Larson v. Nw. Mut. Life Ins. Co., A13–0186.

• Decision Date: 22 October 2014
• Docket Number: No. A13–0186.,A13–0186.
• Citation: 855 N.W.2d 293
• Court: Minnesota Supreme Court
• Parties: Jacky L. LARSON, Appellant, v. The NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY, Respondent, CMInformation Specialists, Inc., Respondent.

855 N.W.2d 293

Jacky L. LARSON, Appellant

v. The NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY, RespondentCMInformation Specialists, Inc., Respondent.

No. A13–0186.

Supreme Court of Minnesota.

Oct. 22, 2014.

Katherine L. MacKinnon, Sarah J. Demers, Law Office of Katherine L. MacKinnon P.L.L.C., Saint Louis Park, MN, for appellant.

Erik T. Salveson, Benjamin C. Johnson, Nilan Johnson Lewis, P.A., Minneapolis, MN, for respondent The Northwestern Mutual Life Insurance Company.

Mark R. Bradford, Bassford Remele, P.A., Minneapolis, MN, for respondent CMInformation Specialists, Inc.

Kelly W. Hoversten, Gray Plant Mooty, Minneapolis, MN, for amicus curiae American Council of Life Insurers.

Jenneane L. Jansen, Kris E. Palmer, Jansen & Palmer, LLC, Minneapolis, MN, for amicus curiae Minnesota Association for Justice.

OPINION

WRIGHT, Justice.

This dispute over the rescission of a life insurance policy presents two questions of statutory interpretation: (1) whether Minn.Stat. § 61A.11 (2012) requires subjective intent to deceive on the part of the insured in order to rescind a life insurance policy issued without a prior medical examination, and (2) whether Minn.Stat. § 144.298, subd. 2 (2012), creates a private right of action for the under-disclosure of medical records. With respect to the first question, we conclude that rescission of a life insurance policy under Minn.Stat. § 61A.11 requires proof of the insured's subjective intent to deceive. Because we conclude that there is a genuine issue of material fact regarding the subjective intent of the insured in this case, we reverse the district court's grant of summary judgment for respondent The Northwestern Mutual Life Insurance Company and remand for further proceedings consistent with this opinion. Regarding the second issue, we conclude that a patient does not have a private right of action under Minn.Stat. § 144.298, subd. 2, when a person releases fewer medical records than authorized by a patient's consent. Therefore, we affirm the district court's grant of summary judgment in favor of respondent CMInformation Specialists, Inc.

I.

Appellant Jacky Larson was named as the sole beneficiary of a life insurance policy that her husband James Larson (“the insured”) obtained from respondent The Northwestern Mutual Life Insurance Company in 2008. As part of Northwestern Mutual's application and underwriting process, the insured was required to answer questions about his medical history on two separate occasions. A paramedical examiner visited the insured's home on December 3, 2007, and asked him the questions on Northwestern Mutual's medical history questionnaire. The insured also completed a client history interview over the telephone with a representative from Northwestern Mutual on December 10, 2007. During each series of questions, the insured was asked whether he had a primary physician and whether he had “consulted any other healthcare providers” within the last five years. The insured also was asked if he had undergone any diagnostic studies or tests within the last five years. Each time, the insured identified his primary care physician at Fairview Ridges Clinic and acknowledged that he had seen a dermatologist. On each occasion, however, the insured failed to disclose that in late 2004 and early 2005, he visited a cardiologist and underwent a CAT scan

angiogram because he was experiencing chest pain. The medical history questionnaire specifically asked whether the insured had experienced or been tested for chest pain within the past ten years, to which the insured responded that he had not.

Northwestern Mutual also required the insured to consent to the release of all of his medical records. Northwestern Mutual's contractor requested the insured's “entire chart for [the] last seven years” from Fairview. Fairview's medical records contractor, respondent CMInformation Specialists, Inc., provided the insured's medical records from Fairview, but Fairview's medical records policy did not permit the release of non-Fairview records unless a Fairview physician had referred the patient to a non-Fairview facility or used the non-Fairview facility to treat the patient. Because of Fairview's policy, CMInformation did not disclose to Northwestern Mutual all of the insured's records that Fairview possessed. Among the items in the insured's medical records that CMInformation did not disclose were letters related to his consultation with a cardiologist and the results of his CAT scan

angiogram.

