Spitz v. Continental Cas. Co.

• Decision Date: 29 October 1968
• Citation: Spitz v. Continental Cas. Co., 40 Wis.2d 439, 162 N.W.2d 1 (Wis. 1968)
• Parties: Milton A. SPITZ, M.D., Appellant, v. CONTINENTAL CASUALTY CO., a foreign corporation, Respondent.
• Court: Wisconsin Supreme Court

Page 1

162 N.W.2d 1

40 Wis.2d 439

Milton A. SPITZ, M.D., Appellant, v. CONTINENTAL CASUALTY CO., a foreign corporation, Respondent.

Supreme Court of Wisconsin.

Oct. 29, 1968.

Aaron L. Tilton, Milwaukee, for appellant; Theodore S. Fins, Milwaukee, of counsel.

Frisch, Dudek, Banholzer & Slattery, Milwaukee, for respondent; Edward A. Dudek, C. Michael Hausman, Milwaukee, of counsel.

ROBERT W. HANSEN, Justice.

While a number of questions are raised and issues argued on this appeal, we see only two questions: (1) Was the doctor eligible to coverage under the group disability policy offered members of the American Medical Association? (2) Was this question determinable by the trial court on a motion for summary judgment?

The plaintiff is a medical doctor and member of the American Medical Association. On August 8, 1962, he made written application for coverage under the group policy offered by defendant to 'eligible members' of the American Medical Association. A certificate indicating coverage was issued to him on September 1, 1962. This policy was available only to 'eligible members' of the AMA, ¹ with the qualifying term, 'eligible member' defined as follows:

"Eligible Member' wherever used in the policy means a member who is not a full-time member of the armed services of any country, who is not retired and who is actively performing the full-time duties of his occupation. Provided that a Member who is temporarily unemployed or temporarily absent from the full-time duties of his occupation for reasons other than sickness or injury shall nevertheless be deemed to be actively performing the full-time duties of his occupation.'

Was the plaintiff an 'eligible member' of the AMA under this definition? To be such, it is clear that he would have to be on the date of his application for coverage:

(1) Actively performing the full-time duties of his occupation; or

(2) If temporarily unemployed or temporarily absent from his occupation, that such absence be for reasons other than sickness or injury.

Appellant contends that the incontestability clause in the insurance policy ² precludes the insurance carrier from contesting the right of the doctor to recovery under the policy. However, the incontestability clause by its terms applies only to statements of insureds who are 'eligible for coverage under the policy.' The requirement of eligibility is the threshold that must be crossed before we reach the question of representations, misrepresentations or possible fraud. ³ In a group policy one's status as an eligible member of the group is the exact basis on which the company offers the policy. One must come within the definition of a member of the group to qualify for coverage. While a misrepresentation as to eligibility for coverage might also increase the risk or contribute to the loss, it is under a group policy something more than a mere statement relating to insurability. It is a certification to status as one eligible to coverage as a member of the group involved.

On the question of appellant's eligibility, the affidavits and supporting documents offered by defendant insurance company, uncontroverted at the hearing on the motion in the trial court, establish that at the time the appellant made his application for the group policy with the respondent he was receiving insurance benefits from the Mutual of Omaha Company for loss of time from his full-time duties of his occupation due to sickness and total disability therefrom. The appellant was on 'sick leave' from May 4, 1962 through July 10, 1962; on 'annual leave' from July 10, 1962 through September 4, 1962; and on 'leave without pay' from September 4, 1962 through December 4, 1962. The appellant, during this period from May 4, 1962 through December 4, 1962 was under the care and treatment of a physician for his illness, multiple sclerosis, and totally disabled. (It was on August 8, 1962, that appellant submitted his application to the respondent for coverage under the provisions of the group policy here involved.) The Mutual of Omaha, upon the interim reports submitted by appellant himself, together with those reports submitted by the appellant's employer and his treating physician, paid to the appellant benefits by reason of loss of time caused by his sickness. Such evidentiary materials submitted in support of defendant's motion for summary judgment appear to constitute an admission by plaintiff that he was totally disabled, unable to work by reason of sickness, for a period of time commencing May 4, 1962 to December 4, 1962, including the date on which he applied for the Continental Casualty Co. group policy. Actually, he submitted eight specific policy reports to confirm his disability to entitle him to loss of income benefits due to such sickness. One such report, dated August 10, 1962, confirms that appellant was not only absent from his occupation at the Veterans Administration, but totally disabled from performing his full-time duties as a doctor. An accompanying supplemental report of the treating physician of the plaintiff, dated August 9, 1962, in response to the question whether the patient was continuously totally disabled (unable to work) include the certification by the treating physician that he was so disabled 'From 5/4/62 through present.' Respondent contends that the appellant's own admissions to the Mutual of Omaha establish that he was in fact sick and totally disabled at the time of filing his application with respondent and therefore unable to qualify as an 'eligible member.' Since eligibility is a condition precedent to receiving benefits under the policy,...