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May 3, 1984


The opinion of the court was delivered by: KEENAN

JOHN F. KEENAN, United States District Judge: Plaintiff, Elayne Lorna Corwin Friedman, brought this action to recover death benefits allegedly due to her as the beneficiary of a life insurance policy on which her deceased husband was the named insured. Defendant, The Prudential Life Insurance Company of America, admitted issuance of the policy but counterclaimed to rescind it on the ground that the insured had made material misrepresentations concerning his past medical history on his application for the policy. Plaintiff replied to this counterclaim alleging that defendant was aware of facts that should have put it on notice of the physical condition of the insured and, thus, waived its right to rescind the policy on the basis of the alleged misrepresentations, and was guilty of laches. Jurisdiction is based on diversity of citizenship, as plaintiff is a New York resident and defendant is a New Jersey corporation. The parties agree that New York law applies.

Defendant claims that the defenses raised by the plaintiff are insufficient as a matter of law and has moved for an order (1) granting summary judgment in its favor, dismissing the complaint on the merits and rescinding the insurance policy; (2) dismissing the complaint and rescinding the insurance policy on the grounds that it has been conclusively resolved that the defendant has a good defense to the contract based on documentary evidence; or (3) striking plaintiff's notice to take depositions of the defendant, the paramedic who examined the insured and anyone else in connection with the application for the policy. For the reasons set forth below defendant's motion is granted.


 On February 17, 1982 a term life insurance policy with a face amount of $37,000 was issued in the name of Melvin Friedman by the defendant. Mr. Friedman's wife, the plaintiff in this action, was named as beneficiary of the policy. On August 17, 1982 Melvin Friedman died. Claim papers, including an authorization to release information and a Certificate of Death issued by the New York State Department of Health, were submitted to Prudential as required under the policy as a condition precedent to the collection of benefits. The Certificate of Death stated that the immediate cause of Melvin Friedman's death was cardiac arrest which was due to, or a consequence of, cardiogenic shock and chronic congestive cardiomypathy, the onset of which had occurred "years ago." Defendant denied liability for the claim, disaffirmed the policy and tendered return of the premiums paid on the policy plus interest. Plaintiff then brought this action for amounts allegedly due under the policy.


 It should be noted at the outset that the defendant has the right to contest this policy. Under New York law, a life insurance policy must contain a clause stating that the policy is incontestable after it has been in effect for two years. Insurance Law Section 155(1)(b). As the insured under the policy that is the subject of this action died six months after the contract date, the policy was still contestable at the time of the insured's death under both New York law and the terms of the policy.

 The right to contest a policy is a continuing one when the insured dies within the contestable period. See Simon v. Government Employees Life Insurance Company, 79 A.D.2d 705, 434 N.Y.S.2d 447, 449 (App. Div. 2d Dept. 1980). The incontestability clause does not limit contest of a policy to a period of two years following the contract date unless the insured survives this two year period. See id. As the insured in this action died within two years of the contract date, the defendant has a continuing right to contest the policy. Its claim for recission, made after it discovered the alleged misrepresentations, therefore, was timely and is not barred by laches.

 Defendant's counterclaim for rescission of the policy is based on section 149(2) of the Insurance Law. Under this section, recovery under an insurance contract is barred if the contract contains a representation made on the behalf of the insured that is false and material and that was relied upon by the insurer in issuing the policy.

 Defendant contends that the insured made false statements in responding to the questions numbered 5, 7(b), 8(a), 9(a), 10(a), 10(b), 11 and 12 on his application for the life insurance policy. In response to these questions, which sought information concerning his medical history, the insured did not disclose treatment received for a heart condition from which the defendant alleges the insured suffered. More specifically, defendant alleges that the insured was confined in Ellenville Community Hospital from January 2, 1979 to January 8, 1979 where his condition was diagnosed as arteriosclerotic heart disease, myocardial ischemia and obesity, that he received certain medication and treatment while confined to the hospital and that subsequent to his discharge he was under the care of Dr. Wainapel. Defendant further alleges that Dr. Wainapel treated the insured for congestive heart failure and an enlarged heart, the latter of which was diagnosed after the doctor had taken an X-ray of the insured's heart, and put him on digitalis and diuretics. No information concerning this alleged treatment is contained in the insured's application attached to the policy.

 Defendant contends that all representations and declarations made in response to questions to its insurance applications are material to it in determining whether to accept an application and issue a policy. According to defendant, by omitting certain treatment and diagnoses in answer to questions concerning his medical history, the insured misrepresented that the treatment mentioned on his application was the only treatment that he had received. Defendant claims that it was induced to and did issue the policy on the basis of these misrepresentations.

 Plaintiff denies knowledge or information concerning the medical history of the insured prior to the date of the application, although admits his obesity. She asserts, however, that even if the facts that defendant alleges concerning the insured's medical history are true, defendant waived its right to rescind the policy. This waiver defense asserted by plaintiff is based on alleged actions of agents of defendant in obtaining, completing and accepting the insured's application. Plaintiff suggests that the insurance agent who solicited the policy mislet the insured as to what was required in response to questions on the application. She notes that the alleged incomplete answers were inserted on the application by Ms. M. K. Fasoulka, a paramedic employed by an organization that was acting as an agent of the insured after she questioned the insured, and not by the insured himself.

 More significantly, plaintiff claims that a review of the questions and responses on the application reveal major inconsistencies which should have required clarification by the paramedic, as well as by the underwriting department of the defendant. In addition, according to plaintiff, the paramedic should have conducted further tests of the insured's heart after she discovered that he had ten premature heart contractions per minute and that the underwriting department should have required further examination after reviewing the paramedic's report revealing this irregularity. It is plaintiff's contention that by failing to seek clarification of inconsistencies on the application or to conduct a further examination of the insured's condition, these agents of the defendant were either negligent or manifested a willingness to assume the risks presented by the inconsistencies on the application and the facts that further investigation would have revealed.

 I. The Insured's Medical History

 Plaintiff has consistently denied knowledge of information concerning the insured's past medical history. Her reply to defendant's counterclaim for rescission stated that she had no knowledge of treatment that the insured had received prior to 1981. On June 13, 1983, defendant served a Request for Admissions of Fact on the plaintiff. Among the facts that defendant sought admission of were that the insured had received certain treatment and diagnoses from Dr. Wainapel and had been admitted to Ellenview Community Hospital for treatment of a heart condition. Attached to the Request were copies of records bearing the name "Ellenview Community Hospital." These records indicated that that the insured had been confined in that hospital from January 2, 1979 to January 8, 1979; that Dr. Wainapel was his attending ...

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