Opinion ID: 796545
Heading Depth: 2
Heading Rank: 2

Heading: Declaratory Relief Claim—Material Misrepresentation

Text: 45 The district court took the unusual step of moving beyond arguments made in support of MetLife's motion for judgment on the administrative record and raising sua sponte the issue of whether Conger misrepresented a material fact by failing to volunteer information regarding his medical history. This issue coincides with MetLife's claim for a declaratory judgment, which was premised solely upon Conger's alleged concealment and/or failure to disclose material facts regarding his medical condition, J.A. at 23-24, although the district court did not clearly indicate that it was addressing this claim. Ultimately, the district court concluded that Conger's failure to disclose his symptoms and overall health condition was a material misrepresentation justifying MetLife's decision to rescind. Conger, 396 F.Supp.2d at 782. 46 Because MetLife did not raise Conger's alleged misrepresentation by omission as a reason for terminating his coverage (or as a basis for judgment on the administrative record), we are uncertain whether the district court properly raised this issue in deciding MetLife's motion for judgment on the administrative record. However, we need not address this issue because even if the district court acted within its discretion to raise the issue, Conger's failure to volunteer unrequested information did not justify MetLife's decision to terminate coverage. 47 In reviewing this decision, we apply the federal common law. The LTC SA contains a broad preemption clause. 5 U.S.C. § 9005(a). In the related arena of insurance plans governed by ERISA, which also broadly preempts state law, we have held that the federal common law determines the effect of a misrepresentation or omission in the insured's application for insurance. Davies v. Centennial Life Ins. Co., 128 F.3d 934, 943 (6th Cir. 1997). We adopt the same approach for cases under the LTCSA. 48 The fatal flaw in the district court's reasoning is its failure to address whether Conger was under any duty to disclose his medical history. This issue is crucial, as we have already determined that MetLife has not shown that Conger answered incorrectly any of the questions MetLife asked, and the record does not indicate that MetLife required any information beyond these questions. It is black-letter law that [a] party applying for insurance ... generally has no duty where the application makes no specific inquiries. 6 COUCH ON INS. § 84:2 (3d ed.2006). Even a case cited by MetLife explicitly recognizes that an applicant is under no duty to volunteer information where no question plainly and directly requires it to be furnished. Aetna Cas. & Sur. Co. v. Retail Local 906 of AFL-CIO Welfare Fund, 921 F.Supp. 122, 132 (E.D.N.Y. 1996) (applying New York law and quoting Vella v. Equitable Life Assurance Soc., 887 F.2d 388, 392 (2d Cir.1989)). At least eight states follow the same principle. See, e.g., id., St. Paul Fire & Marine Ins. Co. v. Jacobson, 48 F.3d 778, 780-81 (4th Cir.1995) (Virginia law); Cosby v. Transamerica Occidental Life Ins. Co., 860 F.Supp. 830, 833 (N.D.Ga.1993) (Georgia law); COUCH § 84:2 n. 10 (citing cases from Alabama, California, Georgia, Minnesota, Washington, and Wisconsin). The district court did not cite, and we were not able to find, a case applying federal common law that reached a contrary conclusion. Accordingly, we hold that under federal common law, applicants for insurance have no duty to disclose undiagnosed symptoms or medical history not specifically requested by an insurance company. 4 IV. CONCLUSION 49 For the reasons explained above, we hold that (1) MetLife abused its discretion by steadfastly adhering to its decision to rescind Conger's long-term care coverage while ignoring, without explanation, significant evidence contrary to its conclusion that Conger had a progressive neurological disorder when he applied for coverage; and (2) Conger had no independent duty to disclose information not requested by MetLife. Accordingly, we REVERSE the district court's judgment on the pleadings. We note that our first holding forecloses MetLife's claim for rescission, and our second holding forecloses its claim for declaratory judgment, so we REMAND with instructions to dismiss MetLife's complaint.