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Parties Involved:
Essex Insurance Company
Appellee
Galilee Medical Center S.C.
Appellant

Document Text:

In the 

United States Court of Appeals 

For the Seventh Circuit ____________________ 

Nos. 14-1791, 14-1801 

ESSEX INSURANCE COMPANY, 

Plaintiff-Appellee, 

v.

GALILEE MEDICAL CENTER S.C., D/B/A MRI LINCOLN IMAGING 

CENTER, et al., 

Defendants-Appellants. 

____________________ 

Appeals from the United States District Court for the 

Northern District of Illinois, Eastern Division. 

No. 11-CV-06934 — John W. Darrah, Judge. 

____________________ 

ARGUED FEBRUARY 10, 2016 — DECIDED MARCH 4, 2016 

____________________ 

Before BAUER, FLAUM, and SYKES, Circuit Judges. 

FLAUM, Circuit Judge. Plaintiff Essex Insurance Company 

(“Essex”) filed a declaratory judgment action against Galilee 

Medical Center S.C., doing business as MRI Lincoln Imaging 

Center (“Galilee”), and Luis Angarita, M.D., a physician employed by Galilee, seeking rescission of an insurance policy 

issued to Galilee. The district court entered summary judgment for Essex, reasoning that rescission was warranted beCase: 14-1791 Document: 40 Filed: 03/04/2016 Pages: 10
2 Nos. 14-1791, 14-1801 

cause defendants had made material misrepresentations in 

their insurance policy applications. For the reasons that follow, we affirm the judgment of the district court. 

I. Background 

A. Insurance Policy 

Galilee is a Delaware corporation that provides medical 

services in Chicago. Essex issued a professional liability insurance policy to Galilee (the “Essex Policy” or the “Policy”) 

under which Essex was obligated to pay for claims against 

Galilee, the “insured,” for personal injuries caused by “any 

act, error or omission” in Galilee’s professional services. The 

Policy also covered claims against Galilee physicians, including Angarita, “solely while acting on behalf of [Galilee] and 

within the scope of his/her duties as such.” 

To obtain coverage, Essex required both Galilee and Angarita to fill out applications. The applications contained a 

notice that Essex would rely on the answers provided by the 

applicants when issuing the policy. Accordingly, the Essex 

Policy deemed all information and statements made in the 

applications “material to the acceptance of the risk or hazard 

assumed by” Essex. Coverage under the Essex Policy was 

conditioned on Galilee’s acceptance that the applications 

were part of the Policy, that Essex had relied on the truth of 

the representations made in the applications, and that Essex 

had deemed the representations material to the acceptance 

of the risk assumed by Essex. 

Galilee’s application asked, “Do[] the Applicant’s employees or independent contractors use drugs for weight reduction for patients?” Galilee answered in the negative. The 

question continued: “If yes, attach a list of drugs used and 

Case: 14-1791 Document: 40 Filed: 03/04/2016 Pages: 10
Nos. 14-1791, 14-1801 3

percentage of practice devoted to weight reduction.” Galilee 

did not identify any such drugs. Galilee also answered “no” 

to the question of whether its employees or independent 

contractors performed any experimental procedures. 

Likewise, Angarita answered “no” to the following questions: 

5. With the exception of surgery for obesity, 

does your practice include weight reduction or 

control by other [sic] than diet or exercise? 

5.(b) Do you dispense any drugs? 

5.(c) Do you use injections for weight control? 

9.(a) Do you use experimental procedures, devices, drugs, or therapy in treatment or surgery? 

B. Medical Negligence Action 

In June 2011, Rosa Ravelo, one of Angarita’s former patients, sued Angarita and an affiliated Galilee corporation, 

Galilee Medical Center S.C., doing business as Affiliated 

Physicians (“Galilee Affiliated Physicians”), for medical negligence based on mesotherapy treatments recommended and 

administered by Angarita. Mesotherapy (also known as lipodissolve, lipozap, lipotherapy, or injection lipolysis) is a 

non-surgical medical treatment involving injections into 

subcutaneous layers of fat. According to Angarita, “mesotherapy is intended to dissolve deposits of subcutaneous fat 

to reduce the size of isolated portions of the body in order to 

provide a more desirable body shape and contour for patients. Common examples include flattening areas of cellulite 

and smoothing ... [such as the] pouching of a woman’s 

Case: 14-1791 Document: 40 Filed: 03/04/2016 Pages: 10
4 Nos. 14-1791, 14-1801 

stomach following birth.” Mesotherapy has not been approved by the U.S. Food and Drug Administration for any 

purpose. Angarita admitted to providing mesotherapy 

treatment to more than 5,000 patients, including Ravelo. 

Ravelo’s first appointment with Angarita occurred on 

November 8, 2008, at Galilee Affiliated Physicians. During 

the appointment, Angarita recommended that Ravelo undergo mesotherapy treatment. Ravelo agreed, and from November 15, 2008 to July 30, 2009, Angarita treated her with 

mesotherapy at his home office in Riverside, Illinois. In June 

2011, Ravelo sued Galilee Affiliated Physicians and Angarita 

for medical negligence, alleging that as a result of the mesotherapy, she developed painful, infected, blister-like granulomas on her body. That lawsuit is currently stayed pending 

the disposition of this litigation. 

