Case Information
*1 IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF WEST VIRGINIA HUNTINGTON DIVISION
HEATHER ROBERTSON, individually
and as the personal representative of
Jon Robertson, deceased,
Plaintiff,
v. CIVIL ACTION NO. 3:16-4242
THE CINCINNATI LIFE INSURANCE COMPANY,
a foreign corporation,
Defendant. MEMORANDUM OPINION AND ORDER
Pending before the Court are the Motions for Summary Judgment submitted by Plaintiff Heather Robertson and Defendant Cincinnati Life Insurance Company. ECF Nos. 119, 120. In her
complaint, Plaintiff alleges claims against Defendant under four causes of action: (1) breach of
contract; (2) violation of the West Virginia Unfair Trade Practices Act (“UTPA”); (3) common
law bad faith; and (4) reasonable expectations. See Compl. , ECF No. 1-1, at 10–21.
Plaintiff moves for summary judgment on her breach of contract claim and violation of the UTPA claim—counts one and two of her complaint, respectively. Pl.’s Mot. for Summ. J. , at 2.
Plaintiff claims she is entitled to summary judgment on these two counts because Defendant failed
to pay her benefits upon the death of her husband, Jon Robertson, and failed to conduct a
reasonable investigation into whether Mr. Robertson made material misrepresentations on his
application for life insurance. Mem. In Supp. of Pl.’s Mot. for Summ. J. , ECF No. 122, at 4,
18. Plaintiff also moves for summary judgment on her allegation that Defendant violated section
114-14-8 of the West Virginia Insurance Regulations, arguing that Defendant failed to adopt
written standards for the investigation of claims. Id. at 23.
Defendant moves for summary judgment on all counts Plaintiff asserts against it in the complaint. Def.’s Mot. for Summ. J. , at 1. Defendant claims it is entitled to summary judgment on
all counts because Mr. Robertson made material misrepresentations on his application for life
insurance, and Defendant reached this conclusion after conducting a reasonable investigation.
Mem. In Supp. of Def.’s Mot. for Summ. J. , ECF No. 121, at 9–14.
The parties have fully briefed the issues and the motions are now ripe for adjudication. As explained below, the Court GRANTS , IN PART , AND DENIES , IN PART , both Plaintiff’s and
Defendant’s Motions for Summary Judgment.
I. BACKGROUND
On January 3, 2013, Plaintiff’s decedent, Jon Robertson, applied for life insurance with Defendant. Application , ECF No. 122-3, at 1, 3. Question 30 of the application asked if the
“Proposed Insured had or had been told by a medical professional he/she had any of the following”
twenty-two listed medical conditions. Id. at 2. The only checked box related to “High Blood
Pressure,” and the remaining 21 boxes, which included one listing chest pain, were unchecked. Id.
Question 31(a) of the application asked whether the proposed insured had, in the last five years,
“been hospitalized or consulted, been examined or treated by any physician, psychiatrist or other
medical professional not disclosed in response to the prior questions.” Id. Mr. Robertson answered
no. Id. Question 34 of the application asked if “the Proposed Insured ever used tobacco or nicotine
Products.” Id. The checked box was in the “No” column. Id. On January 30, 2013, Defendant
issued a policy of life insurance to Plaintiff’s decedent, naming Mr. Robertson as an insured
thereunder. Compl. , at 8; Dep. of Singer , ECF No. 122-21, at 2. Less than two years later, on
January 13, 2015, Mr. Robertson died from esophageal cancer. Death Certificate , ECF No. 122-
1.
On January 23, 2015, Plaintiff made a claim for benefits provided by Defendant. Claim ,
ECF No. 122-9. However, this claim was denied, and Defendant voided the policy via a letter
dated April 8, 2015, after Defendant determined that Mr. Robertson provided inaccurate
information in response to Questions 30, 31(a), and 34 of the application. Denial Letter , ECF No.
122-2.
On April 4, 2016, Plaintiff filed this action against Defendant in the Circuit Court of Cabell County, West Virginia. Notice of Removal , ECF No. 1, at 1. A Notice of Removal to this
Court was then filed by Defendant on May 6, 2016, pursuant to 28 U.S.C. § 1441. Id. Both
parties filed their motion for summary judgment on October 30, 2018. ECF Nos. 119, 120. Both
parties then filed their response and reply on November 13, 2018, and November 20, 2018,
respectively. ECF Nos. 127, 129, 132, 133.
II. STANDARD OF REVIEW
To obtain summary judgment, the moving party must show that no genuine issue as to any material fact remains and that the moving party is entitled to judgment as a matter of law. Fed. R.
