The opinion of the court was delivered by: Richard J. Holwell, District Judge
MEMORANDUM OPINION AND ORDER
Bang Lin acquired a $1 million life insurance policy from the Metropolitan Life Insurance Co. ("MetLife"), but failed to disclose that he had been treated for Hepatitis B. A little less than two years later, Mr. Lin passed away from other causes. When MetLife discovered the discrepancy in his application, it refused to pay a claim on the policy on the basis that Mr. Lin's undisclosed treatment history was material to its underwriting decision. The policy's beneficiary, Mr. Lin's widow Jean Lin, sued.
MetLife' actions highlight a basic dilemma in the law of insurance. On one hand, the law recognizes that an insurer is entitled to accurate information concerning the risk it assumes in issuing a policy. Insurance is the business of pricing risk; and it cannot function efficiently if the insured conceals or misrepresents the risks a policy covers. On the other hand, there is a strong equitable argument against rigid application of the law of misrepresentation to life insurance policies. As a California court has noted, "[i]t is patently unfair for a claimant to obtain a policy, pay his premiums and operate under the assumption that he is insured against a specified risk, only to learn after he submits a claim that he is not insured, and, therefore, cannot obtain any other policy to cover the loss." Hailey v. Cal. Physicians' Serv., 158 Cal. App. 4th 452, 465 (2007).
This dilemma is addressed in so-called "incontestability" laws, which provide that an insurer may not rescind a policy based on the insured's concealment or misrepresentation after a fixed period, generally two years. The practical effect of such laws is to allocate the risk of concealment and misrepresentation between the insurer and the insured. During the initial "contestable" period, the insured bears the risk of concealment and misrepresentation. After that, the risk shifts to the insurer. Insurers price policies accordingly.
In this case, MetLife has moved for summary judgment, and plaintiff has cross-moved to preclude the testimony of two MetLife doctors, Daniel Zamarippa and David Clain.*fn1 The governing law is clear: Where an insured is aware of his condition, symptoms, or treatment, he is obliged to disclose them upon request. Cal. Ins. Code. § 332 (West 2005); Freeman v. Allstate Life Ins. Co., 253 F.3d 533, 536-37 (9th Cir. 2001). If the insurer discovers the concealment within a policy's contestability period, it may challenge liability. Since Mr. Lin did not disclose his history of treatment and Ms. Lin has failed to show circumstances excusing Mr. Lin's duty to do so, MetLife's motion will be granted. Because the Court does not rely on the challenged testimony in granting MetLife's motion, plaintiff's cross-motion will be denied as moot.
A. Hepatitis B Generally*fn2
Like many men who immigrate to the United States from Asia, Mr. Lin carried the Hepatitis B virus ("HBV"), and at some point developed an active Hepatitis B infection. (Dinnocenzo Aff. ¶ 4; see Clain Depo. 102 (estimating that between fifteen and twenty percent of Asian immigrants have active Hepatitis B), Sherer Aff. Ex. J; Compl. ¶ 14 (alleging that "[t]he Hepatitis [Be] antigen is known to appear in people of Asian decent at a far higher rate than other racial and ethnic groups").) Hepatitis B is a disease that affects the liver. (The Merck Manual of Diagnosis and Therapy 219-21 (18th ed. 2006) ("Merck"); Centers for Disease Control and Prevention, Hepatitis B FAQs for the Public, http://www.cdc.gov/hepatitis/B/bFAQ.htm (last visited Mar. 20, 2009).) Active infections are classified as acute (short term) or chronic (long term). (Merck, at 219, 227.)
In its acute form, Hepatitis B can cause anorexia, nausea, vomiting, fever, abdominal pain, and jaundice. (Id. at 223.) In its chronic form, Hepatitis B can cause malaise, anorexia, fatigue, low-grade fever, chronic liver disease, and cholestasis, a checking or failure of bile flow. (Id. at 228; Lee Goldman et al., Textbook of Medicine, 823-24 (21st ed. 2000).) The prognosis for chronic Hepatitis B is "highly variable." (Merck, at 229.) "Without treatment, cases caused by HBV can resolve (uncommon), progress rapidly, or progress slowly to cirrhosis over decades." (Id. at 228.)
Plaintiff's expert witness, Louis M. Aledort, M.D., noted that "[a]lthough the etiology [causation] of Mr. Lin's Hepatitis B is unclear," Hepatitis B "is common among the Asian population and is often vertically transmitted from mother to child." (Letter from Louis M. Aledort, M.D., to Ted Trief, Esq., at 1 (March 12, 2008) ("Aledort Letter"), Dinnocenzo Aff. Ex. O.) According to a recent review article, "[i]mmunologic tolerance to HBV established during perinatal infection is profound and lifelong, but not complete; a low level of liver injury occurs and accounts for up to a 40% lifetime risk of death from liver disease among men." (Jules L. Dienstag, Hepatitis B Virus Infection, 359 New Eng. J. Med. 1486, 1486-87 (Oct. 2008).)*fn3 In other words, a man who acquires HBV from his mother around the time of his birth faces up to a forty percent lifetime risk of death from liver disease.
