The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Family Guardian’s decision not to pay out on a $50,000 life insurance policy has been upheld by the Court of Appeal, which found there was “ample evidence” of fraudulent misrepresentation.

The appellate court, in a February 5, 2014, written ruling backed the Supreme Court’s finding that John McPhee, the representative for the estate of his late wife, Alva, was not entitled to claim the proceeds from her life insurance policy.

This was because Mrs McPhee answered ‘no’ when Family Guardian’s ‘non-medical questionnaire’ asked her whether she had been treated for shortness of breath or any heart-related condition.

That questionnaire was a key part of the life insurance application process, and the BISX-listed underwriter subsequently issued Mrs McPhee with her $50,000 face value policy in 1999.

She passed away some four years later, on September 1, 2003, due to heart-related conditions. Mr McPhee then applied to Family Guardian to receive the proceeds of the policy.

“The [insurer] refused to ay the face value of the policy on the ground that the deceased made various material fraudulent misrepresentations and/or non-disclosures about her physical health when she filled out the application for insurance,” the Court of Appeal president, Justice Anita Allen, wrote in her judgment.

Mr McPhee, and his attorney, Carlton Martin, challenged the initial Supreme Court’s finding that his wife’s false declarations were knowingly made and fraudulent.

They asserted that as the answers to the non-medical questionnaire were “incorporated into the contract they cannot be considered to be misrepresentations”.

Mr McPhee and his attorney also argued there was no evidence to suggest his wife was aware she suffered from the conditions that caused her death, and not enough evidence was produced to prove fraud had occurred.

But Family Guardian and its attorney, Randol Dorsett, said the evidence produced by Mrs McPhee’s doctor, Dr Frank Bartlett, showed that her answers were “knowingly false”. As a result, the life and health insurer was entitled to void the contract.

And Family Guardian also pointed out that Mr McPhee “had no standing to bring and maintain the claim”, as the proceeds of his wife’s policy had been assigned to Scotiabank (Bahamas) from September 22, 2000.

Focusing on the ‘fraud’ side of the case, the Court of Appeal said this was the only ground on which the BISX-listed insurer could ‘void’ the policy.

“Contrary to the appellant’s assertions, ample evidence existed before the learned trial judge upon which she could draw the conclusions that she did, namely that the deceased answered question six of the non-medical questionnaire without an honest belief of the truth of the statements,” the Court of Appeal found.

Referring to the Supreme Court trial, the appellate court said Dr Bartlett testified he had first seen Mrs McPhee on August 24, 1999 - some five months before she completed the life insurance application.

Not only did Mrs McPhee complain about shortness of breath, she also told Dr Bartlett that she had a four-five year history of hypertension.

These were all conditions she had answered ‘no’ to in the questionnaire, and Mrs McPhee had also admitted she had been diagnosed in 1998 with congestive heart failure. She had also been hospitalised for this condition twice.

Given all this, the Court of Appeal said there was “no basis” to interfere with the Supreme Court judgment.