Marshall Salkin et al v. United Services Automobile Association et al
Filing
57
ORDER GRANTING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT by Judge Virginia A. Phillips: For the foregoing reasons, the Court GRANTS USAA's Motion for Summary Judgment. 32 (am)
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UNITED STATES DISTRICT COURT
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CENTRAL DISTRICT OF CALIFORNIA
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11 MARSHALL SALKIN AND
)
ELLEN SALKIN,
)
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Plaintiffs, )
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v.
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UNITED SERVICES
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15 AUTOMOBILE ASSOCIATION; )
USAA LIFE INSURANCE
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16 COMPANY; AND DOES 1
THROUGH 50, INCLUSIVE,
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Defendants.
18 ________________________
Case No. EDCV 10-01322
VAP(OPx)
ORDER GRANTING DEFENDANTS'
MOTION FOR SUMMARY JUDGMENT
[Motion filed on November 7,
2011]
19
Plaintiff Dr. Marshall Salkin, when he learned of his
20
terminal prostate cancer, sought an accelerated death
21
benefit under a life insurance policy he bought from
22
Defendant USAA Life Insurance Company ("USAA").
USAA did
23
not pay the benefit; instead, it rescinded Dr. Salkin's
24
policy on the basis that Dr. Salkin made
25
misrepresentations when he applied for the policy.
Dr.
26
Salkin and his wife, Plaintiff Ellen Salkin (the
27
beneficiary of Dr. Salkin's policy), sued USAA,
28
contending USAA rescinded the policy wrongfully.
USAA
1 filed the instant Motion for Summary Judgment ("Motion")
2 (Doc. No. 32) on November 7, 2011, arguing it was within
3 its rights to rescind Dr. Salkin's policy, based on
4 significant misrepresentations Dr. Salkin made in his
5 application.
6
7
The Court concludes Dr. Salkin made material
8 misrepresentations in his life insurance application;
9 consequently, USAA was within its rights to rescind Dr.
10 Salkin's policy.
As a result, the Salkins' claim for
11 breach of duty of good faith and fair dealing fails as a
12 matter of law.1
Accordingly, for the reasons discussed
13 below, the Court GRANTS USAA's Motion for Summary
14 Judgment.
15
16
I. BACKGROUND
17 A.
Preliminary Evidentiary Issues
18
Before recounting the undisputed facts, the Court
19 takes up the parties' objections to the evidence.
The
20 Salkins posed only one evidentiary objection (see Doc.
21 No. 41), i.e., the medical records submitted as Exhibit F
22 to the Declaration of Tammy Koenig are inadmissible
23
24
1
The Salkins also seek relief from rescission under
25 California Civil Code § 1692, but it is undisputed USAA
returned Dr. Salkin's premium payments when it rescinded
26 his policy, thereby putting the Salkins back in the same
position from which they started. (See Ex. G to Koenig
Decl. (Doc. No. 52-8) at 181.) Moreover, the Salkins did
27
not oppose USAA's Motion for Summary Judgment on this
28 claim.
2
1 hearsay under the Federal Rules of Evidence, and further,
2 are inadmissible as "records containing opinions
3 concerning a person's mental state" under California law.
4 The Court sustains the hearsay objection pursuant to the
5 Federal Rules of Evidence.
Although anything Dr. Salkin
6 told his physicians for the purpose of diagnosis is
7 hearsay subject to an exception, see Fed. R. Evid.
8 803(4), the medical records in which those statements
9 (and other information) are now contained are also
10 hearsay, and without "the testimony of the custodian or
11 another qualified witness" that the records were made
12 contemporaneously with Dr. Salkin's visits and in the
13 regular course of business, Fed. R. Evid. 803(6), the
14 medical records fall outside the business records
15 exception to the hearsay rule.
As USAA failed to provide
16 the declaration of a custodian as to the provenance of
17 the medical records, to the extent USAA's Motion relies
18 upon Dr. Salkin's medical records, it may not do so in a
19 manner that assumes their accuracy.
20
21
Next, the Court turns to USAA's objections (Doc. No.
22 46), chiefly that the Salkins failed to authenticate
23 properly virtually all of the evidence submitted in
24 opposition to summary judgment.
The Court's Standing
25 Order (Doc. No. 8), sent to all parties on September 2,
26 2010, states (in relevant part):
27
28
3
1
Parties offering evidence in support of, or in
2
opposition to, a Rule 56 motion must cite to
3
specific page and line numbers in depositions and
4
paragraph numbers in affidavits.
