Connecticut Gen. Life Ins. Co. v. Wood
Decision Date | 27 January 1984 |
Docket Number | Civ. A. No. C82-1896A. |
Citation | 631 F. Supp. 9 |
Parties | CONNECTICUT GENERAL LIFE INSURANCE COMPANY, Plaintiff, v. Ross J. WOOD, Defendant. |
Court | U.S. District Court — Northern District of Georgia |
Thomas E. Magill, H. Sanders Carter, Jr., Carter, Ansley, Smith & McLendon, Douglas N. Campbell, Mitchell, Loggins, Campbell & Elsberry, Atlanta, Ga., for plaintiff.
Richard P. Decker, Robert A. Moss, Decker, Cooper & Hallman, Atlanta, Ga., for defendant.
Before the Court in the above-styled civil action are cross-motions for complete or partial summary judgment and a motion to strike the affidavit of Francis E. McBride.
This is a diversity action involving insurance coverage of $120,000.00 on the life of Kristofer Lee Wood "Kristofer", who died at the age of twenty-two of respiratory failure resulting from muscular dystrophy.
On September 1, 1977, Connecticut General Life Insurance Company "Connecticut General" became the group insurer for the American Society of Quality Control and issued Group Term Life Policy No. 0423818-01 to the Trustee of the Engineering, Scientific and Technical Organizations Life Insurance Trust, as policyholder. By virtue of the issuance of the group policy, the American Society of Quality Control granted Connecticut General the right, or franchise, to offer to individual members of the Society the opportunity to apply for life insurance coverage. Applicants were required to submit evidence of insurability satisfactory to Connecticut General, and all such applications were considered by Connecticut General and accepted or rejected on an individual basis in accordance with the company's applicable underwriting standards. Affidavit of Francis E. McBride, Connecticut General's Medical Underwriter.1
In years 1978, 1979, 1980, and 1981, Connecticut General received various applications for insurance on Kristofer's life, each application being for coverage under the group policy and representing that Kristofer was a member of the American Society of Quality Control. Wood was designated as beneficiary in each instance.
The first application contained various representations as to Kristofer's health, was purportedly signed "Kris L. Wood" and was dated October 8, 1978. Pursuant to and in reliance upon that application, Connecticut issued certificate no. 7617-001579 on November 1, 1978, evidencing "Option C" coverage which, according to the schedule on page 4 of the certificate, was in the amount of $30,000.00. McBride Affidavit.
Over the next three years, Connecticut General received additional applications or requests for increased coverage purportedly signed by Kristofer. Each application or request either contained new representations as to Kristofer's health or reaffirmed earlier representations. Each application and request was individually considered and approved under Connecticut General's underwriting standards, and in each instance a new certificate of insurance was issued. Each certificate provided a new "face value" or amount of coverage ("Option C," "Option F," etc.). The Connecticut General certificates were issued in the following sequence:
Date of Date of Face Application Issue Value 1st Certificate 10-8-78 11-1-78 $30,000.00 2nd Certificate 2-6-79 3-1-79 $60,000.00 3rd Certificate None (automatic 11-15-79 $72,000.00 increase) 4th Certificate 2-9-80 2-28-80 $84,000.00 5th Certificate 3-4-80 3-18-80 $96,000.00 6th Certificate 2-8-81 2-23-81 $108,000.00
After issuing the sixth certificate, Connecticut General received a further request to increase coverage which was signed "Kris L. Wood" and dated March 2, 1981. The request reaffirmed all statements which were contained in the earlier application of February 8, 1981, to $120,000.00. (A new certificate was not issued). McBride Affidavit.
Each application submitted to Connecticut General contained questions and answers concerning Kristofer's health and medical history, as well as other matters which Connecticut General takes into consideration in evaluating an application for life insurance. Those questions and answers included the following:
Connecticut General assumed that the information set out in each application for insurance was true and correct, as represented, and based on that reliance, Connecticut General issued each of the certificates, the last of which, as modified, provided life insurance coverage in the amount of $120,000.00. McBride Affidavit.
In addition each certificate contained the following incontestability clause:
This Certificate will be incontestable after it has been in force during the life-time of the insured for two years from the Date of Issue, except for nonpayment of premiums.
Kristofer died within two years of the date on which the final $120,000.00 certificate was issued, but more than two years after the issuance of the first three certificates. After Kristofer's death, Wood submitted claims to Connecticut General and to numerous carriers. Connecticut General investigated and upon learning of Kristofer's undisclosed muscular dystrophy denied the claim. This litigation followed.
Five similar actions are pending before this Court as set out in Part I of this Court's order in Guarantee Trust Life Insurance Company v. Wood, Civil Action No. C83-1897A.
In Part I, Section B of the Guarantee Trust order, this Court sets forth a history of the development of muscular dystrophy during Kristofer's life. The Court incorporates by reference that history into this opinion.
The Court first confronts Connecticut General's contention that Kristofer's coverage is void ab initio because he neither signed the application nor consented in writing to the issuance of coverage under O.C.G.A. § 33-24-6(a) (Ga.Code Ann. § 56-2407). Section 33-24-6(a) reads in pertinent part as follows:
No life ... insurance contract upon an individual, except a contract of group life insurance ..., shall be made or effectuated unless at the time of the making of the contract the individual insured, ..., applies for a life ... insurance contract or consents in writing to the contract....
The thrust of Wood's opposition to the argument is that the statute is not applicable to the case at bar because the statute explicitly excludes its application to group policies and because Connecticut General is barred from raising this argument in light of the incontestability clause contained in the initial certificate.
As a preliminary matter, the Court in Guarantee Trust, concerning insurance contracts upon an individual, held on public policy grounds that an incontestability clause is no bar to the argument that the policy is void ab initio on the basis that the insured neither applied for nor consented in writing to the issuance of the coverage as required by O.C.G.A. § 33-24-6(a). See Part III of the Guarantee Trust order.
As a result, the Court must now consider whether the statute applies to applications under the policy issued by Connecticut General.
A careful review of the public policy considerations which underlie the statute and of the nature of the Connecticut General coverage leads to the conclusion that the statute is applicable. The cardinal rule of statutory construction is to ascertain the legislative intent and purpose in enacting a law and then give it the construction that will effectuate the legislative intent and purpose. Hollowell v. Jove, 247 Ga. 678, 279 S.E.2d 430 (1981). In determining the intention of the legislature in enacting a particular statute, the Court should look to the old law and to the evil which the legislature sought to correct. Barton v. Atkinson, 228 Ga. 733, 187 S.E.2d 835 (1972).
In the early common law, there was no requirement that the owner of a life insurance policy have an insurable interest in the life of the insured, nor was there any requirement that the insured consent to the coverage on his life. The statutory requirement of insurable interest was intended to prevent wagering on human lives. The insurable interest requirement is inbred with a potential conflict of interest when one with an insurable interest obtains coverage on the insured without the insured's consent. The conflict is that the beneficiary of the policy has both an interest in the insured's continued life (the insurable interest) and an interest in the insured's death (as beneficiary of the policy). See W.F. Meyer, Life & Health Insurance Law § 4.6 (1972). As expressed by the...
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