Lee v. National Life Assur. Co. of Canada, 79-2473

Decision Date10 December 1980
Docket NumberNo. 79-2473,79-2473
Parties7 Fed. R. Evid. Serv. 453 Wanda R. LEE, PLaintiff-Appellant, v. The NATIONAL LIFE ASSURANCE COMPANY OF CANADA, Defendant-Appellee.
CourtU.S. Court of Appeals — Fifth Circuit

Alvin Boyd, Dallas, Tex., for plaintiff-appellant.

Thompson & Knight, John A. Mackintosh, Jr., O. Paul Corley, Jr., Dallas, Tex., for defendant-appellee.

Appeal from the United States District Court for the Northern District of Texas.

Before THORNBERRY, GEE and REAVLEY, Circuit Judges.

REAVLEY, Circuit Judge:

This is a life insurance case wherein the company denied liability, claiming that the insured had falsely represented that he had not suffered a heart attack or any other symptoms of heart disorder prior to the time of his application for insurance. The insured died of a heart attack approximately four months after the company issued him a policy which named his wife as beneficiary. She brought this diversity suit seeking damages consisting of the amount of the policy ($50,000), a 12% penalty on the amount of the policy for failure to make prompt settlement as authorized by Tex.Ins.Code Ann. art. 3.62 (Vernon 1963), and reasonable attorney's fees. She now appeals from an order of the district court that granted summary judgment in favor of the insurance company on the ground that the company established all the elements of a misrepresentation defense as a matter of law. We reverse.

I.

In February or March of 1977, Roger H. Lee, Jr. applied for life insurance coverage with the National Life Assurance Company of Canada in conjunction with obtaining a small business loan. In connection with the application, Lee submitted to an interview with a medical examiner, who was employed by an office which conducted physical examinations for life insurance companies. During this interview, Lee answered certain questions concerning his prior health history, and the answers to these questions are shown on the application for insurance, which was thereafter attached to the policy when it was issued.

The application form filled out during the medical examination reflects that Lee responded in answer to question 1(a) that he had no personal physician. In answer to question 2(c), the application indicates he responded that he had never been treated for or ever had any known indication of bronchitis or chronic respiratory disorder. The application shows that for question 2(d) he answered that he had never been treated for and had never had any known indication of chest pain, high blood pressure, heart murmur, heart attack or other disorder of the heart or blood vessels. In answer to question 5(a), the form shows that he had not had any mental or physical disorder, other than as disclosed by his previous answers, within the preceding five years. The form also indicates that Lee stated in response to question 5(b) that he had not, within the preceding five years, had a check up, consultation, illness, injury or surgery. In addition, the form reflects that Lee answered question 5(c) to the effect that he had not been a patient in a hospital, clinic, sanitarium, or other medical facility within the preceding five years. The application does show that, in answer to question 5(d), Lee indicated he had received an electrocardiogram within the preceding five years; specifically, the form reflects that Lee had an EKG with negative results and details unknown in 1970. The summary judgment evidence reveals that the true facts did not comport with the answers stated in the application.

The summary judgment evidence before the district court establishes that Dr. Jewell had been Lee's personal physician since July of 1972, when Lee was hospitalized complaining about chest pain. Because Lee complained of chest pain, an electrocardiogram was taken which demonstrated that Lee had suffered a mild myocardial infarction. Lee was then admitted to the coronary care unit of the hospital. Dr. Jewell testified by deposition that he performed a physical examination upon Lee during this hospitalization and reached a diagnosis that in all reasonable medical probability Lee had suffered an acute "inferior myocardial infarction with third degree atrial ventricular block with a nodal rhythm." Dr. Jewell advised Lee that he had suffered a heart attack during his hospitalization.

The plaintiff in her deposition testified she was aware in 1972 that her husband had heart problems, because the doctor had told her that her husband had suffered a coronary, which she understood to mean a heart attack.

