Jacky L. Larson v. The Northwestern Mutual Life Insurance Company, CMInformation Specialists, Inc., 2014 Minn. LEXIS 570

Background

James Larson applied for and received a Northwestern Mutual life policy in 2008 after answering medical-history questions in a paramedical exam and a telephone interview; he identified a primary physician and a dermatologist but did not disclose a 2004–2005 cardiology consultation or a CAT angiogram, and denied chest pain within ten years.
Larson signed consent authorizing Northwestern Mutual to obtain his full medical chart; Northwestern Mutual requested seven years of records from Fairview Ridges Clinic’s records vendor, CMInformation.
CMInformation provided Fairview records but, following Fairview policy, withheld non-Fairview documents (including cardiology letters and the CAT angiogram report) because they were not part of Fairview’s chart under its internal release rules.
After James Larson died within the two-year contestability period, Northwestern Mutual discovered the withheld cardiology information, rescinded the policy under Minn. Stat. § 61A.11, and refunded premiums; beneficiary Jacky Larson sued Northwestern Mutual (breach/rescission) and CMInformation (violation of the Health Records Act).
The district court granted summary judgment to both defendants; the court of appeals affirmed. The Minnesota Supreme Court granted review to decide (1) whether § 61A.11 requires subjective intent to deceive to rescind and (2) whether § 144.298, subd. 2 creates a private cause of action for withholding records authorized by a patient’s consent.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether rescission under Minn. Stat. § 61A.11 requires proof of the insured's subjective intent to deceive	Larson: § 61A.11 requires proof of actual intent to deceive; intent is critical	Northwestern Mut.: only knowledge of material facts and failure to disclose is required (objective standard)	Court: Subjective intent required; can be shown by direct proof or inferred from knowledge + nondisclosure
Whether insured's omissions (cardiology/CAT) were "willfully false or intentionally misleading" as a matter of law	Larson: disputed intent — jury should decide	Northwestern Mut.: omissions to specific questions are patently false; intent irrelevant; summary judgment proper	Court: Genuine issue of material fact on intent; summary judgment for insurer reversed and remanded for trial
Whether Minn. Stat. § 144.298, subd. 2 creates a private cause of action for releasing fewer records than authorized	Larson: withholding records that the patient consented to be released violates § 144.293(10)(c) and is an "unauthorized release" under § 144.298(2)	CMInformation: § 144.298(2) only covers unauthorized disclosures (over‑release), not withholding	Court: "Release" requires an actual disclosure; withholding authorized-but-unreleased records is not an "unauthorized release" actionable under § 144.298(2); summary judgment for CMInformation affirmed
Burden/standard for summary judgment on intent in rescission cases	Larson: intent is factual and for jury	Northwestern Mut.: evidence of knowing omission to specific questions suffices for summary judgment	Court: Insurer bears burden to prove intent; only if evidence is conclusive may court decide intent as matter of law; here, not conclusive

Key Cases Cited

Schmidt v. Prudential Ins. Co. of Am., 190 Minn. 239, 251 N.W. 683 (statute makes intent "all important")
Roeder v. N. Am. Life Ins. Co., 259 Minn. 168, 106 N.W.2d 624 (willfully false denotes knowing concealment; conscious, premeditated falsification)
Howard v. Aid Ass'n for Lutherans, 272 N.W.2d 910 (Minn.) (distinguishes materiality from intent; materiality test does not eliminate intent inquiry)
Nielsen v. Mut. Serv. Cas. Ins. Co., 243 Minn. 246, 67 N.W.2d 457 (intent to deceive not to be found absent conclusive evidence)
Hammer v. Investors Life Ins. Co. of N. Am., 511 N.W.2d 6 (Minn.) (whether answers were willfully false is a question of fact)