Bipin Bhakta v. Hartford Life and Annuity Ins. , 673 F. App'x 762 ( 2016 )

NOT FOR PUBLICATION
FILED
UNITED STATES COURT OF APPEALS
DEC 28 2016
FOR THE NINTH CIRCUIT MOLLY C. DWYER, CLERK
BIPIN BHAKTA, No. 15-55474
Plaintif-Appellant, D.C. No.
8:14-cv-00351-DOC-AN
v.
HARTFORD LIFE AND ANNUITY MEMORANDUM *
INSURANCE COMPANY,
Defendant-Appellee.
Appeal from the United States District Court
for the Central District of California
David O. Carter, District Judge, Presiding
Submitted December 7, 2016**
Pasadena, California
Before: CALLAHAN, BEA, and IKUTA, Circuit Judges.
Appellant Bipin Bhakta (“Bhakta”) appeals from the district court’s decision
on a motion for summary judgment upholding Hartford Life and Annuity Insurance
Company’s (“Hartford”) rescission of a life insurance policy held by Bhakta’s
*
�is disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
�e panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
wife, Mrs. Gharmista Bhakta, for material misstatements on an insurance
application. We review the district court’s grant of summary judgment de novo,
Hamilton v. State Farm Fire & Cas. Co., 270 F.3d 778, 782 (9th Cir. 2001), and
a�rm.
In December 2012, Mrs. Bhakta applied for a life insurance policy with
Hartford, naming Bhakta as the beneficiary. Mrs. Bhakta denied a history of
alcohol abuse, liver disease, or colitis. Two months later, in February 2013, Mrs.
Bhakta died at the age of 41, with a final hospital diagnosis of, inter alia, “acute
liver necrosis.” Bhakta filed a claim for benefits, after which Hartford commenced
an investigation into Mrs. Bhakta’s cause of death and medical history. Mrs.
Bhakta’s medical records reflected a steady history of alcohol dependency since
April 2010, liver disease since May 2010, and a diagnosis of colitis ten years
before her death.
Under California insurance law, “any material misrepresentation or the
failure, whether intentional or unintentional, to provide requested information
permits rescission of the [insurance] policy by the injured party.” Mitchell v.
United Nat’l Ins. Co., 127 Cal. App. 4th 457, 468 (2005) (internal quotation marks
omitted); Old Line Life Ins. Co. v. Superior Court, 229 Cal. App. 3d 1600, 1604–05
2
(1991); see Cal. Ins. Code § 359. Whether a misrepresented fact is material turns
on whether its truthful disclosure would have afected the insurer’s decision
whether to grant the policy. Cal. Ins. Code § 334.
It is undisputed that Mrs. Bhakta answered “no” to the question: “Have you
ever been advised about, counseled or treated for the excessive use of alcoholic
beverages?” Her medical records plainly belie this response, and reveal a repeated
diagnosis of “alcohol dependence.”1 �ose records also reference a discussion
plan regarding Mrs. Bhakta’s eforts to continue “not taking alcohol.” Mrs. Bhakta
was therefore at least “advised about” her “excessive use of alcoholic beverages,”
and her contrary answer was a material misrepresentation.2 San Francisco Lathing
Co. v. Penn Mut. Life Ins. Co., 144 Cal. App. 2d 181, 186 (1956) (“An answer to a
question as to whether an applicant had ever had a specified disease is material
and, if false, avoids the policy.”) (internal quotation marks omitted).
Bhakta contends that, notwithstanding any material misrepresentations,
1
Mrs. Bhakta also represented to Hartford that her alcohol consumption
consisted of one glass of wine “maybe once every two weeks.”
2
Because we conclude that Mrs. Bhakta’s misrepresentation of her alcohol
abuse provided an adequate basis for rescission, we need not decide whether there
is a genuine issue of material fact whether Mrs. Bhakta also materially
misrepresented her liver disease and colitis.
3
Hartford waived its right to rescind the policy by failing to investigate Mrs.
Bhakta’s medical history before issuing the policy. Bhakta argues that several
facts available to Hartford should have put Hartford on inquiry notice of Mrs.
