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Principal National Life Insurance Co. v. Coassin

United States District Court, D. Connecticut

July 25, 2016

PRINCIPAL NATIONAL LIFE INSURANCE COMPANY, Plaintiff,
v.
EMILY C. COASSIN and THOMAS GIBNEY as Co-Trustees of the LAWRENCE P. COASSIN IRREVOCABLE TRUST dated 6/23/1999, Defendants.

          MEMORANDUM OF DECISION

          JANET BOND ARTERTON, U.S.D.J.

         On June 14 through 17, 2016, the Court held a bench trial on Plaintiff Principal National Life Insurance Company ("Principal")'s action against Defendants Emily C. Coassin and Thomas Gibney in their capacities as Co-Trustees of the Lawrence P. Coassin Irrevocable Trust dated 6/23/1999 ("the Trustees"), for rescission of the life insurance policy ("the Policy") Principal issued to Larry Coassin and for a declaratory judgment that the Policy is void ab initio and Principal is not liable to pay benefits under it, as well as Defendants' cross-claim for breach of contract and a declaratory judgment of the Trustee's and Trust's rights under the policy. For the following reasons, the Court concludes that Mr. Coassin's knowing misrepresentations on his life insurance application were not material, and as such, the Policy was not void ab initio and Principal did not have a right to rescind it. Judgment is entered in Defendants' favor on its cross-claim.

         I. Background

         The following background facts were established at the summary judgment stage. On April 9, 2012, Larry Coassin submitted an application to Principal for a $10, 000, 000 life insurance policy at a preferred rate to replace a MetLife life insurance policy for $10, 000, 000 which Mr. Coassin had been issued in 2011. (See Ruling Mot. Summ. J. [Doc. # 90] at 1-2; Policy, Pl.'s Trial Ex. 1.) Among the questions in the application were: No. 18(j) "In the last ten years, have you had, been treated for or diagnosed as having . . . any disease or disorder of the eyes, ears, nose, throat or skin?, " to which Mr. Coassin answered "no"; and No. 21 "Date last seen" by primary physician and reason, to which Mr. Coassin responded, "Nov 2011 - sinus infection - all fine now."[1] (Ruling Mot. Summ. J. at 2; Policy at 28-29). On April 17, 2012, Principal issued Policy No. 4701113 ("the Policy") to the Lawrence P. Coassin Revocable Trust dated 6/23/99, effective February 22, 2012 (the Policy was backdated Mr. Coassin's request), subject to the requirements that Mr. Coassin complete an Amendment form ("the Amendment"), Supplemental Statement of Health ("the Supplement"), and Acknowledgment and Delivery of Receipt, and pay the first annual premium. (Ruling Mot. Summ. J. at 2.)

         The Amendment, signed by Mr. Coassin and then-Trustee David Hadden on April 25, 2012, stated: "With application amended to show response to question 18J, Part B; yes, earache with dizziness, lightheadedness and vertigo 12/11. Resolved completely without recurrence. No further MD visits needed." (Id. at 2; see Policy at 21.) The Supplement, also signed by Mr. Coassin on April 25, 2012, asked "Have you had any illness or injury or consulted a member of the medical profession since the date of the application?" to which Mr. Coassin responded "no." (Ruling Mot. Summ ). at 2; see Policy at 22.) The Policy was issued the same day. (Ruling Mot. Summ.). at 2; see Policy Issuance, Pl's Trial Ex. 43.)

         In fact, the Court found at summary judgment, Mr. Coassin continued to experience three of the four symptoms listed in the Amendment after his December 2011 appointment, and he saw Dr. Hirokawa on April 17, 2012 (after the date of his April 9, 2012 application and before he signed the April 25, 2012 Amendment). (Ruling Mot. Summ. J. at 10, 11.) His medical records reveal that he saw Dr. Hirokawa for weakness/fatigue, off balance/dizziness, and lightheadedness, and that because of these symptoms, on April 17, 2012, Dr. Hirokawa referred him for further testing to be conducted on May 8, 2012. (Id.; see Hirokawa Record Apr. 17, 2012, Pl.'s Trial Ex. 4; Auditory Test Results, Pl.'s Trial Ex. 5.) The Court thus concluded that Mr. Coassin had made knowing misrepresentations in his application. (Ruling Mot. Summ. J. at 10-11.) However, the Court found genuine issues of material fact with respect to the question of whether Mr. Coassin's knowing misrepresentations were material, thus necessitating a trial, which addressed only the narrow issue of materiality.[2]

         II. Findings of Fact and Conclusions of Law

         In making its findings of fact and conclusions of law, the Court applies the following standard of materiality, which it adopted in its summary judgment ruling:

