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BAGEANIS v. AMERICAN BANKERS LIFE ASSUR. CO.

January 13, 1992

MARIE BAGEANIS, Plaintiff,
v.
AMERICAN BANKERS LIFE ASSURANCE COMPANY OF FLORIDA, Defendant.


Kocoras


The opinion of the court was delivered by: CHARLES P. KOCORAS

CHARLES P. KOCORAS, District Judge:

 This matter comes before the Court on defendant's motion for summary judgment. Jurisdiction is based on diversity. For the following reasons, the motion is denied in part and granted in part.

 BACKGROUND

 Plaintiff, Marie Bageanis, filed a five count complaint against defendant, American Bankers Life Assurance Company ("American Bankers"). The basis for her action is that American Bankers has wrongly denied her coverage under a mortgage life insurance policy.

 Marie Bageanis and her now deceased husband, Gus Bageanis, applied for a Monthly Renewable Decreasing Term Life insurance policy on July 6, 1988. In this application, the Bageanis' listed themselves as co-insureds and co-beneficiaries.

 Prior to applying for insurance, Gus Bageanis had been hospitalized a number of times. On November 3, 1987, Mr. Bageanis was admitted to MacNeal Memorial Hospital. At MacNeal, Mr. Bageanis was diagnosed as suffering from: perforated sigmoid; peritonitis; bilateral aspiration pneumonitis; hypertension; metabolic acidosis secondary to sepsis; sinus tachycardia secondary to sepsis; hypokalemia and persistent leukocytosis postop secondary to possible intra-abdominal abscess. At this time, Mr. Bageanis received treatment in the form of an exploratory laparotomy; sigmoid resection, colostomy and peritoneal lavage; and drainage of abdominal abscess.

 After being released, Mr. Bageanis was readmitted to MacNeal Hospital on March 3, 1988 for a colostomy revision with appendectomy. He was discharged on March 10, 1988. Mr. Bageanis, however, was once again readmitted on March 11, 1988. During this stay, he received, among other tests, an abnormal liver function test, the results of which were normal.

 After receiving this extensive medical treatment, the Bageanis' decided to apply for life insurance. According to Plaintiff's affidavit, an agent of Homestead Savings told her that she and her husband were eligible for life insurance through the bank notwithstanding Mr. Bageanis' prior health problems. This agent then sent Plaintiff an American Bankers' insurance policy application.

 American Bankers' application asked three questions, only two of which are relevant here. The first question asked whether: "During the past 3 years have you had any medical 1) advice, or 2) treatment?" With respect to Mr. Bageanis, the applicants circled number two. The second question asked: "Have you ever had or been treated for 1) alcohol or drug abuse, 2) high blood pressure, 3) cancer, 4) diabetes, or 5) any disorder or disease of the heart, liver, brain, lungs or kidneys?" Again with respect to Mr. Bageanis, the applicants circled number two for high blood pressure.

 Below these questions American Bankers provided a small box, approximately one-third of an inch in height and approximately four inches in length, that requested further information. This portion of the application stated:

 If you answered 'yes' to question 1, 2, or 3, circle the condition and give complete details below including physicians name and address. If you had or have high blood pressure give the: 1) date and reading of your last blood pressure check; and 2) type of medication.

 Some months later, on September 1, 1988, American Bankers issued Gus and Marie Bageanis the requested insurance policy. Mr. Bageanis subsequently died on August 28, 1990 due to inoperable brain cancer. Plaintiff then sought to have American Bankers pay her mortgage as provided in the policy. After American Bankers refused, she filed suit.

 Plaintiff's complaint consists of five counts. Count I seeks a declaratory judgment that the policy is valid and enforceable and that American Bankers is liable to Plaintiff for the policy proceeds. Count II asserts a breach of contract claim. Count III contends that American Bankers breached its implied duty of good faith and fair dealing. Count IV claims that American Bankers violated sections 154.6 and 155 of Illinois' Insurance Code. Finally, Count V alleges that American Bankers violated Illinois' Consumer Fraud and Deceptive Business Practices Act, chapter 121 1/2, section 161.

 In response to Plaintiff's complaint, American Bankers filed a counterclaim for rescission and two affirmative defenses. American Bankers' basis for rescission is that the applicants' omissions regarding Mr. Bageanis' prior health and medical history constituted material misrepresentations that affected the risk assumed by American Bankers and that American Bankers would not have issued the insurance policy had it known the true facts.

 American Bankers' affirmative defenses relate to Count III and IV of the complaint. American Bankers contends that it is entitled to summary judgment as to Count III because Section 155 of Illinois' Insurance Code preempts any allegation that American Bankers breached its duty of good faith and fair dealing by denying coverage. Additionally, American Bankers seeks summary judgment with respect to Count IV because section 154.6 of Illinois' Insurance Code allegedly fails to provide litigants with a private cause of action. We will discuss ...


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