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Settlemyer v. Farmers New World Life Insurance Co.

United States District Court, D. Oregon

November 3, 2014

FARMERS NEW WORLD LIFE INSURANCE COMPANY, a Washington corporation, Defendant.

Brandon G. Braun, Clinton L. Tapper, R. Scott Taylor, Taylor & Tapper, Eugene, Oregon. Attorneys for plaintiff.

Margie R. Lariviere, Gordon & Rees LLP, San Francisco, California.

Sarah N. Turner, Gordon & Rees LLP, Seattle, Washington, Attorneys for defendant.


ANN AIKEN, Chief District Judge.

Defendant Farmers New World Life Insurance Company moves for summary judgment on plaintiff Monika Settlemyer's claims pursuant to Fed. R. Civ. R. 56(a). For the reasons set forth below, defendant's motion is granted and this case is dismissed.


On February 13, 2011, John Medenbach applied for a $150, 000 Simple Life Insurance policy with defendant, listing plaintiff as the beneficiary. Defendant's agent, Janell Solterbeck, assisted Mr. Medenbach with the application. Mr. Medenbach reported to Ms. Solterbeck, in relevant part, that he had no past history of drug or alcohol abuse, and the only health condition he suffered from or had been treated for within the past seven years was high blood pressure. Mr. Medenbach expressly acknowledged that "this [signed application] will become a part of the policy if issued by [defendant]." Solterbeck Decl. Ex. 1, at 4. He also "represent[ed] that [his] statements and answers [on the application] are true and complete to the best of [his] knowledge and belief." Id.

Ms. Solterbeck subsequently submitted Mr. Medenbach's application to defendant. Defendant screened Mr. Medenbach's application to determine if he met the threshold life insurance requirements. On February 23, 2011, defendant issued a Simple Life Insurance policy, which consisted of the policy itself, Mr. Medenbach's application, and the applicable riders and endorsements (collectively the "Policy")

On November 6, 2012, defendant received notice that Mr. Medenbach had died the previous day. Mr. Medenbach's Policy was assigned to defendant's claim examiner, Ray Woo. Because Mr. Medenbach died within the Policy's two-year contestability period, his claim was subject to an investigation. On November 7, 2012, Mr. Woo wrote a letter to plaintiff expressing condolences for her loss; he explained that plaintiff was the beneficiary of the Policy and it was defendant's routine procedure to conduct an investigation into any death occurring within two years of the issuance of insurance, which would entail, amongst other things, the completion of certain paperwork necessary to process the claim.

On November 7, 2012, Mr. Woo sent an agent questionnaire to Ms. Solterbeck, who completed it on the same date. Ms. Solterbeck confirmed that she posed all of the application questions to Mr. Medenbach, that he responded to each question, and that she witnessed him signing the application. Ms. Solterbeck indicated further that she was not aware of any past medical history of Mr. Medenbach that was not disclosed on the application itself. Also on November 7, 2012, Mr. Woo faxed a request to Al Broyles, who worked at defendant's claim decision support department, requesting, in pertinent part, that he obtain Mr. Medenbach's medical and pharmacy records for the past 10 years.

On November 27, 2012, Mr. Woo sent a letter to plaintiff reminding her to send in claim forms. On December 3, 2012, defendant received a completed statement, an authorization to obtain medical information, and an initial death certificate from plaintiff. On December 4, 2012, Mr. Woo requested that plaintiff send an original certified death certificate when one became available. On December 13, 2012, Mr. Woo provided a status update to plaintiff, explaining that defendant had not yet received information sufficient to evaluate the claim. On December 17, 2012, defendant received plaintiff's signed statement, reflecting that, on the night of Mr. Medenbach's death, he drank between seven and nine beers and took trazodone and oxycodone. At that time, plaintiff also identified Mr. Medenbach's health care providers and pharmacy, and noted that he had past DUis and attended Alcoholics Anonymous meetings.

From December 2012 through February 2013, defendant received reports from Mr. Broyles regarding the requested medical and pharmacy records. These records revealed that Mr. Medenbach had engaged in significant illegal drug use within seven years of completing his application and was currently taking the prescription medications oxycodone, wellbutrin, and trazodone. In addition, these records demonstrated that Mr. Medenbach suffered from or was being treated for a heart murmur and anxiety. On January 30, 2013, defendant received a certified copy of Mr. Medenbach's death certificate, listing the official cause of death as accidental positional asphyxia due to mixed drug toxicity (alcohol and oxycodone). Throughout this period, defendant sent regular status updates to plaintiff.

On March 15, 2013, Mr. Woo submitted Mr. Medenbach's medical records to defendant's underwriter, Mary Barrett, for review. On March 19, 2013, Ms. Barrett submitted an underwriting report, specifying that Mr. Medenbach "failed to disclose the past diagnosis and history of: Heart murmur[, ] History of drug abusemeth and cocaine [, ][and] Anxiety." Barrett Decl. Ex. 1, at 8. As a result of these omissions, Ms. Barrett concluded that Mr. Medenbach misrepresented the answers to two questions on his application: one pertaining to his past medical history ("Question Five") and the other relating to his past substance abuse ("Question Ten").[1]

On March 20, 2013, Mr. Woo sent a follow-up questionnaire to Ms. Sol terbeck, asking if she was aware of the fact that Mr. Medenbach had been treated for anxiety or a heart murmur, or was taking trazodone, oxycodone, and wellbutrin. Ms. Solterbeck stated that she was neither cognizant of these issues nor had any prior knowledge of Mr. Medenbach's substance abuse. She reiterated that she asked Mr. Medenbach all questions on the application and did not have any other information on which to base the issuance of the Policy.

Thereafter, defendant considered all of the information before it and determined that the Policy should be rescinded based on Mr. Medenbach's material misrepresentations. On April 2, 2013, defendant's claim supervisor, Megera Malaby, sent a letter to plaintiff, again ...

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