Source: https://law.justia.com/cases/california/supreme-court/4th/23/368.html
Timestamp: 2019-09-18 15:25:48
Document Index: 569072395

Matched Legal Cases: ['§ 10350', '§ 437', '§ 10350', '§ 10350', '§ 10350', '§ 10350', '§ 10350', '§ 10350', '§ 10350', '§ 10323', '§ 10350', '§ 1', '§ 19', '§ 799', '§ 1', '§ 120980', '§ 799', '§ 10328', '§ 10350', '§ 11', '§ 450', '§ 1', '§ 7', '§ 10384']

Galanty v. Paul Revere Life Ins. Co. (2000) :: :: Supreme Court of California Decisions :: California Case Law :: California Law :: US Law :: Justia
Justia › US Law › Case Law › California Case Law › Cal. 4th › Volume 23 › Galanty v. Paul Revere Life Ins. Co. (2000)
Galanty v. Paul Revere Life Ins. Co. (2000)
(The Court of Appeal, Second Dist., Div. One, No. B113007.)
Philip E. Stano; Rivkin, Radler & Kremer, Evan H. Krinick, Norman L. Tolle, Michael P. Versichelli and George J. Keller for American Council of Life Insurers as Amicus Curiae on behalf of Defendant and Respondent. [23 Cal. 4th 371]
We granted review to consider the effect of a standard incontestability clause that the Insurance Code requires policies of disability [23 Cal. 4th 372] insurance to include. (Ins. Code, §§ 10350, 10350.2; except as noted, all further statutory citations are to this code.) The lower courts construed the clause as permitting an insurer to deny coverage for its insured's disability, caused by AIDS (acquired immune deficiency syndrome), because the insured tested positive for antibodies to HIV (human immunodeficiency virus) before the policy was issued. We reverse.
In the fall of 1988, Galanty applied for a policy of disability insurance at his insurance agent's solicitation. On the later, formal application that became a part of the policy, Galanty answered "no" to the questions whether he had "ever been treated for or had any known indication of ... [d]isease or disorder of the heart or circulatory system, lungs, kidneys, bladder, genital or reproductive organs, brain or nervous system, skin, eyes, ears or speech" and whether he was "currently receiving any medical advice or treatment." In response to the question whether he had "[i]n the past 5 years ... had any medical advice or operation, physical exam, treatment, illness, abnormality or injury not listed above," Galanty answered that he had consulted Dr. Anthony Scarsella in connection with "flu." The application did not ask [23 Cal. 4th 373] whether Galanty had tested positive for HIV. fn. 1 Paul Revere issued a disability insurance policy to Galanty on March 17, 1989.
Paul Revere initially accepted Galanty's claim and began to pay benefits. Thereafter, the insurer began to investigate. In February 1995, Paul Revere asked Galanty to provide "the exact date and facility" at which he first tested positive for HIV and to authorize UCLA to release its research records. A series of letters ensued, in which Galanty and Paul Revere debated the insurer's entitlement to the requested information and its relevance to coverage. In April 1995, Paul Revere ceased paying benefits. Paul Revere did not, however, formally deny Galanty's claim at that time. Instead, the insurer wrote that Galanty's claim would receive "further attention" upon receipt of the requested information. Galanty then retained an attorney, who disclosed to Paul Revere that Galanty had first tested positive for HIV in 1987. The insurer thereupon formally denied coverage. Explaining its position in a [23 Cal. 4th 374] letter to Galanty's attorney, Paul Revere wrote that Galanty's "current illness manifested itself prior to the date of issue, and therefore it is not a covered sickness as that term is defined under his policy."
The lower courts concluded Paul Revere was entitled to summary judgment because the policy issued to Galanty did not cover his AIDS-related disability. [1] Following the applicable standard, we review the moving papers independently to determine whether there is a triable issue as to any material fact and whether the moving party is entitled to judgment as a matter of law. (See Norgart v. Upjohn Co. (1999) 21 Cal. 4th 383, 404 [87 Cal. Rptr. 2d 453, 981 P.2d 79]; Code Civ. Proc., § 437c.) For the reasons set out below, we conclude the lower courts erred.
