Opinion ID: 2511821
Heading Depth: 1
Heading Rank: 6

Heading: Issue IIDuty to Investigate

Text: [¶ 19] Mrs. Harper argues that Fidelity had a duty to further investigate Mr. Harper's answers on his insurance application, and that Fidelity should have obtained his medical records rather than rely on the application itself. Fidelity, however, disputes the assertion that it was under a duty to investigate the answers Mr. Harper gave in his application when the application was submitted, especially because Fidelity had no reason to assume that the answers were not truthful or accurate. [¶ 20] An insurer is under no duty to investigate the truthfulness of an applicant's responses unless it has notice that those responses might not be truthful or accurate. White, 831 F.Supp. at 1545. A majority of cases interpreting statutes similar to Wyoming's statute have held that an insurer does not have a duty to investigate, and is entitled to rely on the representations made by the applicant on his application. See, for example, Twin City Bank v. Verex Assur. Inc., 733 F.Supp. 67, 71 (E.D.Ark. 1990) (interpreting Ark.Code Ann. § 23-79-107(a) (LexisNexis) which is verbatim to Wyoming's statute). [¶ 21] In White, 831 F.Supp. at 1553, the Tenth Circuit weighed in on this very issue: Although the Tenth Circuit has not spoken to this issue as of the date of this order, this Court is inclined to follow the rulings of the other appellate and trial courts that have considered this issue and have rejected this position, concluding that the insurer is entitled to rely on an insured's representations.... [Citations omitted.] As the court in Bageanis said, the insured was the one who had the burden to supply complete and accurate information to the insurer.... [Citations omitted.] Therefore, the Court concludes that the insurer did not have a duty to investigate and thus was entitled to rely on White's representations. [¶ 22] Also, in a case similar to the instant one (and mentioned in White ), the insured omitted several hospitalizations for psychological problems and a history of suicide attempts from her insurance application (but did disclose three other hospitalizations for mental issues). Mutual Ben. Life Ins. Co. v. Morley, 722 F.Supp. 1048 (S.D.N.Y. 1989). She argued that the insurance company engaged in lax and sloppy underwriting and had the underwriter been more thorough and ordered medical records, her prior hospitalizations and suicide attempts would have been discovered, precluding her from insurance coverage. The court granted summary judgment to the insurance company, noting that the company was entitled to rely on the representations made by the applicant. [¶ 23] Mrs. Harper insists that there were red flags that were ignored by Fidelity and, rather than investigate, the underwriter simply ignored the signs that warranted more study. Specifically, Mrs. Harper points to the conflicting MIB information versus the application regarding Mr. Harper's weight. The MIB listed his weight at 305 pounds, while his application stated his weight to be 275 pounds. Contrary to Mrs. Harper's assertions, however, the red flags in this case were adequately explained away by the underwriter: Indeed, Mr. Harper indicated his weight was 275 pounds, whereas the MIB reported his weight to have been 305. The underwriter testified that she looked at the different weight on the MIB report and assumed that Mr. Harper would have lost enough weight to fit into the guidelines which, for Mr. Harper, would have been 301 pounds. In the simplified underwriting process that was used in Mr. Harper's case, the underwriter is to rely on the health questionnaire and the MIB, which is what happened in this instance. Furthermore, Mr. Harper represented in his application that [t]he statements made in this application are complete, true, and correctly recorded. Mr. Harper's knowledge in this instance was not limited to his knowledge and belief, as in some cases. There, where the insurance application contains knowledge and belief language, the insurer must show that the insured intentionally made the misstatement or omission to rescind the contract. See Joseph v. Zurich Life Ins. Co. of America, 159 Fed. Appx. 114, 116, fn. 3 (11th Cir.2005). [¶ 24] Based upon the law, and Mr. Harper's own assertions, Fidelity was under no duty to investigate and was entitled to rely upon Mr. Harper's application.