Life Insurance Lawyers And Claims Denial

Weatherford attorneys and those in Mineral Wells, Graford, Cool, Millsap, Springtown, Aledo, Azle, Willow Park, and other places in Parker and Palo Pinto Counties need to know the laws related to life insurance claims.
Almost all denials of life insurance policy claims based on the allegation of a misrepresentation in the application can be defeated. This one is one of the few that was not. Only an experience Insurance Law Attorney is going to be able to help draw the distinction.
The Corpus Christi Court of Appeals issued an opinion in 1988. The style of the case is, Lilly Sharp v. Lincoln American Life Insurance Company.
Sharp, the mother of the decedent, bought a life insurance policy on her daughter’s life, naming herself as beneficiary. Lincoln’s salesman filled out the application form after asking the mother certain questions provided on the form. The salesman was apparently a neighbor who knew the mother and the insured. After the application had been completed, the adult daughter entered the room. At her mother’s request, the daughter signed the form and then left the room. There was no evidence that she read the form before signing it. Approximately a month later, the insurance company sent the insurance policy and a copy of the application to the mother’s address.
The insured daughter died about one year later of complications due to an overdose of illicit drugs. Upon investigation, Lincoln refused to pay under the policy, claiming the insured had made material misrepresentations in the application for insurance concerning her health. Lincoln claimed the deceased insured had not disclosed her history of years of drug addiction and hospitalizations for drug dependency. Ms. Sharp brought suit, and the company defended on misrepresentation grounds.
Five elements must be pled and proved before an insurer may avoid a policy because of the misrepresentations of the insured:
(1) the making of the representation;
(2) the falsity of the representation;
(3) reliance thereon by the insurer;
(4) the intent to deceive by the insured in making the representation; and (5) the materiality of the representation.
The parties stipulated to the existence of all elements except the insured’s intent to deceive, which was the only factual issue. Thus, it was Lincoln’s burden to prove the insured acted with an intent to deceive when she signed the application.
In its findings of fact, the trial court found that the daughter made false representations on the application concerning her health, with the intent to deceive the insurance company, and that those representations were material and were relied on by the insurance company. Accordingly, the judgment ordered that Sharp take nothing.
This Court pointed out that a fact finder is entitled to evaluate the facts and draw reasonable inferences from the evidence. An ultimate fact may be conclusively shown by wholly circumstantial evidence when the fact can be fairly and reasonably inferred from other facts in the case.
The insurance application was completed on September 13, 1983. The insured represented that she had not used drugs to a degree that required treatment or advice from a physician or professional addiction organization. However, the insured had been hospitalized for dilaudid addiction from December 29, 1981, until January 11, 1982, and was treated during that hospitalization by Dr. Cecil Childers, M.D. On August 23, 1983, less than a month prior to the application, the insured was hospitalized for heroin addiction by Dr. D.C. Bernwanger. There is evidence that at the time of her hospitalization in August she was using heroin daily as well as receiving methadone from the clinic.
One’s intent to deceive may be proven by circumstantial evidence as may other states of mind. The issue is whether the misrepresentation was innocent and made in good faith or willful with the intent to deceive. A fact finder, in comparing the representation made on the insurance application with the insured’s knowledge, could determine that the misrepresentation was so outrageous and removed from the truth that it must have been made with the intent to deceive. Construing the evidence in the light most consistent with the finding of the trial court, this appeals court found that there is some evidence to support the conclusion that the misrepresentation was made with the intent to deceive.
In this case, Sharp was allowed to get the case to a trial. The Texas Insurance Code, Section 705.004, is what kept the case from being determined on a motion for summary judgement.