Bhakta’s alcohol problem, namely a brief case of mild depression reflective of
family troubles, a respiratory infection, no work history, and elevated alanine
transaminase (“ALT”) and high-density lipoprotein (“HDL”) cholesterol levels.
As a general rule, an insurer may rely upon the insured to provide such
information as it needs to determine whether to provide coverage. Old Line, 229
Cal. App. 3d at 1604. California courts have held that “[r]equiring full disclosure
at the inception of the insurance contract and granting a statutory right to rescind
based on concealment or material misrepresentation at that time safeguard the
parties’ freedom to contract.” Mitchell, 127 Cal. App. 4th at 468–69. Nonetheless,
under California law, “[t]he right to information of material facts may be waived . .
. by neglect to make inquiries as to such facts, where they are distinctly implied in
other facts of which information is communicated.” Cal. Ins. Code § 336; see
Anaheim Builders Supply, Inc. v. Lincoln Nat’l Life Ins. Co., 233 Cal. App. 2d 400,
410–11 (1965); DuBeck v. Cal. Physicians’ Serv., 234 Cal. App. 4th 1254, 1267–68
(2015).
4
Waiver is “ordinarily a question for the trier of fact[, but] . . . where there are
no disputed facts and only one reasonable inference may be drawn, the issue can be
determined as a matter of law.” DuBeck, 234 Cal. App. 4th at 1265.
�e information Hartford had in its possession at the time it issued the policy
did not “distinctly impl[y]” Mrs. Bhakta’s alcohol abuse, liver disease, or colitis.
�e only indicators in the record that Hartford’s underwriting guidelines
recognized as possibly reflecting alcohol abuse are elevated ALT and HDL levels
and a history of depression.3 But Bhakta ofers no evidence that Mrs. Bhakta’s
slightly elevated ALT or HDL levels or a single instance of “mild depression”
present “obvious leads” that “distinctly impl[y]” alcohol abuse or liver disease.
See Old Line, 229 Cal. App. 3d at 1606. An elevated ALT level alone “is not very
specific for alcohol abuse,” nor does an elevated HDL level indicate “heavy
alcohol use” unless associated with other risk factors. While an elevated ALT level
may indicate alcohol abuse if the ratio of aspartate aminotransferase (“AST”) to
3
Bhakta asserts that his wife’s application contained three additional
indicators of alcohol abuse, namely marital instability, frequent bronchial
infections, and frequent job changes or poor employment. �e record lacks
evidentiary support for these contentions. At most, Mrs. Bhakta reported a single
past respiratory infection and that she worked as a homemaker, which Hartford
considers to be an occupation.
5
ALT is greater than 1, Mrs. Bhakta’s AST-to-ALT ratio was only 0.76.
Where courts have found that an insurer waived its right to rescind, the
insurer ignored evidence that flatly contradicted the insured’s answers. See, e.g.,
Rutherford v. Prudential Ins. Co. of Am., 234 Cal. App. 2d 719, 734–35 (1965);
DiPasqua v. Cal. W. States Life Ins. Co., 106 Cal. App. 2d 281, 284 (1951);
DuBeck, 234 Cal. App. 4th at 1257–58, 1268. Here, in contrast, the undisputed
evidence only vaguely suggests the possibility of alcohol abuse or liver disease. 4
Bhakta alternately argues that Hartford waived its right to rescind by
engaging in unlawful post-claims underwriting. Bhakta’s argument relies on an
inapposite provision of California law, California Health and Safety Code
§ 1389.3, which applies to certain medical plans, not life insurance policies. Nieto
v. Blue Shield of Cal. Life & Health Ins. Co., 181 Cal. App. 4th 60, 84 (2010).
Accordingly, Hartford did not waive its right to rescind Mrs. Bhakta’s policy.
AFFIRMED.
4
Bhakta profered expert testimony that Hartford ignored indications of
alcohol abuse, but that testimony relied on assertions not supported by the record—
e.g., that Mrs. Bhakta experienced marital instability. See supra note 3; see also
Fed. R. Evid. 702(b).
6