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Gilcreast v. Providential Life Insurance
Citations: 14 Ark. App. 11; 683 S.W.2d 942; 1985 Ark. App. LEXIS 1797Docket: CA 84-148
Court: Court of Appeals of Arkansas; February 13, 1985; Arkansas; State Appellate Court
The appeal concerns a hospital medical surgical policy issued by the appellee to the appellant, who underwent brain tumor surgery nearly three years after the policy was issued. The appellee denied benefits, citing a pre-existing condition exclusion. The appellant contended that she disclosed her brain tumor history to the appellee's soliciting agent, Robert Reynolds, during the application process, arguing that his knowledge should be imputed to the appellee, thus obligating them under the policy. At trial, the jury ruled in favor of the appellee, but the court's jury instruction was found to be erroneous. The instruction stated Reynolds' knowledge could not be imputed to the appellee, contradicting established Arkansas case law that holds knowledge gained by an insurance agent in relation to the application is generally imputed to the insurer. Exceptions to this rule exist, particularly if there is collusion or fraud between the agent and the applicant. The appellant alleged she informed Reynolds of her prior surgery and that he advised to disregard it when completing her application. The verdict is reversed due to the trial court's incorrect jury instruction. Appellant alleged that she marked 'no' on an application regarding prior hospital confinement based on instructions from Reynolds, who later denied being informed of any prior surgery or hospitalization. Both parties acknowledged that the appellee sent a follow-up letter for verification, prompting appellant to sign that the application information was incorrect. Subsequently, she altered her response to indicate the information was correct, claiming she followed Reynolds' guidance to disregard her previous medical history. This raised factual questions regarding whether appellant had disclosed her medical history to Reynolds and whether Reynolds' knowledge could be imputed to the appellee. The trial court erroneously instructed the jury that Reynolds' knowledge could not be imputed, which necessitated a reversal for a new trial. Additionally, the appellant referenced the policy's incontestable provision, asserting that since the disputed loss occurred over two years after the policy's effective date, her claim should be honored without misstatement or fraud. However, the appellee claimed fraudulent misrepresentation, which was a factual issue for the jury to resolve. The appellate court reversed the trial court's decision and remanded the case for a new trial, with agreement from Corbin, J. and concurrence from Mayfield, J.