Shelby Ireland v. Tennessee Farmers Life Insurance Company

11/02/2022
IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
September 7, 2022 Session
SHELBY IRELAND v. TENNESSEE FARMERS LIFE INSURANCE
COMPANY ET AL.
Appeal from the Chancery Court for Maury County
No. 2020-CV-032 J. Russell Parkes, Judge
___________________________________
No. M2021-01360-COA-R3-CV
___________________________________
This appeal challenges a grant of summary judgment to an insurance company on a breach
of contract claim for failing to honor a life insurance policy. The chancery court concluded
the policy was void because of misrepresentations made by the decedent in obtaining
coverage. The beneficiary, the spouse of the decedent, argues disputed facts exist both as
to whether any misrepresentations were made and whether any of the purported
misrepresentations increased the insurer’s risk of loss. Accordingly, the beneficiary
contends that the chancellor erred in awarding summary judgment. We find no error and
affirm the trial court’s grant of summary judgment.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed
JEFFREY USMAN, J., delivered the opinion of the court, in which FRANK G. CLEMENT, JR.,
P.J., M.S., and KRISTI M. DAVIS, J., joined.
Parks T. Chastain and Hannah J. Leifel, Nashville, Tennessee, for the appellant, Shelby
Ireland.
C.E. Hunter Brush, Nashville, Tennessee, for the appellees, Tennessee Farmers Life
Insurance Company and Chad Cox.
OPINION
I.
Two days before he died of hepatic steatosis, also known as fatty liver disease, Mr.
Lynden Ireland completed a certificate of good health (“COGH”), seeking to add $150,000
in life insurance on top of an existing $250,000 life insurance policy. Since 2012, Mr.
Ireland had held a life insurance policy with Tennessee Farmers Life Insurance Company
(insurer or Farmers) for $250,000. That policy was paid after Mr. Ireland’s death and is
not the subject of this litigation. It is the $150,000 in additional coverage, which Mr.
Ireland sought to add shortly before his death and which the insurer has declined to pay,
that is the subject of the parties’ dispute.
In October of 2018, Mr. Ireland approached his insurance agent Chad Cox about
replacing his existing $250,000 life insurance policy with a new twenty-year term $500,000
policy. The insurer’s application for an increase in coverage provided that the insurance
would not take effect unless a policy was delivered, the first month’s premium was paid,
and there was no change in the insurability of the insured from the date of application. Mr.
Ireland completed a medical questionnaire as part of the application. On the questionnaire,
Mr. Ireland responded, “No,” to a question asking if he had “ever been treated for or ever
had any known indication of: …. Jaundice, intestinal bleeding, ulcer, hernia, appendicitis,
colitis, diverticulitis, hepatitis, Crohn’s disease, hemorrhoids, recurrent indigestion, or
other disorder of the stomach, intestines, liver, gallbladder, pancreas, or spleen.”
(Emphasis added.) Mr. Ireland also submitted to a medical examination in which he tested
positive for an alcohol marker and showed elevated liver enzymes.
Given the findings of the medical examination, in order to obtain the increased
coverage, Mr. Ireland would have had to pay an additional 250 percent in monthly
premiums. Instead of paying these higher premiums, Mr. Ireland consulted with his
insurance agent and decided to proceed with a modified approach. He would obtain a new
twenty-year term policy, as planned, but for $250,000 rather than $500,000. This policy
was set to go into effect on December 28, 2018, but it was subject to Mr. Ireland’s
completion of a COGH, execution of an amendment reflecting the changed amount of
insurance sought, and payment of the first month’s premium of $44.83. Mr. Ireland did
not complete the COGH before the effective date or pay the premium for the $250,000
policy. Consequently, this new policy did not go into effect.
On December 29, 2018, Mr. Ireland suffered a fall that resulted in a trip to an
emergency room. Having consumed a “large amount of alcohol” on the previous evening,
Mr. Ireland became dizzy and fell from a deer stand from which he had been hunting. He
went to the Williamson Medical Center emergency room. He was released the same day.
According to a three-page Williamson Medical Center document entitled “Patient
Signature Page,” Mr. Ireland was “Seen Today for” three things: acute head injury,
concussion, and steatosis of the liver.
