In re Green

• Decision Date: 22 November 1999
• Docket Number: Bankruptcy No. 97 B 32525. Adversary No. 98 A 01175.
• Parties: In re Theophilus GREEN, Debtor. LifeUSA Insurance Company, Plaintiff, v. Theophilus Green, Defendant. Theophilus Green, Counter-Plaintiff, v. LifeUSA Insurance Company, Counter-Defendant.
• Court: United States Bankruptcy Courts. Seventh Circuit. U.S. Bankruptcy Court — Northern District of Illinois

241 B.R. 187 (1999)

In re Theophilus GREEN, Debtor.

LifeUSA Insurance Company, Plaintiff, v. Theophilus Green, Defendant.

Theophilus Green, Counter-Plaintiff, v. LifeUSA Insurance Company, Counter-Defendant.

Bankruptcy No. 97 B 32525. Adversary No. 98 A 01175.

United States Bankruptcy Court, N.D. Illinois, Eastern Division.

November 22, 1999.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

John D. Lien, Frank DiCastri, Foley & Lardner, Larry R. Eaton, Bruce M. Lichtcsien, Blatt, Hammesfahr & Eaton, Chicago, IL, for plaintiff.

Theophilus E. Green, Psy. D., pro se.

MEMORANDUM OPINION

ERWIN I. KATZ, Bankruptcy Judge.

This matter comes before the Court on several motions. LifeUSA Insurance Company ("LifeUSA") filed an Amended Complaint (the "Amended Complaint") in which it seeks: (1) a declaration that a debt for premiums waived under a rider (the "Rider") to a life insurance policy (the "Policy") issued to Theophilus Green ("Green") is nondischargeable due to fraud under § 523(a)(2)(A) of the Bankruptcy Code, 11 U.S.C. § 101 et seq., and (2) a declaration that an award of discovery sanctions granted to it against Green in the Circuit Court of Cook County, Illinois is nondischargeable as a debt for willful and malicious injury under § 523(a)(6). LifeUSA moves for summary judgment in its favor on the Amended Complaint and prayer for rescission. Green, a pro se litigant¹, moves to dismiss LifeUSA's Amended Complaint. Green also moves for summary judgment in his favor on the Amended Complaint.

Green has filed a five-count Second Amended Counterclaim (the "Second Amended Counterclaim") against LifeUSA, seeking damages for: Breach of Contract (Count I); Tortious Interference of Contract (Count II); Filing Bad Faith Claims Before the State Court for Sanctions (Count III); Collusion and Bad Faith Claims Practices Before the Federal Court (Count IV); and Negligence (Count V). Green moves for summary judgment on the Second Amended Counterclaim. LifeUSA moves for summary judgment on the first two counts of the Counterclaim.² LifeUSA also moves to dismiss Counts III, IV, and V of the Counterclaim.

Green has also filed a Motion to Exclude All Medical Information Not Within the Four Corners of the Contract in Contest (the "Motion to Exclude Medical Information").

For the reasons set forth herein, the Court denies Green's Motion to Exclude Medical Information. The Court dismisses Green's Second Amended Counterclaim without prejudice for lack of subject matter jurisdiction; Green may pursue his causes of action in a court that has jurisdiction. The Court denies LifeUSA's Motion to Dismiss Counts III, IV, and V of the Second Amended Counterclaim. The Court denies Green's Motion to Dismiss LifeUSA's Amended Complaint. The Court partially grants and partially denies Green's motion for summary judgment. The Court grants LifeUSA's motion for summary judgment in part and denies LifeUSA's motion for summary judgment in part.

I. FACTUAL BACKGROUND

This background statement has been compiled using the parties' statements of uncontested facts, pleadings, depositions, answers to interrogatories, admissions on file, and affidavits.

In 1993, Green was a licensed clinical psychologist practicing in Chicago, Illinois. He is a veteran of the United States Armed Forces, in which he served from 1965 until 1968.

In December, 1993, Green applied for a life insurance policy and rider for waiver of planned premiums (the "Rider") from LifeUSA. Alan Bloomfield ("Bloomfield"), an insurance agent, completed the application (the "Application") using information provided by Green and information contained in Green's prior insurance policy. The Application contained the following questions:

4. WITHIN THE PAST 5 YEARS HAS ANY PERSON TO BE COVERED

a. Consulted, been examined or been treated by any physician or practitioner?

5. TO THE BEST OF YOUR KNOWLEDGE, HAS ANY PERSON TO BE COVERED HAD OR BEEN TOLD HE OR SHE HAD?

a. Epilepsy, fainting spells, nervous or mental condition, neuritis, paralysis, or any disease or abnormality of the brain or nervous system?