C. Procedural Background 

In September 2011, Galilee sought insurance coverage 

under the Essex Policy for Ravelo’s lawsuit. Essex denied 

coverage and then filed a declaratory judgment action 

against defendants seeking rescission of the Policy. Essex argued that rescission was warranted because defendants 

made the following material misrepresentations in their insurance policy applications: (1) Galilee’s answer of “no” 

when asked whether its employees use drugs for weight reduction; (2) Angarita’s answer of “no” when asked if his 

practice includes weight reduction by methods other than 

diet or exercise and if he “dispenses drugs or injections” for 

weight control; (3) Galilee’s answer of “no” when asked 

whether its employees use experimental procedures; and (4) 

Angarita’s answer of “no” when asked whether he uses experimental procedures, drugs, or therapies. In the alternaCase: 14-1791 Document: 40 Filed: 03/04/2016 Pages: 10
Nos. 14-1791, 14-1801 5

tive, Essex sought a declaration that it was not obligated to 

defend or indemnify defendants. In response, defendants 

filed motions for judgment on the pleadings seeking a declaration that Essex had a duty to defend the lawsuit. 

Essex filed a motion for summary judgment on March 22, 

2013, and the district court granted the motion, holding that 

rescission was warranted because of defendants’ material 

misrepresentations. Accordingly, the district court denied as 

moot Essex’s alternative argument for declaratory relief, as 

well as defendants’ motions for judgment on the pleadings. 

The district court also denied defendants’ ensuing motion 

for reconsideration. This appeal followed. 

II. Discussion 

Defendants1 argue that the district court erred in holding 

that they made material misrepresentations in their insurance policy applications.2 We review de novo a district 

court’s grant of summary judgment, as well as its denial of a 

motion for judgment on the pleadings. Illinois Conf. of Teamsters & Emp’rs Welfare Fund v. Steve Gilbert Trucking, 71 F.3d 

1361, 1364 (7th Cir. 1995); Northern Indiana Gun & Outdoor 

Shows, Inc. v. City of South Bend, 163 F.3d 449, 452 (7th Cir. 

1998). The parties agree that Illinois law, and specifically § 

154 of the Illinois Insurance Code, governs this suit. Section 

 

1 Although defendants filed separate briefs, Angarita adopted Galilee’s 

arguments, and thus, we characterize Galilee’s arguments as “defendants’ arguments.” 

2 Defendants also argue that they are entitled to a declaration that Essex 

is obligated to defend them. Because we agree with the district court’s 

conclusion that rescission of the insurance policy is warranted, we need 

not address the merits of this argument. 

Case: 14-1791 Document: 40 Filed: 03/04/2016 Pages: 10
6 Nos. 14-1791, 14-1801 

154 allows insurers to deny coverage and rescind a policy if 

(1) a statement in the policy application is false and (2) the 

false statement either was made with the intent to deceive 

the insurer or materially affects the acceptance of the risk assumed by the insurer. Illinois State Bar Ass’n Mut. Ins. Co. v. 

Law Office of Tuzzolino & Terpinas, 27 N.E.3d 67, 71 (Ill. 2015). 

Defendants first contend that the district court erred in 

concluding that defendants made material misrepresentations in their insurance policy applications about their “use” 

of drugs for weight control or reduction. Defendants argue 

that “use” includes only the act of administering mesotherapy. Under that narrow definition, Galilee (through Angarita) 

could not have “used” mesotherapy because Angarita administered the injections at his home office, and only recommended mesotherapy while working at Galilee. In the alternative, defendants argue that “use” is ambiguous, and that 

the ambiguity should be construed in defendants’ favor. 

Illinois courts construe terms in an insurance application 

in accordance with their plain meaning and from the standpoint of an ordinary, reasonable person.3 Gillen v. State Farm 

Mut. Auto. Ins. Co., 830 N.E.2d 575, 582 (Ill. 2005). Applying 

that standard, we agree with the district court that the term 

 

3 Defendants contend that the district court erred in construing the insurance policy application under a reasonable person standard. But defendants did not object to the use of that standard before the district 

court—in fact, Galilee argued that the insurance policy should be construed “with reference to ... [the] average, ordinary, normal reasonable 

person.” “A party may not ‘invite’ error and then argue on appeal that 

the error for which he was responsible entitles him to relief.” United 

States v. Johnson, 26 F.3d 669, 677 (7th Cir. 1994). Therefore, we need not 

address this argument. 

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Nos. 14-1791, 14-1801 7

“use” is not ambiguous, nor should it be interpreted narrowly to encompass only the act of administering mesotherapy. 