Dr. Jewell further testified that he saw Lee on numerous occasions after the heart attack in 1972. The doctor stated that x-rays revealed Lee's heart was enlarged, and nitroglycerin was prescribed because of Lee's continuing complaints of chest pain. In July of 1973, Dr. Jewell saw Lee at the Irving Community Hospital when Lee was complaining of chest pain, which Dr. Jewell suspected was caused by bronchial pneumonia.

In April of 1975, Lee again complained of chest pain, and Dr. Jewell ordered an EKG which revealed changes of the old inferior myocardial infarction. In May of that year, Dr. Jewell again hospitalized Lee because of chest pain. The doctor prescribed medications to reduce the work of the heart muscle and to decrease the chest pain. Another EKG was taken during this hospitalization. Dr. Jewell testified that Lee had an abnormal EKG stress test which implied that the circulation of blood to the heart through the coronary arteries was insufficient to give a normal test. When Lee was discharged from the hospital, Dr. Jewell advised him that he had arteriosclerotic heart disease.

From the time of this last hospitalization in May of 1975 to the time when Lee applied for insurance in February or March of 1977, Dr. Jewell saw Lee on three occasions. Thereafter, Dr. Jewell saw Lee in May of 1977 when Lee was complaining about discomfort in his chest upon exertion, which he told the doctor had occurred ever since he had his heart attack in 1972. Dr. Jewell again saw Lee on June 21, 1977 concerning complaints about chest pain, occurring two to three times per week which was relieved by nitroglycerin. Lee died at home on July 31, 1977. Dr. Jewell signed the death certificate, which stated that the immediate cause of death was "myocardial infarction" (heart attack).

In opposition to the motion for summary judgment, plaintiff submitted the affidavit of Joni Duignan, the medical examiner who interviewed Lee when he applied for life insurance. Duignan stated that her job was to assist the doctor in physical examinations for life insurance. In addition to her other duties, which included office work, preparing and mailing urine and blood specimens, and taking x-rays, she interviewed on the average between 10 and 15 applicants for life insurance each day. She indicated these interviews were sandwiched in with all her other duties. There were often interruptions, either by telephone or by other business in the office. The office for which she worked conducted examinations of insurance applicants for 40 to 50 insurance companies, each of which used a different form. During the course of an interview, she would ask questions based on each insurance company's form, and the applicant would provide her with the information. Significantly, Duignan stated:

"The answer of the applicant was not the answer I put down on the form. Usually the applicant's answer was general and informative, and from the information he or she gave me I had to decide how the question should be answered. Generally, I tried to answer the question in favor of the applicant obtaining insurance because the insurance companies wanted to sell the insurance and they did not like it when we found something wrong. In addition, the nature of the questions required an exercise of judgment, and I used my best judgment in writing the answers to the questions based upon the general information the applicant gave me."

Also in the affidavit, Duignan stated that she had been shown a copy of the application attached to the life insurance policy issued to Lee by the National Life Assurance Company. She said that the application consisted of two pages on a single sheet of paper and that the handwriting appearing on the page bearing her signature was hers, with the exception of Lee's signature. 1 Duignan then stated that she had no independent recollection of having interviewed Lee, but that she prepared his form and answered the questions under the circumstances which she described in her affidavit. Thereafter, Duignan proceeded to testify about what "might" have happened or what "may" have happened when she took Lee's application. Initially she stated: "For example, I first checked 2(h) 'no,' and then changed my mind, either because he was still talking or thought of something, or because I thought it should be mentioned ...." She then speculated: "From the application, it appears that Mr. Lee had advised that he had had a cardiogram and, obviously, in the past he had had some difficulty at some time, either in chest pain or some other happening which moved him to obtain the cardiogram, and I answered the question ... that the EKG in 1970 was 'negative results' with 'details unknown.' " Duignan then concluded that she did not recall what Lee said at the time, but it was her opinion that if he did have a heart condition at the time of the EKG, the answers in the application did not reflect that he misrepresented anything to her. She stated: "I could not say that he did not tell me of having some previous heart trouble; in fact, he may have done so and the answers which I have given on the questionnaire would be correct, or if incorrect made by me in good faith in my best judgment at the time."

In its opinion on the insurance company's motion for summary judgment, the district court concluded that the statements in Duignan's...

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