John Hancock Life Ins. Co. of NY v Hirsch (2009 NY Slip Op 51450(U))

Supreme Court, Westchester County

27003/2008

Kelley Drye & Warren LLP

Attorneys for Plaintiff

101 Park Avenue

New York, New York 10178

Schindel, Farman, Lipsius, Gardner & Rabinovich, LLP

Attorneys for Defendant

14 Penn Plaza, Suite 500

New York, New York 10122

William J. Giacomo, J.

Plaintiff John Hancock Life Insurance Company of New York (“John Hancock”) seeks a declaratory judgment that a life insurance policy (the “Policy”) it issued to defendant Shavy Hirsch (“Hirsch”) insuring the life of her stepmother Rivka Landau (“Landau”) is null and void and of no force or effect and that John Hancock has no obligation to pay any benefits or otherwise perform under the Policy. Alternatively John Hancock seeks judgment permitting it to rescind the Policy.

For the reasons set forth below this Court grants the plaintiff’s motion to the extent that the Policy is declared null and void because an express condition precedent to coverage under the Policy was not met.

[*2]FACTUAL & PROCEDURAL BACKGROUND

On December 4, 2006, Landau presented to her personal physician, David M. Ziemba, M.D. (“Dr. Ziemba”) complaining of soreness from a mass on her right breast. Subsequently, on December 11, 2006, Landau had a sonogram on her right breast, which confirmed the presence of a mass “suspicious for a malignancy” and she was referred for a biopsy.

On the same date Landau presented for the sonogram, December 11, 2006, a written application (the “Application”) for the aforementioned Policy was submitted to John Hancock seeking a $10 million life insurance policy on the life of Landau. The Application, as well as a “Health Questionnaire”, were signed by Hirsch, Landau and an independent life insurance broker. Landau and Hirsch acknowledged in the Application and Health Questionnaire the veracity and completeness of all their answers to inquiries in the Application and Health Questionnaire. In response to inquiries regarding Landau’s health, there was no disclosure of Landau’s complaint of pain and soreness to her breast, her visit to her personal physician, or the fact that she had a sonogram done. The Application also contained the following proviso also acknowledged by Landau and Hirsch:

Any life insurance policy issued as a result of this application will be effective on the later of the date the first premium has been paid in full and the date the policy has been delivered. The insurance will not be in effect if there has been any deterioration in the insurability of any proposed life insured(s) since the date of the application. [Application at Declarations ¶2(a).]

On December 14, 2006, Landau, afer undergoing a mammogram and biopsy, was diagnosed with breast cancer, and was immediately referred for a surgical consultation. No document submitted to John Hancock with the Application was ever amended or supplemented.

On December 22, 2006, John Hancock issued the Policy, which Policy was delivered on December 26, 2006 and the first premium was paid on December 28, 2006.

In 2008, as part of internal review, John Hancock procured medical records from Landau’s physicians pursuant to properly executed authorizations and discovered the cancer diagnosis.

On December 15, 2008, John Hancock commenced the instant action by the filing of its summons and complaint and simultaneously forwarded a letter to Hirsch informing that it was rescinding the Policy and requesting its return. John Hancock advised that it would accept no further premium payments and offered to tender all premiums already paid by defendants upon surrender of the Policy and acknowledgment of its rescission. The defendant declined John Hancock’s offer. On February 3, 3009, Hirsch served her answer and issue was joined.

Plaintiff now moves for summary judgment. Defendant opposes the motion. No discovery has been conducted in this matter.

DISCUSSION [*3]

It is well settled that summary judgment is a drastic remedy which should not be granted where there is any doubt about the existence of a triable issue of fact. Winegrad v. New York Univ. Med. Ctr., 64 NY2d 851, 853, 487 NYS2d 316, 476 NE2d 642 (1985).

