Meyling
Security Life Insurance Co. of America v. Meyling
Opinion
Lead Opinion
Garry Meyling appeals the district court’s grant of summary judgment in favor of Security Life Insurance Company of America in Security’s diversity action seeking to rescind its insurance contract with Meyling, its insured. Security sought rescission due to material misrepresentations in Meyling’s insurance application. He failed to disclose his prior negative medical history. We reverse.
BACKGROUND
Meyling is a co-owner, officer, and director of Hubbard, Krause & Meyling, Inc., a small company doing business as HKM Machine and Fabrication. In February 1993, HKM purchased health insurance from Security for its employees and their dependents, including Meyling. The parties do not dispute that the HKM insurance plan is an ERISA 1 plan, nor do they dispute that HKM is the plan administrator.
As part of Security’s application process, each HKM employee including Meyling, was required to fill out an insurance application. The application asked the applicant to describe his medical history. In the five years prior to applying for coverage, Meyling had suffered and been treated for high blood pressure, back pain and back spasms, hyperventilation, and a panic disorder. However, on his…
Concurrence in Part
Fernandez, J.
concurring in part and dissenting in part:
I agree with everything in the majority opinion except the last seven paragraphs, which conclude that Meyling gets to reap the benefits of his fraud.
I agree that Security Life did reserve the right to adjust the premium retroactively, but I cannot agree that it thereby gave up its right to rescind for egregious misrepresentations like the ones made by Meyling. In fact, Security Life did, in effect, reserve the right to contest entitlement to insurance benefits where there was fraud, and there surely was fraud here. The mere fact' that it also reserved the right to change the premium retroactively should not affect that.
Were there any doubt that Security Life was not giving up its recission rights, that doubt should have been wiped away when it wrote to Meyling. It sent him his certificate booklet and a copy of his application. It then exhorted him to review the application and to “make certain all questions have been answered accurately and completely....” The letter continued: “If, upon second review, you determine some answers were not correct, please notify us in writing within ten (10) days of receipt of the certificate. FAILURE…