Civ. P. 56(a). In considering a motion for summary judgment, a court will not “weigh the evidence
and determine the truth of the matter[.]” Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 249 (1986).
Instead, a court will draw any permissible inference from the underlying facts in the light most
favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S.
574, 587–88 (1986). Any inference, however, “must fall within the range of reasonable probability
and not be so tenuous as to amount to speculation or conjecture.” JKC Holding Co. v. Wash. Sports
Ventures, Inc. , 264 F.3d 459, 465 (4th Cir. 2001) (citation omitted). Therefore, summary judgment
will not be granted if a reasonable jury could return a verdict for the non-moving party on the
evidence presented. See Anderson , 477 U.S. at 247–48.
III. DISCUSSION
A. Count One: Breach of Contract
Both Plaintiff and Defendant argue that they are entitled to summary judgment on Plaintiff’s claim that Defendant breached the terms of the life insurance policy issued to Mr.
Robertson by failing to pay the benefits due under the policy. See Mem. In Supp. of Pl.’s Mot. for
Summ. J. , at 4; Mem. In Supp. of Def.’s Mot. for Summ. J. , at 7. Defendant contends it is entitled
to summary judgment because the evidence demonstrates that Mr. Robertson had a history of chest
pain and smoking, he omitted these facts in his application for an insurance policy, and Defendant
would not have issued the policy had this history been disclosed. See Mem. In Supp. of Def.’s Mot.
for Summ. J. , at 9–10. However, Plaintiff asserts that there is no “legally sufficient evidence” to
support the conclusion that Mr. Robertson had a history of chest pain or smoking, and thus no
evidence that he withheld information on his application. Mem. In Supp. of Pl.’s Mot. for
Summ. J. , at 5. The Court must deny each parties’ request for summary judgment as to count one
because Mr. Robertson’s history of chest pain and smoking is a material fact reasonably disputed
by both parties.
West Virginia Code Section 33-6-7 provides that “[m]isrepresentations, omissions, concealments of facts, and incorrect statements” in an application for an insurance policy may
prevent recovery under the policy if those acts are:
(a) Fraudulent; or
(b) Material either to the acceptance of the risk, or to the hazard assumed by the insurer; or
(c) The insurer in good faith would either not have issued the policy, or would not have issued a policy in as large an amount, or would not have provided coverage with respect to the hazard resulting in the loss, if the true facts had been made known to the insurer as required either by the application for the policy or otherwise.
The West Virginia Supreme Court has stated that materiality under this statue is determined by:
[W]hether the insurer in good faith would either not have issued the policy, or would not have issued a policy in as large an amount, or would not have provided coverage with respect to the hazard resulting in the loss, if the true facts had been made known to the insurer as required either by the application for the policy or otherwise.
Powell v. Time Ins. Co. , 382 S.E.2d 342, 250 (W. Va. 1989).
As a result of this holding, “neither West Virginia Code § 33–6–7(b) nor (c) requires that an insurer prove the subjective element that an insured specifically intended to place
misrepresentations, omissions, concealments of fact, or incorrect statements on an application in
order for the insurer to avoid the policy.” Thompson , 460 S.E.2d at 724 (emphasis added).
Avoidance of a policy because of an alleged misrepresentation is an affirmative defense which the insurer bears the burden of proving by a preponderance of the evidence. Powell , 382
S.E.2d at 350. Additionally, “an insured may defeat this [affirmative] defense by setting forth
evidence that the misrepresentation, omission, concealment of fact, or incorrect statement related
to a minor ailment suffered by the insured which was so unrelated and disconnected from the
disabling condition suffered by the insured that it could not have possibly been material with
respect to the issuance of the policy.” Thompson , 460 S.E.2d at 727 (emphasis added).
*6 Because Defendant attempts to avoid the policy as a result of a misrepresentation, it bears the burden of proving this affirmative defense. Thus, the Court will first list Defendant’s evidence
which supports its right to void the policy, then examine Plaintiff’s counterevidence to determine
whether summary judgment should be granted to either party.