Under the heading “Activity Restrictions or Additional Instructions,” Mr. Ireland
was informed,
Your laboratory studies and CT evaluation today did not reveal [the]
presence of any acute abnormality. There was noted to be a finding of “fatty
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liver”. This is not related to your fall today and can be related to diet, alcohol
consumption or obesity. Please advise your PCP of this finding.
The remainder of the “Additional Instructions” concluded that Mr. Ireland had likely
suffered a concussion, instructed him on the treatment, causes, and symptoms of
concussions, and advised him to return if he experienced certain concussion symptoms.
Under the heading “Follow-Ups,” Mr. Ireland was told he had “been referred to the
following clinics/specialists for follow-up care,” and he was given contact information for
Dr. Brad Maltz and Williamson Primary Care. On the third page of the “Patient Signature
Page,” Mr. Ireland signed to certify that he had reviewed the form, acknowledging, “I have
read and understand the instructions given to me by my caregivers.”
On January 24, 2019, approximately a month after his visit to the Williamson
Medical Center, Mr. Ireland met again with Mr. Cox to discuss his insurance. Mr. Ireland
sought to keep his 2012 policy for $250,000 and to change his application from a $250,000,
twenty-year term policy to a $150,000, Secure Annual Renewable Term policy. Mr.
Ireland filled out a “Life Customer Service Request” form which indicated he desired a
“Plan Change.” Handwritten notes under “Special Request” indicate: “Please redate policy
1/24/2019”; “The new monthly premium will be $27.89”; and “[The 2012 policy] will not
be replaced.” Mr. Ireland paid the first month’s premium and was provided with a simple
receipt, which differed from a conditional receipt that he had received on a previous
occasion. No policy, however, was delivered.
As part of adding to his insurance coverage, Mr. Ireland also completed the
certificate of good health (COGH) at this time. The COGH form posed five questions:
Since the date of the original application for the above policy or latest
examination, has any person proposed for insurance (including riders):
(1) Made application to another company for Life Ins. (a) which has been
issued, declined, postponed, or modified or (b) which is pending at the
present time?
(2) Consulted or been examined or treated by a physician or practitioner?
(3) Realized any fact which would require any change in the answer to
any question, or in any statement made in the original application?
(4) Had any change in occupation?
(5) Engaged in aviation activities or any hazardous sports, avocations or
hobbies, or does any one expect to do so?
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Mr. Ireland answered yes to question two and no to questions one, three, four, and five.
The form instructs that “[i]f there is a yes answer to any of the above questions, give full
details in the space below.” The handwritten addition to Mr. Ireland’s COGH written by
Mr. Cox with the information provided by Mr. Ireland stated the following: “12/29/18.
Insured was deer hunting and fell out [of a] deer stand. Went to Williamson Medical
Emergency Room. Had a mild concussion. Had a [CT] scan and was release[d]. Was not
recommended for any follow[-]up.” In signing the form, the document stated that the
insured represented “to the best of his or her knowledge and belief that the above statements
are true and complete and that all details have been given.” Mr. Ireland signed the form.
Two days later, Mr. Ireland passed away from complications of fatty liver, hepatic
steatosis. Shelby Ireland, the beneficiary under both policies, demanded payment. Farmers
honored coverage under the 2012 policy for $250,000 but denied coverage under the
$150,000 policy that was the subject of the “Life Customer Service Request” form. In May
of 2019, Farmers sent Ms. Ireland a letter declining coverage and refunding the $27.89
premium paid by Mr. Ireland. The insurer indicated that additional underwriting had been
necessitated by Mr. Ireland’s answer on the COGH form. Farmers added that “[t]he
decision to decline was based on information from an admission to William Medical Center
. . . indicating fatty liver and steatosis by CT findings with increased liver function tests,
which had tripled since [the] blood profile in November.”
Ms. Ireland brought suit against Farmers, Mr. Cox, and Port Royal Farm Bureau
Insurance,1 asserting breach of contract, bad faith refusal to pay, intentional or negligent
misrepresentation, and failure to procure.
