be aggrieved by the
decision of the Board. 3
The plain language of this statute bars the admission of “any
order” of the Board in “a civil or criminal action” except by
consent, or when “a party to a proceeding before the Board”
brings a civil action, claiming to be “aggrieved by a decision
of the Board.”

Id.

There is nothing in § 14-410, or in any

other portion of the statute, indicating that this admissibility
bar applies only in malpractice actions, or that there is an
exception for insurance coverage matters.

Thus, solely by the

“express stipulation and consent of all parties to a proceeding
before the Board” can a Board order be admitted into evidence in
a civil proceeding like this one.

Id.

There was no consent

here.
Moreover,
that

the

the

General

legislative
Assembly

history

intended

of

the

§

14-410

provision

indicates
to

be

a

straightforward bar to the admission of all Board orders, except
with express
proceeding.

consent

of

all

parties

to

the

underlying

Board

The predecessor to § 14-410 was § 130(q) of Article

43 of the Maryland Code.

The legislature added § 130(q) to

Article 43 for the express “purpose of prohibiting the admission
of certain records of the [Board] into evidence in any civil or

3

The Underwriters do not contend that the sole statutory
exception contained in § 14-410(b) applies here.
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criminal proceeding, with certain exceptions.”
1599 (emphasis added). 4

1976 Md. Laws

In Unnamed Physician v. Commission on

Medical Discipline, the Court of Appeals of Maryland noted that
§ 130(q) did just that:
proceedings
civil

or

parties.”
Nor,
fact

that

to

be

it “forbids the record of [Board]

admitted

criminal,

except

into
by

evidence
the

in

express

any

proceeding,

consent

of

the

does

the

render

it

400 A.2d 396, 397 (Md. 1979).
contrary
the

to

the

Consent

Underwriters’

Order

is

contention,

public

admissible in a judicial proceeding.

somehow

The Consent Order states

on its face that it “shall be a public document” under the
Maryland Public Information Act.

See Public Information Act,

Md. Code Ann., Gen. Prov. §§ 4-101 - 4-601 (2014).

That statute

“allows generally for the inspection and receipt of copies of
public records.”

Waterkeeper Alliance, Inc. v. Md. Dep’t of

4

Section 130(q) provided, in relevant part:
The records of any proceeding before the [Board] or of
any of its investigatory bodies or any order passed by
the [Board] may not be admitted into evidence in any
proceeding, civil or criminal, except by the express
stipulation and consent of all parties to the
proceeding.
1976 Md. Laws 1599.
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Agric., 96 A.3d 105, 108 (Md. 2014). 5

Each disciplinary order is

also publicly available on the Internet.
Health

Occ.

“create

and

§§

14-411.1(b)-(d)(2)

maintain

a

public

See Md. Code Ann.,

(requiring

individual

the

profile”

Board
on

to
each

licensed physician, available to the public on the Internet,
which includes “[a] description of any disciplinary action taken
by the Board . . . within the most recent 10-year period” and
“includes a copy of the public order”).

But nothing in either

the Public Information Act or Title 14 of the Health Occupations
Article requires that public documents be admissible in judicial
proceedings.
The

Underwriters

certainly

cite

no

authority

for

the

general proposition that a document is admissible solely because
it is public.
remove

it

Nor can they.

from

the

That a document is public does not

purview

of

the

rules

of

statute explicitly governing its admissibility.

evidence,

or

a

See The Md.

Inst. for Continuing Prof. Ed. of Lawyers, Inc., Maryland Trial
Judges’ Benchbook, Evidence, § 4-804(g)(1) (1999) (noting that
“[s]ome

public

records

.

.

.

must

meet

specific

statutory

requirements to be admissible”); 10 Eric. C. Surette & Susan L.
5

The Consent Order cited to the 2009 codification of the
Public Information Act.
While this appeal was pending, the
Maryland General Assembly recodified the Act at §§ 4-101 – 6-601
of the Code’s General Provisions Article, but made no changes
affecting Board orders being public documents.
See 2014 Md.
Laws Ch. 94 (H.B. 270).
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Thomas, Maryland Law Encyclopedia, Evidence, § 95 (2015) (noting
that

the

“admissibility

of

public

records

is

subject

to

the

general rules of evidence” governing, for example, relevancy,
competency, materiality, and authenticity).
public

nature

does

not

render

that

And if a document’s

document

automatically

admissible, then the fact that Dr. Cohen agreed to the Order’s
being public does not mean, as the Underwriters assert, that he
“broadly consented” to its admissibility.

Appellees’ Br. 16.

In sum, no statutory language or legislative history in
either the Maryland Public Information Act or Title 14 of the
Health Occupations Article or any other Maryland law indicates
that by making Board orders public, the legislature intended to
repeal or otherwise limit the admissibility bar that § 14-410 so
explicitly

establishes.

See

Comm’n

on

Med.

Discipline

v.

Bendler, 373 A.2d 1232, 1234 (Md. 1977) (noting that “the law
does not favor repeal by implication.”).
“all

statutory

provisions

which

relate

It is axiomatic that
to

the

same

subject

matter . . . should be construed together and harmonized as far
as possible.”

Unnamed Physician, 400 A.2d at 401; see also

Bendler, 373 A.2d at 1234 (noting same).

This well-established

approach applies here and thus requires a court to hold that,
while public, Board orders are not admissible in a civil or
criminal action absent consent, except for in an action brought
by a party aggrieved by a Board decision.
17

Appeal: 14-1227

We

Doc: 42

note

Filed: 05/05/2015

that

our

Pg: 18 of 18

conclusion

not

only

comports

with

the

plain language of the Maryland statutes at issue here and reads
those provisions
sense.
access

in

harmony

--

it

also

makes

good

practical

Requiring disciplinary orders to be public gives people
to

essential

their physicians.

information

about

the

qualifications

of

Barring the admission of Board disciplinary

orders in later civil and criminal actions encourages physicians
to

cooperate

during

Board

proceedings.

Such

cooperation

strengthens the Board’s ability to conduct proceedings that are
thorough and fair, and thereby advances the Board’s efforts to
protect the health and safety of the public. 6

IV.
For the foregoing reasons, the judgment of the district
court

is

reversed

and

the

case

is

remanded

for

further

proceedings consistent with this opinion.
REVERSED AND REMANDED

6

If, on remand, the district court determines that
extrinsic evidence submitted by the parties cures the ambiguity
in the policy application questions, the court may also need to
consider whether references to the inadmissible Order or to the
Board’s proceedings against Dr. Cohen are also inadmissible.
Because the court found the Order to be admissible, that
question was neither addressed below nor properly briefed before
us. Thus, we decline to resolve it in the first instance. That
said, if the court concludes that references to the Order are
indeed inadmissible, we believe redaction may be a prudent use
of the district court’s discretion.
18