1. Chest Pain Defendant first argues that it is entitled to summary judgment because Mr. Robertson had a history of chest pain that he failed to disclose, and Defendant would not have issued the policy
had this history been presented in Mr. Robertson’s application. See Mem. In Supp. of Def.’s Mot.
for Summ. J. , at 9–10. In support of its position that Defendant had a history of chest pain,
Defendant submits the following evidence: (1) a Valley Health medical record from December 26,
2012, which states Mr. Robertson complained that his “chest feels like it has razor blades in it”; [2]
(2) a medical record from a visit to nurse practitioner Mary Adams, also of Valley Health, on
January 25, 2013, which states Mr. Robertson complained that he had “chest pain that radiates up
neck x 6 months. Happens once a week”; [3] (3) a medical record by Dr. Eric Bronstein, cardiologist
at King’s Daughters Medical Center, from February 6, 2013, which states Mr. Robertson had “a
history of chest pain in left chest over the last 5-6 months. Pain would radiate, at times, to the
neck”; [4] and (4) a medical record by Dr. Srinivasan, also of King’s Daughters Medical Center and
from the same day as the record from Dr. Bronstein, which states Mr. Robertson had “retrosternal
chest pain, radiation to his neck with minimal exertion such as walking up a flight of stairs. This
has been going on for last 5-6 months”. [5]
*7 a. Valley Health Medical Record
In response to the first piece of evidence listed above—the Valley Health medical record from December 2012—Plaintiff asserts this evidence is not “material” to the issuance of a policy.
See Mem. In Supp. of Pl.’s Mot. for Summ. J. , at 5 n.3. Plaintiff argues this evidence of chest pain
is immaterial because “it resulted from a bronchial infection with persistent coughing,” the
“supervisor of [Defendant’s] underwriting admitted that a chest cold would not be material to the
issuance of a policy,” and an “insurance company cannot void a policy because of undisclosed
information relating to minor ailments.” Id. (emphasis added). The issue is that, even though a
chest cold may not be material to the issuance of the policy and Defendant may not void a policy
because of undisclosed information relating to minor ailments, there is still a factual dispute as to
whether Mr. Robertson’s described chest pain in this record actually “resulted” from a bronchial
infection. Plaintiff attempts to argue that the following deposition testimony from Ms. Adams, a
nurse practitioner, proves that Mr. Robertson’s chest pain in December of 2012 “resulted” from
an infection, chest cold, or other minor ailment:
Q: Okay. The chest pain that he was experiencing on December 26th felt like razor blades. Given his later history, in terms of the January 25th meeting where he said this was going on for six months, do you now believe that that was part of what was happening in terms of his heart?
A: No.
Q: Okay. What do you think it was?
A: What was going on on December the 26th?
Q: Yes, ma’am.
A: Like a bronchial infection with drainage or, some post nasal drainage. And he had been coughing and coughing.
Dep. of Adams , ECF No. 111-3, at 13.
While this testimony is certainly helpful to Plaintiff’s position that the chest pain described in the Valley Health medical record was immaterial, it is hardly dispositive of the issue. Defendant
considers Ms. Adams’ testimony “conjecture,” and—in light of the remaining medical records
discussed in the next section that also details chest pain—rejects the conclusion that Robertson’s
chest pain described in the Valley Health medical record “resulted” from a bronchial infection. See
Mem. In Supp. of Def.’s Mot. for Summ. J. , at 9. Therefore, the fact of whether Mr. Robertson was
experiencing chest pain in December of 2012 as a result of an immaterial minor ailment, such as
a bronchial infection, or something more serious and material is disputed by the two parties and
must be presented to a jury.
Plaintiff asserts that if Defendant “desires to characterize Mr. Robertson’s chest complaints on December 26” as “anything other than symptoms associated with sinnutis (a cold), it is
[Defendant] that bears the burden of proof of establishing the same, not the plaintiff,” and
Defendant “has no such evidence.” Reply Mem. In Supp. of Pl.’s Mot. for Summ. J. , ECF No. 132,
at 6. Because this statement seems to suggest that Defendant bears the burden of producing
evidence that the chest complaints were not from symptoms associated with sinnutis, the Court
must clarify that this is an incorrect statement of the rule. Defendant does not bear the burden of
producing evidence to show Mr. Robertson’s chest pain was not from symptoms associated with
sinnutis, but rather it is Plaintiff who bears the burden of producing such evidence. Thompson ,
460 S.E.2d at 727 (holding that once a defendant has established a prima facia case for an
affirmative defense “ an insured may defeat this defense by setting forth evidence that the
misrepresentation, omission, concealment of fact, or incorrect statement related to a minor ailment
….”) (emphasis added). Thus, once Defendant has produced evidence to show there was an
omission in the application that a reasonably prudent insurer would consider a material
misrepresentation—such as a complaint of a sensation of razor blades in the chest— Plaintiff may
defeat this defense by setting forth her own evidence which shows this pain only resulted from a
minor ailment such as sinnutis. While a reasonable jury could find in Plaintiff’s favor based on the
testimony of Ms. Adams, it could also find that Ms. Adams lacks credibility or otherwise reject
her opinion and conclude that the complaint in a medical record of razor blade sensations in the
chest is enough evidence for Defendant to have met its burden of proving its affirmative defense.