[2] Any analysis of coverage must begin with the language of the policy. The usual goal of policy interpretation is "to give effect to the mutual intention of the parties," while reading the policy's "language in context with regard to its intended function in the policy." (Bank of the West v. Superior Court (1992) 2 Cal. 4th 1254, 1264, 1265 [10 Cal. Rptr. 2d 538, 833 P.2d 545].) The statutory incontestability clause, however, invokes different rules of construction. Language required by statute must be construed to effect not the intent of the parties but the intent of the Legislature. (See Prudential-LMI Com. Insurance v. Superior Court (1990) 51 Cal. 3d 674, 684 [274 Cal. Rptr. 387, 798 P.2d 1230].) Therefore, the rules of statutory construction apply. (State Farm Mut. Auto. Ins. Co. v. Messinger (1991) 232 Cal. App. 3d 508, 519 [283 Cal. Rptr. 493]; Interinsurance Exchange v. Marquez (1981) 116 Cal. App. 3d 652, 656 [172 Cal. Rptr. 263].) [23 Cal. 4th 375]
In the language of the policy, Paul Revere contracted to pay benefits for "loss due to ... Sickness," and defined "Sickness" as "sickness or disease [23 Cal. 4th 376] which first manifests itself after the Date of Issue and while Your Policy is in force." Paul Revere excluded coverage for "Pre-Existing Condition[s]" with this language: "We will not pay benefits for a Pre-Existing Condition if it was not disclosed on Your application. Pre-Existing Condition means a sickness or physical condition for which prior to the Date of Issue: [¶] a. Symptoms existed that would cause an ordinarily prudent person to seek diagnosis, care, or treatment; or [¶] b. Medical advice or treatment was recommended by or received from a Physician. [¶] Also We will not pay benefits for any loss We have excluded by name or specific description." Finally, Paul Revere included this version fn. 4 of the statutory incontestability clause (cf. § 10350.2, form B): "a. After Your Policy has been in force for 2 years, excluding any time You are Disabled, We cannot contest the statements in the application. [¶] b. No claim for loss incurred or Disability that starts after 2 years from the Date of Issue will be reduced or denied because a sickness or physical condition not excluded by name or specific description before the date of loss had existed before the Date of Issue."
The apparent conflict between the definitional provisions and the incontestability clause generated the present dispute. Paul Revere successfully argued below that the policy did not cover Galanty's disability because the causative sickness first manifested itself, within the meaning of the definitional provisions, when Galanty tested positive for antibodies to HIV, about two years before the policy was issued. Paul Revere asserts that Galanty misleadingly failed to disclose the test on his application. The company does [23 Cal. 4th 377] not, however, seek to rescind the policy for fraud. fn. 5 Instead, Paul Revere defends its denial of coverage as a correct interpretation of the policy that has nothing to do with Galanty's "fraud or lack of fraud in the procurement of his policy ...." Galanty, in opposition, argues that the incontestability clause, and its statutory analogue (§ 10350.2, form B), bar Paul Revere from denying coverage. Invoking the language of the clause, Galanty contends that Paul Revere may not deny his claim for disability benefits on the ground that the causative sickness "existed before the Date of Issue," no matter when it first manifested itself, because he did not become disabled until more than two years after the date of issue and because the policy did not exclude the sickness, AIDS, by name or specific description.
We have not previously addressed this issue. In the only published opinion on point in this state, the court in McMackin v. Great American Reserve Ins. Co. (1971) 22 Cal. App. 3d 428, 439-440 [99 Cal. Rptr. 227] decided the issue in the insured's favor, although without useful discussion. Conversely, courts have decided the issue in the insurer's favor in the case before us and in a case granted and held for this case (Callahan v. Mutual Life Ins. Co. fn. *(Cal.App.)). fn. 7
The issue has often arisen in other jurisdictions. Considering only those decisions interpreting functionally identical policy language, the highest [23 Cal. 4th 378] courts of Delaware, fn. 8 Hawaii, fn. 9 Maryland, fn. 10 Minnesota fn. 11 and New York fn. 12 have resolved the question in the insured's favor. Lower state courts, and federal courts applying state law, have done likewise under the laws of Georgia, fn. 13 Indiana, fn. 14 Michigan fn. 15 and Wisconsin. fn. 16 In contrast, the Supreme Court of New Jersey fn. 17 has resolved the question in the insurer's favor. So, too, have lower state and federal courts applying the laws of Arizona, fn. 18 Florida, fn. 19 Massachusetts, fn. 20 Mississippi, fn. 21 Tennessee, fn. 22 and Washington. fn. 23 [23 Cal. 4th 379]
A few courts took the position that an incontestability clause barred all defenses by the insurer, including the defense that a claim was not covered. In Jordon v. Western States Life Ins. Co. (1952) 78 N.D. 902 [53 N.W.2d [23 Cal. 4th 380] 860], for example, the Supreme Court of North Dakota held that a statutorily required clause making a life insurance policy "incontestable after two years from the date of issue" barred the insurer from denying a claim for death caused by air travel, even though the policy expressly excluded death by air travel as a covered risk. In the court's view, "writers of standard form policies must, by statutory mandate, bind themselves, when two years have elapsed after the issuance of a policy of life insurance, to pay the full amount stated in the principal insuring clause thereof upon proof of the fact of death alone, unless of course the premiums have not been paid or the provisions relating to military and naval service have been violated." (53 N.W.2d at p. 864.) The court rejected, as contrary to the statutory mandate, the insurer's effort to modify the incontestability clause to exclude air travel. (Id. at pp. 863-866.)
