Lane Siefers v. Pacificare Life Assurance Comp

FILED
NOT FOR PUBLICATION DEC 16 2011
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
LANE A. SIEFERS, an individual; No. 11-15524
DAVID SIEFERS, as guardian ad litem of
Riley E. Siefers, a minor; D.C. No. 2:08-cv-00269-PMP-
RILEY E. SIEFERS, a minor, PAL
Plaintiffs - Appellants,
MEMORANDUM*
v.
PACIFICARE LIFE ASSURANCE
COMPANY, a California corporation,
Defendant - Appellee.
Appeal from the United States District Court
for the District of Nevada
Philip M. Pro, District Judge, Presiding
Submitted December 7, 2011**
San Francisco, California
Before: ALARCÓN, CALLAHAN, and N.R. SMITH, Circuit Judges.
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
Lane Siefers (Lane) and family members (the Siefers) appeal the district
court’s grant of summary judgment in favor of PacifiCare Life Assurance
Company (PacifiCare), in an action arising from PacifiCare’s rescission of a health
insurance policy covering Lane’s daughter, Riley Siefers (Riley). We have
jurisdiction under 28 U.S.C. § 1291, and we affirm.
1. In Nevada, even after an insurance company accepts an insurance
application and premium payment from an individual, the company does not grant
temporary coverage unless the company also gives the individual a conditional
receipt. Prudential Ins. Co. of Am. v. Lamme, 425 P.2d 346, 346–47 (Nev. 1967).
This record does not indicate that a conditional receipt was issued here.
Furthermore, the health insurance application’s terms and conditions precluded any
reasonable belief that the application, alone or in tandem with a premium payment,
would provide temporary coverage for Riley.
2. Nevada courts apply contract rules of interpretation to insurance policies.
See, e.g., Fed. Ins. Co. v. Am. Hardware Mut. Ins. Co., 184 P.3d 390, 393 (Nev.
2008). Evidence that serves to defeat a contract, and not to vary its terms, may be
considered by a court even if the evidence was not part of the contract when the
contract was created. See, e.g., Friendly Irishman, Inc. v. Ronnow, 330 P.2d 497,
498–99 (Nev. 1958) (finding that parol evidence rule did not apply to exclude
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evidence that “demonstrated fraud in the procurement of the [car sale] instrument
and served to defeat the instrument and not to vary its terms”).
Here, PacifiCare did not seek to admit evidence of Lane’s alleged
misrepresentations (made during a phone call as part of the health insurance
application process) to be considered as part of the application or to vary the
application’s terms. Rather, the evidence served to defeat the contract, by
demonstrating there were misrepresentations in the procurement of the policy
warranting PacifiCare’s rescission of the policy.
3. To prevent recovery under an insurance policy, Nevada law requires
establishing any one of the following three allegations: (A) an intent to defraud; or
(B) a material misrepresentation; or (C) a misrepresentation where the insurer in
good faith would not have issued the policy (not alleged here). Nev. Rev. Stat.
§ 687B.110.1
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Nevada case law indicates that, in the insurance context, a principal may
be held liable for the misrepresentations of its agent. See Schneider v. Cont’l
Assurance Co., 885 P.2d 572, 573–74 (Nev. 1994) (per curiam) (reasoning that an
insurance company could potentially be estopped from denying an individual
coverage, because of the alleged misrepresentation made by the insurance
company’s agent). Here, Lane acted as Riley’s agent when she completed the
application, signed the application as Riley’s legal guardian, and participated in a
phone call as part of the health insurance application process. Thus, Riley’s
insurance policy could be rescinded because of Lane’s misrepresentations.
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A. As noted above, Nevada law does not require that PacifiCare establish
that Lane acted with an intent to defraud. Similarly, the PacifiCare policy
requirement, that the insured “knowingly provide[] the Company with fraudulent
information” that is material, does not require that PacifiCare establish an intent to
defraud. Nevada case law indicates that a “knowingly” requirement is distinct
from an intent to deceive or defraud requirement. See, e.g., Pac. Maxon, Inc. v.
Wilson, 619 P.2d 816, 818 (Nev. 1980) (“A party who has made a false
representation knowingly and with the intention that the other party be deceived by
it should not be allowed to profit from the credulity or negligence of the party upon
whom it had its intended effect.” (emphasis added)). Inserting an intent to defraud
requirement into the policy would run counter to Nevada law, because it would
impermissibly rewrite an unambiguous contract provision that only contains a
“knowingly” requirement. See United Nat’l Ins. Co. v. Frontier Ins. Co., 99 P.3d
1153, 1156–57 (Nev. 2004).
B. It is normally a question of fact for the jury as to whether
misrepresentations made by an insured to an insurance company are material.
“[O]nly where reasonable minds cannot differ may the issue be resolved as a
matter of law.” Powers v. United Servs. Auto. Ass’n, 979 P.2d 1286, 1289 (Nev.
1999) (per curiam).
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Here, the Siefers did not offer any evidence that the alleged
misrepresentations were not material to the risk assumed by PacifiCare.
Additionally, the Siefers did not offer any evidence showing PacifiCare improperly
treated Lane’s statements in the health insurance application as warranties, or that
Nevada law required PacifiCare to offer evidence of its underwriting practices to
establish materiality. To establish materiality, PacifiCare offered a sworn affidavit
showing the misrepresentations were material. Viewing this evidence in the light
most favorable to the Siefers, reasonable minds could not differ on whether the
misrepresentations were material. As a matter of law, Lane’s misrepresentations
were material to the risk assumed by PacifiCare.
4. Finally, the district court properly granted summary judgment in favor of
PacifiCare on the (A) bad faith and (B) breach of statutory duty claims.
A. In Nevada, “[t]o establish a prima facie case of bad-faith refusal to pay
an insurance claim, the plaintiff must establish that the insurer had no reasonable
basis for disputing coverage, and that the insurer knew or recklessly disregarded
the fact that there was no reasonable basis for disputing coverage.” Powers v.
United Servs. Auto. Ass’n, 962 P.2d 596, 604 (Nev. 1998), modified on denial of
reh’g, 979 P.2d 1286 (Nev. 1999) (per curiam). Here, the Siefers did not provide
any evidence that would establish that PacifiCare lacked a reasonable basis for
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disputing coverage. Rather, the Siefers only offered conclusory statements that
PacifiCare had acted in bad faith.
B. Nevada law proscribes a series of activities as unfair insurance practices.
Nev. Rev. Stat. § 686A.310(1). Here, the Siefers did not make a showing
sufficient to establish the existence of any unfair practices. Rather, the Siefers
contended that PacifiCare engaged in unfair practices, without providing any
evidence in support for that argument.
AFFIRMED.
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