Therefore, because a reasonable jury could find that Mr. Robertson’s first described chest pain from the Valley Health medical record was material, Plaintiff’s motion for summary judgment
on the breach of contract claim in her complaint must be denied, regardless of the Courts analysis
regarding the remaining evidence and arguments. However, because the Court acknowledges that
a reasonable jury could also find Mr. Robertson’s described chest pain in the Valley Health medical
record was immaterial , the Court must analyze Plaintiff’s counterevidence and explanations to
Defendant’s submitted remaining medical records before it can rule on Defendant’s motion for
summary judgment.
b. Remaining Medical Records Plaintiff acknowledges that the remaining medical records described above indicate that Mr. Robertson experienced material chest pain, but simply argues that these records are inaccurate.
Mem. In Supp. of Pl.’s Mot. for Summ. J. , at 10. To prove the inaccuracy of the second medical
record, from January 2013, Plaintiff offers the deposition testimony of Melissa Hankins, the writer
of that record. Dep. of Hankins , ECF No. 122-6. Ms. Hankins claims that she wrote Mr. Robertson
*10 was experiencing “chest pain” even though Mr. Robertson had only complained of neck pain. Id.
at 7. Ms. Hankins claims that she wrote “chest pain” because she knew this would allow for a
stress test to be scheduled, and she was concerned his neck pain was cardiac related. Id. at 7–8. To
prove the inaccuracy of the final two medical records, written by Dr. Bronstein and Dr. Srinivasan,
Plaintiff signed an affidavit stating that she was present during Mr. Robertson’s visits with Dr.
Bronstein and Dr. Srinivasan, and that he never told either doctor he experienced any chest pain.
Affidavit of Robertson , ECF No. 122-22, at 2–3. Plaintiff asserts that a possible explanation for
these allegedly inaccurate statements in the medical records from Dr. Bronstein and Dr. Srinivasan
is that the doctors copied Ms. Hankins’ original notes, essentially creating a domino effect of
incorrect medical records. Mem. In Supp. of Pl.’s Mot. for Summ. J. , at 14–15.
Regardless of the explanation, and regardless of the evidence Defendant offers to attack Plaintiff’s counterevidence, [7] Plaintiff has submitted sufficient contradictory evidence to raise a
dispute as to a material fact: whether Mr. Robertson experienced chest pain. When Defendant
requests this Court to grant its motion for summary judgment despite Plaintiff’s contradictory
evidence it is clearly asking this Court to weigh the evidence and find in its favor, [8] which is not
appropriate at this stage of the proceedings. Because Defendant has not demonstrated that it is
entitled to summary judgment as to count one based on Mr. Robertson’s history of chest pain, the
Court will now examine Plaintiff’s and Defendant’s evidence related to Mr. Robertson’s history
of smoking.
*11 2. Smoking
In support of its position that Mr. Robertson had a history of smoking, and therefore it should be entitled to summary judgment as to count one, Defendant submits more medical records,
including: (1) a medical note written by Dr. Srinivasan on February 6, 2013, which states that
Defendant had a “history of smoking” [9] ; (2) a medical note written by Dr. Srinivasan on June 14,
2013, which states that Defendant was a “former trivial cigarette smoker” [10] ; and (3) a medical note
written by Dr. Bronstein on March 14, 2013, which states that Defendant is a “former smoker.” [11]
In response to this evidence, Plaintiff argues that there are various pieces of evidence which help prove that Mr. Robertson was never a smoker, but at worst merely a “passive smoker.” Mem.
In Supp. of Pl.’s Mot. for Summ. J. , at 7–8. Specifically, Plaintiff testified that Mr. Robertson was
never a smoker, and has submitted fourteen affidavits stating the same. See Affidavits , ECF No.
122-24; Dep. of Robertson , ECF No. 122-17, at 2. Additionally, there are multiple medical records
which state that Mr. Robertson was either a “passive smoker” or that he never smoked before.
ECF No. 122-25, at 10; ECF No. 122-30, at 2; ECF No. 122-28, at 1.
Based on the above evidence the Court finds that there is a genuine dispute as to whether Mr. Robertson was a former smoker. Both parties have submitted inconsistent evidence as to
whether Mr. Robertson was a former smoker, or even a passive smoker, and both parties even have
evidence from medical documents which support their positions. Thus, a reasonable jury could
find for either party based on the evidence presented, and the question of whether Mr. Robertson
was a smoker is a question of fact that must be left to a jury. Therefore, the Court denies
Defendant’s motion for summary judgment as to count one. [12]
*12 B. Count Two: Violation of the West Virginia Unfair Trade Practices Act
Next, both Plaintiff and Defendant argue that they are entitled to summary judgment on Plaintiff’s claim that Defendant violated the UTPA, specifically W. Va. Code § 33-11-4(9)(d),
because of the reasonableness, or lack therefore, of Defendant’s investigation into Plaintiff’s
policy claim. Mem. In Supp. of Pl.’s Mot. for Summ. J. , at 18; Mem. In Supp. of Def.’s Mot.
for Summ. J. , at 11. The Court disagrees with both parties, as the facts of this case demonstrate
that the reasonableness of Defendant’s investigation is in dispute, and a reasonable jury could find
in favor either party.