The decision in Metropolitan Life Ins. Co. v. Conway, supra, 169 N.E. 642 was very influential. In 1947, insurance industry associations formed the so-called Holland Committee, which promulgated a new model incontestability-clause statute embodying the holding of Conway. The new model clause expressly resolved the conflict between coverage and incontestability, in these words: "A clause in any policy of life insurance providing that such policy shall be incontestable after a specified period shall preclude only a contest of the validity of the policy, and shall not preclude the assertion at any time of defenses based upon provisions in the policy which exclude or [23 Cal. 4th 381] restrict coverage, whether or not such restrictions are excepted in such clause." (Note, AIDS and the Incontestability Clause, supra, 66 N.D. L. Rev. at p. 276.) Many states, including California, subsequently adopted incontestability clause statutes influenced by Conway and the Holland Committee's model statute. Section 10113.5, which sets out the incontestability clause required in life insurance policies delivered in this state, expressly provides that the clause "shall not be construed to preclude at any time the assertion of defenses based upon policy provisions that exclude or restrict coverage." (Id., subd. (c); see Note, AIDS and the Incontestability Clause, supra, 66 N.D. L. Rev. at pp. 275-276.)
The incontestability clause required in disability policies has very different language than the clause required in life insurance policies, and additional history. Section 10350.2, which governs disability policies, was based on the Uniform Individual Accident and Sickness Policy Provisions Law promulgated by the NAIC in 1950. Section 10350.2 was enacted in California the next year at the recommendation of the state's Insurance Commissioner, who had served on the NAIC committee responsible for the uniform law. fn. 24 (See John Hancock Mut. Life Ins. Co. v. Greer (1998) 60 Cal. App. 4th 877, 882 [71 Cal. Rptr. 2d 48].)
Section 10350.2 offers a choice of two forms, labeled A and B, to insurers writing noncancellable policies of disability insurance, such as the policy Paul Revere issued to Galanty. The first paragraph of each form addresses challenges to the validity of the policy, but differs depending on the form. Form A expressly permits the insurer to defend claims based on fraudulent misstatements by the insured, in these words: "After two years from the date of issue of this policy no misstatements, except fraudulent misstatements, made by the applicant in the application for such policy shall be used to void the policy or to deny a claim for loss incurred or disability (as defined in the policy) commencing after the expiration of such two-year period." (§ 10350.2, form A, par. (a), italics added.) Form A thus offers insurers greater protection against fraud by insureds than the incontestability clause [23 Cal. 4th 382] required in life insurance policies. The latter does not permit the insurer, in most cases, fn. 25 to challenge the policy or its own liability on account of fraudulent statements by the insured in the application for insurance after the period of contestability has run. (See generally Amex Life Assurance Co. v. Superior Court, supra, 14 Cal. 4th 1231.)
The second paragraph of each form set out in section 10350.2 is identical. This paragraph, which contains the language that primarily concerns us, addresses denials of coverage based on preexisting conditions (as opposed to claims for recission, which the first paragraph addresses). The second paragraph provides: "No claim for loss incurred or disability (as defined in the policy) commencing after two years from the date of issue of this policy shall be reduced or denied on the ground that a disease or physical condition [23 Cal. 4th 383] not excluded from coverage by name or specific description effective on the date of loss had existed prior to the effective date of coverage of this policy." (§ 10350.2, form A, par. (b); id., form B, par. (c).)