5
such evidence must be authenticated properly.
6
Court directs the parties to become familiar with
7
Orr v. Bank of America, NT & SA, 285 F.3d 764 (9th
8
Cir. 2002).
Furthermore,
The
9 (emphasis added).
10
11
Orr deals extensively with the subject of proper
12 authentication of documents submitted in conjunction with
13 summary judgment proceedings, which "must be 'attached to
14 an affidavit that meets the requirements of Fed. R. Civ.
15 P. 56[(c)(4)] and the affiant must be a person through
16 whom the exhibits could be admitted into evidence.'"
285
17 F.3d at 774 (quoting Canada v. Blain's Helicopters, Inc.,
18 831 F.2d 920, 925 (9th Cir. 1987)).
19
20
Here, the Salkins seek to admit various documents
21 based on the declaration of their counsel that the
22 documents are authentic.
23 No. 53-1) ¶ 8.)
(See, e.g. Corby Decl. (Doc.
To make such a declaration effectively,
24 however the authenticating witness must have personal
25 knowledge that the document is what it purports to be,
26 e.g., because he wrote it, signed it, used it, or saw
27 others do so.
Orr, 285 F.3d 774 n.8.
28
4
There is no
1 indication that Corby, the Salkins' attorney, has
2 personal knowledge that (for example) what he declares is
3 an electronic mail message ("email") between two USAA
4 employees is actually a true and correct copy of that
5 email.
6
7
Of course, a party may authenticate a document by
8 virtue of the fact the document was produced in discovery
9 "when the party identifies who produced the document, or
10 if the party opponent admits to having produced it."
11 Barefield v. Bd. of Trustees of Cal. State Univ.,
12 Bakersfield, 500 F. Supp. 2d 1244, 1257-58 (E.D. Cal.
13 2007) (citing Orr, 285 F.3d 777-78).
While it appears
14 from the Bates stamps on the proffered documents that
15 USAA produced them, Corby did not so declare;
16 consequently, the documents may not be authenticated by
17 production.
18
19
Nevertheless, the Court overrules USAA's objections.
20 To the extent USAA proffered some of the same evidence as
21 have the Salkins, "[o]nce evidence has been authenticated
22 by one party, it has been authenticated with regard to
23 all parties,"
Barefield, 500 F. Supp. 2d at 1258 (citing
24 Orr, 285 F.3d at 775-76), and in any event, USAA does not
25 actually contest the authenticity of the evidence at
26 issue, just the Salkins' failure to authenticate it
27 properly.
See Metro-Goldwyn-Mayer Studios, Inc. v.
28
5
1 Grokster, 454 F. Supp. 2d 966, 972 (C.D. Cal. 2006)
2 (citing Maljack Prods., Inc. v. GoodTimes Home Video
3 Corp., 81 F.3d 881, 889 n.12 (9th Cir. 1996)) (holding
4 that an objection to a party's failure to authenticate
5 documents, without a corresponding denial of the
6 documents' authenticity, is insufficient to exclude
7 documents produced in discovery by the objecting party).
8
9
Having thus dispensed with the parties' evidentiary
10 objections, the Court now turns to the facts of the case
11 before it.
12
13 B.
Factual Background
14
Dr. Salkin, a retired Navy commander and physician,
15 first applied for a life insurance policy from USAA in
16 September 2007.
(See Koenig Decl. (Doc. No. 52) ¶ 2.)
17 Based on Dr. Salkin's representation in a telephone
18 interview that his father died of a heart attack, and an
19 electrocardiogram ("EKG") – performed at USAA's request –
20 that showed Dr. Salkin had a right bundle branch block,2
21 USAA offered Dr. Salkin a policy at an increased premium.
22 (Koenig Decl. ¶ 2.)
Dr. Salkin declined the offer.
(Id.
23
24
2
"Bundle branch block is a condition in which
25 there's a delay or obstruction along the pathway that
electrical impulses travel to make your heart beat. The
26 blockage may occur on the pathway that sends electrical
impulses to the left or the right side of your heart."
27 Bundle Branch Block: Definition,
http://www.mayoclinic.com/health/bundle-branch28 block/DS00693 (last visited Dec. 5, 2011).
6
1 ¶ 3.)
