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The Court correctly granted summary
judgment to OCM’s client in this case, which involves
the interpretation and application of M.G.L. ch. 175, §
124 (“Section 124”). Section 124 governs life insurance
policies issued without a full medical examination. The
statute provides that an insurance company may deny a
claim under a policy issued without a prior medical
examination only if there was a willfully false,
fraudulent or misleading statement in the application.
In February of 2003, plaintiff’s wife,
then thirty six years old, completed an application for
life insurance with the defendant, naming the plaintiff
as her beneficiary. Plaintiff’s wife had not been
treated for nor diagnosed with any significant medical
condition at the time of her application and therefore
she listed no major diseases on her application form.
The company elected not to conduct a medical
examination, but chose instead to conduct a more cursory
paramedical examination. Her application was approved,
and the policy was delivered on June 23, 2003. After the
application was submitted but before the policy was
received, plaintiff’s wife was diagnosed with cancer.
Nevertheless, when she received her policy, she signed
and returned a delivery receipt which contained a
certification that her previous answers regarding her
health were still accurate. Plaintiff’s wife died from
cancer in March 2004. |
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When plaintiff filed a claim for payment
with defendant several months later, defendant denied
plaintiff’s claim based on his late wife’s failure to
disclose her cancer diagnosis when she signed her
delivery receipt.
The court commenced its analysis by
noting that under G.L. c. 175, § 124, “an insurer may
avoid payment on a life insurance policy in which the
insurer did not obtain a prior medical examination of
the insured only if the insured made a willfully false,
fraudulent, or misleading statement in her application
regarding her physical condition.” Id. at *5.
“Refusing to pay death benefits based on the contention
that the decedent’s signature on a document
characterized as a Receipt adopted nine assertions,
including assertions as simple as acknowledging receipt
and complex as declaring no change in the condition or
health, is precisely the type of ‘gotcha’ tactics that
the Commissioner of Insurance railed against in 1888 and
ultimately prevailed upon the Legislature to change in
1892 by enacting § 124.” Id. at
*10.
Because OCM believes the application of
the statute to this situation was obvious and the
insurer knew or should have known it was liable to pay
benefits under the Policy, OCM is currently prosecuting
a claim for unfair and deceptive claims settlement
practices under G.L. c. 176D.
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