Santos et al v. Primerica Life Insurance Company

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NORTH DAKOTA
Monalynn Santos and )
Manaura Quichocho, )
) ORDER GRANTING
Plaintiffs, ) DEFENDANT’S MOTION FOR
) SUMMARY JUDGMENT
vs. )
)
Primerica Life Insurance Company, ) Case No. 1:22-cv-066
)
Defendant. )
______________________________________________________________________________
Before the Court is the Defendant’s motion for summary judgment filed on May 25, 2023.
See Doc. No. 18. The Plaintiffs filed a response in opposition to the motion on June 15, 2023. See
Doc. No. 22. The Defendant filed a reply brief on June 29, 2023. See Doc. No. 24. For the reasons
set forth below, the Defendant’s motion for summary judgment is granted.
I. BACKGROUND
On December 17, 2008, Margarita Iguel completed and signed an Application for Life
Insurance (“Application”) with Primerica Life Insurance Company (“Primerica”), for coverage in
the initial amount of $150,000. See Doc. No. 19-1. At the time, Iguel resided in Guam. Plaintiffs
Manaura Quichocho and Monalynn Santos, her daughters, were named as primary beneficiaries.
Quichocho and Santos live in North Dakota. John Concepcion, an independent insurance agent for
Primerica who lives in Guam, assisted Iguel with the completion of her application. On the
application, Iguel revealed she took medication for high blood pressure but had other medical
problems. Primerica issued policy number 0434012532 (“Policy”) to Iguel on January 24, 2009,
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with a term life insurance policy date of January 15, 2009. See Doc. No. 19-2. The Policy was a
level-term life insurance policy for the first ten years which meant the premium and a death benefit
remained the same over the first ten years. After the first ten years the premiums were subject to
increase. See Doc. No. 19-2, p. 5. The Policy also included an exchange provision which allowed
the insured to switch to a plan with level premiums and decreasing coverage without proof of
insurability. See Doc. No. 19-2, pp. 9-13.
Iguel regularly paid her premiums from 2008 until 2017. Between November 15, 2017, to
December 15, 2017, Iguel’s bank account had insufficient funds to cover the premium payment. See
Doc. No. 19-3, p. 2. Primerica continued to attempt to collect overdue premium payments but on
January 16, 2018, it sent notice to Iguel that her policy had lapsed for failure to make her premium
payments. See Doc. No. 19-3, p. 6. However, the letter advised her that the policy could be placed
back in force if she remitted a payment of $289.96 no later than February 11, 2018. On February 14,
2018, when no payment was received by that date, Primerica sent another notice advising Iguel that
she could still apply for reinstatement of her policy by completing and returning a reinstatement
application. See Doc. No. 19-3, p. 8. Iguel completed the reinstatement application on March 9,
2018 (“2018 Reinstatement Application”). See Doc. No. 19-4. Iguel did so with the assistance of
her insurance agent, John Concepcion.
As part of the 2018 Reinstatement Application, Iguel was required to answer six questions
regarding her insurability, including whether, in the preceding three years, she had been treated for
or diagnosed with hypertension (high blood pressure), diabetes, any other heart disease or disorder,
or any kidney disease, among other health concerns. See Doc. No. 19-4, p. 2. She answered “no”
to each of these, and also indicated that she was not taking any prescription medication. On March
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19, 2018, Primerica sent a notice that reinstatement of the Policy had been approved. See Doc. No.
19-5.
A few months later, Iguel again failed to pay her premium, and on September 15, 2018,
Primerica sent another notice of past due payment. See Doc. No. 19-6. This notice was followed
by others subsequent to the Policy’s lapse, one of which allowed her to keep her coverage in force
by remitting the past due payment of $243.46 no later than January 11, 2019. See Doc. No. 19-6,
p. 11. Iguel failed to timely pay the overdue amount, and the Policy remained in a lapsed status. See
Doc. No. 19-7.
On March 4, 2019, Iguel utilized the reinstatement application sent to her by Primerica to
again apply for reinstatement (“March 2019 Reinstatement Application”). See Doc. No. 19-8.