Under Connecticut law, "a fact is material if 'it would so increase the degree or character of the risk of the insurance as to substantially influence its issuance, or substantially affect the rate of premium.'" F.D.I.C. v. Great Am. Ins. Co., 607 F.3d 288, 295 (2d Cir. 2010) (quoting Pinette v. Assurance Co. of Am., 52 F.3d 407, 411 (2d Cir. 1995)). "'The test of materiality is in the effect which the knowledge of the fact in question would have on the making of the contract.'" Quinn v. Fed. Kemper Life Assur. Co., 99 F.3d 402, at *2 (2d Cir. 1995) (unpublished opinion) (quoting State Bank & Trust Co. v. Connecticut General Life Ins. Co., 145 A. 565, 566 (Conn. 1929)).... [A]n answer to a question on an insurance application is presumptively material, " Pinette, 52 F.3d at 411 (emphasis added); see also Great Am. Ins. Co., 607 F.3d at 295 ("[Because the insured's] prior losses were the subject of specific inquiry, [the insured's] response is presumptively material"), and an inquiry into whether the insurer would have issued the policy had the applicant been truthful on the application is therefore appropriate, see Quinn, 99 F.3d at *2 ("As Kemper would not have issued the preferred policy to Albert Quinn had he answered the questions truthfully, the misrepresentations were material as a matter of law.").

         Because the Court already held in its summary judgment ruling that Mr. Coassin had made knowing misrepresentations in response to questions on his application, a presumption of materiality applies. The burden is thus on Defendants to prove, by a preponderance of the evidence, that Mr. Coassin's misrepresentations were not material.

         With that legal standard in mind, the Court makes the following findings of fact and conclusions of law, based on the evidence presented at trial, with respect to: (1) Mr. Coassin's medical history up to June 2012[3]; (2) Principal's contestability review; (3) the relevant guidelines; (4) whether Principal would have issued the Policy had it known the true facts; and (4) Defendants' cross-claim for breach of contract.

         A. Coassin's Medical History

         On December 15, 2011, Mr. Coassin saw Dr. Lorenzo Galante, who was his primary care physician at the time, for lightheadedness. (Galante Record Dec. 15, 2011, Defs.' Trial Ex. 504. at 1.) His records note under "History of Present Illness" that Mr. Coassin was complaining of vertigo which he claimed he had experienced "in the past on and off' and which he had previously been told was benign positional vertigo ("BPV"). (Id.) Under "Examination, " Dr. Galante noted that he had been "able to reproduce vertigo in the office" when he asked Mr. Coassin "to sit up from [a] laying down position." (Id.) Under "Assessments, " he wrote, as relevant here, "Dizziness" and "Vertigo." (Id.) Finally, under "Treatment, " he noted: "This is recurrent BPV, the Differential diagnosis was described/discussed to the [patient] and he declines necessity to eval[uate] with other tests recommended: labs ecg etc... he states [he] had a life insurance exam [with] labs ecg 1 week ago and everything is normal." (Id. at 2.)

         Four months later, on April 17, 2012, Mr. Coassin saw Dr. Ronald Hirokawa, a head and neck surgery specialist and an ear, nose, and throat ("ENT") specialist, at his office in Ansonia for dizziness and lightheadedness, which he said he had been experiencing for the past six months. (See Hirokawa Record Apr. 17, 2012.) Mr. Coassin reported (as memorialized in Dr. Hirokawa's notes) that his symptoms occurred when he stood up, and that they were worse in the mornings. (Id.) He also reported neck pain on his left side which radiated to his left ear. (Id.) Dr. Hirokawa's examination of Mr. Coassin revealed nothing remarkable, but he nonetheless ordered a basic audiometric test, a videonystagmography ("VNG") test, and an auditory brainstem response ("ABR") test to be performed in his office on May 8, 2012. (Id.) He explained at trial that he ordered the testing to determine the cause of Mr. Coassin's dizziness because it was atypical for someone to experience dizziness for such a long period of time.

         The results of the tests, conducted by audiologist P. DeWitt, were as follows. The basic audiogram, which Dr. Hirokawa testified is essentially a hearing test, revealed normal tympanograms on both ears, indicating normal middle ear functioning. (See Auditory Test Results at 7.) The ABR test, which measures how quickly a sound signal goes from the ear to the brain, revealed normal left and right ears, but when both ears were tested, there was some delay in III-V interpeak latency. (See Id. at 2.) Dr. Hirokawa testified that the difference in the ranges was 0.24 (see Id. at 3), which is very slightly above where it should have been. Neurologist Dr. Samuel Potolicchio added that the results were "so border-line" they "were almost normal." However, the audiologist determined that based on the results, retrocochlear (meaning between the inner ear and brain) pathology could not be ruled out. (Id. at 2.) In other words, according to Dr. Hirokawa, the audiologist could not determine based only on the testing whether there was a problem in the nerve that carries the signal from the ear to the brain or in the brain itself. The audiologist recommended that Mr. Coassin follow up with Dr. Hirowkawa. (Id.)

