Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Midland National Life Insurance Co. v. Morrison

United States District Court, D. South Dakota, Central Division

August 16, 2017

MIDLAND NATIONAL LIFE INSURANCE COMPANY, Plaintiff,
v.
LISA J. MORRISON, SHAWN CUDMORE KREMER, IN HER CAPACITY AS PERSONAL REPRESENTATIVE OF THE ESTATE OF GLEN D. CUDMORE, ALSO . KNOWN AS GLEN DUWAYNE CUDMORE, ALSO KNOWN AS GLEN CUDMORE, DECEASED, Defendants.

          OPINION AND ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT

          ROBERTO A. LANGE UNITED STATES DISTRICT JUDGE

         Plaintiff Midland National Life Insurance Company (Midland) filed this suit against Defendants Lisa J. Morrison and Shawn Cudmore Kremer seeking rescission of a life insurance policy issued to Glen D. Cudmore, and a declaratory judgment that it has no obligation under the policy other than the refund of premiums paid, plus interest. DOc. 1. Morrison is named as the beneficiary to the life insurance policy, and Kremer is the personal representative of Cudmore's estate. Doc. 1 at 1-2. Midland seeks to rescind the policy based on information about Cudmore's health that it learned during a two year contestability period following the policy's issuance. Doc. 1 at 5-8. Morrison timely filed an answer to the complaint, but when Kremer did not, Midland filed a motion for entry of default against Kremer. Docs. 8, 16. Midland then moved for summary judgment, as well as default judgment against Kremer. Doc. 22. For the reasons explained below, this Court grants Midland's motion for summary judgment and default judgment.

         I. Facts [1]

         During the last years of his life, Cudmore primarily received treatment from Dr. Margaret Upell and nurse practitioner Kathleen Zambo at the Upell Medical Clinic in Eagle Butte, South Dakota, visiting the office on an almost monthly basis.[2] Doc. 34 at ¶ 6; Doc. 27 at ¶ 18; Doc. 32 at ¶I8. On August 13, 2012, Cudmore visited Avera St. Mary's Hospital in Pierre on the recommendation of nurse practitioner Zambo because of an "elevated PSA." Doc. 27-4 at 4. Dr. Joseph Wyatt reviewed a prostate-specific antigen (PSA) test done at Eagle Butte on August 2, 2012 that showed a level of 4.2. Doc. 27-4 at 4. Dr. Wyatt noted that a previous test done in February of 2012 showed a level of 2.9, and that prior records show readings "in between 2.5 and just above 4 throughout that time." Doc. 27-4 at 4. Dr. Wyatt concluded by noting that because the PSA level "as a trend is not going up or down, " it "is reasonable to observe it which is what [Cudmore] wants to do." Doc. 27-4 at 7. Dr. Wyatt recommended another PSA in one year. Doc. 27-4 at 7.

         On April 30, 2013, Cudmore returned to visit Dr. Wyatt in Pierre at the request of nurse practitioner Zambo because of a recent test showing a PSA level of 5.45. Doc. 27-4 at 12. Dr. Wyatt "lean[ed] the patient strongly towards what I would favor of doing a biopsy at this point." Doc. 27-4 at 15. Cudmore did not want a biopsy done at the time, and Dr. Wyatt ordered a follow-up PSA test for six, months later.

         On May 13, 2013, Cudmore returned to Pierre to have Dr. Wyatt perform a prostate biopsy. Doc. 27-4 at 19. On May 20, 2013, Cudmore met with Dr. Wyatt, who recorded in his medical record that the biopsy results revealed two of the samples having "atypical small acinar proliferation suspicious for but not diagnostic of malignancy." Doc. 27-4 at 23. At that meeting, Dr. Wyatt discussed with Cudmore a "followup PSA in six months time and if persistently elevated, we will repeat a biopsy at that point." Doc. 27-4 at 24.

         On October 28, 2013, Cudmore again traveled to Pierre to meet with Dr. Wyatt because of an elevated PSA level found in a test done on October 8, 2013. See Doc. 27-4 at 25. At this meeting, Dr. Wyatt noted that "PSA remains mildly elevated; however, overall trend is decreasing. In light of this further observation for another six months with PSA at that time is recommended." Doc. 27-4 at 27.

