Jesse v. American Community Mut. Ins. Co., 02A03-9906-CV-214.

• Citation: 725 N.E.2d 420
• Decision Date: 29 February 2000
• Docket Number: No. 02A03-9906-CV-214.,02A03-9906-CV-214.
• Parties: Ila R. JESSE, Appellant-Plaintiff, v. AMERICAN COMMUNITY MUTUAL INSURANCE COMPANY, Davenport Insurance Agency, Inc., and Larry D. Smith, Appellees-Defendants.
• Court: Court of Appeals of Indiana

725 N.E.2d 420

Ila R. JESSE, Appellant-Plaintiff,
v.
AMERICAN COMMUNITY MUTUAL INSURANCE COMPANY, Davenport Insurance Agency, Inc., and Larry D. Smith, Appellees-Defendants

No. 02A03-9906-CV-214.

Court of Appeals of Indiana.

February 29, 2000.

725 N.E.2d 421

James D. Streit, Shambaugh, Kast, Beck & Williams, Fort Wayne, Indiana, Attorney for Appellant

Steven D. Groth, Robert B. Clemens, Bose McKinney & Evans, Indianapolis, Indiana, Attorneys for Appellees.

OPINION

NAJAM, Judge.

STATEMENT OF THE CASE

Ila R. Jesse appeals the trial court's entry of summary judgment in favor of American Community Mutual Insurance Company ("American Community"). Jesse filed her complaint against American Community, Davenport Insurance Agency, Inc. and Larry D. Smith ("Smith") seeking damages sustained by her as a result of American Community's rescission of her

725 N.E.2d 422

health insurance policy.¹ Following a hearing, the trial court concluded that there was no genuine issue of material fact and entered summary judgment in favor of American Community

We reverse.

ISSUE

The sole issue presented for our review is whether, as a matter of law, American Community was entitled to rescind Jesse's insurance policy based upon her failure to disclose that she suffered from a functional heart murmur.

FACTS

The parties agree to the following relevant facts. Prior to March of 1994, Jesse had health insurance provided through her husband's employer. After that employment was terminated, Jesse and her husband contacted Smith, an independent insurance agent employed by Davenport Insurance Agency, Inc., to determine whether they should obtain new health coverage or extend the previous policy under COBRA.² Smith suggested that Jesse and her husband apply for health coverage with American Community and provided them with an application form. Jesse and her husband took the form home to complete and subsequently met once again with Smith to review and finalize the application. Jesse signed the application.

Section 7 of the application requested information regarding the applicant's medical history. Jesse's husband stated on this portion of the application that he had undergone heart surgery in 1991. Jesse disclosed that she had merely undergone "routine exams." While discussing with Smith what effect heart surgery would have on her husband's application, Jesse informed Smith that she had been told by physicians for many years that she had a "functional murmur" and asked Smith whether she should include that fact on her application. Smith asked Jesse whether she had ever been treated or prescribed medication for the functional murmur. Based on Jesse's response that neither treatment nor medication had ever been recommended to her, Smith instructed Jesse that it was not necessary to note the functional murmur on the form.

Following submission of the application, American Community declined health coverage to Jesse's husband due to his heart condition. American Community did issue a health insurance policy to Jesse effective May 1, 1994. Because American Community issued her a policy, Jesse terminated the existing health coverage provided by her husband's former employer.

In October of 1994, Jesse underwent aortic valve replacement surgery based on a diagnosis of aortic stenosis. Jesse incurred more than $40,000.00 in medical expenses that were submitted to American Community. By letter dated March 10, 1995, American Community informed Jesse that it was rescinding her policy retroactive to the original date of issue on the grounds that Jesse had failed to disclose on the application an adverse health condition and that the policy would have only been issued if Jesse had agreed to an exclusion rider for all heart conditions.

On January 26, 1998, Jesse filed her complaint against American Community, Smith and Davenport Insurance Agency, Inc., alleging wrongful rescission, breach of contract and fraud. American Community then filed its motion for summary judgment which the trial court granted.³ This appeal ensued.

DISCUSSION AND DECISION

Standard of Review

When appropriate and finding no just reason for delay, the trial court may enter

725 N.E.2d 423

final judgment as to one or more but fewer than all of the claims or parties. Ind. Trial Rule 54(B). In determining the propriety of summary judgment, we apply the same standard as the trial court. Wal-Mart Stores, Inc. v. Bathe, 715 N.E.2d 954, 960 (Ind.Ct.App.1999). We construe all facts and reasonable inferences to be drawn from those facts in favor of the nonmoving party. Shell Oil Co. v. Lovold Co., 705 N.E.2d 981, 983-84 (Ind.1998). Summary judgment is appropriate only when the evidentiary matter designated by the parties shows that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Dible v. City of Lafayette, 713 N.E.2d 269, 272 (Ind.1999); Ind. Trial Rule 56(C). On appeal, the appellant bears the burden of proving that the trial court erred. Sallee v. Mason, 714 N.E.2d 757, 760 (Ind.Ct.App.1999)

Omission of Functional Murmur on Insurance Application

In entering summary judgment in favor of American Community, the trial court concluded that there was no genuine issue of material fact that American Community was entitled to rescind Jesse's insurance policy due to the omission on her application that she suffered from a "functional murmur." Jesse disputes the propriety of judgment as a matter of law. We agree with Jesse...