Health Insurance Claim Denied

Dallas insurance lawyers need to know about this ruling from the Northern District, Fort Worth Division. The case is styled, Hinna v. Blue Cross Blue Shield of Texas.
This is a lawsuit for declaratory relief filed by Kelly Hinna. Hinna sued for a declaration that Blue Cross had an obligation to pay claims under her health insurance contract and for breach of contract, violations of the Texas Insurance Code, and other causes of action. Blue Cross filed a motion for summary judgment, which was DENIED.
Hinna applied for individual health care coverage with Blue Cross and on her application gave a “No” answer to each of the following questions:
[1] During the last 5 years, has any person applying for coverage had a physical examination (including check-ups), diagnostic tests, consult a physician, chiropractor or therapist? …
[2] Has any person applying for coverage ever been hospitalized or been treated in the emergency room or had any physical impairment, deformity, congenital anomaly, sickness, operation, injury or hospitalization other than admitted to on this page?

Kelly also represented she had not had other problems in the last ten years. The application contained the following additional provisions:
Acknowledgements: …7. Fraud or any intentional misrepresentation of a material fact may result in rescission of coverage or denial of a claim under the terms of the policy.
Agreement: I [the applicant] understand that any statements and answers on this application are representations. To the best of my knowledge and belief they are true and complete. These representations are the basis of my application …. The undersigned Applicant and agent acknowledge that the Applicant has read the completed application and that he/she realizes that any false statement material to the risk or misrepresentation therein may result in loss of coverage under the policy.

Blue Cross began receiving health care claims that emanated from a condition involving Kelly’s liver. In the process of evaluating the claim, Blue Cross discovered the representations made in Kelly’s application were false.
In making its decision, this court stated Texas law that an insured’s misrepresentations is an affirmative defense that can allow an insurer to avoid liability on the policy, but Blue Cross must prove five elements, one of which is to prove Kelly intended to deceive Blue Cross.
The 5th Circuit has stated in other cases that:
Intent to deceive or induce issuance of an insurance policy can never be proved as a matter of law to establish the misrepresentation defense in the absence of either a warranty that the facts contained in the application are true or evidence of collusion between the applicant and the insurance agent.
In this case, Blue Cross has not adducted any evidence that Kelly colluded with any insurance agent. Nor has Blue Cross successfully contended that Kelly warranted the accuracy of her responses.
The Court went on to say that a trier of fact may ultimately determine the opposite but this Court cannot as a matter of law say that is what has occurred.