A party seeking summary judgment bears the initial burden of affirmatively demonstrating its entitlement to summary judgment as a matter of law. Winegrad v. New York Univ. Med. Ctr., 64 NY2d 851, 853, 487 NYS2d 316, 476 NE2d 642 (1985); Alvarez v. Prospect Hospital, 68 NY2d 320, 508 NYS2d 923, 501 NE2d 572 (1986). To obtain summary judgment it is necessary that the movant establish its claim via the tender of evidentiary proof in admissible form sufficient to warrant the court, as a matter of law, in directing judgment in its favor. CPLR 3212(b). Failure of a moving party to tender sufficient evidence to demonstrate as a matter of law its prima facie entitlement to summary judgment requires denial of the motion, regardless of the sufficiency of the opposing papers. McDonald v. Mauss, 38 AD3d 727, 832 NYS2d 291 (2nd Dept., 2007).

After a sufficient prima facie showing is made, the burden of proof then shifts to the the opposing party who must come forward with evidence to demonstrate the existence of a material issue of fact requiring a trial. CPLR 3212(b).

Was an Enforceable Contract of Insurance Created?

It is well settled that to create an enforceable contract of insurance there must be acceptance by the insurance company and communication of that acceptance to the applicant. Goldberg v. Colonial Life Ins. Co. of Am., 284 App.Div. 678, 134 NYS2d 865, (2nd Dept., 1954) app. dismissed, 308 NY 958, 127 NE2d 99(1955). Further, an enforceable contract of insurance also requires compliance with the terms of the application and compliance with the conditions precedent within the application, before the “ripening of the application into a policy of insurance.” Mendel v. U.S. Life Ins. Co. in City of New York, 248 AD2d 873, 875, 670 NYS2d 920, 922 (3rd Dept., 1998), lv. denied 92 NY2d 804, 677 NYS2d 779, 700 NE2d 318(1998); see also, Schmitt v. North American Co. for Life and Health Ins. of New York, 30 AD3d 1007, 817 NYS2d 462(4th Dept., 2006),

lv. denied 7 NY3d 712, 824 NYS2d 604 (2006).

Where an applicant for a life insurance policy knows of even a possible health problem after an application is submitted, but prior to the issuance of the policy, he is under an obligation to inform the insurance company of that information. Id.; see also, Meagher v. Executive Life Ins. Co. of NY, 200 AD2d 720, 721, 607 NYS2d 361(2nd Dept., 1994) and North Atlantic Life Ins. Co. of America v. Katz, 163 AD2d 283, 557 NYS2d 150(2nd Dept.,1990).

In Schmitt v. North American Co. for Life and Health Ins. of New York, it was undisputed that the applications for life insurance did not indicate that decedent had lymphoma and that he had been diagnosed with that condition prior to the delivery and payment of the first premium of the policy. The Court held that the

“decedent failed to comply with a condition precedent inasmuch as he failed to notify defendant of the change in the state of his health prior to the delivery of the respective policies and payment of the first premiums for each policy, and thus the policies never [*4]became effective.” Id. 30 AD3d at 1009, 817 NYS2d at 464.

Similarly, in North Atlantic Life Ins. Co. of America v. Katz, a life insurer brought an action to rescind a life insurance policy after it was discovered that the insured failed to inform the life insurer that he was suffering from a recurrence of lymphoma when he applied for a second policy. The Court held that

An insured cannot remain silent while cognizant that his insurance application contains misleading or incorrect information …In particular, he must notify his insurance company of nonapparent medical conditions which the company probably would consider relevant when deciding whether to issue a policy. Id., citing, Axelroad v. Metropolitan Life Ins. Co., 267 NY 437, 196 N.E. 388(1935); Wageman v. Metropolitan Life Ins. Co., 24 AD2d 67, 263 NYS2d 915(1st Dept., 1965), aff’d 18 NY2d 777, 274 NYS2d 908, 221 NE2d 566(1966).