This background illuminates the parties' arguments. Paul Revere contends it has no obligation, despite the incontestability clause, to pay benefits for Galanty's disability (AIDS and DSPN) because the causative sickness first manifested itself, in the form of a positive HIV test, before the policy was issued. Paul Revere thus seeks to harmonize the policy provisions defining the scope of coverage with the incontestability clause. Galanty, in opposition, argues that Paul Revere may not deny a claim for disability benefits, no matter when the causative sickness first existed, so long as he did not become disabled until more than two years after the policy's date of issue. Galanty would, thus, find a conflict between the coverage provisions and the incontestability clause, and resolve the conflict by giving priority to the latter. [23 Cal. 4th 384]
Paul Revere begins its argument by assuming that incontestability clauses do not affect coverage and that the Legislature, in adopting section 10350.2, shared that assumption. That an incontestability clause does not affect coverage is, as we have seen, the prevailing interpretation of the standard clause contained in many life insurance policies. (See Metropolitan Life Ins. Co. v. Conway, supra, 169 N.E. at pp. 642-644, and the discussion, ante, at p. 380 et seq.) The assumption is consistent, Paul Revere notes, with the general principle that "an insurer has a right to limit the policy coverage in plain and understandable language, and is at liberty to limit the character and extent of the risk it undertakes to assume ...." (VTN Consolidated, Inc. v. Northbrook Ins. Co. (1979) 92 Cal. App. 3d 888, 892 [155 Cal. Rptr. 172]; see also Merril & Seeley, Inc. v. Admiral Ins. Co. (1990) 225 Cal. App. 3d 624, 630 [275 Cal. Rptr. 280].) If we accept these premises (to continue Paul Revere's argument), we must construe the incontestability clause to be consistent with the clauses defining coverage. This might be accomplished by construing the incontestability clause as if it included the following italicized words: "No claim for loss incurred or Disability that starts after 2 years from the Date of Issue will be reduced or denied because a sickness or physical condition not excluded by name or specific description before the date of loss had existed" but not manifested itself "before the Date of Issue." Read in this way, the clauses defining coverage would not conflict with the incontestability clause because the former would create coverage only for a disability caused by a "sickness or disease which first manifests itself after the Date of Issue ...." The net effect of such a construction would be to guarantee coverage for an insured who had no reason to suspect sickness (i.e., had an unmanifested sickness) at the time he or she applied for insurance, but not for an insured who had, in the words of the clause defining preexisting conditions, "symptoms . . . that would [have] cause[d] an ordinarily prudent person to seek diagnosis, care, or treatment" (i.e., had a manifested sickness). This argument was first articulated, and accepted, in Massachusetts Casualty Insurance Co. v. Forman, supra, 516 F.2d 425, 428-430. Most of the courts that have decided the present issue in the insurer's favor have relied on Forman. (See ante, at pp. 378-379, fns. 17-23.)
Paul Revere's argument has serious flaws, beginning with the assumption on which it depends. In the present context, the assumption that an incontestability clause cannot affect coverage is erroneous. The assumption, as noted, finds its origin in Chief Judge Cardozo's explanation that an incontestability clause "is not a mandate as to coverage, a definition of the hazards to be borne by the insurer. [The clause] means only this, that within the limits of the coverage the policy shall stand, unaffected by any defense that it was invalid in its inception, or thereafter became invalid by reason of a condition broken." (Metropolitan Life Ins. Co. v. Conway, supra, 169 N.E. at [23 Cal. 4th 385] p. 642.) This explanation makes perfect sense in its original context: a conflict between an incontestability clause in a life insurance policy, providing simply that the policy "shall be incontestable" after two years, and a provision excluding coverage for a specific hazard, namely, travel by aircraft. (Ibid.) But the proposition that no incontestability clause, regardless of wording, can ever affect coverage has no logical force in the present context of a statutorily required (§ 10350.2) clause that expressly bars the insurer, after two years, from denying coverage "because a sickness or physical condition not excluded by name or specific description before the date of loss had existed before the Date of Issue."
