Woelfling v. Great-West Life Assur. Co.

• Decision Date: 23 June 1972
• Docket Number: GREAT-WEST
• Citation: Woelfling v. Great-West Life Assur. Co., 285 N.E.2d 61, 30 Ohio App.2d 211, 59 O.O.2d 351 (Ohio App. 1972)
• Parties: , 53 A.L.R.3d 1077, 59 O.O.2d 351 WOELFLING, Appellant, v.LIFE ASSURANCE CO., Appellee.
• Court: Ohio Court of Appeals

Page 211

30 Ohio App.2d 211

285 N.E.2d 61, 53 A.L.R.3d 1077, 59 O.O.2d 351

WOELFLING, Appellant, v.GREAT-WEST LIFE ASSURANCE CO., Appellee.

Court of Appeals of Ohio, Sixth District, Lucas County.

June 23, 1972.

Syllabus by the Court

1.Parties to a group insurance contract may select the state whose law is to be applied to the terms of the contract.

2.In a group insurance contract, a choice-of-law provision will be upheld in the absence of a showing that the application of the law of the state chosen by the parties would violate the public policy of the forum.

3.The choice of law made by the parties, the place where the group insurance policy is delivered, the place of the principal office of the holder of the group policy, and the desirability of uniformity and certainty of the law applicable to thousands of insured members scattered throughout many states, are proper factors to be considered in determining the state whose law is to be applied to the terms of the policy.

4.The statutory scheme of the state of Illinois as to group insurance contracts is not repugnant to the public policy of Ohio, although differing in some detail from the statutory scheme of the state of Ohio, as to group insurance.

5.An Illinois statute permitting a defense of innocent misrepresentation rather than fraud as required by Ohio statutes is substantive rather than procedural.

6.A group insurance contract entered into by parties of relatively equal bargaining power is not in the nature of the usual adhesion contract.

7.The statutory physician-patient privilege is a substantive right; it can be waived and it is not against public policy to enforce such waiver.

8.In an application for a group insurance policy, negative answers to the questions whether applicant had consulted a physician during the preceding five years and whether he had reason to believe he would require medical treatment in the ensuing year, whereas the applicant had consulted a physician eight times during the preceding five years, are material misrepresentations as a matter of law, in that the insurer would have made further inquiries materially influencing its decision had it known the true facts.

9.Where there is a provision in the master policy of group insurance that 'no statement made by any mamber insured under the policy relating to his insurability shall be used in contesting the validity of the insurance with respect to which such statement was made after such insurance has been in force prior to the contest for a period of two years during such member's lifetime,' the running of the two-year limitation is tolled by the death of the insured within the two-year period.

Marshall, Melhorn, Bloch & Belt and Wilbur C. Jacobs, Toledo, for appellant.

Doyle, Lewis & Warner, Thomas D. Smith and William H. Heywood, III, Toledo, for appellee.

WILEY, Judge.

Barbara L. Woelfling, plaintiff-appellant, is the designated beneficiary on a certificate of a group life insurance policy issued by the defendant-appellee, Great-West Life Assurance Co.The defendant is a Canadian corporation licensed to do business in Illinois.The certificate was issued to the plaintiff's spouse, Dr. Melvin Woelfling, a 35-year-old dentist engaged in practice in Toledo, Ohio.Dr. Woelfling was insured for $25,000 under the group policy issued by the defendant to the American Dental Association, in Chicago, Illinois, on August 1, 1934.

Dr. Woelfling, a member of the American Dental Association, filled out an application for coverage under the group policy on February 28, 1967.The application was accepted by the defendant and the insurance became effective as to Dr. Woelfling on March 1, 1967.Dr. Woelfling died on december 22, 1968, from a heart attack, with hypertension and diabetes diagnosed as the contributing factors.Upon the refusal of the insurance company to pay the claim allegedly due pursuant to the policy, the plaintiff filed suit in the Court of Common Pleas.The trial court directed a verdict and entered judgment in favor of the defendant at the close of the plaintiff's case, from which judgment this appeal is taken.