Insurance claims made in West Virginia are governed in part by the UTPA, W. Va. Code § 33-11-1 et seq. In one section, the UTPA states that an insurer cannot refuse to pay claims
“without conducting a reasonable investigation based upon all available information” with “such
frequency as to indicate a general business practice.” W. Va. Code § 33-11-4(9)(d). The question
of whether a reasonable investigation was conducted based upon all available information is
“ordinarily [a] question[] of fact for the jury.” Jackson v. State Farm Mut. Auto. Ins. Co. , S.E.2d
346, 354 (W. Va. 2004).
Because liability under subsection (9) depends upon finding a frequency of violations that constitutes a “general business practice,” the West Virginia Supreme Court has gone into detail
explaining what constitutes a “general business practice” by stating:
[T]he evidence should establish that the conduct in question constitutes more than a single violation of W.Va. code § 33–11– 4(9), that the violations arise from separate, discrete acts or omissions in the claim settlement, and that they arise from a habit, Three of Plaintiff’s Complaint should also be dismissed.” Mem. In Supp. of Def.’s Mot. for Summ. J. , at 11. Because
the Court does not reach the conclusion that Defendant effectively rescinded the policy, the Court also denies
Defendant’s motion for summary judgment as to count three. Although Plaintiff states Defendant violated “33-11-4(9)(c),” Plaintiff claims Defendant violated this
subsection by refusing to pay Mr. Robertson claim “without conducting a reasonable, fair, and objective investigation
based upon all available information”—a subsection (d) issue. Mem. In Supp. of Pl.’s Mot. for Summ. J. , at 18.
custom, usage, or business policy of the insurer, so that, viewing the conduct as a whole, the finder of fact is able to conclude that the practice or practices are sufficiently pervasive or sufficiently sanctioned by the insurance company that the conduct can be considered a “general business practice” and can be distinguished by fair minds from an isolated event.
Dodrill v. Nationwide Mut. Ins. Co. , 491 S.E.2d 1, Syl. pt. 4 (W.Va. 1996).
Defendant argues that it conducted a reasonable investigation. In support of this position, Defendant asserts that after Mr. Robertson’s death it obtained medical records that demonstrated
there were material misrepresentations on Mr. Robertson’s application regarding smoking and
chest pain. Dep. of Singer , ECF No. 133-1, at 18. Additionally, Defendant then obtained and
reviewed conflicting evidence, such as other medical records and affidavits that Plaintiff provided,
which essentially gave innocent explanations for the apparent misrepresentations. See id. ; Dep. of
Binzer , ECF No. 120-16, at 17. After reviewing the evidence, however, Defendant determined that
the medical records which supported its position outweighed the medical records and affidavits
which did not. Dep. of Binzer , ECF No. 120-16, at 17. While this may not be the conclusion that
Plaintiff wanted or would have reached herself, Defendant’s receipt and review of this available
evidence, which includes evidence that contradicted its conclusion, could lead a reasonable jury to
find that its investigation was reasonable.
However, Plaintiff has also set forth evidence that could lead a reasonable jury to conclude that Defendant’s investigation was unreasonable. For example, when asked whether there was a
“thorough investigation based upon all available evidence conducted on claims” Luana
Dillingham, employee of Defendant, stated that “the gamut of the investigation” was merely
receiving the medical records and all claim forms, and sending those to Ann Binzer—Defendant’s
representative—and the underwriter for review. See Dep. of Dillingham , ECF No. 129-3, at 2–3.
However, Ms. Binzer stated in her deposition that she never had a position with Defendant’s
company that allowed her to do an investigation of a claim. See Dep. of Binzer , ECF No. 120-16,
at 14. Additionally, when the underwriter, Jeremy Singer, was asked if he ever thought about
whether the information contained in medical records could be wrong, he stated “[n]o.” See Dep.
of Singer , ECF No. 133-1, at 18. Finally, even though Defendant was provided with fourteen
affidavits stating that Mr. Robertson was not a smoker, Defendant did not interview any one of
those fourteen individuals, despite the fact that Ms. Binzer acknowledged in her deposition that
she had no reason to believe the affidavits were false. See Dep. of Binzer , ECF No. 120-16, at 9,
12. Therefore, while Defendant may have explanations for its investigation process or decisions,
this evidence detailed above showing a lack of diligence and inconsistency could lead a reasonable
jury to find that its investigation was unreasonable.