In New York Life Ins. Co. v. Hollender (1951) 38 Cal. 2d 73 [237 P.2d 510], this court held that an incontestability clause in a life and disability insurance policy did not preclude the insurer from adjusting disability benefits to reflect the insured's true age, rather than the false age stated on the application. The court quoted and relied on Chief Judge Cardozo's statement to the effect that an incontestability clause " 'is not a mandate as to coverage ....' " (Id. at p. 79, quoting from Metropolitan Life Ins. Co. v. Conway, supra, 169 N.E. at p. 642.) The policy in question, however, expressly authorized the insurer to adjust benefits for the insured's true age, in these words: " 'If the age of the insured has been misstated, the amount payable hereunder shall be such as the premium paid would have purchased at the correct age.' " (New York Life Ins. Co. v. Hollender, supra, "38 Cal.2d at p. 76.) Furthermore, the policy's incontestability clause expressly excluded disability benefits from its scope. (Ibid.) Most importantly, the incontestability clause was not the clause required by section 10350.2, but the different clause typically required at that time in life insurance policies. (Hollender, at p. 76.)
The decisions in John Hancock etc. Ins. Co. v. Markowitz (1944) 62 Cal. App. 2d 388 [144 P.2d 899] (Markowitz) and Cohen v. Metropolitan Life Ins. Co. (1939) 32 Cal. App. 2d 337 [89 P.2d 732] (Cohen) are similar. In each case, the Court of Appeal permitted the insurer under a policy of life and disability insurance to disclaim coverage for the insured's disability, despite the standard life insurance incontestability clause, because the causative sickness predated the policy. The court in Markowitz reasoned that "an [23 Cal. 4th 386] incontestab[ility] clause does not operate to extend the coverage of a policy to a disease contracted before the issuance of the policy." (Markowitz, supra, "62 Cal.App.2d at p. 397.) Likewise, the court in Cohen observed that "[a]n incontestab[ility] clause in an insurance policy does not extend the coverage beyond the terms of the policy. Therefore, it does not relieve the insured ... from the burden of proving that the disease from which he is suffering originated and occurred after the issuance of the policies ...." (Cohen, supra, "32 Cal.App.2d at p. 346.) Both courts relied on Apter v. Home Life Ins. Co. of New York (1935) 266 N.Y. 333 [194 N.E. 846, 848, 98 A.L.R. 1281], which in turn relied on Chief Judge Cardozo's explanation in Metropolitan Life Ins. Co. v. Conway, supra, 169 N.E. at page 642. (See ante, at p. 384.) Unlike the incontestability clause required by section 10350.2, however, the clauses construed in Markowitz and Cohen did not purport to bar the insurer from denying a claim "because a sickness or physical condition not excluded by name or specific description before the date of loss had existed before the Date of Issue." Instead, the clauses at issue in those cases provided in relevant terms simply that the policies "shall be incontestable" after they had been in force for the requisite period of time, except for nonpayment of premiums. (Markowitz, supra, "62 Cal.App.2d at pp. 395-396; Cohen, supra, "32 Cal.App.2d at p. 341.) The incontestability clause construed in Cohen, moreover, expressly excluded disability benefits from its scope. (Cohen, supra, at p. 341.) These decisions, in short, do not support the insurer's position.
The argument is not convincing. In saying that something exists, one does not normally entertain unarticulated mental reservations about manifestation. Certainly the Legislature might have used the term in this way, if it had labored under the belief that an incontestability clause, by its very nature, could not affect coverage. But there is no good reason to attribute such a belief to the Legislature. As already noted, the NAIC model statute the Legislature adopted as section 10350.2, form B, was understood by its drafters, including the Insurance Commissioner who urged the law's adoption, as "introduc[ing] a new principle in accident and sickness insurance by guarantying [sic] to the insured that, after the policy has been in force for three years, no claim will be denied on the basis of misstatements in the application or on the contention that any infirmity existed prior to the date of [23 Cal. 4th 387] issue of the policy." (NAIC, Explanatory Comments, supra, at p. 2; see also ante, at p. 381, fn. 24.) Form B thus represented a clean break from the line of authority beginning with Metropolitan Life Ins. Co. v. Conway, supra, 169 N.E. 642, in which Chief Judge Cardozo had interpreted the incontestability clause typically found in life insurance policies as preserving the defense of lack of coverage. (See ante, at p. 380 et seq.) It is, moreover, hard to imagine a clearer statement of intent to bar denials of coverage for preexisting conditions than to require coverage even of those conditions concealed from the insurer by misstatements in the application. (See § 10350.2, form B.)
