Court Opinion

ID: 9697684
Source: CourtListenerOpinion
Date Created: 2023-08-25 19:26:10.242966+00
Date Added: 2024-06-11T18:20:34.612563
License: Public Domain

WEDEMEYER, EJ.
¶ 26. (dissenting). I write separately from the majority because I believe the trial court correctly ruled that Wis. Stat. § 631.11(3) does not apply to this case, and that because the blood was not drawn from Patrick until after he died, the life insurance policy did not go into effect.
¶ 27. This is a significant case in the development of insurance law as it is the first Wisconsin case to interpret Wis. Stat. § 631.11(3). I conclude that the majority has incorrectly interpreted the statute. Although the unusual and unfortunate circumstances presented in this case generate sympathy for Patrick and his family, our decision cannot be influenced by those circumstances, but must be decided by the language of the statute and the language of the insurance provisions involved. There is an old saying that "tough cases make bad law," and I fear that is what will happen here if this case is published.
¶ 28. As noted, our review on a summary judgment decision, the interpretation of a statute, and the interpretation of an insurance contract present issues of law, which this court reviews independently.
¶ 29. I agree with the trial court that Wis. Stat. §631.11(3) does not trump the contractual provisions involved because it does not apply under the circumstances presented by this case. This statutory section applies to conditions after the insurance policy comes into effect. Because the insurance policy here never went into effect, § 631.11(3) does not apply.
¶ 30. My conclusion is supported by four separate sources. First, the statutory language itself suggests that for the requirements under the statute to apply, *649there must be an insurance policy in effect. See Wis. Stat. § 631.11(3) ("No failure of a condition ... affects the insurer's obligations under {an insurance] policy....") (emphasis added). Second, the jury instructions and comment on this statute clearly imply that the statute only applies after a policy is in effect. The instructions use two examples of the "condition" referred to in the statute. The first was the insured's "failure to have a night watchman on the premises" and the second was where the insured stored inflammables on the premises. Wis JI — Civil 3105. The comment states that the "condition" the statute refers to is one "that require [s] that something shall or shall not be done after the policy takes effect." Id. (Emphasis added). The instructions/comment suggest that the "condition" referred to in § 631.11(3) is not a condition precedent, which must occur before the policy takes effect. Rather, the "condition" under the statute is an event that takes place after the contract has come into being.
¶ 31. My third source is the legislative history behind the statute.1 The legislative committee comments to Wis. Stat. § 631.11(3) explain:
This draft seeks a better balance, protecting the insurer against fraud and violations of conditions that would preclude acceptance of the risk, and giving [the insurer] access to the information it needs to under*650write, without giving it arbitrary power over the insured through application of the harsh common law doctrines.
¶ 32. Fourth, a Wisconsin federal court faced with this issue concluded that this statute does not apply to the situation where a policy is not yet in effect due to failure of a condition precedent. LaBonte v. Connecticut Gen. Life Ins. Co., 723 F. Supp. 392, 395 (E.D. Wis. 1989) (the "condition" referred to in the statute applies to conditions that occur after the policy takes effect, not before).
¶ 33. This is, in my view, the more reasonable interpretation of the statute and the only interpretation that comports with common sense. It would lead to absurd results to conclude that the statute applies to conditions required before a policy goes into effect. Taking such a premise to its logical conclusion, an applicant could indefinitely postpone required medical examinations and secure life insurance without affording the insurer any opportunity to evaluate the risk or the insurability of the applicant. In fact, the majority points out that the insurance company did not set forth any "specific timing" for the medical studies. Majority at ¶ 23. This was entirely within the potential insured's control. The majority's conclusion will eliminate an insurance company's ability to underwrite the risk that it is to assume in all cases where an insurance applicant postpones or repeatedly delays submitting to required medical studies. There is no reason to infer that Wis. Stat. § 631.11(3) was intended to remove an insurer's ability to perform effective underwriting.