In May 2008, Dr. Salkin applied again, but because
2 of the amount of time that had elapsed since his first
3 application, he was required to undergo new laboratory
4 tests, and to submit to another telephone interview.
5 (Id. ¶¶ 4-5.)
6
7
The following relevant colloquies occurred in the
8 2008 telephone interview:
9
10
Interviewer:
And have you ever consulted with a
11
health care provider for a seizure,
12
paralysis, stroke, depression,
13
anxiety or other mental or nervous
14
system disorder?
15
Dr. Salkin:
16
. . .
17
Interviewer:
No.
Chest pain, high blood pressure,
18
murmur, heart attack or other heart
19
or blood vessel disorder?
20
Dr. Salkin:
21
Okay, I have a history of high blood
pressure.
22
. . .
23
Interviewer:
And what is the name of the doctor
24
or facility named that would have a
25
record for this?
26
27
Dr. Salkin:
Let's see, I'm a doctor so, I doctor
myself.
28
7
1
Interviewer:
2
So you have your own medical records
for your high blood pressure?
3
Dr. Salkin:
4
. . .
5
Interviewer:
I don't have any records, no.
Within the past five years, have you
6
had an electrocardiogram, x-ray or
7
any other diagnostic tests or
8
procedure that was –
9
Dr. Salkin:
10
Yeah, I did an EKG to my insurance
physical.
11
. . .
12
Interviewer:
13
Any other diagnostic tests or
procedure?
14
Dr. Salkin:
15
. . .
16
Interviewer:
No.
And have you consulted a health care
17
provider for any reason not
18
previously disclosed?
19
Dr. Salkin:
20
. . .
21
Interviewer:
No.
And some of your answers indicate
22
that USAA Life Insurance Company
23
will need to obtain a copy of your
24
medical records to better evaluate
25
your application, and I will now –
26
Dr. Salkin:
I don't have any medical records.
27 (Ex. B to Belke Decl. (Doc. No. 51) at 14-22.)
28
8
1
Dr. Salkin then underwent another physical
2 examination and laboratory tests (Koenig Decl. ¶ 7);
3 based on the information gleaned from the examination,
4 tests, and his interview, Dr. Salkin was offered a "10
5 year level term life insurance policy at a Table B
6 rating, with a face amount of $500,000."
(Id. ¶ 8.)3
7 Dr. Salkin's policy contained a clause by which USAA
8 promised:
9
10
not [to] contest this policy based on statements
11
made in an application after this policy has been
12
in effect during the insured's lifetime for 2
13
years from the Effective Date. . . .
14
policy is contestable, [USAA] may rescind the
15
policy or deny a claim on the basis of a material
16
misstatement in the application.
While this
17 (Ex. B to Koenig Decl. at 101.)
18
19
In November 2009, Dr. Salkin was diagnosed with stage
20 IV prostate cancer. (Ex. C to Koenig Decl. at 122-28.)
21 In December, he submitted a claim under his USAA life
22 insurance policy for a $250,000 accelerated death
23
24
3
Salkin disputes this fact based on an internal USAA
25 communication, which states "[Salkin] first applied with
us September 2007 and based on reported history of
26 positive family history and our routine ecg showing CRBBB
a table B was assessed. A final counteroffer was made
27 11/8/07." (Ex. G. to Corby Decl. (Doc. No. 53-3).)
Nothing about this statement contradicts USAA's proffered
28 fact.
9
1 benefit.
(Id.)
In conjunction with that claim, Mrs.
2 Salkin faxed USAA a document containing, among other
3 things, the name of Dr. Salkin's health insurer.
4 to Koenig Decl.)
(Ex. D
As Dr. Salkin's claim came within two
5 years of the effective date of his policy, i.e., during
6 the policy's contestability period, USAA conducted a
7 "routine contestable investigation"
(Koenig Decl. ¶ 14),
8 during which it requested a list of claims Dr. Salkin
9 submitted to his health insurer (Koenig Decl. ¶ 15).
10
11
Dr. Salkin's health insurer responded with a list of
12 claims for payment to physicians including Dr. Hamid R.
13 Salari-Namin, Dr. Andrew S. Janik, and Dr. Ryszard
14 Skulski (Ex. E to Koenig Decl.), prompting USAA to
15 request medical records from those doctors (Koenig Decl.
16 ¶ 17).