These statutory provisions, contrary to Paul Revere's argument, do not destroy an insurer's liberty to limit the character and extent of the risk it undertakes to assume. Paul Revere was free, before issuing its policy to Galanty, to examine his medical condition and to exclude any preexisting condition "by name or specific description" in the policy. (§ 10350.2, form B, par. (c).) The statutory incontestability clause permits and respects such exclusions. (Ibid.) Moreover, if Paul Revere in drafting its policy had perceived a conflict between the incontestability clause and the scope of coverage it wished to provide, the company could have asked the Insurance Commissioner for permission to modify the incontestability clause. [23 Cal. 4th 388] (§ 10323.) fn. 29 Other courts have found, in an insurer's failure to request a modification of the statutory incontestability clause, apparently sufficient reason to reject the argument that policy provisions defining sicknesses and preexisting conditions nullify the incontestability clause. (E.g., New England Mut. Life Ins. Co. v. Doe, supra, 710 N.E.2d at pp. 1063-1064; Penn Mut. Life Ins. Co. v. Oglesby, supra, 695 A.2d at pp. 1150-1151; Estate of Doe v. Paul Revere Ins. Group, supra, 948 P.2d at p. 1116, fn. 22; Equitable Life Assur. Soc. of U.S. v. Bell, supra, 27 F.3d at pp. 1282-1283.)
In the particular context of disability insurance, the Legislature has given insurers the following protections against fraud: The insurer may use a form of incontestability clause that expressly preserves its right to void the policy and to deny claims based on fraudulent misstatements at any time. (§ 10350.2, form A.) Moreover, if the insurer chooses to use the other form of incontestability clause (id., form B), the insurer still has two years after issuing the policy to investigate the insured's medical condition and statements in the application. Only an insurer, like Paul Revere in the case before us, that chooses to forgo both contractual protection against fraud and timely verification of the insured's medical condition runs the risk of having to pay a claim that may turn out to be related to a sickness that first manifested [23 Cal. 4th 389] itself before the policy's inception date. Under these circumstances, there is nothing unfair in the Legislature's evident policy judgment that any risk of fraud is outweighed, after the period of contestability has run, by the need to protect the value of the policy to the insured and to reduce litigation. (Amex Life Assurance Co. v. Superior Court, supra, 14 Cal.4th at p. 1231.) " ' " 'To hold otherwise would be to permit such a clause in its unqualified form to remain in a policy as a deceptive inducement to the insured.' " ' " (Id. at p. 1246, quoting Dibble v. Reliance Life Ins. Co. (1915) 170 Cal. 199, 206 [149 P. 171].)
FN 1. Prior to 1989, Health and Safety Code former section 199.21, subdivision (f) provided: "The results of a blood test to detect antibodies to the probable causative agent of acquired immune deficiency syndrome, which identifies or provides identifying characteristics of the person to whom the test results apply, shall not be used in any instance for the determination of insurability or suitability for employment." (Stats. 1988, ch. 1582, § 1, p. 5731, repealed by Stats. 1995, ch. 415, § 19.) Legislation effective January 1, 1989, however, permitted an insurer to deny an application for insurance based on a positive HIV antibody test confirmed by a second, more reliable test. (Ins. Code, § 799.02, added by Stats. 1988, ch. 1279, § 1, p. 4271; see also Health & Saf. Code, § 120980, subd. (f) [barring the use of HIV test results to determine insurability, except as provided in Ins. Code, § 799.02].)
FN 2. Dr. Scarsella subsequently explained that the notation "viral syndrome" referred to Galanty's flu symptoms rather than to AIDS and that, while HIV infection can present symptoms similar to flu, he did not at that time associate Galanty's symptoms with HIV or AIDS. The record does not reflect the subject matter of the University of California at Los Angeles (UCLA) study.
FN 3. Section 10350.2 provides, as relevant here:
FN 4. Paul Revere's version of the incontestability clause deviates in certain respects from the statutory form. Deviation is permissible, so long as the insurer does not thereby "make a policy or any portion thereof less favorable in any respect to the insured or the beneficiary ...." (§ 10328; see also § 10350.) No party has pointed to any relevant difference between the statutory form and the actual policy language.
FN 5. Paul Revere is currently paying benefits to Galanty, under a reservation of rights, for a different disability apparently unconnected with AIDS or DSPN.