Green answered "No" to both questions.

In the Application, Green authorized an exhaustive list of medical care providers and related entities, including any "institution or person that has any information in its records on me," to release medical and non-medical information about him to LifeUSA (the "Release"). The Application provided that the Release would be effective for two and one-half years from the Application's date. The Application provided that the statements made therein were true and complete. Green signed the Application and dated it with the month, December, and the year, 1993. Green did not indicate on which day of December, 1993 he signed the Application.

On December 24, 1993, Green submitted a supplemental application (the "Supplemental Application") to LifeUSA. In the Supplemental Application, LifeUSA asked Green the three questions that follow:

1. Have you ever consulted any medical practioner sic for, or as far as you know, ever been treated for;

. . .

F. Any brain or nervous system disorder, e.g., epilepsy, convulsions, fainting or loss of consciousness, mental illness, constant nervousness or severe headaches?

. . . .

2. Have you ever:

. . .

G. Ever applied for or received any pension or benefits for sickness, disability or accident?

. . . .

3. Other than previously stated, as far as you know, have you in the last 5 years:

. . .

C. Consulted any medical practioner sic for any reason (including check-ups?)

Green answered "No" to each question.

On February 23, 1994, LifeUSA issued life insurance policy number 3121971 with Green as the insured (the "Policy"). In June, 1994, Green suffered a stroke and made a claim for waiver of premiums under the Rider. Sometime thereafter, LifeUSA waived the premiums for the Policy.

LifeUSA began investigating Green's claims. Upon its request for Green's medical records, it received a letter from Dr. James R. Miller ("Miller"), in which Miller wrote that LifeUSA might have questions about "depression and whether Green's disability is related to a psychiatric diagnosis that may have been pre-existent before the onset of his present illness."

In the course of its investigation, LifeUSA received three letters signed by Dr. Patrick Israel ("Israel"), a psychiatrist practicing in a suburb of Chicago. In a letter dated December 9, 1994, Israel states in part:

Dr. Green has been under my professional care since 1985. Intervals of therapy have varied from weekly to monthly in frequency. His symptoms have consisted of recurring episodes of depression and anxiety.

In the past several years there has been increasing difficulty in functioning in his profession, in response to which he has progressively decreased his work hours and accepted fewer and fewer referrals of clients.

The psychotherapy has been supportive but has not altered his progressive functional impairment. He will continue to receive psychotherapy as needed.

Two later letters from Israel, dated January 26, 1995 and January 31, 1995, respectively, explain that Green was discharged from treatment on December 16, 1987. The letters further explain that eight visits from January, 1989 through the winter of 1990 were consultations about Green's practice. In August, 1990, Green "returned to discuss again problems with the mental health administration and to deal with some difficulties in family and social relationships."

During his deposition, Israel testified that, until 1994, he treated Green for depression, stress, or anxiety. In addition, Israel consulted with Green about his work. The last record Israel has of treating Green is in August, 1994. Israel explained that he diagnosed Green as suffering from dysthymia, or minor depression. Israel prescribed one hour psychotherapy sessions for him. Israel submitted claims to Green's health insurer and the claims were paid.

On September 7, 1992, Israel's billing records show that he filed a disability report with the City of Chicago, Green's then-employer, on Green's behalf. Israel further testified that on November 4, 1991, he drafted a report to the Department of Veteran's Affairs (the "VA"). Israel sent the report because Green was seeking mental and emotional disability benefits from the VA. In the report, Israel explains:

Green had been in urgent need of treatment for a long time but his fear and distrust of authority, paranoid in intensity, has previously made him unable to tolerate more than an occasional visit to one or another psychiatrist to obtain medication. He was taking Chlorpromazine, 400 mg per day as needed to control episodes of severe agitation during which he feared loss of control. He worked sporadically, when his condition was in partial remission, in a semi-volunteer capacity at an alcoholism clinic. . . . There has been some progress in terms of a lessening of tension and longer periods of superficially adequate social appearance and vocational functioning, but the underlying paranoia and depression are constant and his surface adequacy is accomplished via intense conscious effort. He is required to keep regular control over recurring impulses to self-harm or violence toward others. . . . His psychopathology repeatedly interferes with his vocational efforts. . . .

While investigating Green's claims, LifeUSA discovered that Green had been receiving disability benefits from the VA since at least 1989, based on the VA's 1968 diagnosis of Green as a paranoid schizophrenic. During his deposition, Green testified that he had been on disability from the military since 1968.

On January 14, 1994, after signing the Application but before the Policy was issued, Green submitted a Statement in Support of Claim to the VA in which he requested that the VA increase his disability benefits from the 70% level to the 100% level. He listed six hospital stays that took place over the period ...