The defendants moved for summary judgment on various grounds, including most
notably that no contract was ever in effect because certain conditions precedent had not
been met and that if there was a contract that it was voidable because of material
misrepresentations or omissions in the COGH. Ms. Ireland opposed the motion for
summary judgment. She submitted an affidavit asserting that she was with Mr. Ireland
when he was discharged from the emergency room. She indicated that “[w]hen Mr. Ireland
was discharged after the ER Visit, there were no recommendations to follow up with a
medical professional unless he exhibited symptoms related to the fall from the tree stand
that occurred in the morning of December 29, 2018.”
The Maury County Chancery Court granted summary judgment to Farmers on one
but not both its primary asserted grounds. The chancellor declined to award summary
judgment on the basis that no contract existed, finding genuine material disputed facts as
to whether a contract had been formed for the $150,000 insurance policy. As to the other
ground, a void insurance contract based upon misrepresentations, the chancellor concluded
1
Ms. Ireland does not dispute Farmers’ assertion that Port Royal Farm Bureau Insurance is not a
separate legal entity and has not been treated as a party to this case.
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that there were no genuine disputed material facts. The chancellor indicated that Mr.
Ireland made misrepresentations in his application and those misrepresentations increased
the risk of loss to Farmers, rendering any policy void under Tennessee Code Annotated
section 56-7-103. The chancellor found the facts established that Mr. Ireland had been
diagnosed with steatosis of the liver and advised to consult a primary care physician and
that he did not disclose this information in his COGH. The chancellor added that Mr.
Ireland had signed a discharge document indicating that he had read and understood the
information related to the finding of fatty liver. Accordingly, the chancellor awarded
summary judgment to the insurer.
Ms. Ireland appeals the chancery court’s order granting summary judgment on the
breach of contract claim by Farmers.2 Ms. Ireland asserts that the chancellor erred in
granting summary judgment. She contends that there exist material disputed facts as to
whether Mr. Ireland’s answers to the questions on the COGH were misrepresentations and,
if there are any misrepresentations, whether they increased the risk of loss to the insurer.
Farmers asserts that the undisputed facts establish that Mr. Ireland made misrepresentations
through omissions regarding his liver disease and that these misrepresentations increased
Farmers’ risk of loss. Farmers also argues that the trial court should have granted summary
judgment on the basis that there was no contract in place. We conclude that the trial court
correctly determined that the undisputed facts establish that Mr. Ireland made
misrepresentations on his COGH and that the misrepresentations increased Farmers’ risk
of loss. Accordingly, we affirm the trial court’s order granting summary judgment. 3
II.
Summary judgment is appropriate “if the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if any, show that there
is no genuine issue as to any material fact and that the moving party is entitled to a judgment
as a matter of law.” Tenn. R. Civ. P. 56.04. In making this assessment, a court must view
the evidence “in a light most favorable to the claims of the nonmoving party, with all
reasonable inferences drawn in favor of those claims.” Cotten v. Wilson, 576 S.W.3d 626,
637 (Tenn. 2019) (quoting Rye v. Women’s Care Ctr. of Memphis, MPLLC, 477 S.W.3d
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235, 286 (Tenn. 2015)). An appellate court’s review of “a trial court’s summary judgment
decision is de novo without a presumption of correctness.” Regions Bank v. Prager, 625
S.W.3d 842, 849 (Tenn. 2021). In conducting this review, a Tennessee appellate court
makes “a fresh determination of whether the requirements of Rule 56 of the Tennessee
2
Ms. Ireland does not challenge on appeal the summary dismissal of her claims of failure to procure
or misrepresentation against Mr. Cox.
3
Because we conclude that summary judgment was properly granted on the basis that Mr. Ireland
made misrepresentations on the application and that the misrepresentations increased the risk of loss, we
do not reach the issue of whether summary judgment should likewise have been granted on the ground that
no contract was in place.
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Rules of Civil Procedure have been satisfied.” Rye, 477 S.W.3d at 250.
III.
The parties’ dispute in this appeal centers upon whether Mr. Ireland made
misrepresentations in completing his certificate of good health (COGH), whether any
misrepresentations that he may have made increased the risk of loss to the insurer, and
whether a genuine dispute over material facts exists as to either misrepresentation or risk
of loss. Tennessee Code Annotated § 56-7-103 makes the exact terrain contested by the
parties critical in determining whether the contested insurance policy is void.