Defendant argues that even if Plaintiff has sufficient evidence to prove that there was a UTPA violation, Plaintiff has failed to provide evidence for the second requirement of the UTPA:
that the insurer have violations with “such frequency as to indicate a general business practice.” Mem. In Opp. To Pl.’s Mot. for Summ. J. , at 17. However, for reasons explained in the next
section, the Court finds a violation of the West Virginia insurance regulations due to Defendant’s
lack of written standards. This violation of the regulations could lead a reasonable jury to also find
that Defendant violated § 33-11-4(9)(d) of the UTPA and that such a violation must have
logically occurred each and every time Defendant takes on a new claim. Therefore, the Court holds
that a finder of fact could conclude “that the practice [of the violation is] sufficiently pervasive …
*15 [such] that the conduct can be considered a ‘general business practice’” as opposed to “an isolated
event.” Thus, the Court denies both parties’ motion for summary judgment on count two of
Plaintiff’s complaint.
C. Violation of Section 114-14-8 of the West Virginia Insurance Regulations
Next, Plaintiff argues that she is entitled to summary judgment on the issue of whether Defendant violated the West Virginia insurance regulation that requires an insurer to “adopt and
communicate to all its claims agents written standards for the prompt investigation and processing
of claims.” Mem. In Supp. of Pl.’s Mot. for Summ. J. , at 23. Based on the evidence presented by
both parties, the Court agrees with Plaintiff.
The West Virginia Code of State Regulations requires that every insurer “adopt and communicate to all its claims agents written standards for the prompt investigation and processing
of claims.” W. Va. Code R. § 114-14-8. The Court finds that Defendant violated the regulations
as a matter of law based on two pieces of evidence. First, the deposition testimony of Defendant’s
representative Ms. Binzer provides strong evidence that Defendant has not adopted, implemented,
and communicated reasonable written standards to its claims agents for the prompt investigation
and processing of claims. When Ms. Binzer was asked “[w]hat guidelines or manuals [they] have
at Cincinnati Life Insurance Company that will tell [the] employees how to investigate a life
insurance claim,” Ms. Binzer responded that none exist, stating: “We do not have claims
manual.” Dep. of Binzer , ECF No. 122-35, at 2. Ms. Binzer also stated that she did not know
*16 whether West Virginia required insurance companies to have “written guidelines or manuals to
instruct its employees on the proper manner to investigate an insurance claim.” Id. at 3.
Second, and most importantly, Defendant’s own evidence and argument for why it has complied with the regulations leads this Court to conclude that it certainly has not. Defendant
claims that its “claim procedural notes, entitled ‘Guidelines For Setting Up A Claim & Sending
Claim Form For Life Claims’ meet the requirement of the regulation.” Mem. In Opp. To Pl.’s Mot.
for Summ. J. , at 16. Simply put, the Court cannot hold that any reasonable juror could read these
“claim procedural notes” and reach the same conclusion. As Plaintiff points out, these supposed
“written standards for the prompt investigation … of claims” do not even mention the word
“investigation,” but instead only direct employees how to set-up a claims file, send sympathy
letters, or perform other tasks unrelated to investigation or determining liability. See Claim Notes ,
ECF No. 122-36; Reply Mem. In Supp. of Pl.’s Mot. for Summ. J. , at 12. While these notes may
satisfy the second requirement of the regulation that Defendant “adopt and communicate to all its
claims agents written standards for the prompt … processing of claims,” the regulation requires
written standards for this “and” investigations.
Additionally—and perhaps most troubling—Defendant’s analysis of why its procedural notes satisfy the regulations is limited to the following statement: “The claims procedural notes …
are maintained by Cincinnati Life as ‘written standards for the prompt investigation and processing
of claims’ and are in compliance with § 114-14-8.” Mem. In Opp. To Pl.’s Mot. for Summ. J. , at
16. Unfortunately for Defendant, a statement asserting a conclusion is not an analysis, and
*17 Defendant has provided no explanation for how its “procedural notes,” which has no mention of
investigating claims or determining liability, satisfies its obligation to have written standards for
the prompt investigation of claims. Therefore, because the forgoing reasons lead this Court to hold
that no reasonable jury could find Defendant satisfied the requirements of section 114-14-8 of the
West Virginia insurance regulations, the Court grants Plaintiff’s motion for summary judgment as
to this issue.
