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HCC Life Insurance Co. v. Conroy

United States District Court, S.D. California

March 22, 2017

HCC LIFE INSURANCE COMPANY, an Indiana corporation, Plaintiff,


          Hon. Roger T. Benitez, United States District Judge

         Now before the Court is Plaintiff HCC Life Insurance Company's (“Plaintiff” or “HCC Life”) Motion for Summary Judgment. (ECF No. 30.) HCC Life seeks to rescind a short-term health insurance policy it issued to Defendants Linda Conroy and Kevin Conroy. Defendants oppose the motion. (ECF No. 45.) Because genuine issues of material fact exist, the Court DENIES the motion.


         HCC Life argues that the Conroys misrepresented and concealed facts about Kevin Conroy's alcohol abuse and degenerative disc disease that the Conroys were required to disclose when they applied for health insurance. Had it known these facts, HCC Life contends that it would not have issued the policy. Later, after learning about Mr. Conroy's medical history, HCC Life rescinded the Conroys' policy. The relevant facts related to Mr. Conroy's medical history, Mrs. Conroy's application for the HCC Life policy, and HCC Life's subsequent rescission are discussed below.

         1. Kevin Conroy's Medical History

         On June 15, 2012, Kevin Conroy visited Dr. Steven Green at Sharp Medical Group, reporting right shoulder and neck pain for the past 18 months. (Padgett Decl. Ex. G-57.) Mr. Conroy asked to have the shoulder and neck pain evaluated as a workers' compensation injury. (Id.) He also told the doctor that, “for many years, ” he has consumed “12-15 beers a day” and that he “knows [he should] cut down.” (Id.) Dr. Green diagnosed Mr. Conroy with a “neck strain (847.0), ” which he suspected was arthritis and referred the injury for worker's compensation evaluation. (Id. Ex. G-58.) He also diagnosed Mr. Conroy with “alcohol abuse (305.00)” and advised him to reduce his alcoholic intake. (Id.)

         Mr. Conroy had another visit with Dr. Green on August 8, 2012. He again reported chronic right shoulder and neck pain, but had reduced his alcoholic intake to six beers a day. (Id. Ex. G-59.) Dr. Green assessed Mr. Conroy with “neck pain (723.1)” believed to be arthritis, “shoulder joint pain (719.41)” related to a “significant rotator cuff impingement, ” and “alcohol abuse (305.00).” (Id. Ex. G-60.) During another visit on May 17, 2013, Mr. Conroy reported that he had “cut his alcohol down to about 2 beers per day, ” but Dr. Green noted that Mr. Conroy had a “[h]istory of elevated ALT thought to be from alcohol.”[2] (Id. Ex. G-62-63.) This time, Dr. Green did not list “alcohol abuse (305.00)” in the diagnosis section of the report. (Id. Ex. G-63.)

         On August 13, 2013, Dr. Paul Murphy evaluated Mr. Conroy for his reported worker's compensation injury to his neck and shoulders. (Id. Ex. G-65.) The report notes that, in June 2013, Mr. Conroy had surgery for the rotator cuff tear. (Id. Ex. G-66.) The report also indicates that Mr. Conroy consumes 12 to 15 beers a week and summarizes his earlier medical records. (Id. Ex. G-67.) The summary notes that on October 31, 2012, Mr. Conroy had an initial orthopedic consultation and X-rays “exposed to the cervical spine [i.e., his neck] revealed severe degenerative changes and arthritis.”[3](Id. Ex. G-80.) Mr. Conroy's diagnosis at that October 2012 visit included “[m]yoligamentous cervical spine sprain/strain.” (Id.)

         During the August 2013 evaluation, Dr. Murphy took X-rays of Mr. Conroy's right and left shoulders and cervical spine. (Id. Ex. G-71.) X-rays of the cervical spine “reveal[ed] normal overall bony alignment, no fracture or dislocation. There is disc space narrowing at ¶ 3-4, C4-5, C5-6, and C6-7.” (Id.) In response to these X-rays, Dr. Murphy states an “impression” of “degenerative disc disease, multiple levels, cervical spine.” (Id.) Later, in the conclusions section of the report, Dr. Murphy diagnoses Mr. Conroy with “[m]usculoligamentous sprain/strain, cervical spine, ” “[m]usculoligamentous sprain/strain” to both shoulders, and rotator cuff repair. (Id. Ex. G-89-90.) Dr. Murphy opined that Mr. Conroy had no use of his right upper extremity, required physical therapy, and should undergo an MRI study of his cervical spine and left shoulder. (Id. Ex. G-90.) He further opined that Mr. Conroy's injuries were work-related. (Id. Ex. G-91.) Mr. Conroy was carbon copied on the report. (Id. Ex. G-92.)

         Dr. Murphy re-evaluated Mr. Conroy in February 2014. The report notes that Mr. Conroy “drinks beers” but does not state a quantity. (Id. Ex. G-94.) X-rays were again taken of the cervical spine and shoulders. The cervical spine X-rays “reveal[ed] normal overall bony alignment, no fracture or dislocation. There is mild loss of cervical lordosis. Mild disc space narrowing at ¶ 3-4, C4-5, and C5-6. There is mild anterolisthesis of C4 and C5 measuring 1mm.” (Id. Ex. G-99.) The “impression” from these X-rays was “[l]oss of cervical lordosis and degenerative disc disease, multilevel cervical spine.” (Id.)

         The report also summarizes the results of the cervical spine and left shoulder MRI study from December 2013. The MRI found “moderate broad-based disc herniation” and “mild uncovertebral joint degenerative joint disease” to certain vertebrae. (Id. Ex. G-102-103.)

         Dr. Murphy's conclusions again included a diagnosis of “[m]usculoligamentous sprain/strain, cervical spine” and “[m]usculoligamentous sprain/strain” of both shoulders. (Id. Ex. G-104.) Dr. Murphy characterized “Mr. Conroy's pain referable to his neck as being intermittent and slight in nature.” (Id. Ex. G-105.) Related to the cervical spine, Dr. Murphy opined that Mr. Conroy had suffered a 25% loss of preinjury capacity for lifting and a “5% impairment of the whole person.” (Id. Ex. G-106.) Mr. Conroy was again copied on the report. (Id. Ex. G-110.)

         Dr. Murphy issued a supplemental report on May 16, 2014 in response to a request for additional information. He repeated that the August 2013 “cervical spine X-rays revealed degenerative disc disease at multiple levels of the cervical spine” and that the February 2014 X-rays “of the cervical spine reveal[ed] loss of cervical lordosis and degenerative disc disease, multilevel.” (Id. Ex. G-122-123.) Dr. Murphy reaffirmed his conclusions about Mr. Conroy's work-related injuries of sprains/strains to the cervical spine and shoulders. (Id. Ex. G-123-124.) Mr. Conroy was copied on the supplemental report. (Id. Ex. G-127.)

         2. Linda Conroy Applies for HCC Life Health Insurance

         In July 2014, Linda Conroy submitted an application to HCC Life for a short term health insurance policy for herself and Mr. Conroy. (Decl. of Linda Conroy ¶ 6.) Mr. Conroy did not participate in the enrollment process. (Id., Decl. of Kevin Conroy ¶ 8.) Per HCC Life's usual process, Mrs. Conroy completed the enrollment process over the phone. (L. Conroy Decl. ¶ 6; Defs.' Notice of Lodgment (“NOL”), Ex. A, Excerpted Tr. of Dep. of Jon Padgett ...

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