Iguel’s daughter, Quichocho, assisted her with the March 2019 Reinstatement Application. The
March 2019 Reinstatement Application required Iguel to answer a number of questions, including
whether she was currently taking any prescription medication, and whether she had had any illness
or treatment by a physician in the three years preceding the date of application. See Doc. No. 19-8,
p. 2. Iguel answered these questions in the negative. Primerica reinstated the Policy, notifying Ms.
Iguel by letter dated March 26, 2019. See Doc. No. 19-10.
Almost immediately after the second reinstatement of her policy, Iguel again failed to timely
pay her premiums. On June 14, 2019, she made her third application (“June 2019 Reinstatement
Application”) for reinstatement of her policy, this time with the assistance of her insurance agent,
John Concepcion. See Doc. No. 19-11. Concepion assisted Iguel with the June 2019 Reinstatement
application by telephone as Iguel had moved from Guam to North Dakota. See Doc. No. 19-13. In
response to the medical history questions on the application, Iguel indicated she had not been
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diagnosed or treated for any of the listed medical conditions in the past ten years and had not been
hospitalized within the past twelve months. See Doc. No. 19-11, p. 3. By letter dated June 25, 2019,
Primerica notified Iguel that her Policy had been reinstated. See Doc. No. 19-15. This letter was
addressed to Iguel at her post office box in Hagatna, Guam. However, Iguel had relocated to
Bismarck, North Dakota by this time.
The June 2019 reinstated Policy had a issue date of July 2, 2019. See Doc. No. 19-20, p. 4.
The 2019 reinstated Policy contains contestability and reinstatement provisions. See Doc. No. 19-20
The contestability provision provides that Primerica will not “contest this Policy after it has been
in force for two years during the Insured’s life” and “[t]he two years begin on the Date of Issue.”
See Doc. No. 19-20, p. 8. The reinstatement provision provides that, “[t]he reinstated Policy shall
be incontestable to the same extent as indicated in the above Incontestability Provision, from the
reinstated date. This means that the two year contestability period will begin anew with the
reinstatement.” See Doc. No. 19-20, p. 10.
The Policy’s first ten-year term ended on January 15, 2020, which was a year later than it
otherwise would have been due to the three times the Policy lapsed due to non-payment of
premiums. On August 19, 2019, Primerica sent Iguel a notice that, per the terms of the Policy, her
premiums would be increasing to $240.22 per month. See Doc. No. 24-1. The notice also informed
Iquel she had the option to exchange her plan for the Custom Exchange plan, “without having to
answer medical questions.” See Doc. No. 24-1, p. 2. Iguel pursued the coverage conversion option
and contacted agent, John Concepcion, for assistance, ultimately completing a policy change
application for an “end of term” conversion. See Doc. 22-4, p 2. Iguel sought to have her coverage
converted to a “cust exch-10” and to have coverage reduced to a total of $167,500, resulting in a
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premium of $175.38 per month. See Doc. 22-4, p. 8. The 2020 Coverage Change Application was
submitted on January 30, 2020. See Doc. 22-4, p 12.
However, rather than signing the 2020 Coverage Change Application, Iguel printed her name.
See Doc. 22-4, p 12. Because Iguel failed to sign the application, and because she had outstanding
unpaid premium on the Policy, Primerica notified Concepcion on March 2, 2020, that the 2020
Coverage Change Application required corrections before it could be processed. See Doc. 22-7.
Primerica never received the corrections and the conversion was never processed. Primerica did not
notify Iguel it had rejected her 2020 Coverage Change Application or send her a notice confirming
the requested coverage change. Primerica continued to assess the $240.22 monthly premium
associated with the original coverage, as reinstated by the June 2019 Reinstatement Application,
rather than assessing the lower $175.38 premium sought as part of the 2020 Coverage Change
Application. See Doc. No. 22-6. The premiums were directly deducted from Iguel’s checking
account.
Iguel died in a Bismarck, North Dakota, hospital on November 6, 2020, from cardiac arrest
related to a bout of pneumonia. See Doc. No. 19-19. The death certificate noted that hypoxia
encephalopathy, secondary hyperparathyroidism, lactic acidosis, end-stage renal disease, and
hyperlipidemia were contributing factors. Id. Following the death of Iguel, Quichocho and Santos
submitted their claims under the Policy to Primerica. See Doc. No. 19-21.