         On November 21, 2013, Cudmore applied for life insurance with Midland and signed Part I of Midland's General Purpose Life Insurance Application. Doc. 27 at ¶ 8; Doc. 32 at ¶ 8. The application included a variety of questions about Cudmore's health. See Doc. 27-1. Question 34(i) of the application asked whether the applicant has "been diagnosed by a licensed medical professional, treated or advised to get treatment from a licensed medical professional, hospitalized, or presently taking prescriptions) or medication(s) for . . . "Disorder of the kidney, bladder or urinary system, abnormal PSA [prostate-specific antigen], abnormal PAP smear without subsequent normal PAP smear or protein or blood in the urine." Doc. 27 at ¶¶ 10-11; Doc. 32 at ¶¶ 10-11. In the corresponding checkmark box on Cudmore's application, "No" was marked. Doc. 27 at ¶ 11; Doc. 32 at ¶ 11. Question 35(c) asked whether the applicant has "[i]n the past 12 months been advised by a licensed medical professional to have a checkup, EKG, X-ray, blood or urine test or any other diagnostic test." Doc. 27 at ¶ 12; Doc. 32 at ¶ 12. "No" was checked for this question. Doc. 27 at ¶ 12; Doc. 32 at ¶ 12. For questions 34-37, any "Yes" answers must be supplemented with the date, diagnosis, treatment, results, and information of attending physician and hospital. Doc. 27-1 at 33. No additional information was provided in that section of Cudmore's Part I application. Doc. 27 at ¶ 13; Doc. 32 at ¶ 13. Part I of the application contained the certification before the signature block that "It is declared that statements and answers in this application, including statements by the Proposed Insured(s) in any medical questionnaire or supplement that become part of this application, are complete and true to the best knowledge and belief of the undersigned." Doc. 27-1 at 34. Morrison maintains that Cudmore did not fill in the answers to Part I himself, but does not dispute that Cudmore signed the bottom of Part I of the application. Doc. 32 at ¶ 10; Doc. 27-1 at 35.

         As part of the application process, Cudmore had a paramedical examination and completed Part II of the application on December 11, 2013. Doc. 27 at ¶ 16; Doc. 32 at ¶ 16. Again, Morrison maintains that Cudmore did not fill in the answers to Part II himself, but does not dispute that Cudmore signed the bottom of Part II of the application. See Doc. 32 at ¶ 17. Question 2 of Part II asked about several diseases or disorders, and in conjunction with two "Yes" answers, nurse practitioner Zambo and Dr. Upell, both of Eagle Butte, SD, were disclosed as "Attending Physician[s]." Doc. 27-1 at 36; Doc. 27 at ¶ 17; Doc. 32 at ¶ 17. Question 2(i) of Part II specifically asked whether, in the past ten years, Cudmore had "ever had or been diagnosed by a licensed medical professional, treated or advised to get treatment from a licensed medical professional, hospitalized, or presently taking prescriptions) or medications(s) for . . . [d]isorder of the kidney, bladder or urinary system, abnormal PSA, abnormal PAP smear without subsequent normal PAP smear or protein or blood in the urine." Doc. 27-1 at 36. The "No" box was checked for this question. Doc. 27 at ¶ 19; Doc. 32 at ¶ 19. Question 6 of Part II stated that "[i]f not listed above, please provide full name, address and phone numbers of licensed medical professionals) consulted in the past five years, include date and findings of last visit and test performed and treatment received." Doc. 27-1 at 36. This space was left blank. Doc. 27 at ¶ 20; Doc. 32 at ¶ 20. Throughout the application, other aspects of Cudmore's other medical history, including a 1979 accident resulting in disability payments, were disclosed. See Doc. 27-1 at 36-37. The application contained an affirmative oath that: "The above statements and answers are true and complete to the best of my knowledge and belief. I agree that such statements and answers shall be part of the application and are made to induce the Midland National Life Insurance Company to issue the policy or certificate applied for." Doc. 27-1 at 36. Cudmore signed Part II of the application. Doc. 27-1 at 38; Doc. 27 at ¶ 17; Doc. 32 at ¶ 17.

         Following the application's submission, Midland assessed the mortality risk for Cudmore through its underwriting process. See Doc. 27 at ¶ 24; Doc. 32 at ¶ 24. This process determines the type of policy Midland is willing to offer, the appropriate death benefit, the premium rate, • and the ultimate issuance of the policy. Doc. 27 at ¶ 24; Doc. 32 at ¶ 24. On January 10, 2014, Midland issued a life insurance policy to Cudmore, of which he accepted delivery on January 15, 2014, as Policy No. 1503084386. Doc. 27 at ¶¶ 27, 30; Doc. 32 at ¶¶ 27, 30. The policy has a face amount of $ 100, 000, with Morrison designated as the sole primary beneficiary of the policy. Doc. 27 at ¶¶ 28-29; Doc. 32 at ¶¶ 28-29.