¶ 34. Having concluded that the language of the statute does not apply, the analysis turns to the language at issue in the contract. Here, the conditional agreement provided that coverage would not begin *651until "[t]he date of completion of all examinations and medical studies required by the rules and practices of CKIS." Thus, the life insurance contract did not come into being until Patrick completed the required medical studies. "If a condition is attached to the contract's coming into being, there is as yet no contract." Kocinski v. Home Ins. Co., 147 Wis. 2d 728, 738, 433 N.W.2d 654 (Ct. App. 1988) (citation omitted), aff'd, 154 Wis. 2d 56, 452 N.W.2d 360 (1990).
¶ 35. Although there is some dispute whether both a urine test and a blood test were required or whether only a blood test was required, that dispute is immaterial because neither test occurred before Patrick died. The trial court made an important distinction when ruling on this matter. It stated that the required medical exam — a blood draw — was not completed until after Patrick died. If Patrick's blood had been drawn before he died, according to the language of the policy, coverage would have gone into effect. Thus, this case was distinguishable from Brown v. Equitable Life Insurance Co., 60 Wis. 2d 620, 211 N.W.2d 431 (1973) because Mr. Brown completed all the medical examinations that were required before he died. Id. at 625. Thus, the insurance company in Brown had the necessary information to underwrite the risk.
¶ 36. That was not the case here. It is undisputed that Patrick understood he had an obligation to submit to the blood draw and that the coverage would not be effective until that time. Patrick did not complete the blood draw before his death and, therefore, coverage never went into effect. The majority suggests that the insurance company should have attempted to perform the required tests using the blood drawn from Patrick's body post-mortem. Majority at ¶ 19.1 disagree. It was Patrick's responsibility to submit to a blood test in the *652manner prescribed by the insurance company. Moreover, the insurance company submitted an expert affidavit attesting that it would not be able to perform the necessary tests on the post-mortem blood because the chemical components of the blood would have changed and become insufficient for underwriting requirements.
¶ 37. The majority also states that the insurance company "could not prove that Patrick's failure to provide a blood sample before his death ’increase[d] the risk at the time of the loss,'" as required by Wis. Stat. § 631.11(3). Majority at ¶ 23. This statement reveals another reason why § 631.11(3) cannot apply to medical studies required as conditions precedent before an insurance policy becomes effective. If the insured applicant dies before completing the required medical studies, an insurance company will never be able to show that such failure "increased the risk." The purpose of the medical studies is to determine the risk of insuring the applicant. The insurance company does not have the ability to control the timing of the required medical studies, but must rely on the applicant to submit to the testing in a timely fashion. The incentive for the applicant to complete the medical studies timely is that until he or she does so, no coverage is in effect. The majority's opinion changes all that. Now, an applicant does not have that incentive because if he/she postpones the medical tests and dies before submitting to the studies, the insurance company has no way to prove that the applicant would have been denied for medical reasons. The insurance company will have to pay the benefits even though it had no opportunity to underwrite the risks. The legislature could not have intended such a result when it enacted § 631.11(3).
*653¶ 38. Accordingly, I respectfully dissent.2

 The majority summarily concludes that the statute is not ambiguous. I disagree. As evidenced by the split of this court in analyzing the statute, reasonable minds differ as to its meaning, and it is therefore ambiguous. State v. Sweat, 208 Wis. 2d 409, 416-17, 561 N.W.2d 695 (1997). Because I conclude that the statute is ambiguous, an examination of the legislative history is appropriate. UVE, Inc. v. LIRC, 201 Wis. 2d 274, 281-82, 548 N.W.2d 57 (1996).

 The conditional agreement also listed "Coverage Limitations." The second limitation stated: "No coverage shall be in force if the person(s) proposed to be insured is not a risk insurable in accordance with CKIS rules, limits and standards for the plans ...." CKIS was never able to determine whether Patrick was a "risk insurable" because he did not complete the medical studies required before he died. Thus, the limitation provides additional support for the conclusion that no coverage was in effect under the conditional agreement or the insurance policy.