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03/03/89 Marionjoy Rehabilitation v. Ceasar J. Lo Et Al.

March 3, 1989

MARIONJOY REHABILITATION HOSPITAL, PLAINTIFF

v.

CEASAR J. LO ET AL., DEFENDANTS AND THIRD-PARTY, PLAINTIFFS-APPELLANTS (UNION BANKERS INSURANCE COMPANY, THIRD-PARTY DEFENDANT-APPELLEE; ALEX



APPELLATE COURT OF ILLINOIS, SECOND DISTRICT

Mishulovich, Third-Party Defendant)

535 N.E.2d 1061, 180 Ill. App. 3d 49, 129 Ill. Dec. 296 1989.IL.271

Appeal from the Circuit Court of Du Page County; the Hon. Fredrick Henzi, Judge, presiding.

APPELLATE Judges:

JUSTICE INGLIS delivered the opinion of the court. UNVERZAGT, P.J., and REINHARD, J., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE INGLIS

This appeal arises from an order for summary judgment granted in favor of third-party defendant, Union Bankers Insurance Company (Union). Ceasar J. Lo and Cleotilde Lo, defendants and third-party plaintiffs, brought an action against Union seeking indemnification under a health insurance policy issued to Ceasar Lo. The trial court granted summary judgment in favor of Union, finding that Ceasar Lo had intentionally misrepresented material facts to Union in applying for insurance, thereby voiding any coverage obligation.

On appeal, the Los contend that (1) the trial court erred in granting summary judgment because there was an issue as to whether the Los acted to deceive Union, and (2) the trial court erred in granting summary judgment because Union is precluded from rescinding the insurance policy because it failed to comply with section 154 of the Illinois Insurance Code (Ill. Rev. Stat. 1985, ch. 73, par. 766). We affirm.

The insurance policy at issue was to cover Mr. Lo and the Los' son, Ceasar J. Lo, Jr. At the time that the policy was obtained, the Los' son was suffering from a condition known as hydrocephalus. As a result of this condition, surgery was performed in 1981, at which time a ventricular shunt was attached to his skull.

In November 1984, Mr. Lo was introduced to third-party defendant, Alex Mishulovich. Mishulovich was selling insurance policies on behalf of Union and other companies. During their November meeting, Lo provided Mishulovich with information about his son's brain surgery and the insertion of the ventricular shunt.

Sometime after their meeting, Mishulovich forwarded to Lo an application for an insurance policy with the John Alden Life Insurance Company. Lo completed the application and in so doing disclosed his son's condition relative to hydrocephalus and the fact that his son had a ventricular shunt placed in his skull. Lo mailed the application to Mishulovich and was subsequently informed that the application had been denied.

Sometime in February 1985, Lo received through the mail a medical insurance policy from Union which provided coverage for his son. The policy was mailed to Lo by his employer, Oak Tree Liquors. Attached to the policy was a copy of the application. Lo had never seen the application, and the application had not been filled out by either himself or his wife. A sworn affidavit of Maureen Casey Owens, a forensic document examiner, stated that the signatures of Ceasar J. Lo on the application form and the policy were not actually those of Ceasar J. Lo.

Upon receipt of the policy, Lo contacted Mishulovich by telephone. Mishulovich informed Lo that he, Mishulovich, had in fact prepared the entire application. Lo asked Mishulovich what happened to the application because it appeared that all the questions were answered in the negative when it was known that Lo's son had had brain surgery. According to Lo, Mishulovich told Lo not to worry, that Mishulovich had prepared the application, and that Union was a very high risk insurance company.

At or near the same time he received the Union policy, Lo received a letter from the policy holders service department for Union. The letter requested that Lo examine a copy of the application attached to the policy to ensure that all of the information disclosed therein was correct. Specifically, the letter asked: " Do we have all the right information about past health for you and your family ?" (Emphasis in original.) Attached to the letter was a checklist asking whether various information on the application was correct. Lo signed and returned the checklist to Union, indicating that all the ...


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