D. Count Four: Reasonable Expectations
In count four of her complaint, Plaintiff asserts a claim of “reasonable expectations.” Compl. , at 17. As Defendant correctly argues, the “doctrine of reasonable expectations is not a
stand-alone cause of action but rather a rule of construction applicable to insurance contracts.”
State ex rel. Erie Ins. Prop. And Cas. Co. v. Beance , No.15-0968, 2016 WL 3392560, at n.2 (W.
Va. June 13, 2016). Therefore, the Court grants Defendant’s motion for summary judgment with
respect to count four.
E. Punitive Damages
Finally, Defendant argues that Plaintiff has “failed to make a prima facia showing of … punitive damages,” and therefore it is entitled to summary judgment. Mem. In Supp. of Def.’s Mot.
for Summ. J. , at 18. Because the Court finds that Plaintiff has demonstrated evidence to show that
Defendant knew Mr. Robertson’s claim was proper, the Court disagrees with Defendant and denies
its motion for summary judgment regarding the punitive damages issue.
West Virginia Code § 55-7-29(a) states the following regarding limitations on punitive damages:
An award of punitive damages may only occur in a civil action against a defendant if a plaintiff establishes by clear and convincing evidence that the damages suffered were the result of the conduct that was carried out by the defendant with actual malice toward the *18 plaintiff or a conscious, reckless and outrageous indifference to the health, safety and welfare of others.
In an action for breach of contract, punitive damages are only available when “the conduct of the defendant constitutes an independent, intentional tort.” Hayseed, Inc. v. State Farm Fire &
Cas. , 352 S.E.2d 73, 80 (W. Va. 1986). As a result of this “intentional tort” requirement “an insurer
is not liable for punitive damages by its refusal to pay on a claim unless such refusal is
accompanied by a malicious intention to injure or defraud. ” Id. (emphasis added). Therefore,
punitive damages “shall not be awarded against an insurance company unless the policyholder can
establish a high threshold of actual malice in the settlement process.” Id.
For a plaintiff to prove “actual malice” it must provide evidence that demonstrates “the company actually knew that the policyholder's claim was proper,” but intentionally denied the
claim. Id. at 80, 81 (emphasis added). The Supreme Court of West Virginia has stated that it
“intend[s] this to be a bright line standard, highly susceptible to summary judgment for the
defendant, such as exists in the law of libel and slander, or the West Virginia law of commercial
arbitration.” Id. at 81 . The West Virginia Supreme Court has further emphasized that, for the issue
of punitive damages to be submitted to a jury, the policyholder cannot merely introduce evidence
of “negligence, lack of judgment, [or even] incompetence,” but must introduce evidence “of
intentional injury.” Id.
Based on the evidence presented by Plaintiff, the Court holds that a reasonable jury could find that Defendant “actually knew” Mr. Robertson’s claim was proper. In reaching this
conclusion, the Court draws its attention to Ms. Binzer’s testimony where she admitted to receiving
and reading the affidavits which contradicted the information Defendant relied on in the medical
records. Dep. of Binzer , ECF No. 120-16, at 12. Critical to note, Ms. Binzer answered “no”
when asked whether she had “any reason to believe [the affidavits] were not true.” Id. This means
that Defendant read affidavits which contradicted the information Defendant relied on in the
medical records, and nonetheless determined that not even the conflicting medical records were
“reason to believe” the affidavits were not true. It would be illogical to believe in the accuracy of
statements of smoking and chest pain in medical records, yet not view this information as a reason
to even doubt the truth of affidavits which explicitly conflict with it. Therefore, the testimony by
Ms. Binzer could be interpreted by a reasonable jury as her acknowledging that after weighing the
evidence she determined that the information regarding smoking and chest pain in the medical
records was not true, yet nevertheless denied coverage. This conclusion is certainly not the only
one a jury could reach. For example, a reasonable jury could undoubtedly conclude that it is absurd
to think Ms. Binzer would make such a “smoking gun” statement, and that she was merely
attempting to say that she did not have any strong reason to believe one piece of conflicting
evidence over the other. Regardless, the conclusion is one for the jury to reach. Therefore, because
a reasonable jury could find that Defendant knew Plaintiff’s policy claim was proper based on Ms.
Binzer’s testimony, the Court denies Defendant’s motion for summary judgment as to punitive
damages.
IV. CONCLUSION
Based upon the analysis provided above, the Court GRANTS Plaintiff’s Motion for Summary Judgment (ECF No. 119) regarding only the issue of whether Defendant violated
Section 114-14-8 of the West Virginia Insurance Regulations and DENIES the remainder of
Plaintiff’s Motion for Summary Judgment. Additionally, the Court GRANTS Defendant’s
Motion for Summary Judgment (ECF No. 120) regarding only Plaintiff’s claim of Reasonable
ROBERT C. CHAMBERSUNITED STATES DISTRICT JUDGE Expectations and DENIES the remainder of Defendant’s Motion for Summary Judgment.
