Protective Life Ins. Co. v. Apex Parks Grp.

• Decision Date: 18 September 2020
• Docket Number: 1180508
• Parties: Protective Life Insurance Company v. Apex Parks Group, LLC
• Court: Supreme Court of Alabama

Protective Life Insurance Company
v.
Apex Parks Group, LLC

1180508

SUPREME COURT OF ALABAMA

SPECIAL TERM, 2020
September 18, 2020

Notice: This opinion is subject to formal revision before publication in the advance sheets of Southern Reporter. Readers are requested to notify the Reporter of Decisions, Alabama Appellate Courts, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334) 229-0649), of any typographical or other errors, in order that corrections may be made before the opinion is printed in Southern Reporter.

Appeal from Jefferson Circuit Court
(CV-17-165)

MENDHEIM, Justice.

Protective Life Insurance Company ("Protective") appeals from a judgment entered on a jury verdict rendered in the Jefferson Circuit Court against Protective and in favor of Apex Parks Group, LLC ("Apex"), in the amount of

Page 2

$11,495,890.41. We reverse the judgment and render a judgment for Protective.

I. Facts

Apex, a California-based corporation, owns and operates 16 moderately sized amusement parks, water parks, and family-entertainment centers nationwide. Apex's founder and chief executive officer was Alexander Weber, who had possessed 43 years' experience in the industry and who was critical to Apex's success. Because of Weber's importance, in early 2016 Apex sought a "key-man" insurance policy on Weber.¹ Protective is a Birmingham-based insurance company owned by the Dai-ichi Corporation.

Page 3

Apex applied for key-man insurance for Weber with Protective in March 2016; Apex used an insurance broker to aid in the application process. At that time, Weber was 64 years old. The initial premium quote provided to Apex on the insurance application was $40,054.33, contingent upon approval by Protective's underwriters.

On March 2, 2016, Protective had Weber interviewed by a paramedical professional to gain information about his medical history. Weber answered several detailed questions, and in the process he revealed that he had high blood pressure, high cholesterol, and that he had had a "left bundle branch block" ("LBBB") since childhood. In detailing what an LBBB is, Protective's medical expert, Dr. Vance Plumb, explained:

"[T]he normal heartbeat is created by the passage of electricity through the heart. ... [T]here are special fibers in the heart that carry this electricity ... directly to the left bottom chamber of the heart into the right bottom chamber of the heart. The fibers that carry the electricity to the left, we call it a left bundle branch block. The ones that go to the right, the right bundle branch. ... Electricity is delivered late to the left ventricle when there is left bundle branch block."

Dr. Plumb further explained that if you have an LBBB, "you are more likely to have heart disease. If you have heart disease, you are somewhat more likely to have atrial fibrillation."

Page 4

Both Dr. Plumb and Apex's medical expert, Dr. Hugh McElderry, testified that an LBBB is a serious heart condition. Weber also disclosed that both his father and his mother had died of heart attacks at ages 47 and 56, respectively.

The answers from Weber's interview with the paramedical professional were incorporated into the Apex application for insurance. On March 10, 2016, the application was finalized and signed by Weber and Apex's chief financial officer, Doug Honey ("the application"). Apex sought $10 million in coverage in the application.

Protective received the application on March 14, 2016. At that point, Protective underwriter Paula Nicols began the process of determining whether Protective would issue the policy and what premium it would charge. Nicols testified at trial that the standard approach for this task included consulting two underwriting manuals issued by Protective's reinsurers. Those manuals -- the "Gen Re" and "Swiss Re" manuals -- prescribe premiums in light of an applicant's medical history. Protective generally compares the "rate classifications" in the two manuals and offers an applicant the lower of the two. Protective has several ratings, which

Page 5

correspond to successively higher premiums. Protective's best rating, for which Protective charges its lowest premium, is called "select-preferred." That rating is followed by "preferred," and then "standard," which each carry higher premiums than the "select-preferred" rating. After the "standard" rating, Protective has seven "table" ratings, ranging from "Table 2" to "Table 8." As the table number goes up, so does the charged premium.

