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S.B. v. United of Omaha Life Insurance Co.

United States District Court, Third Circuit

June 13, 2013

S.B. and D.B., Plaintiffs,
v.
UNITED OF OMAHA LIFE INSURANCE CO., Defendant.

MEMORANDUM

ROBERT F. KELLY, Sr., District Judge.

Presently before this Court are Plaintiffs, S.B. and D.B.'s[1] ("Plaintiffs"), Motion for Remand Pursuant to 28 U.S.C.A. § 1447(c), and Defendant, United of Omaha Life Insurance Co.'s ("Defendant"), Motion for Judgment on the Pleadings. For the reasons set forth below, Plaintiffs' Motion is denied and Defendant's Motion is granted.

I. BACKGROUND

The Parties

Plaintiffs are minor children who reside in Philadelphia, Pennsylvania. (Compl. ¶¶ 1-2.[2]) Defendant is a citizen of the state of Nebraska with a principal place of business in Omaha, Nebraska. (See Doc. 1, Notice of Removal.) Defendant is a licensed insurance company, registered and incorporated within the Commonwealth of Pennsylvania, which maintains insurance brokers and agents. (Compl. ¶ 3.) Defendant's business operations extend throughout the state of Pennsylvania and, in particular, Philadelphia county. (Id.)

The Application and Subsequent Events

On or around October 1, 2011, Steven L. Bennett, Jr. ("Bennett"), the father of Plaintiffs, submitted an application for the purchase of a life insurance policy (the "application") to Defendant. (Id. ¶ 5.) The application included a number of health related questions including a specific question asking whether Bennett "ever (a) received care or treatment for, or (b) been advised by a member of the medical profession to seek treatment for, or (c) consulted with a health care provider regarding... (e) Diabetes with onset before age 50 or with vascular or renal complications?" (Id. ¶¶ 10-11.) Bennett answered "NO" to the question. (Id. ¶ 11.) The application notes that if Bennett had answered "YES", he would not have been eligible for coverage under this application. (Compl., Ex. A at 20.)

In the final section of the application titled "Agreement, " the document asserts that "the statements and answers in the application are the basis for any policy issued by United of Omaha (Defendant), and no information about them will be considered to have been given to United of Omaha (Defendant) unless it is stated in the application." (Compl., Ex. A at 21.) Directly above the space for an applicant's signature is a line that reads, "I have read and understand... (the application)... and approve of all my answers as recorded." (Id.) Though the record is not clear as to who filled out the application, it is uncontested that a completed application was signed by Bennett. (Id. ¶ 16.)

Relying on Bennett's responses to the inquiries in the application, Defendant issued Policy No. BU1359060 (the "policy") on October 13, 2011. (Def.'s Mot. J. on the Pleadings 2.) The policy had a face value of $50, 000 with Plaintiffs listed as the sole beneficiaries. (Comp. ¶ 7.)

Bennett died on February 8, 2012. (Id. ¶ 6.) Bennett's death resulted from an intracerebral hemorrhage, which Plaintiffs claim has no known relation to diabetes or elevated blood sugar levels. (Id. ¶ 18.) Sometime after Bennett's death, Plaintiffs, as sole beneficiaries of the policy, submitted a claim to Defendant for the $50, 000. (Id. ¶ 8.) Since Bennett's death was within two years of the issuance of the policy, Defendant commenced a claim review. (Def.'s Mot. J. on the Pleadings 2.) During this review, Defendant received medical records indicating that Bennett was diagnosed and treated for diabetes prior to his fiftieth birthday on May 30, 2010. (Compl. ¶ 14; Def.'s Mot. J. on the Pleadings 2.) These records demonstrate that on December 31, 2009, Bennett was diagnosed with diabetes at Parkside Family Medical, and was later treated at Lankenau Hospital for diabetes and elevated blood glucose levels on January 5, 2010 and February 10, 2010. (Def.'s Mot. J. on the Pleadings 2.) In light of this newfound information, Defendant rescinded the policy and refunded the premium payments. (Id.) Further, Defendant notified Plaintiffs by letter dated January 8, 2013, that the insurance proceeds would not be paid due to the material misrepresentation made by Bennett in the application. (Compl. ¶ 9.)

II. PROCEDURAL HISTORY

Plaintiffs, through their court appointed guardian, Nolvira Curry, filed suit against Defendant in the Court of Common Pleas of Philadelphia County on February 19, 2013. (See Doc. 1.) Plaintiffs' claims include breach of contract and bad faith. (Id.) On March 20, 2013, Defendant filed a Motion to Remove this case to federal Court. (Id.) Subsequent to this Motion, the matter was assigned to this Court. (Id.) Plaintiffs filed a Motion to Remand to State Court on April 1, 2013, and Defendant timely submitted a Response in Opposition ten days later. (See Docs. 4, 6.)

On April 16, 2013, Defendant filed an Answer to Plaintiffs' Complaint. (See Doc. 8.) Eight days later, Defendant filed a Motion for Judgment on the Pleadings to ...


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