California Court of Appeals, Second District, Fourth Division
APPEAL from a judgment of the Superior Court of Los Angeles County No. BC397704, Mel Red Recana, Judge.
[Copyrighted Material Omitted]
Michael G. Nutter for Plaintiff and Appellant.
Manatt, Phelps & Phillips, John M. LeBlanc and Joanna S. McCallum for Defendant and Respondent.
In September 2006, respondent California Physicians’ Service, doing business as Blue Shield of California (Blue Shield), canceled appellant Bonnie DuBeck’s medical insurance policy, claiming DuBeck had made material misrepresentations in her application and concealed that she had undergone a fine needle aspiration for a lump in her breast several days before submitting the application. At the
time of cancellation, the policy had been in effect 17 months, and Blue Shield
had paid medical claims unrelated
to the breast cancer, deemed a pre-existing condition. The cancellation letter expressly stated that Blue Shield was electing to cancel coverage prospectively, rather than rescind the policy, and that any claims for covered services incurred prior to the cancellation would be covered.
In September 2008, appellant filed the underlying lawsuit, alleging among other things that Blue Shield had failed to pay covered claims while the policy was in force. Blue Shield asserted as an affirmative defense its right to rescind the policy, voiding it ab initio. The trial court granted summary judgment in favor of Blue Shield on this defense. We hold that Blue Shield’s September 2006 decision to cancel, rather than rescind her policy, its affirmation of policy coverage up to that date and assurance that it would pay for services covered prior to the cancellation, its retention of appellant’s premiums, and its failure to assert a right to rescind until more than two years after it concededly had all the pertinent facts, constituted a waiver of its right to rescind as a matter of law. Accordingly, we reverse the grant of summary judgment.
FACTUAL AND PROCEDURAL BACKGROUND
A. Background Facts
Certain background facts are not in dispute. In October 2004, appellant physically injured her left breast when she ran into a cabinet. She developed a lump in the area where the injury occurred. On February 11, 2005, appellant visited the Revlon UCLA Breast Center (Breast Center). She was examined by Sherry Goldman, a nurse practitioner, and the lump in her breast was subjected to a fine needle aspiration. That same day, appellant was given appointments in late February for a mammogram, ultrasound, and a consultation with Helena Chang, M.D., a breast surgeon. The lump proved to be cancerous, and in the months that followed, appellant underwent surgery and other medical procedures. In the course of her treatment for breast cancer, her doctors discovered she was also suffering from leukemia.
B. The Application
Certain aspects pertaining to appellant’s application for medical insurance also are undisputed. Appellant submitted the signed application to Blue
Shield on February 16, 2005, five days after her visit to the Breast Center. The section of the application seeking medical information asked whether the applicant had “received any professional advice or treatment... from a licensed health practitioner” or “had any symptoms” pertaining to “breast problems, breast implants, adhesion, abnormal bleeding, amenorrhea, endometriosis, fibroid tumors”; “[b]een an inpatient or outpatient in a hospital, surgical center, ... or other medical facility”; had any “[a]bnormal laboratory results”; or had any “[d]iagnoses, symptoms and/or health problems not mentioned elsewhere on this application, or that have not been evaluated by a physician, or have any complications or residuals remaining following any treatment, or been advised to have a physician exam, further testing, treatment or surgery which has not yet been performed by a physician, dentist, or other health care provider?” Appellant checked “No” in answer to all these questions.
On another page, the applicant was asked to “provide details regarding the last physician visit you... had, regardless of the date....” Appellant responded that her last such visit had been with Dr. Hasson Hassouri in September 2004 for an annual checkup, that he found nothing, and that her “present status” was “great.”
Page seven of the application form asked for the applicant’s signature and stated: “I alone am responsible for the accuracy and completeness of the information provided on this application. I understand that neither I, nor any family members, will be eligible for coverage if any information is false or incomplete. I also understand that if coverage is issued, it may be canceled or rescinded upon such a finding.”
C. The Policy
Blue Shield issued a policy dated April 1, 2005. The policy contained cancellation and termination provisions stating: “This Agreement may be canceled by [Blue Shield] for false representations to, or concealment of material facts from, [Blue Shield] in any health statement, application, or ...