JUNE 2010 BAD FAITH CASES MAGISTRATE RECOMMENDS SUMMARY JUDGMENT FOR INSURER BASED ON BAD FAITH AND FALSEHOODS OF INSURED IN OBTAINING THE POLICY (Western District)

In Baer v. Union Security Life Insurance Company, the insured applied for credit life insurance in conjunction with a loan.  When applying for insurance, he answered that he had never been medically advised that he had, or had been treated for, heart disease.  The insured passed away approximately two years after applying for the insurance, and the administratrix of his estate made a request for insurance proceeds.  When the insurer obtained medical records, it learned that the insured had been treated for heart disease on several occasions before the insured filled out the insurance application.

The insurer denied the request for insurance proceeds because the insurer incorrectly answered the question on the application, and the administratrix proceeded to file a Complaint that included Counts for breach of contract, negligence, fraud and deceit, and violations of the Pennsylvania Unfair Trade Practices and Consumer Protection Law (UTPCPL).

The Magistrate Judge recommended that the insurer’s Motion for Summary Judgment be granted with respect to all counts, ruling that the insured acted in bad faith and deceived the insurer when he wrote that he had not been treated for heart disease on his insurance application.  The Magistrate stated that all evidence demonstrated that the insured had heart disease and was being treated for it, and that his condition did not deteriorate during the relevant time period did not change these facts.  Therefore, because the insurer demonstrated that the insured knowingly made a false statement that was material to the policy on the application, the policy was void, and the insurer had no responsibility to pay the estate of the insured under the policy.

Date of Decision:  September 16, 2008

Baer v. Union Sec. Life Ins. Co., Civil Action No. 07-473, United States District Court for the Western District of Pennsylvania, 2008 U.S. Dist. LEXIS 115420 (Sept.16, 2008) (Mitchell, U.S.M.J.).