Nicols testified that she considered four pieces of medical information in determining Weber's insurance rating: his LBBB, his high blood pressure, his high cholesterol, and his parents' deaths from heart attacks. Weber's LBBB meant that he could not receive Protective's select-preferred or preferred ratings. Nicols informed the insurance broker that Apex could not receive the preferred rating Apex had requested and that Protective would need Weber's medical records. Those records did not include tests associated with assessing the current status of Weber's heart issues. In fact, Weber had not seen a cardiologist in 10 years. The medical records did reveal that Weber previously had undergone stress tests, but the records did not show the results of those tests. On

Page 6

April 19, 2016, Protective requested "complete records" from any cardiologist Weber may have visited for his LBBB. Weber responded that he had not yet seen a cardiologist for his LBBB. Nicols testified that she was not troubled by the fact that Weber had not seen a cardiologist, despite the fact that he had been given a referral to see one, because Weber "was not told he had to be seen by a cardiologist so that was up to Mr. Weber whether or not he chose to do that."

On April 30, 2016, Nicols e-mailed the broker with a "tentative offer" to Apex, stating, in part:

"At this point and AS IS MEDICALLY, Table 2 Non-Tobacco due to left bundle branch block per exam, records from Dr. Jenkins and Dr. Dyksterhouse. ...

"....

"If [Apex] will accept Table 2, no additional records are needed. However, if [Apex] wants reconsideration, we will need copy of past testing noted per Dr. Dyksterhouse's records, or [Weber] will need to get established with his new cardiologist for follow-up to include either treadmill stress test or nuclear/imaging stress test, at no cost to Protective Life."

A Table 2 rating meant a substantial premium increase from the initial premium quoted to Apex in the application, with a first-year premium of $89,771.75. Nonetheless, Apex subsequently orally agreed to the Table 2 rating offer, and on

Page 7

May 3, 2016, another Protective underwriter approved the policy based on that rating.

On May 5, 2016, Weber had an appointment for an annual physical with a physician he had not previously seen, Dr. Samuel Fink. Based on Weber's family and personal medical history, particularly the deaths of his father and mother as a result of heart attacks and his diagnosis of an LBBB, Dr. Fink recommended that Weber return the following day for a "stress echo" test. On May 6, 2016, Weber visited Dr. Fink and underwent a stress test that involved Weber being connected to an EKG machine while he walked and then ran on a treadmill as the treadmill increased speed and incline level. The test lasted for 13 minutes. All the medical experts at trial agreed that Weber performed extremely well in the test in terms of demonstrating physical fitness. However, Dr. Fink had a cardiologist, Dr. Michael Burnam, read the results from the EKG machine remotely. Dr. Burnam testified that during the stress test Weber experienced an episode of paroxysmal atrial fibrillation ("AFib"). Dr. Burnam explained that paroxysmal AFib is a separate condition from -- and is not caused by -- LBBB and that it occurs when there is a temporary

Page 8

or intermittent irregular rhythm of the upper chamber of the heart. Dr. McElderry confirmed that Weber's AFib "came and went on its own." Dr. Plumb testified that, because of its intermittent nature, it was possible that Weber had been "living with this for a while." Indeed, Weber did not feel any physical difference during the stress test. Because Dr. Burnam was not able to tell from the stress test whether there was a restriction in the blood flow of Weber's coronary arteries, he recommended that Weber be taken to the emergency room ("ER").

Because of Dr. Burnam's recommendation, Dr. Fink escorted Weber to the ER during his May 6, 2016, appointment. Weber's wife testified that when Weber arrived at the ER he telephoned her to tell her about the AFib diagnosis, and she stated that they laughed about it because they recalled a television commercial with famous golfers talking about having AFib. Dr. Fink presented Weber to the ER doctor on call, Dr. Scott Brewster. Weber also met Dr. Burnam in the ER. Dr. Burnam examined Weber, and he confirmed that Weber had paroxysmal AFib, rather than persistent AFib, which meant that it was not necessary to perform a cardioversion, "an electrical shock to

Page 9

the heart to return its normal rhythm." Dr. Burnam concluded that Weber had a low risk of having a stroke and so, for the time being, his condition could be treated with a mild blood-thinning medication, such as aspirin. Dr. Burnam prescribed that Weber take one aspirin tablet per day, and they discussed two additional treatment options: either taking medication or using an "an electrophysiologic approach," meaning having a procedure on the heart to correct the AFib, called an ablation. Altogether, Weber spent two hours at the ER. A follow-up appointment with Dr. Burnam was scheduled for May 9, 2016, which Dr. Burnam testified was "for additional testing" and for Weber "to decide which approach he wanted."

On May 9, 2016, Weber had the follow-up appointment with Dr. Burnam. An EKG revealed that Weber's heart was in normal rhythm during that visit. Dr. Burnam testified that his notes of that visit reflected that he and Weber discussed Weber's options for treating his AFib and...