Denial Due To Misrepresentation

People in Weatherford, Mineral Wells, Aledo, Azle, Springtown, Peaster, Cool, Millsap, Brock, Willow Park, Hudson Oaks, and other places in Parker County will make mistakes in insurance applications. It just happens. So what if you have a claim denied due to the mistake? Let’s see.
The Houston Court of Appeals, 14th District, issued an opinion in 1991, that is still good law and cited by today’s courts. The style of the case is, Betty Flowers v. United Insurance Company of America.
The basic facts of the case are not in dispute. In November 1987, Betty and her husband, Edward, applied for and were issued a joint life insurance policy with United. In the application for the policy Mr. Flowers was asked a series of questions regarding his health history. In pertinent part, the question asked:
10. Has any Proposed Insured or Payor to be covered ever had:
a. High blood pressure?
b. Disease or disorder of heart or circulatory system?
11. Answer for any Proposed Insured(s) or Payor a. Have you ever had a physical examination, consulted a physician, or been in a clinic, hospital or institution for surgery, diagnosis or treatment within the past 5 years?
Mr. Flowers answered “no” to each health question. He did not give any explanations of health problems in the space provided. Mr. Flowers executed the application stating “I certify that I have read (or have had read to me) all the questions and answers on this application.” As it turns out, three years before applying for the life insurance, Mr. Flowers was incarcerated in prison. On the prison medical intake form, Mr. Flowers indicated he had high blood pressure. Later, he was admitted to the prison hospital for a broken wrist and during hospitalization he was diagnosed with borderline cardiomegaly, enlargement of the heart.
In 1998, about a year after the life insurance policy was taken out, Mr. Flowers was killed in a car wreck. Ms. Flowers sought life insurance benefits and was denied by United due to misrepresentations concerning the state of Mr. Flowers health in the application for insurance.
In analyzing this case, the court pointed out that under Texas law, there are five elements an insurance carrier must plead and prove in order to establish a misrepresentation defense:
1) the making of the misrepresentation;
2) the falsity of the misrepresentation;
3) reliance on the misrepresentation by the insurer;
4) the intent to deceive on the part of the insured in making the misrepresentation; and 5) the materiality of the misrepresentation,
The trial court had granted United’s motion for summary judgement. This court reversed that ruling.
The burden on United was to show that as “a matter of law” Mr. Flowers actions satisfied the five factors set out above.
United argued showed the following evidence:
a. – prison records showing that in 1984 Mr. Flowers had a history of high blood pressure, and that Mr. Flowers was the one to inform the prison of that fact, and showing that he received medication for hypertension for approximately two years;
b. – a written deposition from a Dr. Zeon who stated that he had examined Mr. Flowers six times from 1984 to 1986 and that he told Mr. Flowers that he was suffering from hypertension. Dr. Zeon also prescribed drugs for Mr. Flowers to control the hypertension;
c. – the insurance policy and the application for insurance completed by Mr. Flowers in 1987 in which Mr. Flowers responded negatively to questions as to whether he had any heart or circulatory problems; and d. – the affidavit from United’s chief insurance underwriter stating that hypertension is a serious condition and material to the insurance policy and that had United known of the condition it would not have issued the life insurance policy.
In making its ruling, the court said that the fact Mr. Flowers admitted a health problem when he was in prison simply shows that he knew of his health conditions. The fact that one misrepresents one’s health condition is insufficient to establish intent to deceive as a matter of law. The circumstances of this case would raise a fact question as to Mr. Flowers’ intent. A jury might well believe that his knowledge shows that he intended to deceive United. But the court cannot say as a matter of law that this is true.
When a life insurance company discovers any kind of misrepresentation in an application for coverage, you can bet that they are going to deny coverage. This is when an experienced Insurance Law Attorney needs to be hired to see if the insurance company can properly prove the five elements listed above. If the insurance company is unable to prove them in a motion for summary judgment, then a judge or jury gets to decide.

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