After receiving the records, USAA concluded that
17 Dr. Salkin made material misrepresentations in his
18 application for health insurance, returned his premiums,
19 and rescinded his policy.
(See Ex. G to Koenig Decl.)
20
21
This lawsuit, charging that USAA had no right to
22 rescind Dr. Salkin's policy, followed.
Having engaged in
23 discovery, USAA now moves for summary judgment on all
24 three claims made against it, i.e.:
(1) that it breached
25 a contract by rescinding Dr. Salkin's policy; (2) that it
26 concurrently breached the covenant of good faith and fair
27 dealing, and; (3) that its rescission of the policy
28
10
1 entitles the Salkins to damages under California Civil
2 Code § 1692.
(See generally Motion.)
3
4
The Salkins filed an Opposition (Doc. No. 36),
5 arguing USAA waived its right to rescind Dr. Salkin's
6 policy by not underwriting it properly in the first
7 place.
(Opp'n at 8-16.)
They further argue Dr. Salkin
8 made no misrepresentations, or alternatively, any
9 misrepresentations were immaterial.
(Id. at 16-20.)
The
10 Salkins also contend that USAA has engaged in what
11 amounts to impermissible post-claim underwriting.
12 at 20-22.)
(Id.
USAA filed a Reply (Doc. No. 43), and this
13 matter is now ripe for decision under the following legal
14 standard.
15
16
17
II. LEGAL STANDARD
A motion for summary judgment shall be granted when
18 there is no genuine issue as to any material fact and the
19 moving party is entitled to judgment as a matter of law.
20 Fed. R. Civ. P. 56(a); Anderson v. Liberty Lobby, Inc.,
21 477 U.S. 242, 247-48 (1986).
The moving party must show
22 that "under the governing law, there can be but one
23 reasonable conclusion as to the verdict."
Anderson, 477
24 U.S. at 250.
25
26
Generally, the burden is on the moving party to
27 demonstrate that it is entitled to summary judgment.
28
11
1 Margolis v. Ryan, 140 F.3d 850, 852 (9th Cir. 1998);
2 Retail Clerks Union Local 648 v. Hub Pharmacy, Inc., 707
3 F.2d 1030, 1033 (9th Cir. 1983).
The moving party bears
4 the initial burden of identifying the elements of the
5 claim or defense and evidence that it believes
6 demonstrates the absence of an issue of material fact.
7 Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
8
9
When the non-moving party has the burden at trial,
10 however, the moving party need not produce evidence
11 negating or disproving every essential element of the
12 non-moving party's case.
Celotex, 477 U.S. at 325.
13 Instead, the moving party's burden is met by pointing out
14 there is an absence of evidence supporting the non-moving
15 party's case.
Id.
16
17
The burden then shifts to the non-moving party to
18 show that there is a genuine issue of material fact that
19 must be resolved at trial.
Fed. R. Civ. P. 56(e);
20 Celotex, 477 U.S. at 324; Anderson, 477 U.S. at 256.
The
21 non-moving party must make an affirmative showing on all
22 matters placed in issue by the motion as to which it has
23 the burden of proof at trial.
Celotex, 477 U.S. at 322;
24 Anderson, 477 U.S. at 252; see also William W. Schwarzer,
25 A. Wallace Tashima & James M. Wagstaffe, Federal Civil
26 Procedure Before Trial, 14:144.
27 light one.
"This burden is not a
The non-moving party must show more than the
28
12
1 mere existence of a scintilla of evidence."
In re Oracle
2 Corp. Securities Litigation, 627 F.3d 376, 387 (9th Cir.
3 2010) (citing Anderson, 477 U.S. at 252).
"The
4 non-moving party must do more than show there is some
5 'metaphysical doubt' as to the material facts at issue."
6 In re Oracle, 627 F.3d at 387 (citing Matsushita Elec.
7 Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586
8 (1986)).
9
10
A genuine issue of material fact exists "if the
11 evidence is such that a reasonable jury could return a
12 verdict for the non-moving party."
13 248.
Anderson, 477 U.S. at
In ruling on a motion for summary judgment, the
14 Court construes the evidence in the light most favorable
15 to the non-moving party.
Barlow v. Ground, 943 F.2d
16 1132, 1135 (9th Cir. 1991); T.W. Elec. Serv. Inc. v. Pac.
17 Elec. Contractors Ass'n, 809 F.2d 626, 630-31 (9th Cir.
18 1987).
