Matlock v. Texas Life Ins. Co., No. CIV-05-612-C.

• Court: U.S. District Court — Western District of Oklahoma
• Writing for the Court: Cauthron
• Citation: Matlock v. Texas Life Ins. Co., 404 F.Supp.2d 1307 (W.D. Okla. 2005)
• Decision Date: 14 December 2005
• Docket Number: No. CIV-05-612-C.
• Parties: Shelly MATLOCK, Plaintiff, v. TEXAS LIFE INSURANCE COMPANY, Defendant.

404 F.Supp.2d 1307

Shelly MATLOCK, Plaintiff, v. TEXAS LIFE INSURANCE COMPANY, Defendant.

No. CIV-05-612-C.

United States District Court, W.D. Oklahoma.

December 14, 2005.

COPYRIGHT MATERIAL OMITTED

Bill V. Wilkinson, Wilkinson Law Firm, Tulsa, OK, for Plaintiff.

Stuart G. Smith, Naman Howell Smith & Lee, Waco, TX, Thomas A. Paruolo, Whitten Nelson, Oklahoma City, OK, for Defendant.

MEMORANDUM OPINION

CAUTHRON, District Judge.

Before the Court is Defendant's Motion for Summary Judgment (Dkt. No. 20). Plaintiff filed a Response to which Defendant filed a Reply. This matter is now at issue.

I. BACKGROUND

Plaintiff's husband, Joe Matlock, purchased a life insurance policy from Defendant. After Mr. Matlock's death, Defendant, acting within the contestability period, obtained Mr. Matlock's medical records, determined he had incorrectly answered a question, canceled the policy and refused to pay the death benefits. Plaintiff filed this action alleging breach of contract, bad faith, and intentional infliction of emotional distress ("IIED"). Defendant filed the present motion arguing the unambiguous contract language clearly establishes that Mr. Matlock made a material misrepresentation and therefore there was no breach of contract. Defendant also argues that in the event the contract is found ambiguous, its denial of Mr. Matlock's claim was premised on a legitimate dispute and therefore there is no bad faith. Defendant argues that Plaintiff cannot establish her claim for IIED and it is entitled to judgment on that claim. Finally, Defendant asserts that because Plaintiff has failed to state a viable tort claim, her request for punitive damages must fail.

II. STANDARD OF REVIEW

Summary judgment is appropriate if the pleadings and affidavits show there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). "[A] motion for summary judgment should be granted only when the moving party has established the absence of any genuine issue as to a material fact." Mustang Fuel Corp. v. Youngstown Sheet & Tube Co., 561 F.2d 202, 204 (10th Cir. 1977). The movant bears the initial burden of demonstrating the absence of material fact requiring judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A fact is material if it is essential to the proper disposition of the claim. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). If the movant carries this initial burden, the nonmovant must then set forth "specific facts" outside the pleadings and admissible into evidence which would convince a rational trier of fact to find for the nonmovant. Fed.R.Civ.P. 56(e). These specific facts may be shown "by any of the kinds of evidentiary materials listed in Rule 56(c) except the mere pleadings themselves." Celotex, 477 U.S. at 324, 106 S.Ct. 2548. Such evidentiary materials include affidavits, deposition transcripts, or specific exhibits. Thomas v. Wichita Coca-Cola Bottling Co., 968 F.2d 1022, 1024 (10th Cir.1992). "The burden is not an onerous one for the nonmoving party in each case, but does not at any point shift from the nonmovant to the district court." Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 672 (10th Cir.1998). All facts and reasonable inferences therefrom are construed in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).

III. DISCUSSION

A. CONTRACT CLAIM

The issue before the Court is straight-forward — did Mr. Matlock make a material misrepresentation on the application for Defendant insurance?

In pertinent part, the question at issue reads as follows:

13c. Has the Proposed Insured been disabled; received treatment or care in a hospital or hospice or in a custodial, intermediate skilled nursing care or long-term care facility; received chemotherapy, radiation therapy, or dialysis treatment; received treatment at a hospital or rehabilitation center for alcohol or drug abuse within the past 6 mos.? If "yes" give details.

(Exh. A, Defendant's Motion for Summary Judgment). Mr. Matlock completed his application on September 9, 2003, and answered no to question 13c. On the basis of this application, Defendant issued Mr. Matlock a $75,000.00 life insurance policy on March 1, 2004. Mr. Matlock died on January 17, 2005. Following Mr. Matlock's death, Defendant obtained his medical records and learned he had, in fact, been to the Via Christi Oklahoma Regional Medical Center, Ponca City, Oklahoma, on March 14, 2003, and June 12, 2003, for CT scans. Mr. Matlock had been to the same facility on April 18, 2003; May 30, 2003; July 2, 2003; July 18, 2003; and August 29, 2003, for blood work. These tests were to monitor Mr. Matlock's condition as he was recovering from cancer. Relying on these visits, Defendant asserts Mr. Matlock received treatment or care in a hospital within the six months preceding his application and therefore the policy was void.

