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Ramsey v. Penn Mut. Life Ins. Co.

United States Court of Appeals, Sixth Circuit

June 1, 2015

BARBARA RAMSEY, Plaintiff-Appellant,
v.
PENN MUTUAL LIFE INSURANCE COMPANY, Defendant-Appellee

Argued April 29, 2015

Page 814

Appeal from the United States District Court for the Northern District of Ohio at Cleveland. No. 1:12-cv-01738--William H. Baughman, Jr., Magistrate Judge.

ARGUED:

Joseph William Diemert, Jr., DIEMERT & ASSOCIATES CO., L.P.A., Cleveland, Ohio, for Appellant.

Jeffrey D. Fincun, WESTON HURD LLP, Cleveland, Ohio, for Appellee.

ON BRIEF:

Joseph William Diemert, Jr., Daniel A. Powell, DIEMERT & ASSOCIATES CO., L.P.A., Cleveland, Ohio, for Appellant.

Jeffrey D. Fincun, Karen A. Davey, Shawn W. Maestle, WESTON HURD LLP, Cleveland, Ohio, for Appellee.

Before: CLAY, KETHLEDGE, and DONALD, Circuit Judges.

OPINION

Page 815

BERNICE BOUIE DONALD, Circuit Judge.

In this case, Defendant-Appellee Penn Mutual Life Insurance Company (" Penn Mutual" ) refused to pay death benefits to Plaintiff-Appellant Barbara Ramsey (" Plaintiff" ) upon the death of her husband, John Ramsey (" Mr. Ramsey" ). The district court concluded that Mr. Ramsey had failed to inform Penn Mutual of a change in the status of his health prior to the delivery of his life-insurance policy, thereby breaching a representation in the contract and permitting Penn Mutual to deny payment of benefits. Ramsey v. Penn Mut. Life Ins. Co., 36 F.Supp.3d 761, 770-71 (N.D. Ohio 2014). On that basis, the district court granted summary judgment to Penn Mutual. Id. at 773. We REVERSE.

I.

A.

The parties have stipulated to the following facts. On February 10, 2010, Mr. Ramsey applied for $2 million in life insurance from Penn Mutual. The application

Page 816

consisted of two parts. Part I, completed and signed by Mr. Ramsey, indicated that he was a firefighter for the City of Cleveland for sixteen years, that his wife was his primary beneficiary, and that he had last seen his personal physician for a checkup in February 2006. Part I also contained the following representation:

I[ ], the Proposed Insured[ ], . . . represent that the statements and answers in this part I of the application are written as made by me[ ] and are complete and true to the best of my [ ] knowledge and belief. I[,] the Proposed Insured[ ], . . . agree that they will be a part of the contract of insurance if issued; that I[ ] will be bound by such statements and answers, and that [Penn Mutual], believing them to be true, will rely and act upon them. I[ ] also understand and agree that:
1. Subject to the provisions of the temporary insurance agreement attached to this application, no insurance will be in force until the first premium is paid in full and the policy is delivered while the health, habits, occupation and other facts relating to the Proposed Insured[ ] . . . are the same as described in this Part I of the application, any Part II required by [Penn Mutual] and any amendments or supplements to them.

Part II of the application, entitled " Medical Examiner's Report," involved a medical examination of Mr. Ramsey at his home by a licensed professional nurse. The Medical Examiner's Report contained a series of medical history questions. As relevant to this appeal, question 2(e) of the application asked whether Mr. Ramsey had " ever been treated for or had any indicator of . . . [j]aundice, intestinal bleeding, ulcer, hernia, colitis, recurrent indigestion or other disorder of the stomach, intestines, liver or gall bladder?" Mr. Ramsey disclosed that he suffered from chronic ulcerative colitis, providing the following explanatory details: " 1984. COLITIS. COLON -- INTESTINAL RESECTION[.] HOSPITAL X 4 DAYS. FULL RECOVERY 6 MOS. IAN LAVERY . . . LAST SEEN 2006. BX DONE. NORMAL FINDINGS[.]" Penn Mutual's underwriting guidelines define ulcerative colitis as " [a]n inflammatory disease of the mucosa of the large bowel," with symptoms including " [r]ectal bleeding, diarrhea, cramping, abdominal pain, anorexia and weight loss . . . ." Since at least 1981, Mr. Ramsey had suffered from chronic ulcerative colitis, which " occurs in a minority of patients." In 1984, Dr. Ian Lavery--a colorectal surgeon at the Cleveland Clinic--surgically removed Mr. Ramsey's colon in order to alleviate his colitis symptoms. According to Penn Mutual's underwriting guidelines, that procedure--called a " resection" --" is now rarely performed as persistent or recurrent symptoms almost invariably occur, and there is a risk of cancer developing in the rectal stump."

As with Part I, Mr. Ramsey signed Part II of the application, which contained the following representation:

I represent that the statements and answers in this Part II are written as made by me and are full, complete and true to the best of my knowledge and belief. I agree that they will be a part of the contract of insurance if issued, that I will be bound by such statements and answers, and that Penn Mutual . .., believing them to be true, will rely and act upon them.

Penn Mutual then proceeded with its underwriting process. On February 19, 2010, one of Penn Mutual's underwriters determined that, based on Mr. Ramsey's disclosures in question 2(e), Penn ...


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