Based on the information supplied in the insured's application, Northwestern Mutual's underwriter granted its approval of the life insurance policy that Northwestern Mutual issued in 2008. After the insured died in August 2008 from injuries sustained in a motorcycle accident, Jacky Larson made a claim on the life insurance policy. Because the insured died within the two-year contestability period, Northwestern Mutual conducted a routine investigation. In the course of that investigation, Northwestern Mutual discovered that the insured had failed to disclose that he had consulted with a cardiologist and undergone a CAT scan

angiogram. Northwestern Mutual subsequently informed Larson that it was rescinding the life insurance policy because it would not have issued the policy if the insured had disclosed this information. Northwestern Mutual refunded the amount of the premiums paid.

Larson sued Northwestern Mutual and CMInformation. Larson alleged that Northwestern Mutual breached the insurance contract by rescinding the life insurance policy and refusing to pay the death benefit. Larson also alleged that when CMInformation provided the insured's incomplete medical records to Northwestern Mutual, CMInformation violated Minn.Stat. § 144.293, subd. 10(c) (2012), by failing to comply with the limits of the consent the insured provided for the release of his medical records.¹ Larson argued that CMInformation's failure to release the letters indicating that the insured had consulted with a cardiologist was the basis for Northwestern Mutual's rescission of the life insurance policy.

At the close of discovery, Northwestern Mutual and CMInformation each moved for summary judgment. Northwestern Mutual argued that it was entitled to rescind the life insurance policy under Minn.Stat. § 61A.11 because the insured's inaccurate and incomplete responses to specific questions about his medical history, of which he had full knowledge, were willfully false or intentionally misleading. CMInformation argued that Minn.Stat. § 144.298, subd. 2, imposes liability only for unauthorized disclosures of protected information, and therefore, a patient does not have a cause of action when a person releasing medical records fails to release all of the records authorized for release.

The district court granted Northwestern Mutual's motion for summary judgment, concluding that the insured's knowledge of and failure to disclose the cardiology consultation and test made his statements willfully false or intentionally misleading as a matter of law. The district court also granted summary judgment in favor of CMInformation, concluding that a patient does not have a cause of action under Minn.Stat. § 144.298, subd. 2, unless the release of the patient's medical records exceeds the scope of the patient's consent.

Larson appealed, and the court of appeals affirmed. Larson v. Nw. Mut. Life Ins. Co., No. A13–0186, 2013 WL 6050356 (Minn.App. Nov. 18, 2013). The court of appeals concluded that the answers the insured provided on the life insurance application were willfully false as a matter of law because they were “patently false” and given in response to specific questions. Id. at *5. Therefore, the insured's intent in giving those answers was irrelevant and summary judgment in favor of Northwestern Mutual was properly granted. Id. The court of appeals also concluded that summary judgment in favor of CMInformation was properly granted because Minn.Stat. § 144.298, subd. 2, does not provide a private right of action for withholding a medical record that the patient authorized to be released. Larson, No. A13–0186, 2013 WL 6050356, at *6.

We granted Larson's petition for further review.

II.

The first question presented for our review is whether the insured's failure to disclose the fact that he saw a cardiologist and had a CAT scan

angiogram was “willfully false or intentionally misleading” as a matter of law such that summary judgment for Northwestern Mutual and rescission of the life insurance policy were proper under Minn.Stat. § 61A.11.

For more than 100 years, Minnesota law has barred rescission of life insurance policies issued without a medical examination based on a misrepresentation in the insurance application, unless the representation is “willfully false or intentionally misleading.” Minn. Rev. Laws § 1693 (1905). The relevant statutory language, which currently appears at Minn.Stat. § 61A.11, provides:

In any claim upon a policy issued in this state without previous medical examination, or without the knowledge or consent of the insured, or, in case of a minor, without the consent of a parent, guardian, or other person having legal custody, the statements made in the application as to the age, physical condition, and family history of the insured shall be valid and binding upon the company, unless willfully false or intentionally misleading.

In other words, an insurer can rescind a life insurance policy issued without a medical examination based on an incorrect statement in the insurance application only if the statement was willfully false or intentionally misleading. Schmidt v. Prudential Ins. Co. of Am., 190 Minn. 239, 241, 251 N.W. 683, 684–85 (1933) ; Hafner v. Prudential Ins. Co. of Am., 188 Minn. 481, 484, 247 N.W. 576, 578 (1933). To determine whether rescission of the life insurance policy in this case was proper, we first consider whether the district court applied the correct legal standard. We then must decide, in light of the...