Defendant argues the application was unambiguous and required Mr. Matlock to disclose his visits to Via Christi. In response, Plaintiff argues the policy is ambiguous and no reasonable person would construe the phrase "treatment or care" to address the procedures Mr. Matlock underwent at his visits to Via Christi. Defendant argues that when given their ordinary use in the English language, the terms "treatment" and "care" include diagnostic procedures, therapeutic procedures, or any other medical procedure. Therefore, Defendant argues there is no ambiguity.

The Court's initial task is to determine if the phrase "received treatment or care" is ambiguous. See Dodson v. St. Paul Ins. Co., 1991 OK 24, ¶ 12, 812 P.2d 372, 376 ("The interpretation of an insurance contract and whether it is ambiguous is a matter of law for the Court to determine and resolve accordingly."); see also Harjo Gravel Co. v. Luke-Dick Co., 1944 OK 268, 153 P.2d 112. In a case such as this one, where the parties ascribe two irreconcilable interpretations to the same term of an insurance contract, the Court must determine if the insurance contract is unambiguous despite the parties' conflicting interpretations:

Oklahoma's extant jurisprudence demarcates guidelines for ascribing meaning to an insurance policy's terms. Basically, an insurance policy is a contract. When its terms are unambiguous and clear, the employed language is accorded its ordinary, plain meaning and enforced so as to carry out the parties' intentions. In this process we are mindful that an insured and insurer are free to contract for that quantum of coverage which one is willing to extend and the other is willing to purchase. The parties are bound by the terms of their agreement and the Court will not undertake to rewrite the same nor to make for either party a better contract than the one which was executed.

Bituminous Cas. Corp. v. Cowen Constr. Inc., 2002 OK 34, ¶ 9, 55 P.3d 1030, 1033 (emphasis in original) (footnotes omitted). See also IDG, Inc. v. Continental Cas. Co., 275 F.3d 916, 921 n. 2 (10th Cir.2001). "[T]he test to be applied in determining whether a word [or phrase] is ambiguous is whether the word [or phrase] `is susceptible to two interpretations' on its face." Cranfill v. Aetna Life Ins. Co., 1993 OK 26, ¶ 7, 49 P.3d 703, 706, quoting Littlefield v. State Farm Fire & Cas. Co., 1993 OK 102, ¶ 7, 857 P.2d 65, 69. The test "is applied from the standpoint of a reasonably prudent lay person, not from that of a lawyer." Cranfill, at ¶ 8, 49 P.3d at 706 (citing Couch on Insurance 3d § 21:14 (1995)). In reviewing a provision of an insurance contract, the Court should not use "a forced or strained construction," take "a provision out of context," or "narrowly focus[] on a provision," Wynn v. Avemco Ins. Co., 1998 OK 75, ¶ 17, 963 P.2d 572, 575 (citing Dodson v. St. Paul Ins. Co., 1991 OK 24, ¶ 13, 812 P.2d at 376), "`so as to import a favorable consideration to either party than that expressed in the contract.'" Crawford v. Indem. Underwriters Ins. Co., 1997 OK CIV APP 39, ¶ 6, 943 P.2d 1099, 1101 (quoting Dodson, id.). The question of whether policy language is ambiguous is a matter of law and therefore appropriate for summary judgment determination. MIC Property & Cas. Ins. Corp. v. Int'l Ins. Co., 990 F.2d 573, 576 (10th Cir.1993).

Following these rules of construction and viewing the policy language from the standpoint of a reasonably prudent layperson, the Court finds the policy is ambiguous as it is susceptible to two or more meanings. To the extent the definitions are related to medical issues, Webster's Third International Dictionary defines treatment as "the action or manner of treating a patient medically or surgically," p. 2435. Care is defined as "provide for or attend to needs or perform necessary personal services," p. 338. Neither definition clearly addresses the services received by Mr. Matlock at Via Christi. The Court finds the phrase ambiguous for an additional reason. Defendant argues when the nature of Mr. Matlock's visits to Via Christi is considered it is clear that those visits were for treatment and management of his condition and therefore disclosure was required. Defendant argues that an accurate answer was required to permit proper analysis for underwriting. However, this argument is disingenuous as it depends on the happenstance of the type of facility Mr. Matlock visited. Had Mr. Matlock gone to the local clinic or laboratory for the CT scan or blood work, there could be no claim that he failed to disclose material facts as those visits would not have occurred in a "hospital," Defendant would have issued the policy and had no recourse. Thus, it is only by the coincidence that Mr. Matlock, either due to convenience for himself or his doctor, or the lack of alternatives, went to the hospital for his tests that allows ...