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Rice v. Farmers New World Life Insurance Company

United States District Court, C.D. Illinois, Peoria Division

May 9, 2018

KELLY RICE, Plaintiff,
v.
FARMERS NEW WORLD LIFE INSURANCE COMPANY, Defendant.

          ORDER

          JAMES E. SHADID, CHIEF U.S. DISTRICT JUDGE.

         Before the Court are the Defendant, Farmers New World Life Insurance Company's (“Farmers”), Motion for Summary Judgment (D. 46), [1] the Plaintiff, Kelly Rice's, Response (D. 47), and the Plaintiff's Reply (D. 49). For the reasons stated, infra, the Defendant's Motion for Summary Judgment is DENIED.

         Background

         The Plaintiff originally brought this breach of contract and insurance code relief action against the Defendant in Illinois' Circuit Court of Knox County. (D. 9-1). The Court granted the Defendant removal of the case to the Central District of Illinois. (D. 1); (D. 9). The Plaintiff alleges the Defendant breached the parties' contract, a life insurance policy issued by the Defendant to her husband, Terry Rice. (D. 9-1 at pp. 1-3). Specifically, she claims the Defendant failed to pay her-the designated beneficiary-$100, 000 upon Terry's death. Id. The Plaintiff further alleges she is entitled to interest on that amount (Id.), statutory damages, attorney's fees, and other costs (Id. at pp. 4-6). The Defendant insists it rescinded the life insurance policy at issue because Terry provided false answers to medical history questions on the application which were material to its decision to issue the policy. (D. 46 at pg. 1). The Plaintiff maintains that she and her husband were never asked the relevant questions. (D. 47 at pg. 1). The undisputed facts demonstrate the following:

         Michael Rogers, a Farmers insurance agent, contacted Kelly about Terry and Kelly buying life insurance policies from Farmers in May or June 2014. (D. 47 at pg. 10, 14); (D. 49 at pg. 1, 7). The Rices decided to purchase life insurance through Rogers, beginning the process sometime in early July. (D. 47 at pg. 14); (D. 49 at pg. 7). Rogers never spoke directly with Terry and obtained all of his information through Kelly over the phone. (D. 47 at pp. 11, 14); (D. 49 at pp. 2, 7). On July 23, 2014, in response to Rogers' inquiry as to when the Rices were going to visit his office to sign their life insurance applications, Kelly informed Rogers that Terry was in the hospital. Id.

         Terry arrived at the emergency room of St. Mary Medical Center in Galesburg at 4:21 PM on July, 222014. (D. 46-1). He complained of abdominal pain and diarrhea. The medical staff conducted several tests, including a computed tomography (“CT”) scan of Terry's abdomen and pelvis. The CT scan revealed that he had “multiple low-density liver lesions consistent with metastatic disease.” (D. 46-3). A biopsy was recommended. Id. At 9:36 PM, he was transferred from the emergency department to oncology. (D. 46-2 at pg. 2).

         In oncology, doctor Thomas Whittle was 95% certain Terry had colorectal cancer with additional metastases on his liver and possibly his lungs. (D. 46-4 at pg. 4). He performed a colonoscopy and biopsy on Terry on July 23, 2014. Id.; (D. 46-7 at pg. 4). Whittle's office also scheduled an appoint for Terry with an oncologist, doctor Julius Bonello, on that day. (D. 46-10 at pg. 3). Terry was discharged from St. Mary on July 23, 2014 at 6:42 PM. (D. 46-9). His treatment notes indicate that he was also treated for nicotine dependence while he was there.[2] Id.

         A representative with Bonello's office confirmed with Kelly on July 24, that Terry's appointment on July 28, 2014 was a consultation for colon cancer treatment. Id. at pg. 12. On July 25, 2014 at 11:11 AM, a surgical pathology report confirmed that Terry had colon cancer. (D. 46-12).

         Additionally, on July 25, 2014, Rogers electronically submitted Terry's application for life insurance to Farmers. (D. 46-13 at pg. 1). The timestamp on the application indicates that Terry and Kelly signed the application at the equivalent of 4:39 PM Central Daylight Time. (D. 46-13 at pg. 10). The following language was displayed above the signature line of the electronic signature pad when Terry signed the application:

I (We) acknowledge that I (we) have read and understand all of the forms displayed and agree that the electronic signature I (we) provide below shall be applied to all of these forms and will not be used on any other forms or future transactions.

(D. 46-14 at pg. 16).

         Relevant to the dispute before the Court, Terry's life insurance application contained the following questions:

5. Have you, in the past seven years, had, consulted a physician or other healthcare provider(s) for, or been treated or hospitalized for or taken medication for any of the following: any diseases or disorders of the heart (including rheumatic fever), circulatory system, diabetes/ endocrine/ thyroid, blood, kidneys, liver, digestive system, lungs (including allergies or sleep apnea); any mental or nervous disorders (including depression, anxiety, or suicide); muscular, spinal, joint, or bone disorders or injuries (including concussions); high blood pressure; elevated cholesterol; cancer/skin cancer; stroke; epilepsy/ seizures (including dizziness or fainting); arthritis; congenital defects or physical impairments?
7. Have you, in the past 12 months, been hospitalized for 24 or more consecutive hours?
8. Have you scheduled or been advised to have, a surgical operation, diagnostic test, or evaluation that has ...

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