Because Iguel’s death occurred within two years of the final reinstatement of the Policy,
Primerica initiated a routine investigation, during which it obtained Iguel’s medical records from
health providers in Bismarck, North Dakota, and Guam. See Doc. Nos. 19-16, 19-17, and 19-18.
These records revealed Iguel had a history of hypertension, diabetes, chronic renal failure, pulmonary
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edema, and cardiomegaly, was taking a number of prescription medications, including Metformin,
Tramadol, Clonidine, Glipizide, Lisinopril, Metoprolol, and Gabapentin, and had been hospitalized
on multiple occasions between 2015 and 2019. Primerica would have denied coverage had Iguel
fully disclosed her relevant medical history on the June 2019 Reinstatement Application. See Doc.
No. 23, pp. 30, 103-04.
By letter dated March 19, 2021, Primerica denied coverage based on Iguel’s failure to
disclose her relevant medical history. See Doc. No. 19-22. The Plaintiffs filed this lawsuit in state
court in March of 2022. The case was removed to federal court on April 14, 2022. See Doc. No.
1. The Plaintiffs allege breach of contract. Primerica has moved for summary judgment. The
motion has been fully briefed and is ripe for consideration.
II. STANDARD OF REVIEW
Summary judgment is appropriate when the evidence, viewed in a light most favorable to the
non-moving party, indicates that no genuine issues of material fact exist and that the moving party
is entitled to judgment as a matter of law. Davison v. City of Minneapolis, 490 F.3d 648, 654 (8th
Cir. 2007); see Fed. R. Civ. P. 56(a). Summary judgment is not appropriate if there are factual
disputes that may affect the outcome of the case under the applicable substantive law. Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). An issue of material fact is genuine if the evidence
would allow a reasonable jury to return a verdict for the non-moving party. Id. The purpose of
summary judgment is to assess the evidence and determine if a trial is genuinely necessary.
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
The Court must inquire whether the evidence presents a sufficient disagreement to require
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the submission of the case to a jury or whether the evidence is so one-sided that one party must
prevail as a matter of law. Diesel Mach., Inc. v. B.R. Lee Indus., Inc., 418 F.3d 820, 832 (8th Cir.
2005). The moving party bears the responsibility of informing the court of the basis for the motion
and identifying the portions of the record which demonstrate the absence of a genuine issue of
material fact. Torgerson v. City of Rochester, 643 F.3d 1031, 1042 (8th Cir. 2011). The
non-moving party may not rely merely on allegations or denials in its own pleading; rather, its
response must set out specific facts showing a genuine issue for trial. Id.; Fed. R. Civ. P. 56(c)(1).
If the record taken as a whole and viewed in a light most favorable to the non-moving party could
not lead a rational trier of fact to find for the non-moving party, there is no genuine issue for trial and
summary judgment is appropriate. Matsushita, 475 U.S. at 587.
III. LEGAL DISCUSSION
In its motion for summary judgment, Primerica contends Iguel failed to disclose her relevant
medical history on the June 2019 Reinstatement Application and consequently Primerica was within
in rights under the contract to rescind the Policy. The Plaintiffs contend Iguel did not actually make
any misrepresentations of the June 2019 Reinstatement Application and, in any case, the 2020
Coverage Change Application was the operative contract.
A. June 2019 Reinstatement Application
It is undisputed that Iguel dictated the responses to the June 2019 Reinstatement Application
to Primerica’s agent, John Concepcion, over the telephone. It is also undisputed that if Iguel did in
fact make the false representations, Primerica would not have approved the June 2019 Reinstatement
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Policy and rescission of the Policy would be justified.
The Plaintiffs contend that because Concepcion only sent Iguel the signature page and not
the entire application she never ratified the information and there exists a material dispute as to
whether Concepcion accurately recorded her answers. The contention fails because it is unsupported
by any material evidence. Concepcion gave a statement regarding the June 2019 Reinstatement
Application on January 22, 2021, in which he stated Iguel told him there were “[n]o changes to
medical history.” See Doc. No. 19-13. The record reveals no evidence that Concepcion recorded
the wrong information on the June 2019 Reinstatement Application. See Doc. 22 at 12.