Under Tennessee law,
[n]o written or oral misrepresentation or warranty made in the negotiations
of a contract or policy of insurance, or in the application for contract or policy
of insurance, by the insured or in the insured’s behalf, shall be deemed
material or defeat or void the policy or prevent its attaching, unless the
misrepresentation or warranty is made with actual intent to deceive, or unless
the matter represented increases the risk of loss.
Tenn. Code Ann. § 56-7-103. To avoid coverage, the insurer must first show a false
representation or warranty by the insured. Womack v. Blue Cross & Blue Shield of Tenn.,
593 S.W.2d 294, 295 (Tenn. 1980); Owens v. Tenn. Rural Health Improvement Ass’n, 213
S.W.3d 283, 285-86 (Tenn. Ct. App. 2006). Next, to avoid coverage, the insurer must
demonstrate either that the insured made the false representation or warranty with intent to
deceive or alternatively that the falsity increased the risk of loss to the insurance company.
Womack, 593 S.W.2d at 295; Owens, 213 S.W.3d at 286; see also, e.g., State Farm Gen.
Ins. Co. v. Wood, 1 S.W.3d 658, 661 (Tenn. Ct. App. 1999) (“It is clear that the language
of the statute is disjunctive, i.e., the insurer may show either 1) that the misrepresentation
was made with the intent to deceive, or 2) that the matter represented increased the risk of
loss.”).
A. Misrepresentation
Tennessee courts have interpreted the statutory “written or oral misrepresentation”
language to apply not only to false affirmative statements but also to material omissions
made when applying for insurance coverage. First Tenn. Bank Nat’l Ass’n v. U.S. Fid. &
Guar. Co., 829 S.W.2d 144, 147 (Tenn. Ct. App. 1991); see also Smith v. Tenn. Farmers
Life Reassurance Co., 210 S.W.3d 584, 591 (Tenn. Ct. App. 2006). In general, the
determination of whether an applicant misrepresented information in the application is a
question of fact. Womack, 593 S.W.2d at 295. The factfinder must be permitted to
determine whether the answers on the application were misrepresentations “unless the
minds of reasonable men could reach only one conclusion as to whether the answers were
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true or false.” Id.Ms. Ireland asserts that there is a genuine dispute of material fact regarding whether
Mr. Ireland’s answers on the COGH constituted misrepresentations. In particular, Ms.
Ireland argues that her affidavit creates a genuine issue of material fact regarding whether
Mr. Ireland answered the questions on the COGH to the best of his knowledge and belief.
Farmers responds along two tacks. One, Farmers contends that whether Mr. Ireland
answered the questions on the COGH to the best of his knowledge and belief is irrelevant
if his responses were incorrect and increased the insurer’s risk of loss. Two, Farmers
argues that, even if Mr. Ireland’s knowledge and belief are relevant, there are no genuine
disputed material facts regarding whether Mr. Ireland knew and understood material
information regarding his liver disease that he failed to disclose in response to questions
from the insurer on his COGH.
Farmers’ contention that Mr. Ireland’s knowledge and belief in responding to the
insurer’s questions on the COGH are irrelevant runs squarely into prior precedent of this
court. In Lane v. American General Life & Accident Insurance Company, a trial court
granted summary judgment to an insurer finding the policy to be void based on
misrepresentations made by the decedent in his application for life insurance. 252 S.W.3d
289, 291 (Tenn. Ct. App. 2007). The primary argument of the insurance beneficiary on
appeal before this court was that no misrepresentation had occurred because “the decedent
answered the questions to the best of his ‘knowledge and belief.’” Id. at 296. While the
Lane court ultimately upheld the grant of summary judgment because some of the
decedent’s answers stretched the concept of knowledge and belief too far, the court did
embrace aspects of the beneficiary’s argument. Id. at 296-97. This court indicated that
[b]ecause the insurance policy requires the applicant only to answer the
questions to the best of his or her “knowledge and belief”, we do not believe
the statute mandates a loss of benefits when the questions are answered to
the best of the applicant’s “knowledge and belief,” even if the answer is
wrong and the insurance company can show an increase in the risk of loss . .