19
20
21
III. DISCUSSION
USAA can only prevail on its Motion for Summary
22 Judgment if it shows that it rescinded Dr. Salkin's
23 policy rightfully, because there is no genuine issue of
24 fact as to whether Dr. Salkin made material
25 misrepresentations when he applied for his insurance
26 policy.
See Cal. Ins. Code § 331 ("Concealment, whether
27 intentional or unintentional, entitles the injured party
28
13
1 to rescind insurance."); Nieto v. Blue Shield of Cal.
2 Life & Health Ins. Co., 181 Cal. App. 4th 60, 75-77
3 (2010) ("'Governing law permits an insurer to rescind a
4 policy when the insured has misrepresented or concealed
5 material information in connection with obtaining
6 insurance.'") (quoting TIG Ins. Co. of Mich. v.
7 Homestore, Inc., 137 Cal. App. 4th 749, 755-56 (2006)).
8 USAA carries that burden successfully.
9
10
The California Insurance Code creates a "statutory
11 framework that imposes 'heavy burdens of disclosure'
12 'upon both parties to a contract of insurance, and any
13 material misrepresentation or the failure, whether
14 intentional or unintentional, to provide requested
15 information permits rescission of the policy by the
16 injured party.'"
Mitchell v. United Nat. Ins. Co., 127
17 Cal. App. 4th 457, 468 (2005) (quoting Imperial Cas. &
18 Ins. Co. v. Sogomonian, 198 Cal. App. 3d 169, 179-80
19 (1980)).
"Materiality," in turn, "is to be determined
20 not by the event, but solely by the probable and
21 reasonable influence of the facts upon the party to whom
22 the communication is due, in forming his estimate of the
23 disadvantages of the proposed contract, or in making his
24 inquiries."
Cal. Ins. Code § 334.
In other words, a
25 representation is material if it would have had an effect
26 on USAA's underwriting, and not whether it would have
27 affected the underwriting of "some 'average reasonable'
28
14
1 insurer."
Imperial Cas. & Ins. Co., 198 Cal. App. 3d at
2 181; see also Nieto, 181 Cal. App. 4th at 920.
3
4
USAA argues that Dr. Salkin misrepresented his
5 medical history in the application process when he told
6 the interviewer, among other things:
(1) he had no
7 medical records; (2) he never consulted a health care
8 provider for assistance with a mental disorder, and; (3)
9 he had no diagnostic tests in the preceding five years,
10 other than an EKG.
11
12
Dr. Salkin later admitted, however, to having
13 consulted a psychiatrist for obsessive-compulsive
14 disorder (M. Salkin Dep. 28:10-17, Apr. 15, 2011 (Ex. A
15 to Corby Decl.)), though he thought the problem so minor
16 as not to be worth disclosing to USAA (see id. 28:18-22).
17 He also admitted to having had an MRI that revealed
18 "really inconsequential lacunar infarcts." (Id. 31:1719 32:4.)
USAA defines "lacunar infarcts" as "strokes
20 caused by blocked arteries" (Mot. at 8).4
For their
21 part, the Salkins do not define "lacunar infarcts" at
22 all, though Dr. Salkin testified that he was told by the
23 medical professional who diagnosed them that they were
24 "really minor," and he therefore never thought to
25
26
4
An "infarct" is "[a] portion of tissue that has
become stuffed with extravasated [effused] blood, serum,
27
or other matter . . . ." Oxford English Dictionary (2d
28 ed. 1989; online version Sept. 2011).
15
1 disclose them to USAA.
(M. Salkin Dep. 32:6-10.)
2 Presumably both Dr. Salkin's consultation of a
3 psychiatrist and his MRI resulted in the generation of
4 medical records, though Dr. Salkin told USAA he had
5 none.5
6
7
Citing Thompson v. Occidental Life Insurance Co., 9
8 Cal. 3d 904, 916 (1973), the Salkins argue Dr. Salkin had
9 no obligation to disclose a minor ailment, and if he "had
10 no present knowledge of the facts sought, or failed to
11 appreciate the significance of information related to
12 him, his incorrect or incomplete responses would not
13 constitute grounds for rescission."
14 at 916.
Thompson, 9 Cal. 3d
The Salkins therefore contend Dr. Salkin had no
15 obligation to disclose either his psychiatric treatment
16 for obsessive-compulsive disorder or the MRI that
17 revealed his lacunar infarcts, and that USAA has no basis
18 for rescission if Dr. Salkin lacked knowledge of the
19 facts USAA sought or did not understand the significance
20 of its questions.