FN 6. Galanty argues in the alternative that his unconfirmed positive test for antibodies to HIV in 1987 did not constitute a manifestation of AIDS within the meaning of the policy. In view of the ground on which we reverse, we do not address the argument.
FN *. Review granted on Aug. 11, 1999, S079363. On September 13, 2000, the cause was transferred to Court of Appeal, Second Appellate District, Division Four, with directions. Opinion was filed December 16, 2000, not for publication.
FN 7. In United Fidelity Life Ins. Co. v. Emert (1996) 49 Cal. App. 4th 941, 944-947 [57 Cal. Rptr. 2d 14], the Court of Appeal interpreted the differently worded incontestability clause in a life and disability insurance policy as barring the insurer from rescinding the policy for fraud. The insured, who was HIV positive, had falsely represented on his application that he had no immune deficiency disorder.
FN 8. Penn Mut. Life Ins. Co. v. Oglesby (Del. 1997) 695 A.2d 1146, 1149-1152 (answering certified question); see also Oglesby v. Penn Mut. Life Ins. Co. (D.Del. 1995) 889 F. Supp. 770, 773-779, affirmed by table disposition (3d Cir. 1997) 127 F.3d 1096.
FN 9. Estate of Doe v. Paul Revere Ins. Group (1997) 86 Hawaii 262 [948 P.2d 1103, 1112-1122, 67 A.L.R.5th 743].
FN 10. Mutual Life v. Insurance Comm. (1999) 352 Md. 561 [723 A.2d 891, 895-898].
FN 11. Kersten v. Minnesota Mut. Life Ins. Co. (Minn. 2000) 608 N.W.2d 869, 872-878.
FN 12. New England Mut. Life Ins. Co. v. Doe (1999) 93 N.Y.2d 122 [688 N.Y.S.2d 459, 710 N.E.2d 1060, 1061-1064]; see also Monarch Life Ins. Co. v. Brown (1987) 512 N.Y.S.2d 99, 101-103]; Rackear v. Springfield Fire & Marine Ins. Co. (1965) 48 Misc.2d 707 [265 N.Y.S.2d 715, 717-720] (hospitalization policy); Fisher v. Massachusetts Cas. Ins. Co. (S.D.N.Y. 1978) 458 F. Supp. 939, 941-945 (applying New York law).
FN 13. The court in Brock v. Guaranty Trust Life Ins. Co. (1985) 175 Ga.App. 275 [333 S.E.2d 158, 160-161], found no coverage for the insured's claim because the policy's definition of "confinement" had not been satisfied. The court found for the insured, however, on the issue presented here. (Id. at pp. 159-160.) The federal court in Keaten v. Paul Revere Life Ins. Co. (5th Cir. 1981) 648 F.2d 299, 300-304, had erroneously predicted that Georgia's courts would decide the issue for the insurer.
FN 14. Equitable Life Assur. Soc. of U.S. v. Bell (7th Cir. 1994) 27 F.3d 1274, 1277-1283 (applying Indiana law); see Wischmeyer v. Paul Revere Life Ins. Co. (S.D.Ind. 1989) 725 F. Supp. 995, 999-1005 (same).
FN 15. Equitable Life Assur. Soc. of U.S. v. Poe (6th Cir. 1998) 143 F.3d 1013, 1017-1020 (applying Michigan law); Provident Life and Acc. Ins. Co. v. Altman (E.D.Mich. 1992) 795 F. Supp. 216, 220-223 (same). An unpublished decision to the contrary, Weiner v. Paul Revere Life Ins. Co. (E.D.Mich. July 31, 1991, No. 90-72772) 1991 WL 353370, *2-3, was effectively overruled by Equitable Life Assur. Soc. of U.S. v. Poe.
FN 16. Peterson v. Equitable Life Assurance Society (W.D.Wis. 1999) 57 F. Supp. 2d 692, 700-704.
FN 17. Paul Revere Life Ins. Co. v. Haas (1994) 137 N.J. 190 [644 A.2d 1098, 1103-1104]. In reaching its decision, the high court of New Jersey rejected other courts' contrary conclusions about New Jersey law. (See Lindsay v. U.S. Life Ins. Co. (1963) 80 N.J.Super. 465 [194 A.2d 31, 33-35] [major medical insurance policy]; and Manzella v. Indianapolis Life Ins. Co. (E.D.Pa. 1993) 814 F. Supp. 428, 430-434 [applying New Jersey law].)