.. Just because a response is incorrect does not necessarily make that
response a misrepresentation given the language of the application requiring
the applicant to answer only to the best of his “knowledge and belief.”
Id.
The same is true in this case. The COGH through which Mr. Ireland is purported
to have made his misrepresentations in the form of material omissions provides that the
responses are given “to the best of his . . . knowledge and belief.” Farmers suggests this
knowledge and belief language of the COGH can be erased. We find this contention
unconvincing. The language of Farmers’ COGH that provides the responses are “to the
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best of” the insured’s “knowledge and belief” cannot simply be erased.4 The insurer
cannot, in seeking to void an insurance policy, demand that the insured meet a higher
standard than that which was communicated on the form that the insurer is asserting was
mistakenly completed. In light of this court’s precedent in Lane and the language of this
contract, the assessment of misrepresentation must, accordingly, occur within the prism of
Mr. Ireland’s knowledge and belief.
When assessed within that prism, Ms. Ireland argues there is a genuine issue of
material fact as to whether Mr. Ireland made a misrepresentation given the state of his
knowledge and belief and that, accordingly, granting summary judgment was improper.
We find this argument unconvincing. Just under a month before he died, Mr. Ireland was
seen in the Williamson Medical Center emergency room, and one of the three things that
he was seen for that day was steatosis of the liver. He was examined by medical
professionals and informed of a finding of fatty liver. He was advised to inform his primary
care physician of this finding. In being released from Williamson Medical Center, Mr.
Ireland signed a document indicating that he had read and understood this. Mr. Ireland,
however, did not inform Farmers of any examination of or findings as to his liver in his
COGH. His understanding that the Williamson Medical Center visit on December 29,
2018, fell within the scope of what he was required to disclose on the COGH is reflected
in his affirmative response to the second question and his providing information related to
his examination for a concussion at that same hospital visit. Despite the COGH form
directing him to “give full details” Mr. Ireland failed to inform Farmers about the
examination of his liver that occurred and the findings as to fatty liver that were made as
part of the same hospital visit. He also failed to provide this information despite
representing with his signature that his statements on the COGH “are true and complete
and that all details have been given.”
In contravention of this showing of misrepresentation, as a basis for asserting the
existence of a genuine dispute as to a question of material fact, Ms. Ireland offers her own
affidavit. In her affidavit, she observes that she was with Mr. Ireland when he was
discharged from Williamson Medical Center and that there were no oral or written
recommendations that Mr. Ireland follow up with a medical professional unless he
exhibited symptoms related to the fall from the tree.
Ms. Ireland’s affidavit does not undermine the chancellor’s conclusion that there
was no genuine disputed fact as to whether Mr. Ireland’s COGH included a
misrepresentation. In the Lane case, which Ms. Ireland leans upon heavily, the
beneficiary’s affidavit attested to being present with her husband for his entire hospital visit
and denied that her husband had stated he was suffering from certain symptoms, which he
4
See generally Purkey v. Am. Home Assur. Co., 173 S.W.3d 703, 705 (Tenn. 2005) (noting that
“[i]nsurance policies are contracts between the insurer and the insured and as such are subject to ordinary
rules of contract interpretation”).
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failed to disclose on his insurance application, or that he had been informed of certain
diagnoses, which he had also failed to disclose on his application. 252 S.W.3d at 296. The
Lane court regarded the affidavit as creating a genuine material issue of fact with regard to
what the decedent had said to medical personnel during this hospital visit and what he had
been informed of by hospital personnel regarding actual diagnosis. Id. at 296-97.
Accordingly, on these points, the Lane affidavit served to create a basis for material
disputed facts for purposes of assessing what was within the knowledge and belief of the
decedent.
The present case is distinguishable. Ms. Ireland’s affidavit falls short of creating a
genuine issue of material fact regarding misrepresentations on Mr. Ireland’s COGH. Ms.
Ireland’s affidavit established at most a dispute regarding whether the follow-up
recommendations regarding liver disease were communicated to Mr. Ireland when he was
discharged.
