LeBus v. Northwestern Mut. Life Ins. Co., 94-2668

• Decision Date: 09 June 1995
• Docket Number: No. 94-2668,94-2668
• Citation: 55 F.3d 1374
• Parties: Peggy A. LeBUS, Plaintiff-Appellant, v. NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 1374

55 F.3d 1374

Peggy A. LeBUS, Plaintiff-Appellant, v. NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY, Defendant-Appellee.

No. 94-2668.

United States Court of Appeals Eighth Circuit.

Submitted Feb. 13, 1995.

Decided June 9, 1995.

Daniel W. Schermer, Minneapolis, MN, argued, for appellant.

Bridget M. Ahmann, Minneapolis, MN, argued, for appellee.

Before BOWMAN, BEAM and HANSEN, Circuit Judges.

HANSEN, Circuit Judge.

Peggy A. LeBus appeals the district court's grant of summary judgment in favor of Northwestern Mutual Life Insurance Company (Northwestern) in this action to recover death benefits on a life insurance policy that Northwestern issued to Peggy LeBus's now deceased husband, L. Martin LeBus. The district court concluded that because the undisputed facts disclose that Martin intentionally misled Northwestern concerning material health-related facts, Northwestern was entitled to deny Peggy's claim on the policy. We affirm in part and reverse in part.

I.

The following facts are undisputed. Peggy LeBus's husband, L. Martin LeBus, originally applied for and obtained a life insurance policy from Northwestern in 1986, naming Peggy as the beneficiary. Over the years, Martin allowed the policy coverage to lapse several times due to delinquent premium payments. Each time, Martin would request reinstatement of the policy when he had the money available to pay the premiums. The most recent lapse of coverage occurred on October 13, 1991, due to Martin's nonpayment of the August 6, 1991, premium. Martin tendered payment and completed a request for reinstatement form on October 21, 1991.

Northwestern's reinstatement request form requires the insured to make a statement of health, declaring that since the policy lapsed, the insured has not "consulted, been treated or advised to be treated by a physician or health practitioner for sickness, disease, injury or other reason." (Jt. App. at A-15.) The insured is instructed to give specific dates and details if any exceptions to this declaration exist. On Martin's October 21, 1991, request for reinstatement, he declared that he had not "consulted, been treated or advised to be treated by a physician" during the lapse in coverage beginning August 6, 1991. In the space provided to list exceptions to the declaration, Martin noted that he had seen Dr. LaFond for a cold. Martin provided no dates and no further details.

Dr. LaFond's deposition testimony and Martin's medical records reveal that during the policy lapse, Martin consulted Dr. LaFond for what he originally thought was a cold, but the focus of the consultation and treatment quickly changed from treatment of a cold to diagnosing an abnormal mass found in Martin's lung. Martin, a heavy smoker with a long history of lung and upper respiratory difficulties (disclosed to Northwestern in his initial policy application), visited Dr. LaFond on September 25, 1991, complaining of persistent cold symptoms. Dr. LaFond diagnosed an upper respiratory infection for which he prescribed antibiotics. Martin returned on October 15, 1991, because the infection did not respond to the antibiotics. Dr. LaFond then diagnosed bronchitis with "possible pneumonia," (Jt.App. at A-33) and changed the antibiotics prescription. Dr. LaFond also took chest X rays, which he showed to Martin that day. The X rays revealed an "abnormality" which, in Dr. LaFond's opinion, needed a closer look "to see if this was clearly just a pneumonia or if there was something more serious going on." (Id. at A-41, -42.)

Dr. LaFond scheduled Martin for a CT scan on October 18, 1991. The CT scan showed "a significant abnormality highly suggestive of cancer." (Id. at A-43.) Because of this finding, Dr. LaFond scheduled a bronchoscopy, which is in essence a lung tissue biopsy, for October 21, 1991, which was the day that Martin signed the request for reinstatement form. Dr. LaFond informed Martin of the risks and reasons for these various procedures. Dr. LaFond made a definitive diagnosis of lung cancer after the bronchoscopy on October 21, 1991. Whether or not Dr. LaFond communicated the definitive cancer diagnosis to Martin on the same day or sometime later is in dispute, but it is not material to our resolution of this case.

Peggy LeBus testified by affidavit that she urged Martin to see Dr. LaFond because of a persistent cold. She said that Martin's demeanor, behavior, and personality (always an optimist) were unchanged while he was going through the tests on October 18 and 21, and that Martin told her that Dr. LaFond would not speculate on what might be wrong until he got the results of the tests. She further testified that Martin was extremely distraught when he called her from his office on October 25, 1991, to tell her that he had just learned of the cancer diagnosis. She maintains that Martin did not know he had cancer until October 25, 1991, so he did not intentionally mislead Northwestern on the request for reinstatement form.

On May 14, 1993, Martin LeBus died of lung cancer. After Martin's death, Peggy sought to recover $100,000 in death benefits on the life insurance policy that Northwestern had issued to her husband. Northwestern refused to pay benefits on the policy, asserting that Martin had misrepresented his health condition in his most recent application for policy reinstatement, dated October 21, 1991.

Peggy brought this diversity of citizenship suit against Northwestern, seeking to recover the proceeds allegedly due under the life insurance policy. Based upon the undisputed facts, the district court granted Northwestern summary judgment, concluding that Martin had made material misrepresentations in his request for reinstatement form--not because he had knowledge of a cancer diagnosis but because he failed to disclose the facts he knew regarding the abnormal lung mass and the diagnostic testing. Peggy appeals, arguing that the district court improperly resolved disputed facts on a motion for summary judgment. She also contends that she is entitled to the paid-up value of the policy.

II.

We review a grant of summary judgment de novo, applying the same standard as the district court. RSBI Aerospace, Inc. v. Affiliated FM Ins. Co., 49 F.3d 399, 401 (8th Cir.1995). Summary judgment is proper when, construing all evidence in favor of the nonmoving party, there are no genuine issues of material fact and the movant is entitled to judgment as a matter of law. Id.; Fed.R.Civ.P. 56(c). See also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 2509-10, 91 L.Ed.2d 202 (1986). When a motion for summary judgment is made and properly supported, the nonmoving party may not rely on bare allegations but must set forth specific facts showing that there is a genuine issue for trial. See Marshall v. UNUM Life Ins. Co., 13 F.3d 282, 284 (8th Cir.1994).

The first issue in this case is whether Martin LeBus made intentional misrepresentations on the request for policy reinstatement form dated October 21, 1991, within the meaning of Minnesota law, which the parties agree applies to this case. The request for reinstatement form specifically provided that "on the basis of a misstatement in this Request or application, [Northwestern] may rescind the insurance or deny a claim." (Id. at A-16.) Minnesota law allows an insurance company to void an insurance contract if the policy was issued on the basis of statements about the insured's medical condition that were wilfully false or intentionally misleading, as those terms are used in Minn.Stat. Sec. 61A.11. See Ellis v. The Great-West Life Assurance Co., 43 F.3d 382, 386 (8th Cir.1994). Minn.Stat. Sec. 61A.11 provides in pertinent part as follows:

In any claim upon a policy issued in this state without a previous medical examination ..., 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 wilfully false or intentionally misleading.

Minnesota courts have held that "a willfully false and intentionally misleading answer is one which is consciously made with a premeditated design so as to falsify facts so as to lead the insurer to act when he otherwise would not" and that "[w]ilfully false denotes knowingly concealed." Siemers v. United Benefit Life Ins. Co., 246 Minn. 459, 75 N.W.2d 605, 608 (1956). We have observed, however, that the Minnesota courts do not...