Appeal from the District Court of Natrona County The Honorable Scott W. Skavdahl, Judge.
The opinion of the court was delivered by: Hill, Justice.
Before VOIGT, C.J., and GOLDEN, HILL, KITE, and BURKE, JJ.
[¶1] Joseph Harper, the husband of Appellant Gail Harper, bought a life insurance policy and died within two months of doing so. Fidelity and Guaranty Life Insurance Company refused to pay the claim because they insisted that Mr. Harper "misrepresented/omitted" the state of his health in the claim application. Mrs. Harper filed suit, the district court granted summary judgment in favor of Fidelity, and this appeal followed.
[¶2] Harper lists the issues as follows:
1. Is the determination of what is a "material" omission or misstatement in a life insurance application an issue of fact to be determined by the jury?
2. Were there genuine issues of material fact as to whether there were any material misrepresentations or omissions in [Mr. Harper‟s] life insurance application?
3. When [Mr. Harper‟s] insurance application disclosed the actual health conditions that were later determined to be the cause of his death, was it error to grant summary judgment based on allegations of his material omissions or misrepresentations as to other health conditions.
4. Whether in granting [Fidelity‟s] Motion for Summary Judgment, did the District Court accord to [Gail] the benefit of all reasonable inferences that could be fairly drawn from the record?
5. When [Fidelity] had notice of material medical information that differed from the information in [Joseph‟s] life insurance application, was it a genuine issue of material fact as to whether [Fidelity] could reasonably rely solely on the life insurance application information in issuing the life insurance policy to [Mr. Harper]?
6. Whether the application‟s reference to the records of [Mr. Harper‟s] treating physician and the authorization provided to [Fidelity] to gather [Mr. Harper‟s] medical records created a disputed factual issue as to whether [Fidelity] needed to review more than [Mr. Harper‟s] life insurance application as part of the underwriting decision?
7. Did [Fidelity] engage in "post-claim" underwriting?
8. Where the life insurance contract provisions at issue have been made ambiguous by the life insurance application‟s uncertainties, was summary judgment appropriate?
Fidelity recites the issues this way:
1. Did the District Court properly conclude that there was no genuine issue of material fact on whether [Fidelity] properly rescinded [Mr. Harper‟s] policy of insurance pursuant to W.S. § 26-15-109?
2. Did the trial court properly conclude that [Fidelity], under the facts of this case, did not have a duty to investigate [Mr. Harper‟s] medical condition?
3. Did the trial court properly grant Summary Judgment on [Mrs. Harper‟s] claim that [Fidelity] was estopped to deny coverage under the policy?
4. Did the trial court properly grant Summary Judgment on [Mrs. Harper‟s] claim of the breach of good faith and fair dealing?
5. Did the trial court properly grant Summary Judgment on [Mrs. Harper‟s] claim that she should recover the benefits of the policy under the reasonable expectations doctrine?
[¶3] Joseph Harper (Mr. Harper) applied for a $63,000.00 life insurance policy with Fidelity & Guaranty Life Insurance Company (Fidelity) on February 10, 2006, and named his wife Gail (Mrs. Harper) as the beneficiary.
[¶4] Fidelity‟s application for insurance required that Mr. Harper answer questions about his health and health history. He indicated that he was born on January 19, 1955, that he was 5‟11" tall, and that he weighed 275 pounds. He represented on his application that he had never sought or received treatment, advice, or counseling for the use of alcohol. He listed that he was diagnosed with both high blood pressure and high cholesterol in 1997, and the application noted that he was currently taking medication for both conditions. He responded "no" to whether he had been treated for or diagnosed with "[a]ny circulatory disease, stroke, TIA, aneurysm, or any other disorder of the veins or arteries," "[h]epatitis, gastritis, colitis, or any disease or disorder of the liver, stomach, pancreas, or intestines." Mr. Harper reported that he had surgery on his knee in "1995 or 1996," and that he had "[b]lood tests and an electrocardiogram for complaint of migraine & headaches -- complete recovery from symptoms in 1996."
[¶5] After Mr. Harper signed and submitted the application to Fidelity for approval or denial, Lisa Jones, a senior underwriter for Mid-America Agency Services (MAAS)*fn1 , reviewed the application. The type of life insurance applied for by Mr. Harper was a "simplified underwritten product," where the underwriter reviews and relies upon only the information and medical history provided by the application plus a single report from the Medical Information Bureau (MIB).
[¶6] Overall, the information contained in the MIB was consistent with Mr. Harper‟s application information, but two pieces of information from the MIB were of note to Ms. Jones. First, based upon the MIB information existing for Mr. Harper, Fidelity knew that he had applied for another insurance product, the type and results of which were unknown. Second, Ms. Jones noted a weight discrepancy -- the MIB recorded Mr. Harper‟s weight to be 305 pounds within sixty days prior to January 9, 2006; Mr. Harper‟s February application represented his weight to be 275 pounds. Under Fidelity‟s underwriting guidelines, an individual the height of Mr. Harper (5‟11") must be less than 301 pounds for an application to be accepted. Ms. Jones concluded that given the time between the date of the application and the date of her review, she assumed Mr. Harper had lost enough weight (four pounds) to fit within the guidelines, so she gave him the benefit of the doubt and "let it go."
[¶7] Ms. Jones made several other observations about Mr. Harper‟s application that she ultimately let go as well. She noted that Mr. Harper had been treated for depression in 1996 but had a "complete recovery;" thus she was not concerned about his depression being severe, which would have resulted in denial of the application. Also, she observed his diagnosis for high blood pressure and high cholesterol, but considered both to be under control based on the fact that he was taking medication for both conditions. Based on all of Mr. Harper‟s answers, Ms. Jones recommended his application for life insurance be approved.
[¶8] On March 1, 2006, Fidelity issued a life insurance policy to Mr. Harper. On April 20, 2006, Mr. Harper died from sudden cardiac arrest, hypertensive cardiovascular disease, and hypertriglyceridemia, just 50 days after the policy was issued.
[¶9] In light of Mr. Harper‟s death, Fidelity conducted an investigation within the insurance company‟s "two-year contestability period," during which Mr. Harper‟s medical records were reviewed. Fidelity identified various medical conditions of Mr. Harper‟s that had not been disclosed on his application for life insurance but that, in Fidelity‟s estimation, were material to the issuance of the policy. First, Mr. Harper had been treated for a "probable transient ischemic attack (TIA)" in May of 2000. On his application, however, he denied ever being treated for a TIA. Also, Mr. Harper‟s medical records reflected a history of alcohol abuse, including advice from his physician to quit drinking because his liver tests were abnormal -- he denied any such condition on his insurance application. In March of 2000, Mr. Harper was also hospitalized for heart fluttering and chest pains, which he did not disclose. Mr. Harper‟s weight discrepancies also came up. Although he listed himself at 275 pounds on his application, and although his MIB report listed him to be 306 pounds, Mr. Harper‟s certificate of death recorded Mr. Harper as morbidly obese at 350 pounds.
[¶10] Mrs. Harper submitted a claim for benefits, but her claim was denied by Fidelity based on Wyo. Stat. Ann. § 26-15-124. Along with its denial, Fidelity refunded the premiums paid on the policy to Mrs. Harper, who nevertheless filed suit in district court, asserting four claims for relief: breach of contract, reasonable expectations, equitable and/or promissory estoppel, and breach of the implied covenant of good faith and fair dealing. She also sought an award of punitive damages, ...