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Date: 04-17-2024

Case Style:

Malcolm Wiener v. AXA Equitable Life Insurance Company

Case Number: 3:18-cv-00106

Judge: Robert J. Conrad, Jr.

Court: United States District Court for the Western District of North Carolina (Mecklenburg County)

Plaintiff's Attorney: David G. Webbert, Kerry Link Traynum, Kristen Alexandra O'Neill, Ross Robert Fulton

Defendant's Attorney: John R. Wester, Matthew W. Sawchak, Robert William Cassot, Stephen D. Feldman, Aaron C. Lang

Description: Charlotte, North Carolina insurance law lawyers represented the Plaintiff who sued on a bad faith breach of insurance contract theory.

This case was filed in the Mecklenburg County Superior Court, 18-CVS-1254
4th Circuit, 21-02165, Fourth, 24-01316, and was removed to federal court by AXA Equitable Life Insurance Company.

Under the North Carolina Unfair and Deceptive Trade Practices Act, a policyholder can recover “treble damages,” three times the amount of any damages caused.

Defendant is an insurance company and member of the Medical Information Bureau ("MIB"), a corporation owned by its member life and health insurance companies. The MIB compiles information about insurance applicants that is analogous to a credit report but for health history. (Doc. No. 48-5, at 4.) The MIB serves as an information exchange in that its member companies contribute to the MIB database information about insurance applicants that was obtained during the underwriting process. (Doc. No. 49-5, at 3.) When an individual applies for life insurance with an MIB member company, the company notifies the individual that the MIB may disclose the individual's MIB report, if any, to the company. (Doc. No. 49-5, at 3.) The company also notifies the individual that it may report information it obtains regarding the individual's medical conditions to the MIB. (Doc. No. 49-5, at 3.) The member company then asks the individual to sign an authorization allowing the company to use the MIB as an information source. (Doc. No. 49-5, at 3.)

When an MIB member completes the underwriting of an insurance application, it must report to the MIB information involving impairments listed in the MIB coding manual that it obtained during its underwriting of the individual's application. (Doc. No. 45-5, at 13-14.) Such information is reported using six-digit MIB codes signifying different medical impairments and conditions, diagnostic test results, and other conditions affecting the insurability of the applicant. The first three digits in the code signify the impairment or condition. (Doc. No. 45-7, at 281:1-2.) That a certain condition or impairment is reported, however, means only that the reporting member obtained evidence of the condition or impairment during the underwriting process; it does not signify a confirmed diagnosis. (See Doc. No. 45-3, at 48:2-8; Doc. No. 49-5, at 3.) The fourth digit signifies the degree of the impairment and, at least for some impairments, whether it is treated or untreated. (Doc. No. 45-7, at 280:7-16, 281:2-13.) The fifth digit signifies the source of the information, and the sixth digit signifies the duration of the impairment. (Doc. No. 45-7, at 281:4-7.) Any codes reported by an MIB member about an applicant are maintained in MIB's database and are available to other MIB members who obtain the applicant's authorization to use the MIB as an information source. (Doc. No. 49-5, at 3.)

In 1986 and 1987, Plaintiff purchased from Defendant three life insurance policies with a total face value of $16 million. (Doc. No. 1-2, at Exs. A-C.) The policies were universal life insurance policies that were to stay in effect throughout Plaintiff's life provided that the conditions of the policies were met. (Doc. No. 1-2, ¶ 11; Doc. No. 9, ¶ 11.) Plaintiff has paid over $3 million in premiums under the policies. (Doc. No. 1-2, ¶ 20; Doc. No. 9, ¶ 20.)

On December 2, 2013, Defendant notified Plaintiff by letter that the policies had terminated for lack of payment but could be reinstated subject to Defendant's approval. (Doc. No. 1-2, at Ex. D.) Defendant directed Plaintiff to complete and submit the enclosed reinstatement applications if he sought to reinstate the policies. (Doc. No. 1-2, at Ex. D.)

The termination of the policies is the subject of an earlier lawsuit pending in the Southern District of New York. Wiener v. AXA Equitable Life Insurance Co., No. 1:16-cv-04019-ER.

On December 23, 2013, Plaintiff submitted the reinstatement applications along with the materials required by Defendant for medical evidence of insurability. (Doc. No. 1-2, ¶ 26; Doc. No. 9, ¶ 26.) These materials included an authorization for Defendant to communicate with Plaintiff's physician regarding Plaintiff's health and a release granting Defendant access to all information, including the MIB, regarding Plaintiff's past, present, or future physical or mental condition. (Doc. No. 1-2, ¶¶ 46-47; Doc. No. 9, ¶¶ 46-47; Doc. No. 48-1, at Ex. 61.) Plaintiff further acknowledged that information may be disclosed to the MIB who in turn may disclose such information to another MIB member with whom Plaintiff applies for life insurance. (Doc. No. 48-1, at Ex. 61.)