The answers Iguel gave on her June 2019 Reinstatement Application denying any relevant
medical history are consistent with the inaccurate statements regarding her medical history she made
in her two prior reinstatement applications. Compare Doc No. 19-4, 19-8, and 19-11. The two prior
reinstatement applications were both recorded in Iguel’s presence, either by Primerica Agent John
Concepcion or her daughter Manaura Quichocho. The consistency of the false statements in all three
reinstatement applications and the 2020 Coverage Change Application shows a pattern of omitting
relevant medical history.
Speculation alone is insufficient to create a genuine dispute as to a material fact. Riverside
Park Condominiums Unit Owners Ass’n v. Lucas, 691 N.W.2d 862, 874 (N.D. 2005). The Court
concludes Primerica has demonstrated there is no genuine dispute that Iguel made false
representations regarding her medical history on her June 2019 Reinstatement Application.
B. 2020 Coverage Change Application
In response to Primerica’s motion for summary judgment, the Plaintiffs contend the Policy
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had been replaced by the Custom Exchange Plan in 2020 which did not require underwriting.
Primerica maintains the 2020 Coverage Change Application was never accepted and no coverage
change was ever made.
The 2020 Coverage Change Application was completed on January 30, 2020. See Doc. No.
22-4. The purpose of the coverage change was to lower the amount of coverage and the premiums.
On March 4, 2020, Primerica rejected the 2020 Coverage Change Application because Iguel failed
to sign it (she printed her name instead) and outstanding premiums had not been paid. See Doc. No.
22-7. The notice listing the corrections necessary in order to get the application processed was sent
to Primerica’s agent, Concepcion, rather than Iguel. There is no evidence in the record Concepcion
ever made Iguel aware of the deficiencies in her application. Iguel died on November 6, 2020.
The 2020 Coverage Change Application provides Primerica will have no liability under the
application until “(1) coverage is issued on this Application and delivered to and accepted by the
owner; and (2) the first premium due under this Application is paid in full while each insured is
alive.” See Doc. No. 22-4, p. 11. The 2020 Coverage Change Application did not require medical
underwriting. See Doc. No. 22-5, p. 6. However, the 2020 Coverage Change Application contained
a number of questions about medical history which Iguel answered in the negative. Her answers
were clearly false. The necessary corrections were never made. Primerica never notified Iguel that
the 2020 Policy Change Application had been accepted or rejected. No revised policy was ever
issued. Primerica continued to assess the $240.22 monthly premium associated with the original
coverage, as reinstated by the June 2019 Reinstatement Application, rather than assessing the lower
$175.38 premium sought as part of the 2020 Coverage Change Application. See Doc. No. 22-6.
The formation of a contract requires parties capable of contracting, the consent of the parties,
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a lawful object, and consideration. Bakke v. Magi-Touch Carpet One Floor & Home, Inc., 920
N.W.2d 726, 730 (N.D. 2018); Good Bird v. Twin Buttes Sch. Dist., 733 N.W.2d 601, 605 (N.D.
2007); N.D.C.C. § 9-01-02. The parties dispute whether Primerica gave its consent to the 2020
Coverage Change Application.
The 2020 Coverage Change Application clearly states Primerica will have no liability under
the application until coverage is issued, delivered, and accepted by the insured and the first premium
is paid. None of these requirements occurred. No notice of acceptance or rejection was ever sent
by Primerica to Iguel. No new policy was issued. No premiums were collected. Primerica rejected
the 2020 Coverage Change application as incomplete as it was not signed and outstanding premiums
had not been paid. The only premiums collected were in the amount due on the June 2019
Reinstatement Application. In her past dealings with Primerica Iguel had been sent a notice of
acceptance or reinstatement and a copy of the new policy along with a receipt confirming delivery
which she was required to sign. None of this occurred in relation to the 2020 Coverage Change
Application.
Primerica certainly had good grounds to reject the 2020 Coverage Change Application, but
it failed to communicate its rejection to Iguel. Primerica only notified its agent, Concepcion, of the
need for a signature and payment of outstanding premiums. Under North Dakota law, this failure
to communicate the rejection arguably creates a question of fact as to whether Primerica consented.