B. Mr. Lin's Treatment History
Although Mr. Lin carried HBV, his Hepatitis B infection was well under control in the years immediately preceding his death. In September 1998, Mr. Lin visited his doctor, Sam Kam, and tested positive for the Hepatitis Be antigen, which signals an active Hepatitis B infection. (Dinnocenzo Aff. ¶ 21.)*fn4 According to Dr. Kam, Mr. Lin had the chronic form of Hepatitis B. (Kam Depo. 89, Dinnocenzo Aff. Ex. B.) Dr. Kam treated Mr. Lin with interferon, an antiviral drug administered by injection. (Id. ¶ 22; Solomon-Stowe Aff. Ex. E, at ML LIN 00102.)
Following this treatment, "Mr. Lin showed a conversion of Hepatitis B antigen from positive to negative, demonstrating that his condition had been successfully treated and he no longer had an active infection." (Aledort Letter, at 1.) Furthermore, "Mr. Lin's lab markers showed a consistent trend of normal liver function and negative HBV DNA results." (Id.) According to Dr. Aledort, this indicated that Mr. Lin's Hepatitis B "was no longer active and thus had no impact on his longevity or survival." (Id.) Dr. Kam terminated Mr. Lin's interferon treatment on February 6, 1999. He may have told Mr. Lin, "your Hepatitis B now is cured, it's inactive." (Kam Depo. 90, Sherer Aff, Ex. H.)*fn5
Despite this positive prognosis, Dr. Kam continued to monitor Mr. Lin for Hepatitis B over the next five years. (Id. ¶ 25.) In March 2004, for example, Dr. Kam ordered an ultrasound of Mr. Lin's abdomen. (See Dinnocenzo Aff. ¶ 23; Solomon-Stowe Aff. Ex. E, at ML LIN 00154.) In August 2004, Dr. Kam ordered a blood test for alpha-feo-protein, a liver cancer marker. (Dinnocenzo Aff. ¶ 23.) And throughout this period, Mr. Lin underwent biannual testing to verify that his Hepatitis B had not reactivated. (Id. ¶ 25.)
Dr. Kam testified that if Mr. Lin's Hepatitis B did reactivate, he could have successfully treated it. (Kam Depo. 64.) Based on this, plaintiff suggests that Mr. Lin's Hepatitis B would have been successfully treated for the rest of his life. (Dinnocenzo Aff. ¶ 25.)
C. Mr. Lin's Life Insurance Application
In August 2004, Mr. Lin applied for a $1 million life insurance with MetLife. (Dinnocenzo Aff. ¶ 5.) The policy was Mr. Lin's second with the company. (Id. ¶ 6.) Five years earlier, Mr. Lin applied for and received a $500,000 policy. (Id.) This policy was incontestable when Mr. Lin died, and MetLife has paid plaintiff's claim under it. (Id. ¶ 6; Solomon-Stowe Aff. ¶ 21.)*fn6
The second policy's application form consisted of two sections: "Part I" and "Part II (Paramedical/Medical Exam)." (Dinnocenzo Aff. ¶ 6.) A MetLife agent, Judy Huang, completed Part I at Mr. Lin's office while plaintiff was present. (Id.) Question 21(d) asked, "Has any person proposed for insurance EVER received treatment, attention, or advice from any physician, practitioner or health facility for, or been told by any physician, practitioner or health facility that he/she had," among other liver ailments, "hepatitis?" (Solomon-Stowe Aff. Ex A, at ML LIN 00398 (emphasis in original) ("Policy").) In a box next to this question, Ms. Huang checked "No." (Id.) This answer was false.
Question 22 asked, "Has any person proposed for insurance: . . . a) In the past six months, taken any medication or been under observation or treatment? b) Scheduled any: doctor's visits; medical care; or surgery for the next six months? c) During the past five years had any: checkup; health condition; or hospitalization not revealed above?" (Id. (paragraph breaks omitted).) Ms. Huang checked "No" in boxes next to each of these questions. (Id.) These answers were false.
Ms. Huang testified that before marking answers, she read "each and every" question to Mr. Lin, translating the questions from English to Mandarin, the language she and Mr. Lin normally conversed in. (Huang Depo. 25-26, Sherer Aff. Ex. I.) Ms. Huang also stated in a letter to MetLife's central claims office, which was sent after plaintiff filed her claim but before plaintiff filed this suit, that she asked the "applicant" all the questions on the application and recorded all the responses "as given by applicant." (Sherer Aff. Ex. L., at 2.)
Plaintiff remembers things differently. She testified that she sat down with Ms. Huang to fill out the form ...