Furthermore, whether or not Landau or defendant had actual knowledge of a cancer diagnosis is immaterial. All that was necessary was a showing that Landau’s health had “deteriorated” between the time of the submission of the Application and the issuance of the Policy. Levande v. Canada Life Assur. Co., 23 AD2d 669, 257 NYS2d 323 (2nd Dept., 1965) aff’d, 17 NY2d 645, 269 NYS2d 430, 216 NE2d 594 (1966). In Levande v. Canada Life Assur. Co., the Appellate Division held that where, between the time of medical examinations of insured by insurer and delivery of life policies, “the insured had visited doctors by reason of symptoms of disease-symptoms which were not trivial and which would ordinarily act as a warning or notice, even to a layman, that his health might be impaired” there was breach of condition precedent to taking effect of life policies. Id.

Based on the foregoing, the dispositive issue to be determined on this motion is whether (1) Landau and Hirsch failed to disclose material health information at the time of the Application and the submission of the Health Questionnaire, or (2) there had been a deteriorative change in Landau’s health between the time of the Application and the issuance of the Policy which required defendant to notify plaintiff of that information.

Either of the foregoing would constitute a breach of the condition precedent and render the Policy void.

Were the Terms of the Condition Precedent Satisfied?

In the instant matter, in order to prove the medical condition which is the basis for its argument that the Policy is void or should be rescinded, plaintiff submits the medical records of Landau which it obtained via the aforementioned duly executed authorizations. These records include: the illegible handwritten notes of Dr. Ziemba; a December 11, 2006 report of the sonogram performed by Martin I. Elsant, M.D. and addressed to Dr. Ziemba; two (2) December 14, 2006 mammogram reports from Julie Mitnick, M.D. addressed to Alisan Goldfarb, M.D.; and a December 19, 2006 MRI report from Barbara Baskin, M.D. addressed to Alisan Goldfarb, M.D.

These reports and records submitted by plaintiff in support of its motion for summary judgment, and notably without which it cannot meet its prima facie burden, are unsworn or unaffirmed, not certified nor have the requisite statutory foundation [*5]been laid for their admission as business records. Accordingly, defendant argues in opposition that these reports and records lack probative value and thus summary judgment must be denied on account of plaintiff’s failure to meet its initial burden of proof.

This Court rejects defendant’s argument. First, these records and reports are not hearsay^[FN1] because they are not necessarily being offered for the truth of their content, but rather to establish that Landau did have these tests done and sought medical attention. See generally, Spensieri v. Lasky, 94 NY2d 231, 723 NE2d 544(1999)[When the Physicians Desk Reference is admitted into evidence “it is admitted solely to establish the existence of a warning, …the warning is not offered for the truth of its contents.”]; Stern v. Waldbaum, Inc., 234 AD2d 534, 535, 651 NYS2d 187 (2d Dep’t 1996)[Out-of-court statements by unknown declarants are admissible to establish notice of a dangerous condition, even where accuracy of statements is not established]; Oberle v. Caracappa, 133 AD2d 202, 518 NYS2d 989 (2nd Dept., 1987)[Testimony as to what subscribing witnesses said when presenting candidate’s designating petition for signature was not hearsay and was admissible, as it was introduced merely to demonstrate that statements were made, not truth of matter asserted in them]; Novak v. Greater New York Sav. Bank, 35 AD2d 541, 313 NYS2d 425 (2nd Dept., 1970)[In action to recover balance allegedly owing to depositor upon his account in defendant bank, allegedly forged withdrawal slip offered by bank in attempt to prove that it had exercised reasonable care in mistakenly making payment to one other than depositor was not hearsay as the slip was not offered for its truth]; Yee Sing Tung v. Mon-Leang Mui, 260 AD2d 294, 689 NYS2d 46 (1st Dep’t, 1999) [Out-of-court statements not admitted for the truth of their assertions but to explain the defendant’s actions].