FN 18. Button v. Connecticut General Life Ins. Co. (9th Cir. 1988) 847 F.2d 584, 587-589 (applying Arizona law).
FN 19. Allen v. Aetna Life Ins. Co. (5th Cir. 1977) 563 F.2d 1240, 1241-1242 (applying Florida law to accidental death policy).
FN 20. Massachusetts Casualty Insurance Co. v. Forman (5th Cir. 1975) 516 F.2d 425, 427-431 (applying Massachussetts law).
FN 21. Neville v. American Republic Ins. Co. (5th Cir. 1990) 912 F.2d 813, 814-815 (applying Mississippi law).
FN 22. Krakowiak v. Paul Revere Life Ins. Co. (Tenn.Ct.App. June 7, 1996, No. 01-A-01-9511-CH00541) 1996 WL 303661, *2-7.
FN 23. Jack v. Paul Revere Life Ins. Co. (1999) 97 Wn. App. 314 [982 P.2d 1228, 1230-1235].
FN 24. Amicus curiae AIDS Project Los Angeles asks us to take judicial notice of Insurance Commissioner Maloney's 1951 letter to Governor Warren recommending approval of Assembly Bill No. 524 (1951 Reg. Sess.) (Stats. 1951, ch. 570, § 11, pp. 1724-1725), which reflected the NAIC uniform law, and other materials from the Governor's files, including additional letters recommending approval of the bill, executive branch memoranda reflecting the Insurance Commissioner's participation in the NAIC, and Assembly Bill No. 524 itself. The motion is granted. (See Cal. Law Revision Com. com., 29B West's Ann. Evid. Code (1995 ed.) foll. § 450, p. 420 ["Under the Evidence Code, as under existing law, courts may consider whatever materials are appropriate in construing statutes, determining constitutional issues, and formulating rules of law. That a court may consider legislative history ..., materials that ... indicate contemporary opinion, and similar materials is inherent in the requirement that it take judicial notice of the law."].)
FN 25. Following the decision in Amex Life Assurance Co. v. Superior Court (1997) 14 Cal. 4th 1231 [60 Cal. Rptr. 2d 898, 930 P.2d 1264], the Legislature amended sections 10113.5 and 10206 to declare "void from its inception" "any purported insurance contract" "if photographic identification is presented during the application process, and if an impostor is substituted for a named insured in any part of the application process ...." (Stats. 1998, ch. 184, § 1.)
FN 26. " 'Incontestability clauses are generally "included in the policies to affect their saleability." Even when such clauses are required by statute, insurance agents undoubtedly point out the clause to potential buyers and explain that coverage may not be denied after a period of time. Thus, it follows that when given the choice between two clauses, an insurance company would choose the clause that would result in increased sales or in some other benefit to the company. If potential fraud was enough of a threat to the insurance company, the company could have chosen the option that offered long-term protection against fraud.' " (New England Mut. Life Ins. Co. v. Doe, supra, 710 N.E.2d at p. 1064, quoting Note, Liar's Poker: The Effect of Incontestability Clauses After Paul Revere Life Insurance Co. v. Haas (1995) 1 Conn. Ins. L.J. 225, 233-234.)
FN 27. The Legislature reduced the period of contestability to two years in 1993, as part of the Health Insurance Access and Equity Act. (Stats. 1993, ch. 1210, § 7, p. 6946.) The same act contained a variety of provisions intended to protect access to insurance for persons with HIV. The act also prohibited "postclaims underwriting," defined as "the rescinding, canceling, or limiting of a policy or certificate due to the insurer's failure to complete medical underwriting and resolve all reasonable questions arising from written information submitted on or with an application before issuing the policy or certificate." (§ 10384.)
FN 28. Except, of course, in the decision on review and in the case granted and held for this case (see ante, at p. 377).
FN 29. Section 10323 provides: "If any provision set forth in Article 4a or 5a of this chapter [governing disability insurance] is in whole or in part inapplicable to or inconsistent with the coverage provided by a particular form of policy the insurer, with the approval of the commissioner, shall omit from such policy any inapplicable provision or part of a provision, and shall modify any inconsistent provision or part of the provision in such manner as to make the provision as contained in the policy consistent with the coverage provided by the policy."