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DENNIS C. KNEPP AND KAREN L. KNEPP v. NATIONWIDE INSURANCE COMPANY (02/03/84)

filed: February 3, 1984.

DENNIS C. KNEPP AND KAREN L. KNEPP, PARENTS AND NATURAL GUARDIANS OF DENNIS C. KNEPP, JR., A MINOR, AND DENNIS C. KNEPP, JR., AS AN INDIVIDUAL, APPELLANTS,
v.
NATIONWIDE INSURANCE COMPANY



Appeal from the Order of the Court of Common Pleas of Centre County, Civil No. 79-564. Appeal from the Judgment of the Court of Common Pleas of Centre County, Civil No. 79-564.

COUNSEL

John R. Carfley, Philipsburg, for appellants.

Grant H. Fleming, State College, for appellee.

Rowley, Wieand and Cirillo, JJ. Wieand, J., filed a concurring opinion.

Author: Rowley

[ 324 Pa. Super. Page 481]

These are consolidated appeals from an order of the trial court en banc sustaining exceptions filed by Nationwide Insurance Company, and dismissing exceptions filed by the Knepps to the decision of the trial judge sitting without a jury and from the entry of judgment in favor of Nationwide.

Dennis C. Knepp, Jr., was born on December 9, 1973. At that time it was discovered that he suffered from a congenital condition known as coronal hypospadias or hypospadias of the first degree, a disorder of the urethra. The condition was diagnosed almost immediately after birth and it was noted on the hospital's "Newborn Examination Record." Dennis' physician informed the Knepps of the nature of Dennis' condition at or near the time of his birth and, over the next four years, Dennis' parents twice inquired as to whether it was not yet necessary for corrective surgery to be performed. They were informed that surgery would not be necessary until after Dennis had begun to attend school.

On June 8, 1977, the Knepps applied to Nationwide for two policies of insurance, one denominated a "Hospital and Surgical Expense Policy" and the other a "Major Medical Expense Policy." Nationwide approved the applications and, on September 1, 1977, issued the two policies.

[ 324 Pa. Super. Page 482]

On June 9, 1978, surgery was performed on Dennis in an unsuccessful attempt to correct the disorder. The Knepps submitted a claim to Nationwide for the cost of the operation and related expenses claiming that the costs were covered by the policies issued some nine months prior to the operation. By letter dated November 2, 1978, Nationwide denied the claim stating that "the policies are designed to cover only those illnesses, injuries or disorders which have their origin after the effective date of the policy [sic]." The letter also informed the Knepps that the company believed that the Knepps had wrongfully failed to disclose Dennis' condition and labelled the failure as a "material misrepresentation." Nationwide gave the Knepps the option of signing waivers as to Dennis with regard to "any disorder of the urethra," or having the policies terminated and all premiums returned. The Knepps failed to respond. By letter dated February 9, 1979, Nationwide informed the Knepps that it presumed they would not execute the waivers and that the company was giving them formal notice of cancellation. A check was enclosed with this letter "in full refund of the premiums paid."

The Knepps commenced this action on March 3, 1979, by filing a complaint containing two counts. Count I stated a claim in assumpsit for $1,393.70 representing the costs attendant to the surgery. In Count II, the Knepps sought a declaratory judgment in their favor "reinstating" the insurance policies without any restriction as to Dennis in order to have insurance coverage for future surgery necessary to correct the hypospadias.

The case was tried on November 6, 1979, before the Honorable Richard M. Sharp, President Judge, sitting without a jury. By an opinion and order dated January 17, 1980, Judge Sharp found in favor of the Knepps on Count I and in favor of Nationwide on Count II. Both parties filed exceptions to the decision and argument was heard by a court en banc. The court en banc sustained Nationwide's exceptions to the decision on Count I and dismissed the Knepps' exceptions to the decision on Count II. Judgment

[ 324 Pa. Super. Page 483]

    was subsequently entered in favor of Nationwide on both counts of the complaint and the Knepps appealed.*fn1

Appellants present two issues for our consideration. First, whether the trial court en banc erred in concluding that appellee insurer was not required to reimburse the Knepps for the cost of the unsuccessful surgery of March, 1979. Second, whether the trial court erred in holding that Nationwide could rightfully rescind the insurance policies and return the premiums to the Knepps.

We agree with the trial court's determination that Dennis' disorder is not covered by the policies issued by Nationwide. Nationwide agreed, in each of the two policies, to pay benefits "in the event of injury or sickness" as those terms were defined in the policies. Sickness is defined in the policies as:*fn2

"Sickness" means sickness or disease contracted by an Insured Family Member more than 15 days after such Insured Family Member becomes covered under this policy and while such coverage is in force . . . ." (Emphasis added.)

Thus, coverage is not provided for sicknesses contracted prior to the ...


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