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COURT OF APPEALS DECISION DATED AND RELEASED July 5, 1995 |
NOTICE |
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A party may file with the
Supreme Court a petition to review an adverse decision by the Court of
Appeals. See § 808.10 and
Rule 809.62, Stats. |
This opinion is subject to
further editing. If published, the
official version will appear in the bound volume of the Official Reports. |
No. 94-2578
STATE
OF WISCONSIN IN COURT OF
APPEALS
DISTRICT I
GREGORY L. SCHULZ,
Plaintiff-Appellant,
v.
TIME INSURANCE
COMPANY,
AMERICAN FAMILY
INSURANCE COMPANY,
and KELLY KARCZ,
Defendants-Respondents.
APPEAL from judgments
and an order of the circuit court for Milwaukee County: LOUISE M. TESMER,, Judge. Affirmed.
Before Sullivan, Fine
and Schudson, JJ.
PER
CURIAM. Gregory L. Schulz appeals from the trial court's grant
of summary judgment to Time Insurance Company, American Family Insurance
Company, and Kelly Karcz. We affirm.
I.
Schulz, a physician with
training in oncology, the diagnosis and treatment of cancer, and his wife
applied for health insurance coverage from American Family on October 22,
1991. Kelly Karcz, an American Family
sales agent, took their application. On
January 2, 1992, American Family denied coverage to the Schulzes based on
Schulz's history of possible alcohol abuse and domestic abuse, and on
nonreceipt of Mrs. Schulz's health records.
Schulz was then re-examined, and American Family received a letter from
his doctor on February 25, 1992, indicating that Schulz had no problems
with his liver. On March 5, 1992,
American Family notified the Schulzes that it would “be willing to reconsider
your application for health insurance,” and advised them to submit a new
application. They did so on March 16,
1992, through Kelly Karcz. Mrs. Schulz
testified that Karcz assured them “in effect, that no, you didn't need to do
anything and this should go through just fine.” When Mrs. Schulz called Karcz to ask about the status of their
application, Karcz advised that they needed to complete a “hypertension
form.” The Schulzes did not submit the
form, and American Family rejected the Schulzes' second application on May 21,
1992.
On May 4, 1992, the
Schulzes applied for health insurance through Time Insurance, which approved
their application with an effective date for coverage of May 4. The policy contained the following
exclusions:
EXPENSES NOT COVERED BY THIS POLICY: This policy does not provide benefits for
the following:
a)Pre-existing Conditions during the
first two years coverage is in force; except as provided by the policy;
b)expense incurred during the first two
years of coverage for a Sickness which manifests itself during the first 15
days after a Covered Person's Effective Date of Coverage.
....
PRE-EXISTING CONDITIONS: A Pre-Existing Condition is a condition not
fully disclosed on the application for insurance:
1)for which the Covered Person received
medical treatment or advice from a Physician within the 2 year period
immediately preceding that Covered Person's Effective Date of Coverage; or
2)which produced signs or symptoms within
the 2 year period immediately preceding that Covered Person's Effective Date of
Coverage which should have caused an ordinarily prudent person to seek
diagnosis or treatment.
....
SICKNESS: Sickness means an illness, disease or condition
of a Covered Person which manifests itself more than 15 days after the Covered
Person's Effective Date of Coverage.
On May 19, 1992, Schulz
consulted a doctor for symptoms of possible illness. On May 20, 1992, doctors conducted a biopsy on a lymph node, and
Schulz was diagnosed with testicular cancer.
Time Insurance denied coverage for his cancer treatment expenses based
on the pre-existing condition exclusion and the clause excluding from coverage
any illness manifesting itself within fifteen days of the effective date of
coverage.
Schulz sued American
Family, Karcz, and Time Insurance. The
trial court granted summary judgment to American Family on the grounds that it
did not intentionally, recklessly, or negligently defer acting on his
application for insurance. The trial
court also granted summary judgment to Karcz on the ground that her promise to
obtain insurance coverage for the Schulzes was not a binding contract. Finally, the trial court determined that
Schulz's illness manifested itself within the 15‑day exclusion period,
and granted summary judgment to Time Insurance; it did not address the
pre-existing condition exclusion.
Schulz appeals.
II.
Summary judgment is used
to determine whether there are any disputed issues for trial. U.S. Oil Co. v. Midwest Auto Care
Servs., Inc., 150 Wis.2d 80, 86, 440 N.W.2d 825, 827 (Ct. App.
1989). Appellate courts and trial
courts follow the same methodology. Green
Spring Farms v. Kersten, 136 Wis.2d 304, 315, 401 N.W.2d 816, 820
(1987). First, we examine the pleadings
to determine whether the complaint states a claim for relief. Id. If the complaint states a claim and the answer joins issue, we
then examine the pleadings, depositions, answers to interrogatories, admissions
on file, and affidavits, if any. Id. If the summary judgment materials indicate
that there is no material issue of fact and if the moving party is entitled to
judgment as a matter of law, summary judgment must be entered. Section 802.08(2), Stats.
A. Claim
against American Family
Schulz claims that
American Family unreasonably delayed processing his application for health
insurance. This states a cause of
action, so we examine the evidentiary material to determine whether a genuine
issue of material fact remains.
