Meyer v. Blue Cross and Blue Shield of Minnesota
| Decision Date | 18 May 1993 |
| Docket Number | No. C3-92-1990,C3-92-1990 |
| Citation | 500 N.W.2d 150 |
| Parties | M. MEYER, as personal representative of the Estate of D. Meyer, Appellant, v. BLUE CROSS AND BLUE SHIELD OF MINNESOTA, Respondent, MedCenters Health Plan, et al., Defendants. |
| Court | Minnesota Court of Appeals |
Syllabus by the Court
Whether a false statement on a health insurance application materially affected an insurer's acceptance of the risk under Minn.Stat. Sec. 62A.06, subd. 3 is generally an issue for the factfinder, even when the insurer offers uncontradicted testimony that it would not have accepted the application absent the false statement.
Dean L. McAdams, Maple Grove, for appellant.
Louise A. Dovre, Gregory M. Weyandt, Rider, Bennett, Egan & Arundel, Minneapolis, for respondent.
Considered and decided by HARTEN, P.J., and LANSING and SCHUMACHER, JJ.
This is a coverage dispute on a health insurance policy retroactively rescinded one year after its issuance. The evidence establishes a fact question for the jury, and we reverse the directed verdict and remand for a new trial.
Darwin Meyer, now deceased, applied for a health insurance policy from Blue Cross and Blue Shield of Minnesota on March 19, 1986. He did not include on his application a March 18 visit to Park Nicollet Clinic for a cough, his history of kidney stones, or a previous shoulder injury. He stated that he did not have other health coverage, although in fact he was covered by his ex-wife's health care provider. It is unknown whether he was aware of this coverage.
After receiving Meyer's application, Blue Cross notified him that it needed additional medical information. Blue Cross requested that a form be filled out by Meyer's current physician or that his physician submit a narrative account of his health. Meyer forwarded the request to Park Nicollet Clinic, but instead of filling out the Blue Cross form or submitting a narrative, the clinic provided copies of Meyer's medical records. The evidence does not establish when or how the records were forwarded to Blue Cross or whether they were complete records from both Park Nicollet clinics where Meyer had received medical care over the years.
In April 1986 Blue Cross approved Meyer's application and issued a policy with an effective date of March 25. In July Meyer was diagnosed as HIV-positive. He subsequently developed AIDS and died in July 1987. After Meyer became ill, substantially all of his medical bills were paid through his ex-wife's health care coverage. Meyer's Blue Cross policy had no coordination-of-benefits provision, and it is Meyer's estate that would receive the benefit of the Blue Cross payments.
Blue Cross became aware of the high expenses incurred in treating Meyer, and in November 1986 and January 1987 it again requested additional medical history information. In March 1987 Blue Cross informed Meyer of its intent to rescind his policy retroactive to its effective date. Approximately three months later, two weeks before Meyer's death, Blue Cross notified him that it had rescinded his policy due to material misrepresentations in his application.
The personal representative of Meyer's estate brought this action seeking reinstatement of the policy. At trial the district court granted Blue Cross' motion for a directed verdict at the close of the evidence. The court denied the estate's posttrial motions for reconsideration or for a new trial.
Did the trial court err in directing a verdict that a false statement materially affected the insurer's acceptance of the policy risk?
A motion for a directed verdict presents a question of law for the trial court on the sufficiency of the evidence to create a fact question for the jury. M.W. Ettinger Transfer & Leasing Co. v. Schaper Mfg., 494 N.W.2d 29, 34 (Minn.1992). A trial court should grant the motion only when it would clearly be the court's duty to set aside a contrary jury verdict as manifestly against the evidence or impermissible under the applicable law. Advanced Training Systems, Inc. v. Caswell Equip. Co., 352 N.W.2d 1, 12 (Minn.1984). A reviewing court makes an independent judgment about the appropriateness of the directed verdict. Chemlease Worldwide, Inc. v. Brace, Inc., 338 N.W.2d 428, 432 (Minn.1983).
The trial judge directed a verdict for Blue Cross on the ground that uncontradicted evidence showed that Blue Cross "would not have issued a policy if it had the medical records from March and April 1986 pursuant to Blue Cross and Blue Shield guidelines." A Blue Cross underwriter testified that Blue Cross would have declined coverage if it had seen the notation "cough, etiology uncertain" in the records from the March 18 visit, because it was Blue Cross' policy to decline coverage whenever an applicant had a condition of unknown origin.
Minn.Stat. Sec. 62A.06, subd. 3 (1984) regulates the denial of coverage based on false statement:
The falsity of any statement in the application for any policy covered by sections 62A.01 to 62A.09 hereof, may not bar the right to recovery thereunder unless such false statement materially affected either the acceptance of the risk or the hazard assumed by the insurer.
(Emphasis added.) The highlighted language has been part of Minnesota law since 1913. See 1967 Minn.Laws ch. 395, art. 3, Sec. 6; 1957 Minn.Laws ch. 489, Sec. 6; 1913 Minn.Laws ch. 156, Sec. 6.
The Minnesota Supreme Court interpreted Minn.Stat. Sec. 62A.06, subd. 3 in Waite v. American Family Mut. Ins. Co., 352 N.W.2d 19 (Minn.1984). The insurer's underwriter in Waite testified that if the application had disclosed the policyholder's history of high blood pressure, the insurer would have made a further inquiry and likely would have denied coverage. Waite, 352 N.W.2d at 21. The supreme court did not allow the insurer to reformulate its acceptance. The court reasoned:
If the application had been correctly answered, however, and American Family had then talked to Dr. Nelson, it would have learned, among other things, that Mrs. Waite had pleurisy, borderline hypertension and a current, normal electrocardiogram. [The underwriter] conceded these were factors the insurer would have considered. A jury is not required to accept even uncontradicted testimony if improbable or if surrounding facts and circumstances afford reasonable grounds for doubting its credibility. (Citation omitted.) On this record, we do not think it can be said as a matter of law the...
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