21
22
Thompson is, at first, a compelling analog to this
23 case, and therefore merits a full discussion.
In that
24 case, the insured, Thompson, was asked the following
25
5
Indeed, as the Court discusses, below, the Salkins'
Opposition depends in part on the contention that USAA
27 should have discovered these records itself, an argument
that assumes the records exist, despite Dr. Salkin's
28 representation.
26
16
1 multipart questions in the course of a medical
2 examination by a Dr. Epstein:
3
4 During the past five years have you:
5
6 [5]A.
Consulted, been examined, or been treated by any
7 physician or practitioner?
8
9 [5]B.
Had an X-ray, electrocardiogram or any laboratory
10 test or study?
11
12 [5]C.
Had observation or treatment at a clinic,
13 hospital, or sanitarium?
14
15 [5]D.
Had or been advised to have a surgical operation?
16
17 . . .
18
19 Have you ever had or been told you had: . . .
20
21 [6]B. . . . pain or pressure in the chest, or any
22 disorder of the heart, blood or blood vessels?
23
24 [6]C. . . . any disorder of the lungs, bronchial tubes,
25 throat or respiratory systems?
26 . . .
27
28
17
1 [6]I.
Any disease, condition or disorder not indicated
2 above?
3 Thompson, 9 Cal. 3d at 914-15.
4
5
In response to questions 5 A-D, Dr. Epstein recorded
6 that Thompson had "[v]ein ligation - hernia - Providence
7 Hosp. Oakland, 1963, M.C. Green MD 330 Elm St., Oakland,
8 Cal."
Id. at 915.
In response to questions 6 B, C, and
9 I, however, Dr. Epstein recorded negative responses.
Id.
10 Thompson died after slipping and falling into his
11 bathtub, id. at 909, but his insurer, Occidental Life
12 Insurance Co., refused to honor his policy, id. at 910.
13 Thompson's wife sued.
Occidental lost at trial and
14 appealed, id., arguing among other things that any
15 contract with Thompson was rendered unenforceable due to
16 misrepresentations he made to Dr. Epstein, id. at 914-15.
17 Specifically, Thompson failed to tell Dr. Epstein that in
18 the two months leading up to the medical examination, he
19 had "approximately 10 medical consultations . . . with
20 five different doctors," in which "he (1) had complained
21 of chest pain, (2) had an electrocardiogram performed,
22 (3) was treated for 'phlebitis' (vein inflammation), . .
23 . (5) had his legs X-rayed . . . , and (6) was advised to
24 undergo a 'chemical sympathectomy' . . . ."
25
26
27
28
18
Id. at 915.
1
The California Supreme Court nevertheless affirmed
2 the judgment against Occidental.
First, it observed that
3 many of the omitted items "appear to relate to the
4 ailment which Thompson affirmatively disclosed in
5 answering question 5," and therefore "the trial court
6 might have concluded that it was the responsibility of
7 the examining doctor to elicit additional details."
8 at 917.
Id.
It also noted that "none of the physicians with
9 whom [Thompson] consulted testified that [Thompson] was
10 ever advised that he had arteriosclerosis" – another
11 condition Occidental argued that Thompson failed to
12 disclose – and one of Thompson's physicians testified
13 that he purposefully was vague with Thompson about his
14 medical condition to avoid worrying him.
Id. at 917.
15 Thus, the trial court could have concluded "that Thompson
16 believed that he had a single leg circulation problem,"
17 and that he disclosed the problem properly.
Id.
The
18 court further posited "that Thompson, as an ordinary
19 layman, failed to recollect or appreciate the
20 significance of the subject matter of the various . . .
21 consultations," and the technical diagnoses that resulted
22 therefrom "might well have been meaningless jargon to
23 him."
Id. at 918.
In any event, the court added, the
24 trial court "may have found that most of Thompson's
25 undisclosed problems related to 'minor indispositions'
26 rather than serious ailments . . . ."
27
28
19
Id.
1
The unduly broad view of the holding in Thompson
2 urged by the Salkins collides with the principle that
3 even an unintentional misrepresentation can be the basis
4 for rescission of an insurance policy.
Under that
5 standard, whether the insured appreciated the
6 significance of the questions is irrelevant unless,
7 perhaps, the question itself was vague.