Hallie Hawkins was assigned to underwrite Plaintiff's reinstatement applications on behalf of Defendant. (Doc. No. 1-2, ¶ 29; Doc. No. 9, ¶ 29.) As part of her underwriting, Hawkins requested Plaintiff's medical records from Plaintiff's treating physician, Dr. Barry Boyd. (Doc. No. 1-2, ¶ 30; Doc. No. 9, ¶ 30.) Dr. Boyd provided the requested medical records and asked to speak with the underwriter. (Doc. No. 48-1, at Ex. 71; Doc. No. 48-7, at 3.) Henry Lewer, Defendant's Senior Director, and Sandra Huffstetler, a Lead Associate, directed Hawkins to contact Dr. Boyd regarding Plaintiff's reinstatement applications. (Doc. No. 48-1, at Ex. 71.) Despite that directive, Hawkins never contacted Dr. Boyd. (Doc. No. 48-1, at 253:9-18; Doc. No. 48-7, at 3.) Based on her review of Dr. Boyd's medical records, Hawkins directed Huffstetler to report seven MIB codes regarding Plaintiff, six of which are at issue in this litigation. (Doc. No. 48-1, at Ex. 71.) The six MIB codes at issue signified the following conditions, all of which were coded to reflect that the information was obtained from a doctor:

• Atrial fibrillation: Details (including the degree, whether it was treated or untreated, and duration) unknown. (Doc. No. 45-7, at 280:18-281:1.)

• Suspected cerebral vascular accident: Details unknown. (Doc. No. 45-7, at 283:17-284:8.)

• High blood pressure: Details (including the degree, whether it was treated or untreated, and duration) unknown. (Doc. No. 45-7, at 280:7-16.)

• Suspected memory loss: Details unknown. (Doc. No. 45-7, at 284:21-22.)

• Monoclonal gammopathy of uncertain significance ("MGUS"): Details (including the degree and duration) unknown. (Doc. No. 45-7, at 284:10-13.)

• Sleep apnea: Details (including the degree and duration) unknown. (Doc. No. 45-7, at 283:5-15.)

Defendant notified Plaintiff by letter dated March 24, 2014 that his reinstatement applications were declined. (Doc. No. 1-2, at Ex. E.)

Shortly after Defendant declined his reinstatement applications, Plaintiff contacted Sanford Robbins of American Business, an insurance brokerage company. (See Doc. No. 48-4, at 7:8-19.) In or about April 2014, Robbins submitted on Plaintiff's behalf an informal application for life insurance to John Hancock, Principal Life Insurance Company, and Security Mutual Life Insurance Company of New York. (Doc. No. 48-4, at 20:21-21:3, 23:6-25, 26:25-27:19.) John Hancock reviewed Plaintiff's medical records and declined his application. (Doc. No. 48-4, at 20:24-23:5.) Principal Life Insurance Company reviewed Plaintiff's medical records and tentatively approved his informal application at a Table 4 rating, which is double the standard rate, subject to a full underwriting and MIB check upon receipt of a formal application. (Doc. No. 48-4, at 23:6-24:13.) Unlike John Hancock and Principal Life Insurance Company, Security Mutual obtained and reviewed Plaintiff's MIB file in addition to Plaintiff's medical records. (Doc. No. 48-4, at 27:23-28:13.) Security Mutual tentatively approved Plaintiff's application at a Table 4 rating. (Doc. No. 48-4, at 28:15-22.) Plaintiff did not submit additional records to Principal Life Insurance Company or Security Mutual because the offered rating was too costly. (See Doc. No. 48-4, at 25:8-20.)

On January 25, 2018, Plaintiff filed his Complaint in the Superior Court of Mecklenburg County, North Carolina, and Defendant subsequently removed the action to the United States District Court for the Western District of North Carolina. Plaintiff alleges that Defendant failed to exercise reasonable care in assessing Plaintiff's medical history and conditions and reporting such information to the MIB. Based thereon, Plaintiff asserts claims for negligent misrepresentation, libel, negligence, and unfair or deceptive acts or practices in violation of N.C. Gen. Stat. § 75-1.1.

On January 24, 2020, Defendant filed its Motion for Summary Judgment. The motion has been fully briefed and is now ripe for adjudication.

Outcome: Motion for summary judgment grant.

04/12/2024 176 USCA Case Number 24-1316 for 174 Notice of Appeal, USCA Case Manager: Anisha Walker. (nvc) (Entered: 04/12/2024)

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