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VAN RIPER v. EQUITABLE LIFE ASSUR. SOCY. OF THE UN

April 21, 1982

W. Russell VAN RIPER
v.
The EQUITABLE LIFE ASSURANCE SOCIETY OF the UNITED STATES



The opinion of the court was delivered by: MCGLYNN

 McGLYNN, District Judge.

 This is an action by plaintiff, W. Russell Van Riper, to enjoin defendant, the Equitable Life Assurance Society of the United States ("Equitable") from rescinding a disability income policy of insurance issued to plaintiff. The action was originally filed in the Philadelphia Court of Common Pleas but was later removed to this court pursuant to 28 U.S.C. ยง 1441(a). Jurisdiction is based on diversity of citizenship.

 In defense to this lawsuit, Equitable alleges that plaintiff failed to answer truth-fully and fully questions on his insurance application which related to his past medical history thereby justifying a rescission of the policy. In addition, defendant counterclaimed to recover payments made to the plaintiff prior to the date of the policy's rescission. The case was tried to the court without a jury. This memorandum will set forth my findings of fact and conclusions of law pursuant to Federal Rule of Civil Procedure 52.

 FINDINGS OF FACT

 1. Plaintiff is a citizen of the Commonwealth of Pennsylvania. Defendant is a corporation, incorporated under the laws of the State of New York and has its principal place of business in New York.

 2. Since September 1977, plaintiff was employed by the Graduate Hospital in Philadelphia, Pennsylvania as Director of Personnel. As part of his duties, he arranged for pensions and other benefits for the employees of the Hospital.

 3. In early 1980, the management of the Hospital decided to purchase disability income insurance for certain executives of the Hospital, including the plaintiff. Plaintiff was therefore instructed to obtain information concerning the available policies and make arrangements for obtaining the insurance.

 4. In the Spring of 1980, plaintiff was approached by Jack Schall, an agent of the defendant. Schall proposed that the Hospital purchase disability income policies from Equitable. He offered the policies on a "guaranteed to issue" basis which meant that each of the proposed insureds was guaranteed an insurance policy but that an individual insured may be issued a policy with exclusions for disability from certain causes or the premium rate for an individual may be higher because of certain conditions in that individual's medical background.

 5. Plaintiff recommended to his superiors that the Hospital purchase the Disability Insurance Plan that was proposed by Mr. Schall and eventually the purchase was approved by the Board of Directors.

 6. In the summer of 1980, the plaintiff, as well as other professional members of the staff of Graduate Hospital, applied for individual disability insurance policies with the Equitable.

 7. Plaintiff's application for the policy of insurance consisted of two separate and distinct forms. The first of these forms pertains to the plaintiff's employment history, social background and his insurance experience. The second form relates to the plaintiff's past medical history.

 8. This second form, identified as "Application Part 2", was completed on two different occasions. As an initial screening device, Jack Schall, the insurance agent, posed the questions on July 2, 1980 and completed the form on the basis of information supplied by the plaintiff.

 9. Later, on August 13, 1980, Dr. Harvey L. Kaufman, a self-employed physician specializing in family practice in Cherry Hill, New Jersey and periodically hired by the Equitable and other insurance companies, performed a general medical checkup on Van Riper, and then sat down with him and asked him each question appearing on the medical history part of the application form. Dr. Kaufman completed the form by recording plaintiff's responses which plaintiff then signed.

 10. According to Mr. Schall and Dr. Kaufman, plaintiff's answers to the pertinent questions were as follows:

 
3. Has Proposed Insured ever been treated for or ever had any known indication of:
 
c. Shortness of breath; blood spitting; bronchitis, asthma, emphysema, tuberculosis or other chronic respiratory disease or disorder? . . . No.
 
j. Allergies; anemia; other blood or lymph disease or disorder? . . . Yes.
 
5. Has Proposed Insured:
 
b. Ever received counseling or treatment regarding the use of alcohol or drugs? . . . No.
 
6. Other than as stated in answers to Questions 2-5, has Proposed Insured within the last 5 years:
 
b. Had any illness, injury or surgery? . . . No.
 
c. Been a patient in or been examined or treated at a hospital, clinic, sanatorium, or other ...

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