Any reasonable applicant would have understood that by 

asking several questions about the use of experimental drugs 

and weight reduction procedures, Essex wanted to know 

whether Galilee doctors were recommending and administering such procedures. But defendants did not disclose this 

information, and thus, Essex was not able to correctly price 

the insurance policy based on the risk it was undertaking. 

We will not permit defendants, who did not pay for coverage for suits arising out of weight loss procedures, to circumvent their duty to make truthful representations to their 

insurer by reading ambiguity into a clear insurance policy 

application. 

The fact that Angarita made his recommendation at his 

Galilee office, and then administered the treatment in his 

home office, does not change this analysis. Angarita admits 

that he recommended mesotherapy to Ravelo, a Galilee patient, while working at Galilee, and that he followed up on 

his recommendation by administering the treatment. Perhaps this would be a different case if Angarita had referred 

Ravelo to another provider for treatment, or made a recommendation that Ravelo ignored. But here, a reasonable person would not find a meaningful distinction between the 

recommendation and the treatment. There is no evidence 

that Angarita informed Ravelo that he was administering 

mesotherapy in his individual capacity, and Ravelo likely 

relied on Angarita’s employment at Galilee, a reputable 

medical center, when she took him up on his offer. It is also 

irrelevant that Galilee may have been unaware that Angarita 

was recommending and administering mesotherapy to his 

patients—under § 154, “a misrepresentation, even if innoCase: 14-1791 Document: 40 Filed: 03/04/2016 Pages: 10
8 Nos. 14-1791, 14-1801 

cently made, can serve as the basis to void a policy.” Golden 

Rule Ins. Co. v. Schwartz, 786 N.E.2d 1010, 1015 (Ill. 2003). 

Defendants next contend that the district court improperly equated “size reduction,” which is supposedly the goal of 

mesotherapy, with “weight reduction.” Defendants did not 

raise this argument until after Ravelo amended her complaint. Initially, Ravelo had alleged that Angarita recommended mesotherapy for “weight loss.” After Essex filed its 

declaratory judgment action against defendants, Ravelo 

amended her complaint to substitute “size reduction” for 

“weight loss,” despite the fact that Galilee Affiliated Physicians and Angarita never objected to her use of the term 

“weight loss.” Around the same time, defendants amended 

their motions for judgment on the pleadings and opposition 

briefs, arguing for the first time that mesotherapy is used for 

“size reduction,” and not “weight reduction.” More specifically, defendants contended that mesotherapy is a body 

shaping procedure that is used to reduce fat in isolated parts 

of the body, not to reduce a patient’s overall weight. 

The district court rejected this argument, describing the 

distinction between weight reduction and size reduction as 

“disingenuous at best.” We agree. Defendants fail to convince us that there is a meaningful difference between 

“weight reduction” and “size reduction” that would excuse 

the negative and incomplete answers on their insurance policy applications. Any reasonable person would have understood from the insurance policy application questions that 

Essex wanted to know whether Galilee doctors performed 

non-traditional weight loss procedures. Experimental procedures used to eliminate fat in certain parts of the body, such 

as mesotherapy, certainly fall within that category. 

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Nos. 14-1791, 14-1801 9

Finally, we agree with the district court that defendants’ 

misrepresentations were sufficiently material to warrant rescission. To determine materiality, Illinois courts use an objective test that asks whether a “reasonably careful and intelligent” underwriter “would regard the facts as stated to substantially increase the chances of the event insured against, 

so as to cause a rejection of the application.” Small v. Prudential Life Ins. Co., 617 N.E.2d 80, 83 (Ill. App. Ct. 1993). Testimony from an insurer’s underwriter may be used to establish the materiality of omitted information. Id. Accordingly, 

Essex submitted an affidavit from the managing director of 

Essex’s underwriter stating that if Galilee and Angarita had 

answered “yes” to the disputed questions, Essex would not 

have issued the policy or would have issued it for a much 

higher premium. That conclusion is consistent with the insurance policy application, which asked several questions 

about non-traditional and experimental weight loss procedures, and with the Policy itself, which noted that all statements made in the application were material to the acceptance of the risk assumed by Essex. 

Although defendants argue that summary judgment is 

warranted only if the insurer can show that truthful statements by the insured would have caused the insurer to reject 

the application entirely, defendants’ interpretation of the 

materiality inquiry is too limited. Under § 154, a misrepresentation is material if it “affects either the acceptance of the 

risk or the hazard assumed” by the insurer. Here, the misrepresentations involving the scope of Angarita’s medical 

practice significantly increased Galilee’s exposure, and thus, 

Essex’s risk. Because Angarita’s use of mesotherapy led directly to Essex’s exposure in the Ravelo suit, “it borders on 

the surreal to think that the nondisclosure was immaterial.” 

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10 Nos. 14-1791, 14-1801 

TIG Ins. Co. v. Reliable Research Co., 334 F.3d 630, 637 (7th Cir. 

2003). Accordingly, the district court did not err in holding 

that Essex was entitled to rescission of the Essex Policy. 

AFFIRMED. 

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