Unsubstantiated refusal - A Law Each Day (Keeps Trouble Away)

A claim for insurance may be denied on the ground of non-disclosure or concealment of a fact material to the risk insured against. This is one of the issues raised in this case.

This case started when Dr. Artemio, a physician applied for membership in the group life insurance plan of an insurance Company which has a contract with a Development Bank to insure the lives of eligible housing loan mortgagors of said bank. Dr. Artemio then had a housing loan with the said bank.

In his application for membership in the group life insurance, Dr. Artemio said that he was in good health to the best of his knowledge and that he never had, nor ever consulted, a physician for a heart condition, high blood pressure, cancer, diabetes, lung, kidney, stomach disorder or any other physical impairment.

Nine months after he was insured, Dr. Artemio, died due to "massive cerebral hemorrhage". Consequently, the bank filed a death claim against the insurance Company. The company denied the claim alleging that Dr. Artemio was not physically healthy when he applied for an insurance coverage. The company insisted that Dr. Artemio did not disclose he had been suffering from hypertension which caused his death. Such non-disclosure constituted concealment that justified the denial of the claim, according to the Insurance Company.

At the trial of the case filed by the widow of Dr. Artemio, the Insurance Company relied solely on the testimony of Dr. Artemio's attending physician who issued the death certificate. The said physician stated that he had no knowledge of Dr. Artemio's previous hospital confinement. While in the certificate he said that cerebral hemorrhage probably secondary to hypertension is the cause of death. He also said that in preparing the Certificate he merely relied on the information relayed to him by the widow that the late Dr. Artemio during his lifetime complained of headaches due to high blood pressure. The attending physician made this inference without conducting an autopsy. Is this enough for the Insurance Company to refuse payment of the claim?

No. The fraudulent intent on the part of the insured must be established to entitle the insurer to rescind the contract. Misrepresentation to avoid liability is an affirmative defense and the duty to establish such defense by satisfactory and convincing evidence rests upon the insurer. In this case, the Insurance Company merely relied on the testimony of the attending physician regarding possible cause of death as supported by the information given by the widow of the decedent. This medical findings are not conclusive because the physician did not conduct an autopsy on the body of the decedent. The death certificate stated that hypertension was only the "possible" cause of death. Hence, the testimony of the physician was merely hearsay.

The company should therefore pay the insurance claim (Great Pacific Life Assurance Corp. vs. Court of Appeals et. al. G.R. No. 113899 Oct. 13, 1999).

Atty. Sison's e-mail address is: [email protected]