Harper v. Fidelity and Guaranty Life Insurance Company

Joseph Harper purchased a $63,000 life insurance policy from Fidelity and Guaranty Life Insurance Co. (Fidelity) (defendant) with his wife, Gail Harper (plaintiff), as the beneficiary. As part of a simplified underwriting process, Lisa Jones, a senior underwriter for Mid-America Agency Services, reviewed Joseph’s application, which also included a Medical Information Bureau report (MIB). The bureau collected information from member organizations, including life and health insurance companies to compile reports used in underwriting. On the application, which warranted that the statements made were complete, true, and correctly recorded, Joseph stated he was 5’11” and 275 pounds, but the MIB listed his weight as 305 pounds. Jones assumed he had lost at least four pounds since the application, bringing him within the 301-pound weight limit for his height. The MIB also indicated Joseph had applied for another unknown insurance product. Jones noted some other discrepancies including that Joseph had been successfully treated for depression and was on medication to control high blood pressure and high cholesterol, but those things did not prevent Jones from recommending approval of his application. Fifty days after Fidelity issued the policy, Joseph died from sudden cardiac arrest, hypertensive cardiovascular disease, and hypertriglyceridemia. Fidelity had a two-year contestability period and reviewed Joseph’s medical records, which revealed various medical conditions not disclosed on his application: (1) treatment for a transient ischemic attack (TIA); (2) a history of alcohol abuse, including abnormal liver tests; (3) hospitalization for heart fluttering and chest pains; and (4) morbid obesity at a weight of 350 pounds. Fidelity denied Gail’s claim for benefits, rescinded the plan, and refunded the premiums paid on the policy. Gail sued, alleging breach of contract, reasonable expectations, equitable or promissory estoppel, and breach of the implied covenant of good faith and fair dealing. The district court granted Fidelity’s motion for summary judgment, finding that there was no issue of material fact. Gail appealed.