The “Patient Signature Page” document that Mr. Ireland signed informed him that
he had been examined for and been found to have a liver disorder. “Generally, the law
presumes that a person who has signed a document, after having an opportunity to read it,
is bound by his signature.” Mitchell v. Kayem, 54 S.W.3d 775, 781 (Tenn. Ct. App. 2001);
see Beasley v. Metro. Life Ins. Co., 229 S.W.2d 146, 148 (Tenn. 1950) (holding that a party
who signs a contract is presumed to know its contents); see also Est. of Howard v. First
Cmty. Bank of E. Tenn., No. E2007-02391-COA-R3-CV, 2009 WL 499541, at *12 (Tenn.
Ct. App. Feb. 27, 2009) (concluding that medical treatment the deceased had just received
would have been in his consciousness). This presumption has been applied to medical
forms. See, e.g., Church v. Perales, 39 S.W.3d 149, 161 (Tenn. Ct. App. 2000) (noting
that “the law presumes that patients ordinarily read and take whatever other measures are
necessary to understand the nature, terms, and general meaning of consent forms involving
medical treatment”). This presumption has also been applied to insurance applications.
Freeze v. Tenn. Farmers Mut. Ins. Co., 527 S.W.3d 227, 234 (Tenn. Ct. App. 2017) (“The
failure to read an application for insurance does not insulate an applicant from errors or
omissions in a signed application. A party’s signature binds him or her as [a] matter of law
to the representations in the signed document.” (quoting Smith, 210 S.W.3d at 591)). In
considering the impact of the signature on this patient discharge form, this case does not
raise a factually supported contention that Mr. Ireland had not read, understood, or paid
attention to the discharge document which contained information about the examination of
his liver and the condition thereof. Asked specifically at oral argument whether there was
any denial in the affidavit that Mr. Ireland had read the patient discharge information or an
addressing of the manner in which Mr. Ireland had read the document, counsel for Ms.
Ireland appropriately and correctly indicated there was not.5 Accordingly, we do not have
5
Judge’s Question: “Counsel is there any denial in the affidavit that he read the patient discharge
information? Is there any sort of express addressing of how he read it or didn’t read it?”
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before us the question of how such facts might affect the assessment of the impact of a
signature on such a form when considering the question of misrepresentation within the
prism of an insured’s knowledge and belief.
Mr. Ireland signed the “Patient Signature Page,” indicating that he had read and
understood the instructions that included information indicating he had been examined for
and determined to have “fatty liver.” Assuming that Ms. Ireland’s affidavit creates a
material disputed issue as to whether Mr. Ireland was advised to follow up about this
condition at discharge, the affidavit, nevertheless, still does not undermine the chancellor’s
conclusion that Mr. Ireland’s liver was examined while at the Williamson Medical Center
and that he was informed of this examination and alerted of the existence of a fatty liver.
All of this is information that Mr. Ireland failed to disclose on his COGH. Accordingly,
the chancery court did not err in concluding that reasonable minds could only reach one
conclusion regarding whether the statements on the COGH constituted a misrepresentation.
See Womack, 593 S.W.2d at 295.
B. Risk of Loss
Ms. Ireland asserts that even if there were misrepresentations, Farmers failed to
establish that the misrepresentations were material such that they increased Farmers’ risk
of loss. She argues that the limited scope of the questions in the COGH demonstrates that
Farmers did not seek the information related to Mr. Ireland’s liver disease. Farmers argues
that the undisputed facts demonstrate that Mr. Ireland’s misrepresentations increased the
risk of loss. We agree that there is no genuine issue of material fact regarding whether the
misrepresentations increased the risk of loss.
The chancery court correctly found that the misrepresentations increased the
insurer’s risk of loss. Interestingly, the question of whether a misrepresentation increases
the risk of loss to an insurer has long been considered a question of law for the court in
Tennessee.6 A trial court’s conclusion as to risk of loss in this context is reviewed de novo
on appeal. Smith, 210 S.W.3d at 589; Vt. Mut. Ins. Co. v. Chiu, 21 S.W.3d 232, 235 (Tenn.
