A federal district court in Pennsylvania has denied an insurer's motion to void a life insurance policy based on the insured's alleged marijuana dependency.
The Case
After Tammy Horvath's son Luke Yuzwa died, she sought to recover benefits under two life insurance policies on his life that had been issued by Globe Life and Accident Insurance Company.
Globe investigated and said that, among other things, it found that Mr. Yuzwa had participated in a drug treatment program at two facilities and that he had been diagnosed as having "marijuana dependency issues."
Globe denied Ms. Horvath's claims, stating that Mr. Yuzwa had "chronic conditions which required periodic medical care prior to the applications for insurance" that should have been disclosed on the insurance applications in response to the question:
Within the past 3 years, have any of the Proposed Insured(s) had any chronic illness or condition which requires periodic medical care?
Globe asserted that if it "had been aware of Luke Yuzwa's medical history at the time of application, we would have been unable to approve him for coverage." It indicated that it considered substance abuse to be a medical condition that required periodic medical care.
Ms. Horvath sued, and Globe moved for partial summary judgment. Among other things, it argued that it reasonably believed that it could rescind the policies based on the failure of Mr. Yuzwa's alleged marijuana dependency to be disclosed on the insurance applications.
The District Court's Decision
The district court denied Globe's motion, finding that a reasonable jury could conclude that Globe unreasonably believed it could rescind the policies based on Mr. Yuzwa's alleged marijuana dependency.
Specifically, the district court said, a reasonable jury could conclude that Globe lacked a reasonable basis to believe that Ms. Horvath knew the purported misrepresentation was false when made.
The district court acknowledged that Globe adduced evidence that Ms. Horvath communicated with personnel at the drug treatment program about Mr. Yuzwa's continued drug-dependency treatment and, therefore, that it reasonably believed that she knew about Mr. Yuzwa's treatment when she failed to disclose it on the applications.
The district court added, however, that Ms. Horvath pointed to evidence that she explained to Globe that she believed the treatment was a one-time occurrence and therefore was not "periodic" under the application language.
The district court concluded that the fact that Ms. Horvath knew of Mr. Yuzwa's treatment did "not, under the facts of this case, necessarily suggest that she knew her representations on the application were false."
The case is Horvath v. Globe Life and Accident Ins. Co., No. 3:18-cv-84 (W.D. Pa. Aug. 27, 2019). Attorneys involved include: For TAMMY HORVATH, Plaintiff: Douglas J. Olcott, LEAD ATTORNEY, Bordas and Bordas, PLLC, Pittsburgh, PA; Scott S. Blass, LEAD ATTORNEY, PRO HAC VICE, Bordas & Bordas, Wheeling, WV. For GLOBE LIFE AND ACCIDENT INSURANCE COMPANY, Defendant: Albert P. Veverka, LEAD ATTORNEY, Dickie, McCamey & Chilcote, P.C., Pittsburgh, PA; Charles E. Haddick, Jr., PRO HAC VICE, Dickie McCamey & Chilcote, P.C., Camp Hill, PA.
Steven A. Meyerowitz
Steven A. Meyerowitz, a Harvard Law School graduate, is the founder and president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. He may be contacted at [email protected].