         The VNG test, the final test the audiologist conducted, was actually a series of tests used to determine if there is a normal response between the inner ear and brain. Of the VNG tests the audiologist performed, two returned abnormal results: the Dix-Hallpike Right and the Positional Head tests. (See Id. at 1.) The Dix-Hallpike Right test entailed suddenly thrusting Mr. Coassin in a backwards position while he was lying on his back, on the right side. When this was performed, Mr. Coassin's eyes flickered to the left, then came back to the right, and then went back left. When the test was repeated, however, this did not occur. (See id.) The audiologist reported that this was a "non-localizing sign, " meaning (as Dr. Hirokawa testified) that the testing did not reveal whether Mr. Coassin had only an inner-ear problem or something else. (See id) The positional head test showed a "down-beating nystagmus" in the supine position (id.), a result Dr. Hirokawa testified was not commonly associated with BPV, but which, Dr. Potolicchio asserted was sometimes seen in people with BPV. Additionally, Mr. Coassin reported significant dizziness when he lay down during the test. (Id.) The audiologist noted: "This is a sign of [a central nervous system ('CNS')] lesion" (id.), though Dr. Hirokawa was somewhat more equivocal in his testimony, stating that it could be sign of a CNS lesion.

         Dr. Hirokawa spoke with Mr. Coassin on the phone on May 10, 2012, at which time he told him that the VNG test results were abnormal, there was a question about whether he had a central nervous system abnormality or lesion, and that based on the ABR test results, a retrocochlear lesion could not be ruled out. (See Hirokawa Notes May 10, 2012, Defs.' Trial Ex. 513 & PL's Trial Ex. 6.) As a result, he ordered an MRI, which was conducted by radiologist Richard Becker on May 31, 2012. (See Radiology Report, PL's Trial Ex. 7.) Dr. Becker's report notes a diagnosis of vertigo, and states that an MRI without contrast was performed and revealed "[s]light patchy long TR hyperintensity in the frontal lobe." (Id.) Although this "white matter" was "nonspecific, " Dr. Becker stated that it "likely represent[ed] mild age-related ischemic change." (Id.) He added that "[d]emyelinating disease and other possibilities are considered less likely although not excluded." (Id.) Finally, he noted, "[n]o abnormal mass is seen." (Id.)

         Dr. Hirokawa testified that he had ordered the MRI because he wanted to look at the posterior aspect of the brain, which is where one would generally expect to see something causing vertigo or dizziness. While the scan revealed nothing in the posterior part of the brain and no indication of a tumor or lesion, the MRI was "not exactly normal, " and so when Dr. Hirokawa spoke to Mr. Coassin on June 2, 2012, he recommended that he seek a consult with a neurologist. (See Hirokawa Notes June 2, 2012, PL's Trial Ex. 8.) Mr. Coassin responded that he had a brother-in-law who was a neurologist, and Dr. Hirokawa thus recorded in his records "Rec: Neurology consult (Brother-in-Law)." (Id.)

         On the weekend of June 2, 2012, Mr. Coassin's wife, Emily Coassin, fedexed Mr. Coassin's MRI results to his brother-in-law, Dr. Samuel Potolicchio, who spoke with Mr. Coassin on the phone a day or two later (Dr. Potolicchio did not examine Mr. Coassin[4]). He testified that during that conversation, he told Mr. Coassin that his MRI was for the most part normal. There was no structural lesion in the brain to suggest a tumor. The only reported finding, tiny white spots, were, he said, very common and non-specific (in other words, one could see such spots in people who are ageing, people with migraines, etc.). Although Dr. Potolicchio admitted that he did not know about Mr. Coassin's abnormal VNG and ABR tests at the time, he also testified that had he seen the testing results, it would not have changed his evaluation of the MRI. After reviewing the MRI and talking to Mr. Coassin, he testified, he believed Mr. Coassin most likely had BPV because his symptoms were episodic and not progressive. He told Mr. Coassin he was fine, and he did not recommend any further testing or evaluation. He took no notes on his conversation with Mr. Coassin. Mr. Coassin's wife, Emily Coassin, testified that when Mr. Coassin got off the phone with Dr. Potolicchio, he started dancing around the room, pointing at his daughter and saying "my brain's better than your brain." She added, he was relieved; everything was fine.

         Dr. Potolicchio never communicated his analysis to Dr. Hirokawa. However, Dr. Hirokawa testified that had Dr. Potolicchio done so, he would not have referred him to any other doctors or given him any additional treatment.

         Five months later, in November 2012, Mr. Coassin was diagnosed with a brain tumor, which appeared on a second MRI taken at that ...


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