The Court DIRECTS the Clerk to send a copy of this Order to counsel of record and any unrepresented parties.
ENTER: February 4, 2019
[1] West Virginia Code § 33–6–7 adopts the standard of whether a “reasonably prudent insurer” would consider a misrepresentation material to the contract. Massachusetts Mut. Life Ins. Co. v. Thompson , 460 S.E.2d 719, 724 (W. Va. 1995).
[2] Valley Health Medical Record , ECF No. 120-6, at 1.
[3] Adams Medical Record , ECF No. 120-7, at 1.
[4] Dr. Bronstein Medical Record , ECF No. 120-8, at 1.
[5] Dr. Srinivasan Medical Record , ECF No. 120-9, at 1.
[6] Plaintiff claims that in the factual disputes present in this case the “ Powell court made it clear that the rule of liberality should be applied in favor of the insured.” Mem. In Supp. of Pl.’s Mot. for Summ. J. , at 9. However, Powell was discussing how a statute should be construed, not factual disputes. Powell , 382 S.E.2d at 348 (holding that “ statutes , which are designed to alleviate the harshness of the common law, are to be liberally construed in favor of the insured.”) (emphasis added).
[7] Defendant offers evidence that Dr. Bronstein reviews a patient’s medical history with them, and that Ms. Hankins stated that no one was present in the exam room with her and Mr. Robertson during the December visit— conflicting with Plaintiff’s contention that she was present for all her husband’s doctor’s visits. See Reply Mem. In Supp. of Def.’s Mot. for Summ. J. , ECF No. 134, at 3, 4; Dep. of Dr. Bronstein , ECF No. 111-4, at 5; Dep. of Hankins , ECF No. 111-2, at 15.
[8] For example, Defendant attacks Plaintiff’s argument and evidence as “unpersuasive, at best.” Mem. In Opp. To Pl.’s Mot. for Summ. J. , ECF No. 128, at 11.
[9] Dr. Srinivasan Medical Record , ECF No. 120-9, at 1.
[10] Dr. Srinivasan Medical Record , ECF No. 120-10, at 12.
[11] Dr. Bronstein Medical Record , ECF No. 120-10, at 8.
[12] Defendant asserts that “if the Court agrees that Cincinnati Life effectively rescinded the Policy then Count
[14] While the West Virginia Supreme Court has explained that “a violation of an insurance regulation standing alone does not give rise to a cause of action under West Virginia Code § 33–11–4(9),” a violation of the regulation may be reviewed “insofar as they may inform the scope and purpose of the statutory practice at issue.” Russell v. Amerisure Ins. Co. , 433 S.E.2d 532, 535 n.3 (W. Va. 1993) (overruled in part on other grounds by State ex rel. State Farm Fire & Cas. Co. v. Madden , 451 S.E.2d 721, 725 (W. Va. 1994)); Am. Safety Indem. Co. v. Stollings Trucking Co. , No. 2:04–0752, 2007 WL 2220589, at *7 (S.D.W.Va. July 30, 2007).
[15] Defendant argues, and the Court generally agrees, that a “claims manual” is not specifically required under the regulations, as only the phrase “written standards” is used. Mem. In Opp. To Pl.’s Mot. for Summ. J. , at 16. However, whatever distinction there may be between a “claims manual” and “written standards” is likely irrelevant in this case for two reasons. First, the Court is reluctant to hold that a reasonable jury could find that asking what “ guidelines or manuals exist to tell employees how to investigate a life insurance claim”—what Ms. Binzer was asked—and asking what “ written standards exist to tell employees how to investigate a life insurance claim”—what the regulations state—would lead to different answers. Second, it was Ms. Binzer, not Plaintiff, who arbitrarily chose to classify this former question as asking about a “claims manual.”
[16] This dual requirement is why the Court is unpersuaded by Defendant’s expert, Mr. Martin, who argues that Defendant does meet the requirement of the regulation. Affidavit of Martin , ECF No. 127-1, at 2–3. Mr. Martin’s reasoning for why Defendant’s “claims procedural notes” satisfy the regulation is that the regulation “ simply requires an insurance company to maintain written guidelines for handling claims, which Cincinnati Life did.” Id. at 3 (emphasis added). This is plainly an incorrect reading and understanding of the regulation by Defendant’s expert, and that misunderstanding explains why he believes the “claims procedural notes” satisfy the regulation.