Ct. App. 2000). “A misrepresentation increases the risk of loss when it is of such
importance that it ‘naturally and reasonably influences the judgment of the insuror in
making the contract.’” Sine v. Tenn. Farmers Mut. Ins. Co., 861 S.W.2d 838, 839 (Tenn.
Ct. App. 1993) (quoting Seaton v. Nat’l Grange Mut. Ins. Co., 732 S.W.2d 288, 288-89
(Tenn. App. 1987)). The misrepresentation need not relate to the hazard which produced
Counsel for Ms. Ireland’s Answer: “No there is not.”
6
See generally Mut. Life Ins. Co. v. Dibrell, 137 Tenn. 528, 194 S.W. 581, 581-84 (1916)
(discussing the history of risk of loss analysis under the Tennessee Code); see also, e.g., Freeze, 527 S.W.3d
at 232 (quoting Smith, 210 S.W.3d at 589); Little v. Wash. Nat’l Ins. Co., 34 Tenn. App. 593, 598, 241
S.W.2d 838, 840 (1951).
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the loss. Loyd v. Farmers Mut. Fire Ins. Co., 838 S.W.2d 542, 545 (Tenn. Ct. App. 1992).
Neither is there any requirement to demonstrate that the policy would not have been issued
absent the misrepresentation. Id. Instead, “[i]t is sufficient that the insurer was denied
information which it sought in good faith and which was deemed necessary to an honest
appraisal of insurability.” Id. Courts may use the questions asked by an insurance
company on its application to determine the information which the insurance company
deems relevant to its risk of loss. Smith, 210 S.W.3d at 590. In considering risk of loss,
courts “frequently rely on the testimony of insurance company representatives to establish
how truthful answers by the proposed insured would have affected the amount of the
premium or the company’s decision to issue the policy.” Tenn. Farmers Mut. Ins. Co. v.
Farrar, 337 S.W.3d 829, 835-36 (Tenn. Ct. App. 2009) (quoting Est. of Howard v. First
Cmty. Bank of E. Tenn., No. 2007-02391-COA-R3-CV, 2009 WL 499541, at *11 (Tenn.
Ct. App. Feb. 27, 2009)).
Here, Farmers asked Mr. Ireland in the initial medical questionnaire whether he had
ever been treated for or ever had any known indication of a liver disorder. In the COGH,
Farmers asked whether Mr. Ireland, “[s]ince the date of the original application for the
above policy or latest examination,” had “[r]ealized any fact which would require any
change in the answer to any question, or in any statement made in the original application.”
Accordingly, it appears that Farmers found “any known indication of” liver disorder
relevant to its analysis of the risk of loss. The COGH also inquired whether Mr. Ireland
had “[c]onsulted or been examined or treated by a physician or practitioner” since the date
of the application or latest examination. It asked Mr. Ireland to “give full details,” and it
reiterated above the signature that the information was “true and complete” to the best of
his knowledge and that “all details have been given.” These questions indicate that Farmers
found the full details of any intervening medical treatment, consultation, or examination
relevant to the risk of loss. Farmers also submitted the declaration of the Assistant Vice
President of Farmers’ Underwriting Department, indicating that based on Mr. Ireland’s
diagnosis of steatosis and based on his elevated liver enzymes from the emergency room
examination, he would have been deemed uninsurable. Accordingly, it is abundantly clear
that the trial court did not err in concluding that the misrepresentations affected the risk of
loss. See Est. of Howard, 2009 WL 499541, at *12 (the insured’s “intentional failure to
disclose his chronic liver disease unquestionably increased [the insurance company’s] risk
of loss, as abundantly evidenced by the fact that [the insured] was dead from that ailment
less than six months later”); Hammond v. Indep. Life & Accident Ins. Co., 589 S.W.2d 913,
918 (Tenn. Ct. App. 1979) (the failure of the insured to disclose that he had a known
indication of a liver disorder influenced the issuance of the policy and therefore increased
the risk of loss). We conclude that the trial court properly found the misrepresentation
increased the risk of loss to the insurer.
CONCLUSION
The judgment of the trial court is affirmed, and this matter is remanded with costs
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of appeal assessed against the appellant, Shelby Ireland, for which execution may issue if
necessary.
_________________________________
JEFFREY USMAN, JUDGE
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