Thompson v. Occidental Life Insurance Co.

Donald L. Thompson had a $15,000 life-insurance policy with Occidental Life Insurance Company (defendant). Mr. Thompson wanted to increase his coverage, so he applied for a $100,000 policy, paid the first premium, and submitted to a medical examination. During the roughly 20-minute examination, an Occidental-approved doctor completed a medical-history questionnaire for Mr. Thompson. On the questionnaire, the doctor indicated that Mr. Thompson suffered from varicose veins and had had a vein ligation tying the veins in Mr. Thompson’s legs to alleviate pain and improve his circulation. The doctor did not indicate any other medical conditions or treatments. However, in the two months prior to his application, Mr. Thompson had had 10 medical consultations after presenting with chest pains. Then, Mr. Thompson’s legs were x-rayed, and he was treated for leg pain and vein inflammation. When Mr. Thompson’s application was reviewed, Occidental underwriters wanted him to submit to another medical examination before issuing the $100,000 policy. Unfortunately, Mr. Thompson died following a slip and fall before receiving the underwriters’ decision. When Mrs. Thompson (plaintiff) filed a claim as Mr. Thompson’s beneficiary, Occidental concluded that Mr. Thompson’s death was accidental and paid Mrs. Thompson $30,000 according to a double-indemnity clause in the $15,000 policy. Occidental sent the premium Mr. Thompson had paid for the $100,000 policy to Mrs. Thompson and did not issue that policy. Mrs. Thompson sued Occidental in state court to recover under the $100,000 policy. A jury ultimately awarded Mrs. Thompson $200,000 as double indemnification under the $100,000 policy, plus interest. Occidental appealed.