         On April 28, 2014, Cudmore met with Dr. Wyatt in Pierre because of an elevated PSA level, which was lower than at the time of the prior biopsy, but still "not back to a normal level." Doc. 27-4 at 28. Dr. Wyatt noted that the follow up was for "both history of elevated PSA and also abnormal biopsy." Doc. 27-4 at 28. While Dr. Wyatt thought a second biopsy was "the optimal plan, " Cudmore wanted to "pursue ongoing followup, " and a PSA test was recommended every six months. Doc. 27-4 at 31.

         On October 1, 2014, Cudmore returned to Pierre because of a PSA level "elevated to 6.5." Doc. 27-4 at 32. Dr. Wyatt "quite bluntly recommended that he have a repeat biopsy at this point, " but Cudmore elected to have only a follow-up PSA exam in six months. Doc. 27-4 at 32.

         On July 6, 2015, Cudmore met with Dr. Wyatt in Pierre to follow up concerning his elevated PSA level. Doc. 27-4 at 38. Dr. Wyatt noted in his care chart that Cudmore expressed at this meeting "that even if it is higher he is going to refuse biopsy." Doc. 27-4 at 39. Later, Melissa Simons, an R.N. at Avera St. Mary's Hospital in Pierre called Cudmore to tell him the PSA level had "decreased to 6.39." Doc. 27-4 at 41. Simons noted that he declined a prostate biopsy, but will return for another PSA check in six months. Doc. 27-4 at 41.

         On August 16, 2015, Cudmore died in an ATV accident, and on September 10, 2015, Morrison submitted the appropriate paperwork to claim the death benefit proceeds. Doc. 27 at ¶¶ 33-34; Doc. 27-2 at 2; Doc. 32 at ¶¶ 33-34. The policy contains an incontestability provision: "We cannot contest this policy after it has been in force during the Insured's lifetime for 2 years from the Policy Date or, if reinstated, for two years from the date of reinstatement." Doc. 27 at ¶ 32; Doc. 32 at ¶ 32. Following Morrison's, claim, Midland conducted a routine contestability investigation, as Cudmore's death occurred within two years from the policy's effective date. Doc. 27 at ¶ 36; Doc. 32 at ¶ 36. During the course of this investigation, Midland obtained medical records relating to Cudmore involving his elevated PSA levels and the subsequent biopsy to determine whether the elevated PSA levels were related to prostate cancer. Doc. 27 at ¶¶ 38, 41; Doc. 32 at ¶¶ 38, 41.

         On January 11, 2016, Midland sent letters to both Morrison and Kremer stating that because "Cudmore did not disclose his complete medical history ... the Company did not have a proper opportunity to evaluate him.as an insurance risk, " and had he disclosed his full history, Midland "would not have offered him life insurance coverage under the Policy, and would not have issued the Policy." Doc. 27-1 at 41-46. Midland alleged that Cudmore "materially misrepresented his medical history" during the application, and "[a]s such, we are exercising our right to rescind the Policy, deeming it null and void. The extent of our liability is limited to the return of all premiums paid into the Policy, plus interest." Doc. 27-1 at 41-46. Along with the letters, Midland sent a copy of the complaint filed with this Court, which seeks rescission of the life insurance policy "based on Mr. Cudmore's misrepresentation and omission of material facts." Doc. 27-1 at 41-46.

         Midland's complaint alleges that "[t]he false statements, misrepresentations, omissions, incorrect statements made and facts concealed and/or failed to be disclosed by Mr. Cudmore in Parts I and II of the Application were fraudulent or intentional misrepresentations of material fact." Doc 1 at ¶3l. Because of this, it asserts that it would have declined Cudmore's application had it known the "true facts." Doc. 1 at ¶ 33. Midland's two count complaint seeks rescission of the policy and an accompanying declaratory judgment. See Doc. 1. Following an answer by Morrison, Doc. 8, and a clerk's entry of default as to Kremer, Doc. 17, Midland moved for summary judgment and default judgment under Rules 56 and 55(b) of the Federal Rules of Civil Procedure, Doc. 22. Midland argues it is entitled to summary judgment because there is no dispute as to facts establishing that had it known Cudmore's "true and complete health history, " it would not have issued him a policy, and that "Cudmore's material misrepresentations allow Midland National to rescind the life insurance policy under SDCL § 58-11-44." Doc. 22 at 2. Morrison opposes the entry of summary judgment, ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.