Question

Read chapter 18 and pick ONE of the cases in this chapter to discuss: Anderson v. Country Life Insurance, Mendenhall v. Hanesbrands, INC., O'Brien v. Ohio State University, or Hoosier Energy Rural Electric cooperative, INC. v. John Hancock Life Insurance Co. Share with the class your impression of the case and why you agree or disagree with the court's holding.

Answer 1

Impression of the case:

The case is between two parties Anna Mae Anderson who is widow of Roger Anderson. In this case she is plaintiff and appellant. She is representing herself on her own and as representative of the estate of Roger Anderson. The other party who are defendant and Appellees is the insurance company Country Life Insurance Company and their insurance agents Donald and J. D. Fitzgerald.

The case is very simple. It starts in November with Donald Fitzgerald coming to Anderson couple place for getting their application filled for health coverage. He gets a check from Anderson wife as advance premium of six month for insurance. He hand-overs a conditional receipt to Andersons of that very same day. He further informs that policy will come to effect after all conditions are met and after the company gives its approval to it. Mr. Anderson agreed to it.

The insurer Country Life started processing application of Andersons’. They en-cashed the received check on 4 December. Country Life asked Fitzgerald on 7 Dec, for furnishing more health information of Andersons’ specifically Mr. Anderson and medical examination of couple.

Mrs. Anderson due to her physique dimensions was needed to pay rate that will be 75 percent high. On Dec 14, Fitzgerald informed Andersons about it. On Dec 15 Mr. Anderson had a heart attack and was hospitalized. Next day, Mrs. Anderson informed Fitzgerald and asked surety about having insurance on health expenses at hospital. Fitzgerald couldn’t confirm her without checking with home-office of country life management. He sent the request to home-office. Meanwhile, application was continuously under local processing. Dr. Potoch, visited Mrs. Anderson for medical examination and took paper signed from her. Fitzgerald went to hospital on 20 Dec, and met Andersons to get Mr. Anderson sign his papers of medical history. Same day in evening Mr. Anderson passed away.

County Life was unaware of it and sent a letter to Mr. Anderson informing that they are refunding the amount for his advance policy premium. The application processing will be only for Mrs. Anderson if she pass medical examination and pay the higher rate.

After few months, Fitzgerald visited Mrs. Anderson. He had three application amendments that he wanted her to sign for her policy. She did so for her policy. The third amendment stated that Mr. Anderson will be removed from the initial policy application. Mrs. Anderson declined to sign it because her husband was not in policy. The company refused to process application of Mrs. Anderson because of it and refunded her the amount.

Now, Mrs. Anderson filed legal suit against the insurer Country Life. According to her it was “violation of contract and duty of good faith and fair dealing”. Country Life contended absence of policy contract as from the beginning it was conditional and the conditions didn’t fulfill. It required medical exam of Mr. Anderson but it couldn’t happen. There was fair dealing. The trial court gave summary judgment in favor of country Life.

Mrs. Anderson appealed to Court of Appeals of Arizona. The court stated it a question of an insurer who gets advance policy premiums and give a receipt in writing for immediate health coverage but makes it dependent on issue of a policy at later date save himself from paying any interim cover to the insured.

The court declined it. It stated that a conditional receipt is deception and is against public policy.

I too agree with it as it is unethical too. Country-life should not have asked for advance premium before the medical exam results or confirmation from home-office. And if they did receive premium for instant coverage, the interim insurance contract is formed regardless of any conditional receipts.

Judgment came in favor of Andersons.