First, Schulz concedes
that “up to the time of its initial rejection of Mr. Schulz on January 2,
1992, the conduct of American Family and its underwriting personnel was
entirely proper,” and that “it certainly had the right to reject him on the
basis of a perceived health risk and did so within a reasonable time.” Schulz further concedes that he “did not
financially impair himself from securing other coverage and the circumstances
at the time did not indicate the need for haste,” referring to the criteria for
unreasonable delay liability in Wisconsin as discussed in Kukuska v. Home
Mut. Hail-Tornado Ins. Co., 204 Wis. 166, 235 N.W. 403 (1931), and Wallace
v. Metropolitan Life Ins. Co., 212 Wis. 346, 248 N.W. 435 (1933). Instead, Schulz argues that the submission
of both applications was one long process that was unreasonably delayed.
We note, however, that
Schulz did not complete the application process the second time. We have previously held that failure to
complete an application precludes a person from obtaining insurance
coverage. See Tourtillott
v. Ormson Corp., 190 Wis.2d 292, 298, 526 N.W.2d 515, 518 (Ct. App.
1994) (widow denied life insurance benefits because her husband never completed
an application before his death). He
argues that his failure to complete the application is irrelevant because
American Family invited him to reapply for insurance even though “the company
knew the application would ultimately be rejected.” Although Schulz has submitted a note by an American Family
supervisor that reveals that the supervisor was uneasy about the risk to
American Family, Schulz has provided no evidence suggesting that American
Family's invitation to Schulz to reapply was a sham or that it intended to
reject his application a second time.[1] He has not, therefore, established that
there is a genuine issue of material fact for trial. See Transportation Ins. Co. v. Hunzinger Constr. Co.,
179 Wis.2d 281, 290-292, 507 N.W.2d 136, 139 (Ct. App. 1993). We affirm.
B. Claim
against Kelly Karcz
Schulz claims that Karcz
promised him and his wife that American Family would grant them insurance
coverage. This states a claim for
misrepresentation. Schulz has not,
however, established that there is a genuine issue of material fact for trial.
Schulz argues that
Karcz's promise “could be found by a jury to have induced a temporary reliance
... that a policy would be issued, thereby preventing [Schulz] from seeking
alternative coverage in a timely fashion.”
For a cause of action
for misrepresentation in Wisconsin, whether of intentional misrepresentation,
negligent misrepresentation, or strict responsibility, at least three elements
must be proven: “(1) [t]he representation
must be of a fact and made by the defendant; (2) the representation of fact
must be untrue; and (3) the plaintiff must believe such representation to be
true and rely thereon to his damage.” Whipp
v. Iverson, 43 Wis.2d 166, 169, 168 N.W.2d 201, 203 (1969).
Here, Schulz concedes
that he did not complete the application process; instead, he applied for
insurance from Time Insurance seventeen days before the date of American
Family's letter to him denying his application. Thus, he has not demonstrated any reliance on the alleged
promise. See id. There is no genuine issue of material fact
concerning Karcz's alleged misrepresentation, and we affirm on this claim.
C. Claim
against Time Insurance
Schulz claims that the
trial court erroneously concluded that his symptoms manifested themselves
during the 15-day exclusion period in his policy. Schulz's claim is one of breach of contract by his insurer, and
we conclude that he has stated a cause of action. There is no genuine issue of material fact for trial, however,
because Schulz conceded in his evidentiary materials that he had a
“pre-existing condition” as defined in his policy. His deposition, submitted on motions for summary judgment,
contained the following exchange:
QIf you want to look at page 7, at Time
Insurance's definition of pre-existing?
A Um-hum.
QIn your opinion, does the sequence of
your illness fall within the definition of preexisting condition?
A Yes.
Schulz's
attorney did not object to this question during the examination.
Other evidence submitted
on the motions for summary judgment supports Schulz's admission. Schulz's physician testified at a deposition
that, when he examined Schulz on May 19, 1992:
I
think what I was looking at here were just signs in his muscles and his face
that would tell me that it just wasn't something that had happened within a few
days or a week or something like this.
It had been going on for at least a month or so.
Both
Schulz's deposition testimony and his medical records indicate that he had multiple
symptoms of illness before consulting a physician on May 19, 1992, including an
enlarged lymph node existing for “some weeks,” “drenching” night sweats,
low-grade fever, “progressive” fatigue, and a thirty-pound weight loss; in
addition, his right testicle contained a “lesion.” Schulz indicated that he had consulted a physician friend about
his symptoms “[a] couple weeks before” May 19, 1992, and that he conducted a
CBC diagnostic test on himself to check for “an infectious process.”
We conclude that Schulz
admitted that his illness constituted a pre-existing condition under his health
insurance policy with Time Insurance, and, accordingly, we do not reach the
issue of whether Schulz's symptoms manifested themselves within the 15-day
exclusion period.[2] We affirm on this claim. See Transportation Ins. Co.,
179 Wis.2d at 295 n.6, 507 N.W.2d at 141 n.6 (appellate court may affirm trial
court on reasons other than those relied upon by the trial court).
By the Court.—Judgments
and order affirmed.
This opinion will not be
published. See Rule 809.23(1)(b)5, Stats.
[1] The supervisor's note was in response to another employee's query as to whether American Family should issue the policy in light of an examining physician's report that Schulz did not have an enlarged liver. The note read: “Yes! But I don't like it.” As noted, American Family then sought additional information from Schulz that he did not supply.