Adding another
8 exception sketched out in Thompson, that an insured can
9 also assess the severity of his own ailments to determine
10 whether they meet an (undefined) threshold for reporting,
11 Thompson swallows entirely the rule that any material
12 misrepresentation is a basis for rescission.
To make
13 sense in the context of California's insurance law,
14 Thompson needs a limiting principle.
15
16
USAA offers one, from a case predating, but not
17 overruled by, Thompson.
In San Francisco Lathing Co. v.
18 Penn Mut. Life Ins. Co., 144 Cal. App. 2d 181, 186
19 (1956), the court held that "when [an] applicant is asked
20 specific questions as to his medical history," as opposed
21 to "generally whether he has had or been treated for any
22 disease or ailment," "the failure to refer to temporary
23 or minor indispositions" will not be excused.
24
25
In this case, Dr. Salkin was asked whether he had
26 ever consulted a physician regarding a nervous system
27 disorder, and though he admits consulting a psychiatrist
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1 regarding obsessive-compulsive disorder, he told USAA he
2 never consulted anyone at all.6
Dr. Salkin was asked
3 whether he had certain diagnostic tests within the last
4 five years, interrupted the interviewer to volunteer that
5 he had an EKG, and then said he had no other tests – not
6 that the results of the other tests were insignificant,
7 but that they never occurred.
Finally, and most
8 critically, Dr. Salkin volunteered that he had no medical
9 records at all.
He did so in a peremptory response to a
10 question about whether USAA had his authorization to
11 request medical records from any healthcare providers who
12 treated him.
Answering whether one has medical records
13 is not a question that calls in any realistic way for the
14 exercise of one's judgment; either the records exist or
15 they do not.7
Consequently, Dr. Salkin made at least one
16
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USAA asked Dr. Salkin whether he sought treatment
for a mental disorder, not whether it was a severe
disorder. In Thompson, the court was lenient towards a
layman's failure to realize that his ailments should have
been reported in response to a question more general than
the one USAA asked Salkin. USAA's question was specific,
however, and Dr. Salkin is not a layman. Of course, as a
physician, Dr. Salkin may have brought a different bias
to the process than would a layman, basing his responses
on his own assessment of the underlying severity of his
problems, rather than simply answering the questions he
was asked. Nevertheless, when presented with specific
questions, Dr. Salkin's judgment should have had little
role in his response.
7
At the hearing on this Motion, the Salkins' counsel
argued that the Court should grant the Salkins the
benefit of the inference that Dr. Salkin only meant that
he had no medical records in his possession, or was
merely reiterating that his self-diagnosis of high blood
pressure generated no medical records. In the context of
the entire conversation, however, that inference is
(continued...)
21
1 representation that cannot be excused by even the
2 broadest reading of Thompson.
3
4
Even assuming Dr. Salkin should have disclosed his
5 MRI, or his psychiatric treatment, or the existence of
6 his medical records, the Salkins argue those failures are
7 waived as grounds for rescission by USAA's failure to
8 make a proper investigation of Dr. Salkin's medical
9 history.
USAA's initial failure to investigate Dr.
10 Salkin's medical history properly, the Salkins assert,
11 makes its subsequent investigation and rescission of Dr.
12 Salkin's policy an example of unlawful post-claim
13 underwriting.
14
15
The Court disagrees.
The Salkins contend that
16 California law required USAA to conduct an underwriting
17 investigation robust enough to have belied Dr. Salkin's
18 representations, and whether USAA did so is, according to
19 the Salkins, a disputed question of fact.
See Hailey v.
20 Cal. Physicians' Serv., 158 Cal. App. 4th 452, 469 (2007)
21 ("[W]e interpret 'medical underwriting' to require a plan
22 to make reasonable efforts to ensure a potential
23 subscriber's application is accurate and complete. . . .
24 This will usually present a question of fact.").
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(...continued)
unreasonable. In deciding a motion for summary judgment,
27 the Court need only grant the non-movant the benefit of
reasonable inferences. Barnes v. Arden Mayfair, Inc.,
28 759 F.2d 676, 680 (9th Cir. 1985).
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1 California law imposes no such requirement on USAA in
2 this case.
