Life Insurance Claim Denial – Pham II

Here is a life insurance claim denial that is interesting factually and legally, and a must read for lawyers handling life insurance claims.  This is a case handled by the Law Office of Mark S. Humphreys.

The opinion is a December 10, 2021, summary judgment ruling from the Northern District of Texas, Dallas Division.  It is styled, Pham v. TransAmerica Premier Life Insurance Company.  Johnny Pham sues in his own right and Kim Van Bui sues on behalf of minor children SKB and BDB.

This case will be presented in multiple blogs.

In looking at this summary judgment case the Court stated:

We review a grant of summary judgment de novo, applying the same standard as the district court.  Pursuant to Federal Rule of Evidence 56(a), summary judgment is appropriate where “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.”  Where federal jurisdiction is premised on diversity of citizenship, a federal court applies the substantive law of the forum state.  The parties agree that Texas law applies in these proceedings.

Under Texas law, a conditional receipt may create a binding contract for temporary life insurance.  As stated in the 2008, Texas Supreme Court opinion styled, Don’s Bldg. Supply v. OneBeacon Ins. Co., Texas courts “construe insurance policies according to the same rules of construction that apply to contracts generally.”  Accordingly, courts use the standard rules of contract construction—that is, assess language, terms, and conditions—to determine whether a particular conditional receipt has created a binding contract for life insurance.

Because Plaintiffs concede that the Policy itself had not gone into effect, the only issue in this case is whether Bich was covered under the Conditional Receipt at the time of her death.  That question turns on whether Bich was insurable “in the amount . . . applied for” on the Effective Date of the Conditional Receipt.  Even more narrowly, the disagreement between the parties is whether the Effective Date was February 6, 2018 or February 26, 2018.  As such, in order to decide whether summary judgment was appropriate, we must determine whether there is a genuine dispute of any fact that is material to determining the Effective Date.

The Conditional Receipt defined the Effective Date as the later of: “the date of completing all parts of the application (including medical questions), the date of the last medical examination, tests, and other screenings required by the Company, if any, or the date requested in the application.”  Plaintiffs contend that Bich’s signing of the numeric summary constituted an amendment to and, thus, a “part[] of the application.”  Thus, according to Plaintiffs, Bich did not “complete all parts of the application” until February 26, 2018, when she signed the numeric summary and accepted the lower coverage amount.  On that date, she was insurable “in the [lower] amount . . . applied for.”  Meanwhile, Transamerica asserts that Bich’s application was not amended.  Instead, Bich “completed all parts of the application” on January 29, 2018, when she submitted her initial application.  Thus, according to Transamerica, the Effective Date of the Conditional Receipt was February 6, 2018, the date that Bich completed the required medical examinations.  On that date, Bich was not insurable in the coverage amount she had applied for—$600,000.

With this backdrop and the previous Blog statement of Facts, the next Blog will complete the case.

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