Life Insurance, Intent To Deceive

Life Insurance Attorneys in Weatherford, Mineral Wells, Peaster, Springtown, Aledo, Azle, Brock, Millsap, Cool, Hudson Oaks, Willow Park, and other places in Parker County would want to read this case.
The case is an appeal in the Corpus Christ Court of Appeals that was issued in 1988. The style of the case is, Lilly Sharp v. Lincoln American Life Insurance Company. Here is some easily understood background.
Lincoln defended the case on the grounds of there being misrepresentations in the policy application. The trial was to the Judge without a jury. A take nothing judgment was entered in favor of Lincoln. Findings of fact and conclusions of law were properly requested and filed.
Lilly Sharp, 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 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 she had read the form before signing it.
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 addition and hospitalizations for drug dependency. Ms. Sharp filed this lawsuit, and Lincoln defended based on misrepresentation grounds.
Five elements must be plead 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.
Here, 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 Judge 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 upon by the insurance company.
The mother, Lilly Sharp, complained that there was no evidence to support the Judge’s finding.
An appeals court has to look to see if there is any evidence to support the Judge’s finding. In that role, the appeals court is to consider only the evidence which tends to support the finding, disregarding all evidence to the contrary, and indulge in those references which are necessary to support the finding or verdict.
The law allows a fact finder 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.
Looking at the evidence shown to the Judge, this court painted out:
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. On August 23, 1983, less than a month prior to the application, the insured was hospitalized for 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.
In conclusion, this court said there was “some evidence” to support the conclusion that the misrepresentation was made with the intent to deceive.
An experienced Insurance Law Attorney, looks for and embraces these types of cases. The result in this case was not good. It is hard to be critical of what the attorney did in this case, but these types of cases, as a whole, should have much more favorable results.

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