The record indicates that Dr. Woelfling had been a patient of Dr. John J. Newton, M. D., from late 1961 until his death in December of 1968.Dr. Newton testified at trial as a witness for the defendant over the strenuous objection of plaintiff's counsel.Essentially, Dr. Newton's testimony indicated that he had seen Dr. Woelfling eight times, from October of 1961 through August of 1967.Dr. Newton diagnosed mild hypertension and mild diabetes on Dr. Woelfling's first visit in 1961.From 1964 until Dr. Woelfling's death in 1968, Dr. Newton prescribed a regular dosage of naturetin to control the blood pressure condition and orinase to remedy the mild diabetes.The evidence shows that Dr. Woelfling consulted his longtime friend and insurance counselor, James Findlay, before completing the application for insurance with the defendant company.Although Mr. Findlay was not an agent of the defendant, he filled out the application in consultation with Dr. Woelfling.The application was signed by Dr. Woelfling in two places and forwarded to the A. D. A. Group Life Program, Great-West Life AssuranceCo., 1035FieldBldg., 135 S. LaSalle St., Chicago, Illinois, in accordance with the instructions printed thereon.A photostatic copy of the reverse side of the application is included in Appendix A to this opinion.

The pertinent portions of the application consist of specific questions with regard to the state of the applicant's health.In response to questions (7) and (9), Dr. Woelfling stated, in effect, that he had not consulted a physician in the preceding five years and had no reason to believe that he would require medical treatment in the ensuing year.If either of these inquiries had been answered in the affirmative, Dr. Woelfling would have been required to explain the answers in detail and furnish the defendant with the name and address of the attending physician.By responding in the negative to these questions, Dr. Woelfling misrepresented the state of his health to the defendant.

The issue before this court is whether the trial court erred in concluding that the misrepresentations preclude recovery of the death benefit by the beneficiary as a matter of law.In order to decide that issue, we must determine at the outset whether Illinois law or the law of Ohio is controlling.

The appellant has briefed five separate assignments of error, some of which contain multiple parts.We hold that the substantive law of Illinois is applicable to the terms of the policy for the reasons stated below.

Whether Illinois law or Ohio law applies, we recognize a distinction between a certificate of insurance and the group policy itself.Both the state of Ohio and the state of Illinois have statutory provisions relating to group insurance.R.C. Chapter 3917;Illinois Annotated Statutes Chapter 73, Insurance, Sections 842,843. 44 American Jurisprudence 2d, Insurance, Sections 1868-1871 et seq.

The group policy issued to the American Dental Association by the Great-West Life Assurance Co. was delivered to the American Dental Association in the state of Illinois.When this policy was first issued in 1934, the place of the contract was indicated to be Winnipeg, Canada.However, in the transmittal letter dated February 13, 1935, it was stated:

'Notwithstanding the statement in the policy that the place of contract is the head office of the company in the city of Winnipeg, the construction of the terms of the policy is subject to the provisions of the Illinois statutes made applicable thereto.'

The group policy was amended in 1959, and also in other years but the provision of the applicability of Illinois law was retained in paragraph 21 of the 1959amendment to the policy.

A certificate of insurance was issued to Melvin Leroy Woelfling, effective as of March 1, 1967, in accordance with the terms of the group policy, issued by the Great-West Life Assurance Co., to American Dental Association, Chicago, Illinois.This certificate of insurance was not introduced as an exhibit in the case at the trial but had been presented previously on a motion for summary judgment and was referred to by both counsel during the trial of the case and is being considered by this court as an exhibit properly admitted in evidence in the case under the general jurisdiction of the Court of Appeals.(SeeOhio Constitution, Section 3, Article IV, effective 1970.)Section 843 of the Illinois Annotated Statutes, supra, requires certain standard provisions for group life policies, one of which is as follows:

'(b) A provision that the policy, the application of the employer or trustee of any association of employees and the individual applications, if any, of the employees insured shall constitute the entire contract between the parties, and that all statements made by the employer or trustee or by the individual employees shall, in the absence of fraud, be deemed representations and not warranties, and that no such statement shall be used in defense to a claim under the policy, unless it is contained in a written application.'

This provision is contained in the certificate of insurance issued to Dr. Woelfling.The certificate of insurance also contained the following provision:

'Entire Contract.The group policy, the application therefor, the individual applications and the evidence of insurability of the members supplied to the Company therewith contain and constitute the entire contract between the parties.

'* * *.

'The place of the contract for all purposes is the head office of the company.But, notwithstanding that the place of the contract is the Head Office of the Company, the construction of the terms of the contract is subject to the Illinois statutes made applicable thereto.'

We hold that in the absence of a statutory prohibition, the group policy, as in any...