Opinion ID: 2971672
Heading Depth: 2
Heading Rank: 1

Heading: false answers in policy application

Text: Provident argues that “[a]lthough Provident conclusively established all the elements of insurance fraud under [Ohio Rev. Code] § 3923.14, the District Court misapplied the law and held that Provident failed to meet the elements of R.C. § 3923.14.” Ohio R.C. § 3923.14 states: The falsity of any statement in the application for any policy of sickness and accident insurance shall not bar the right to recovery thereunder, or be used in evidence at any trial to recover upon such policy, unless it is clearly proved that such false statement is willfully false, that it was fraudulently made, that it materially affects either the acceptance of the risk or the hazard assumed by the insurer, that it induced the insurer to issue the policy, and that but for such false statement the policy would not have been issued. The district court found that the insurance application in question bore questionable or incomplete answers to certain questions concerning Matthews’ medical history, and that one question was not answered. At trial and on appeal Provident has challenged answers (and a failure to answer) with respect to four questions: Questions 6(c) and (d) asked if Matthews had “ever been treated for or ever had any known indication of” “emotional, mental, nervous, urinary or digestive disorder” or “high blood pressure or disease of the heart or circulatory system.” Matthews answered both 6(c) and 6(d) in the negative, though he had sought treatment for chest pains, awaking at night in a cold sweat, and general anxiety and irritability. Matthews’ doctor told him to stop smoking and prescribed an anti-depressant to help Matthews stop. The district court accepted Matthews’ -3- No. 03-3824/3825 B-T Dissolution, Inc. v. Provident Life & Accident Ins. Co. testimony that he believed the diagnosis was that he did not have a heart condition, but only received the prescription for high stress and a smoking habit. Without finding that Matthews’ answers to these two questions were false, the district court determined that the evidence did not prove Matthews gave those answers with fraudulent intent. In response to question 9, asking whether Matthews had within the past five years received medical care, Matthews answered “yes” and listed one visit to the doctor, but omitted the visit occasioned by the chest pains discussed above. Finally, Matthews left blank question 12, which asked whether he had ever applied for insurance only to be turned down, or if any insurance policy of his had ever been modified, rated, or canceled. Matthews had in the past applied for increased insurance and been turned down. Finding that the application was filled out by B-T’s insurance broker and then later signed by Matthews, the court determined that the challenged answers were not willfully made nor fraudulently made, so as to void the policy. We review a district court’s factual findings for clear error, but we review legal conclusions de novo. Lincoln Elec. Co. v. St. Paul Fire & Marine Ins. Co., 210 F.3d 672 (6th Cir. 2000). Provident asserts that the court’s finding that Matthews and B-T signed an insurance application containing false and incomplete answers suffices to render the application fraudulent under Ohio law. Provident argues that the district court’s contrary conclusions amount to the creation of a goodfaith exception to the mandate of R.C. § 3923.14. Provident cites Buemi v. Mutual of Omaha Ins. Co., 524 N.E.2d 183 (Ohio App. 1987) for the proposition that a false statement on an insurance application constitutes a willful and fraudulent statement. -4- No. 03-3824/3825 B-T Dissolution, Inc. v. Provident Life & Accident Ins. Co. The Ohio courts have recognized that R.C. § 3923.14 creates a five-part test, each element of which is a factual issue on which the insurance company bears the burden of proof by clear and convincing evidence. See, e.g., Buemi, 524 N.E.2d at 187. The Ohio courts have not held that a false answer on a signed insurance application is, as a matter of law, both willful and fraudulent. Indeed, R.C. § 3923.14 on its face would preclude such a holding, for it declares that a false statement does not excuse the denial of benefits unless the statement was willfully made and, as a separate question, fraudulently made. The district court determined as a factual matter that Provident did not present clear and convincing evidence that Matthews and B-T willfully and fraudulently made false statements. Provident does not argue that these factual findings are clearly erroneous. We therefore affirm the district court’s factual findings and the conclusion that B-T’s recovery under the insurance policy is not barred by the falsity of the statements on the application.