Lechler v. Montana Life Ins. Co. of Helena, Mont., 186 N.W. 271, 273 (N.D. 1921). “[W]here the
relations between parties have been such as to justify the offerer in expecting a reply, or where the
offeree has come under some duty to communicate either a rejection or acceptance, his failure to
communicate his rejection or to perform this duty may result in a legal assent to the terms of the
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offer.” Lechler, 186 N.W. at 274. Both parties point to their past dealings to support their position.
Primerica points out that in the past it had always sent Iguel notice of acceptance or reinstatement
and a copy of the new policy along with a receipt confirming delivery which she was required to
sign. Since it did not do any of these things Primerica contends it cannot be held to have consented
to the 2020 Coverage Change Application despite its failure to notify Iguel it had rejected the
application. The Plaintiffs argue the past dealings between Primerica and Iguel always involved
direct notification between Primerica and Iguel and it would have been reasonable for Iguel to expect
direct notification of the rejection of her 2020 Coverage Change Application. A jury could
reasonably decide the issue either way. As the North Dakota Supreme Court pointed out long ago,
when an insurance company rejects an application it has to assume the “legal consequences of its
failure to communicate its rejection to the applicant.” Lechler, 186 N.W. at 273. The record before
the Court is too thin to grant summary judgment on the question of consent which the Court finds
to be material and disputed.
But even assuming a contract was formed based on the 2020 Coverage Change Application,
Primerica is still entitled to summary judgment. Iguel having provided material false information
regarding her medical history on the 2020 Coverage Change Application, albeit voluntarily, and the
June 2019 Reinstatement Application, Primerica is entitled to rescind. Countryside Cas. Co. v. Orr,
523 F.2d 870, 872 (8th Cir. 1975) (“a material misrepresentation made on an application for an
insurance policy and relied upon by the insurance company will void the policy”). The general rule
is that, in the absence of a new application, an insurance company may rely on information provided
in prior applications and/or renewals. Batka v. Liberty Mut. Fire Ins. Co., 704 F.2d 684, 687 (3d Cir.
1983) (“in the absence of a new application[,] renewal of a . . . policy is made on the assumption that
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the facts disclosed in the original application are true”); Pioneer Indus. v. Hartford Fire Ins. Co., No.
07-4421, 2009 WL 2187379, at *10 (D. Minn. July 22, 2009) (citing Batka to hold that an insurance
company was “entitled to rely on representations made by [the insured] in earlier applications when
renewing or issuing new policies . . . .”); Borden v. Paul Revere Ins. Co., 935 F.2d 370, 378 (1st Cir.
1991) (finding material misrepresentations as to medical history on the first application warranted
rescission of the first policy and the replacement policy). Had Iguel been truthful on her June 2019
Reinstatement Application, not to mention her March 2019 Reinstatement application and 2018
Reinstatement Application, no policy would have been issued and the circumstances attendant to the
2020 Coverage Change Application never would have arisen. Borden, 935 F.2d at 378 (noting
statements made in an insurance application constitute continuing representations). Primerica would
be entitled to rescind the 2020 Coverage Change Application based upon the false medical history
information provided on the June 2019 Reinstatement Application. N.D.C.C. §§ 26.1-29-15 and
26.1-29-24; Thomas v. New York Life Ins. Co., 260 N.W. 605, 612 (N.D. 1935) (noting false
representations regarding medical history are grounds for rescission); Lindlauf v. N. Founder’s Ins.
Co., 130 N.W.2d 86, 89 (N.D. 1964) (finding misrepresentations regarding medical conditions were
grounds to avoid a life insurance policy); Borden, 935 F.2d at 377 (noting the well-established rule
that an insurance policy may be rescinded based upon material false representations in the
application). On this record of repeated material false representations by Iguel as to her medical
history, rescission by Primerica was warranted.
IV. CONCLUSION
The Court has carefully reviewed the record, the parties’ briefs, and the relevant case law.
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For the reasons set forth above, the Defendant’s motion for summary judgment (Doc. No. 18) is
GRANTED.
IT IS SO ORDERED.
Dated this 24th day of August, 2023.
/s/ Daniel L. Hovland
Daniel L. Hovland, District Judge
United States District Court
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