Golden Rule Insurance v. Tomlinson Ex Rel. Commissioner of Insurance
277 P.3d 421
Kan. Ct. App.2012Background
- Golden Rule appeals a district court ruling upholding a Kansas Insurance Department order finding unfair claim settlement practices under K.S.A. 40-2404(9)(d) and (f).
- Denney sought medical coverage for preexisting digestive conditions; McClary, an independent broker, submitted Denney’s Golden Rule application without disclosing medical history.
- Golden Rule’s Independent Broker’s Contract states McClary is an independent contractor, not Golden Rule’s agent.
- The Department found McClary acted as Golden Rule’s agent and that Golden Rule violated the unfair claim settlement provisions by denying coverage pending investigation and then denying the claim.
- The court reverses, holding McClary was actually Denney’s agent, not Golden Rule’s, and Golden Rule did not violate 40-2404(9)(d) or (f).
- The predetermination issue is deemed moot after holding McClary as Denney’s agent; the matter is remanded for reversal of the department’s order.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was McClary Golden Rule’s agent? | Golden Rule contends no agency; McClary was an independent broker for Denney. | Department found McClary was Golden Rule’s agent. | No; McClary was actually Denney’s independent broker, not Golden Rule’s agent. |
| Did Golden Rule engage in unfair claim settlement practices (d) and (f)? | Golden Rule acted reasonably; McClary misrepresented to Denney and Golden Rule owed duty to insured. | Golden Rule’s underwriting relied on misrepresentation by the agent; they could deny or rider accordingly. | Reversed; Golden Rule did not violate 40-2404(9)(d) or (f) based on agency finding. |
| Should the predetermination claim be addressed? | N/A | N/A | Moot; not addressed further. |
Key Cases Cited
- Barbara Oil Co. v. Kansas Gas Supply Corp., 250 Kan. 438 (1992) (agency relationships and duties of the insurer to insured)
- Rosedale Securities Co. v. Home Ins. Co., 120 Kan. 415 (1926) (independent broker as agent of insured, not insurer)
- Pettijohn v. The Saint Paul Fire and Marine Ins. Co., 100 Kan. 482 (1917) (definition of soliciting agent and broker authority)
- Wilcox v. Eadie, 65 Kan. 459 (1902) (agency must be proven by principal’s action, not merely agent’s claims)
- Schneider v. Washington National Ins. Co., 200 Kan. 380 (1968) (insurer-agent relationships in insurance transactions)
- Chism v. Protective Life Ins. Co., 290 Kan. 645 (2010) (agency, liability, and misrepresentations in insurance)
- Earth Scientists v. United States Fidelity & Guar., 619 F. Supp. 1465 (D. Kan. 1985) (discussed concept of soliciting agent vs. broker (note: not official reporter))