Second, this Court holds that in this case the plaintiff may submit unsworn medical reports and records to support its motion.A party moving for summary judgment may “submit unsworn medical reports and records of an injured plaintiff’s physicians in support of a motion for summary judgment.”^[FN2] Meely v. 4 G’s Truck Renting Co., Inc., 16 AD3d 26, 789 NYS2d 277(2nd Dept., 2005); see also, Pagano v. Kingsbury, 182 AD2d 268, 587 NYS2d 692(2nd Dept., 1992)[threshold motion]; Arbour v. Commercial Life Ins. Co., 240 AD2d 1001, 659 NYS2d 525(3rd Dept., 1997)[action against insurer to recover permanent and total disability benefits]; A.B. Medical Services PLLC v. Travelers Property Cas. Corp., 5 Misc 3d 214, 783 NYS2d 244 (N.Y.City Civ.Ct., 2004)[action to recover first-party no-fault benefits]. Moreover, in the instant matter, the reports and records that plaintiff relies upon were obtained from Landau’s physicians pursuant to a duly executed authorization accompanied by a [*6]HIPAA release which insured their authenticity. See, Burnett v. Zito,252 AD2d 879, 676 NYS2d 318 (3rd Dept.,1998)[movant’s submission of unsworn medical reports from two of plaintiff’s physicians permitted as plaintiff’s authorization for release insured their authenticity]; Oeffler v. Miles Inc., 241 AD2d 822, 660 NYS2d 897(3rd Dept., 1997)[movant may rely upon records and reports of plaintiff’s own doctors for which it received releases on summary judgment motion].

Accordingly the court will consider all the medical reports and records submitted by the plaintiff in support of its motion for summary judgment.

Starting with the records of Dr. Ziemba, this Court will not consider the handwritten notes of Dr. Ziemba since they are illegible. No “translation” of these notes is included with the papers. It is not the Court’s obligation to decipher illegible documents or to guess as to what the meaning of the “shorthand” entries contained therein mean. Simply “a notation in a physician’s office record which is illegible is not admissible”. Wilson v. Bodian, 130 AD2d 221, 232, 519 NYS2d 126, 133 (2nd Dept., 1987), citing, Campbell v. Manhattan & Bronx Surface Tr. Operating Auth., 81 AD2d 529, 438 NYS2d 87(1st Dept., 1981).

The remaining medical reports and records, i.e. the December 11, 2006 report of the sonogram performed by Martin I. Elsant, M.D., the two (2) December 14, 2006 mammogram reports from Julie Mitnick, M.D., and the December 19, 2006 MRI report from Barbara Baskin, M.D. are legible.

The reports, all of which were issued prior to the issuance of the Policy, indicate that Landau and Hirsch knew at the very least of a possible health problem after the Application was submitted, but prior to the issuance of the policy, and thus they were under an obligation to inform the Plaintiff of that information. Schmitt v. North American Co. for Life and Health Ins. of New York, supra ; Meagher v. Executive Life Ins. Co. of NY, supra and North Atlantic Life Ins. Co. of America v. Katz, supra .

Based on the foregoing, plaintiff has established its prima facie entitlement to summary judgment as a matter of law.

In opposition, defendant fails to raise a triable issue of fact that would defeat the motion. Addressing defendant’s claim that summary judgment is inappropriate because there has been no discovery, the Court notes the defendant does not make any showing that facts sufficient to defeat the motion would be revealed during discovery; the mere hope that discovery may reveal such facts is insufficient to defeat a summary judgment motion. Companion Life Ins. Co. v. All State Abstract Co., 35 AD3d 519, 829 NYS2d 536 (2d Dept., 2006). Moreover, mere speculation cannot serve to defeat the motion. Leggio v. Gearhart, 294 AD2d 543, 743 NYS2d 135(2nd Dept., 2002).

On account of the foregoing, the motion for summary judgment is GRANTED. The Policy is hereby declared VOID.

Plaintiff is directed to return all premium paid pursuant to the Policy to defendant within thirty (30) days.

The foregoing shall constitute the decision, order and judgment of the Court.

Dated: White Plains, New York

July 8, 2009 [*7]

HON. WILLIAM J. GIACOMO, J.S.C.

cc:

Footnotes

Footnote 1:Hearsay is an out-of-court statement offered for the truth of the fact asserted. Richardson, Evidence [Prince, 10th ed.], § 200, p. 176.

Footnote 2:While the use of unsworn and unaffirmed medical reports and records by a defendant moving for summary judgment in a threshold case is well settled, this Court sees no reason why the same rule does not apply herein.