Court Opinion

ID: 4111894
Source: CourtListenerOpinion
Date Created: 2016-12-28 21:01:13.901228+00
Date Added: 2024-06-11T07:46:12.009823
License: Public Domain

NOT FOR PUBLICATION
                                                                      FILED
                     UNITED STATES COURT OF APPEALS
                                                                       DEC 28 2016
                            FOR THE NINTH CIRCUIT                  MOLLY C. DWYER, CLERK

 BIPIN BHAKTA,                                   No.    15-55474

                      Plaintif-Appellant,        D.C. No.
                                                 8:14-cv-00351-DOC-AN
   v.

 HARTFORD LIFE AND ANNUITY                       MEMORANDUM *
 INSURANCE COMPANY,

                      Defendant-Appellee.

                    Appeal from the United States District Court
                       for the Central District of California
                     David O. Carter, District Judge, Presiding

                           Submitted December 7, 2016**
                               Pasadena, California

Before: CALLAHAN, BEA, and IKUTA, Circuit Judges.

        Appellant Bipin Bhakta (“Bhakta”) appeals from the district court’s decision

on a motion for summary judgment upholding Hartford Life and Annuity Insurance

Company’s (“Hartford”) rescission of a life insurance policy held by Bhakta’s

        *
             �is disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
        **
             �e panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
wife, Mrs. Gharmista Bhakta, for material misstatements on an insurance

application. We review the district court’s grant of summary judgment de novo,

Hamilton v. State Farm Fire & Cas. Co., 270 F.3d 778, 782 (9th Cir. 2001), and

a�rm.

      In December 2012, Mrs. Bhakta applied for a life insurance policy with

Hartford, naming Bhakta as the beneﬁciary. Mrs. Bhakta denied a history of

alcohol abuse, liver disease, or colitis. Two months later, in February 2013, Mrs.

Bhakta died at the age of 41, with a ﬁnal hospital diagnosis of, inter alia, “acute

liver necrosis.” Bhakta ﬁled a claim for beneﬁts, after which Hartford commenced

an investigation into Mrs. Bhakta’s cause of death and medical history. Mrs.

Bhakta’s medical records reﬂected a steady history of alcohol dependency since

April 2010, liver disease since May 2010, and a diagnosis of colitis ten years

before her death.

      Under California insurance law, “any material misrepresentation or the

failure, whether intentional or unintentional, to provide requested information

permits rescission of the [insurance] policy by the injured party.” Mitchell v.

United Nat’l Ins. Co., 127 Cal. App. 4th 457, 468 (2005) (internal quotation marks

omitted); Old Line Life Ins. Co. v. Superior Court, 229 Cal. App. 3d 1600, 1604–05

                                          2
(1991); see Cal. Ins. Code § 359. Whether a misrepresented fact is material turns

on whether its truthful disclosure would have afected the insurer’s decision

whether to grant the policy. Cal. Ins. Code § 334.

      It is undisputed that Mrs. Bhakta answered “no” to the question: “Have you

ever been advised about, counseled or treated for the excessive use of alcoholic

beverages?” Her medical records plainly belie this response, and reveal a repeated

diagnosis of “alcohol dependence.”1 �ose records also reference a discussion

plan regarding Mrs. Bhakta’s eforts to continue “not taking alcohol.” Mrs. Bhakta

was therefore at least “advised about” her “excessive use of alcoholic beverages,”

and her contrary answer was a material misrepresentation.2 San Francisco Lathing

Co. v. Penn Mut. Life Ins. Co., 144 Cal. App. 2d 181, 186 (1956) (“An answer to a

question as to whether an applicant had ever had a speciﬁed disease is material

and, if false, avoids the policy.”) (internal quotation marks omitted).

      Bhakta contends that, notwithstanding any material misrepresentations,

1
       Mrs. Bhakta also represented to Hartford that her alcohol consumption
consisted of one glass of wine “maybe once every two weeks.”
2
       Because we conclude that Mrs. Bhakta’s misrepresentation of her alcohol
abuse provided an adequate basis for rescission, we need not decide whether there
is a genuine issue of material fact whether Mrs. Bhakta also materially
misrepresented her liver disease and colitis.