See Nazaretyan v. Cal. Physicians' Serv., 182
3 Cal. App. 4th 1601, 1608 (2010) (distinguishing Hailey on
4 the grounds that a health care service plan's basis for
5 rescinding a health plan contract is governed by a
6 different statutory provision, and therefore by different
7 requirements, than an ordinary insurer's basis for
8 rescinding an insurance policy) (citing Nieto, 181 Cal.
9 App. 4th at 65, 75-77).
10
11
Assuming USAA was required to make some further
12 investigation, Dr. Salkin's protestation in his
13 application interview that there would be no records for
14 USAA to discover undercuts the Salkins' argument that
15 "[c]learly USAA could have obtained Dr. Salkin's medical
16 records," because "Dr. Salkin's life insurance
17 application contains an authorization allowing USAA to do
18 just that."
(Opp'n at 15.)
While "USAA had no problem
19 pulling Dr. Salkin's health claims history and obtaining
20 his medical records during the rescission investigation"
21 (id.), it did so after receiving from Mrs. Salkin a list
22 of health care providers who treated Dr. Salkin and the
23 name of the health insurer to which Dr. Salkin was
24 submitting his medical claims.
Accord DiPasqua v. Cal.
25 W. States Life Ins. Co., 106 Cal. App. 2d 281, 284-85
26 (1951) (forbidding an insurer from rescinding a policy
27 when, prior to its issuance, the insurer had in its
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1 possession both a medical records release and the name of
2 a facility that treated the insured – items that would
3 have allowed it to discover the insured's
4 misrepresentations easily).
5
6
The Salkins put forth many other reasons why USAA's
7 underwriters should have noticed something was amiss,
8 based on other statements Dr. Salkin made in his
9 interview and the results of his tests.
The Court finds
10 the rigors of USAA's underwriting procedures, or what it
11 would have, could have, or should have done, are not at
12 issue, when:
(1) a material misrepresentation in an
13 application, whether intentional or not, is a sufficient
14 basis to rescind an insurance policy, and; (2) at least
15 one of the misrepresentations in this case (i.e., that
16 Dr. Salkin had no medical records) had the effect of
17 stymying further investigation, see Lunardi v. Great-West
18 Life Assurance Co., 37 Cal. App. 4th 807, 822 n.9 (1995)
19 (noting that an insured cannot withhold information and
20 then fault his insurer for not discovering it).
21
22
Dr. Salkin neglected to inform USAA properly of facts
23 material to processing an application for life insurance.
24 Even if he did so because he genuinely believed that the
25 information he withheld was immaterial, that was not Dr.
26 Salkin's determination to make.
This is particularly so
27 because at least one representation, that Dr. Salkin had
28
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1 no medical records, discouraged USAA from eliciting those
2 records from Dr. Salkin's treating physicians.
3 Accordingly, the Court concludes there is no genuine
4 dispute of material fact as to whether Dr. Salkin made
5 material misrepresentations to USAA.
The Court therefore
6 GRANTS USAA's Motion for Summary Judgment as to the
7 Salkins' claim that USAA breached a contract with Dr.
8 Salkin by rescinding his insurance policy.
9
10
The Salkins also oppose summary judgment on their
11 claim for breach of the covenant of good faith and fair
12 dealing; however, because that claim is intertwined with
13 their claim for breach of contract, which fails, the
14 Court need not address the arguments supporting the
15 Salkins' position.
See San Diego Housing Comm'n v.
16 Indus. Indem. Co., 68 Cal. App. 4th 526, 544 (1998)
17 ("Where a breach of contract cannot be shown, there is no
18 basis for finding a breach of the covenant.") (citing
19 Waller v. Truck Ins. Exch., Inc., 11 Cal. 4th 1, 35-36
20 (1995)).
USAA is also entitled to summary judgment as to
21 that claim.
The Salkins' claim for relief from
22 rescission under California Civil Code § 1692 fails
23 because it too depends on the breach of contract claim,
24 it is undisputed that USAA returned the Salkins'
25 premiums, and finally, the Salkins did not oppose USAA's
26 Motion as to that claim.
Finally, the Salkins' request
27 for punitive damages is denied as moot, as no claims
28
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1 remain for which punitive damages may be assessed.
2 USAA's Motion is therefore granted in full.
3
4
IV. CONCLUSION
5
For the foregoing reasons, the Court GRANTS USAA's
6 Motion for Summary Judgment.
7
8
9
10 Dated: December 19, 2011
11
VIRGINIA A. PHILLIPS
United States District Judge
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