                                          3
Hartford waived its right to rescind the policy by failing to investigate Mrs.

Bhakta’s medical history before issuing the policy. Bhakta argues that several

facts available to Hartford should have put Hartford on inquiry notice of Mrs.

Bhakta’s alcohol problem, namely a brief case of mild depression reﬂective of

family troubles, a respiratory infection, no work history, and elevated alanine

transaminase (“ALT”) and high-density lipoprotein (“HDL”) cholesterol levels.

      As a general rule, an insurer may rely upon the insured to provide such

information as it needs to determine whether to provide coverage. Old Line, 229
Cal. App. 3d at 1604. California courts have held that “[r]equiring full disclosure

at the inception of the insurance contract and granting a statutory right to rescind

based on concealment or material misrepresentation at that time safeguard the

parties’ freedom to contract.” Mitchell, 127 Cal. App. 4th at 468–69. Nonetheless,

under California law, “[t]he right to information of material facts may be waived . .

. by neglect to make inquiries as to such facts, where they are distinctly implied in

other facts of which information is communicated.” Cal. Ins. Code § 336; see

Anaheim Builders Supply, Inc. v. Lincoln Nat’l Life Ins. Co., 233 Cal. App. 2d 400,

410–11 (1965); DuBeck v. Cal. Physicians’ Serv., 234 Cal. App. 4th 1254, 1267–68

(2015).

                                          4
      Waiver is “ordinarily a question for the trier of fact[, but] . . . where there are

no disputed facts and only one reasonable inference may be drawn, the issue can be

determined as a matter of law.” DuBeck, 234 Cal. App. 4th at 1265.

      �e information Hartford had in its possession at the time it issued the policy

did not “distinctly impl[y]” Mrs. Bhakta’s alcohol abuse, liver disease, or colitis.

�e only indicators in the record that Hartford’s underwriting guidelines

recognized as possibly reﬂecting alcohol abuse are elevated ALT and HDL levels

and a history of depression.3 But Bhakta ofers no evidence that Mrs. Bhakta’s

slightly elevated ALT or HDL levels or a single instance of “mild depression”

present “obvious leads” that “distinctly impl[y]” alcohol abuse or liver disease.

See Old Line, 229 Cal. App. 3d at 1606. An elevated ALT level alone “is not very

speciﬁc for alcohol abuse,” nor does an elevated HDL level indicate “heavy

alcohol use” unless associated with other risk factors. While an elevated ALT level

may indicate alcohol abuse if the ratio of aspartate aminotransferase (“AST”) to

3
       Bhakta asserts that his wife’s application contained three additional
indicators of alcohol abuse, namely marital instability, frequent bronchial
infections, and frequent job changes or poor employment. �e record lacks
evidentiary support for these contentions. At most, Mrs. Bhakta reported a single
past respiratory infection and that she worked as a homemaker, which Hartford
considers to be an occupation.

                                           5
ALT is greater than 1, Mrs. Bhakta’s AST-to-ALT ratio was only 0.76.

      Where courts have found that an insurer waived its right to rescind, the

insurer ignored evidence that ﬂatly contradicted the insured’s answers. See, e.g.,

Rutherford v. Prudential Ins. Co. of Am., 234 Cal. App. 2d 719, 734–35 (1965);

DiPasqua v. Cal. W. States Life Ins. Co., 106 Cal. App. 2d 281, 284 (1951);

DuBeck, 234 Cal. App. 4th at 1257–58, 1268. Here, in contrast, the undisputed

evidence only vaguely suggests the possibility of alcohol abuse or liver disease. 4

      Bhakta alternately argues that Hartford waived its right to rescind by

engaging in unlawful post-claims underwriting. Bhakta’s argument relies on an

inapposite provision of California law, California Health and Safety Code

§ 1389.3, which applies to certain medical plans, not life insurance policies. Nieto

v. Blue Shield of Cal. Life & Health Ins. Co., 181 Cal. App. 4th 60, 84 (2010).

Accordingly, Hartford did not waive its right to rescind Mrs. Bhakta’s policy.

      AFFIRMED.

4
        Bhakta profered expert testimony that Hartford ignored indications of
alcohol abuse, but that testimony relied on assertions not supported by the record—
e.g., that Mrs. Bhakta experienced marital instability. See supra note 3; see also
Fed. R. Evid. 702(b).

                                          6