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In a $1 million victory for an insurer, a federal judge has ruled there is no duty to pay a life insurance claim where the man withheld the truth about the extent of his illegal drug use and later died of an overdose. In his 23-page opinion in Buckert v. The Equitable Life Assurance Society of the United States, U.S. District Judge Jan E. DuBois found that an insured’s misrepresentations about drug use should always be deemed to have been made in “bad faith.” “Although it appears that no court applying Pennsylvania law has squarely addressed the issue of misrepresentations regarding drug use, the court concludes that misstatements regarding drug use should also be deemed to be made in bad faith as a matter of law,” DuBois wrote. DuBois also rejected the argument that Seth Jamison’s answers to Equitable’s questions were ambiguous and that the insurer therefore had the duty to investigate before issuing the policy. Instead, DuBois found that Jamison’s answers were “consistent and unambiguous” and that in such an instance, “Pennsylvania law does not impose a duty on insurers to investigate.” According to court papers, Jamison applied for an Equitable life insurance policy in July 1997 and completed a medical questionnaire that asked about his illegal drug use in the previous 10 years. Jamison responded by writing: “late ’80s — 1990 — occasional use of cocaine,” and stated that he had received inpatient treatment at the Institute of Pennsylvania for 28 days with “no problems since.” Equitable then sent Jamison a “confidential questionnaire” that asked more questions about his drug use. In response, he stated that he had used minimal quantities of cocaine less than one time per month from 1988 to 1989. In response to the question, “Have you used alcohol in combination with any drug,” he wrote: “I used cocaine on approximately 10 occasions while drinking over the above two-year period.” He was also asked if he had ever stopped using drugs and later returned to using them, to which he answered “no.” Equitable issued a $1 million life insurance policy in November 1997 that designated Grace Burkert and Jacob Jamison as beneficiaries, with each receiving a 50 percent share. Seth Jamison died on Jan. 10, 1998, in the Four Seasons Hotel in Toronto, Canada, as a result of an overdose of heroin and cocaine. Because his death came within two years of the issuance of the policy, Equitable initiated a routine investigation. Investigators discovered that Jamison’s psychotherapy records showed that his drug problems had persisted into the 1990s. Treatment records revealed that he had abused alcohol and cocaine within five years prior to applying for life insurance and was treated for addiction to alcohol during that time — none of which was disclosed in his application. As a result, Equitable rescinded the policy. The court battle began when Buckert, who is represented by attorney Robert G. Bauer of Abraham Bauer & Spalding, filed suit seeking her half of the $1 million proceeds. Equitable’s lawyer, Daniel J. Zucker, responded by filing a counterclaim that asked the court to declare the policy void ab initio due to Jamison’s material misrepresentations about his drug and alcohol use and treatment. Bauer quickly moved for a protective order to prevent Equitable from using Jamison’s treatment records from two psychologists on the ground that they were covered by Pennsylvania’s psychotherapeutic privilege. But DuBois refused to grant it, saying Buckert did not have standing to assert Jamison’s psychotherapeutic privilege and that the privilege had been waived. With the records in, DuBois found that Equitable easily won the case. “In light of substantial evidence that decedent regularly used cocaine and alcohol, the court concludes that decedent’s representation regarding his use of cocaine in 1988-90, with ‘no problems since,’ was made fraudulently and in bad faith,” DuBois wrote. “In addition, the court concludes that decedent’s representations regarding his history of medical counseling and treatment for drug and alcohol treatment were made in bad faith as a matter of law,” he wrote. DuBois found that the treatment notes and deposition testimony of the two therapists “disclose a pattern of drug abuse and treatment, including regular use of cocaine and periods of drinking.” Bauer argued that despite that evidence, Jamison’s answers on the application were not false. DuBois strongly disagreed, saying he found Jamison made “blatant” misrepresentations. “Question 6(a) of the application asks whether the proposed insured has used narcotics and other drugs within the last 10 years — not whether the proposed insured’s alcohol or drug use is, or has been, a problem,” DuBois wrote. “Question 6(b) asks whether the proposed insured has received medical counseling or medical treatment regarding the use of alcohol or drugs. Although decedent’s partial answers were perhaps truthful with respect to decedent’s prior drug and alcohol use and treatment, his answers where not ‘true and complete’ as required by the application.” Instead, DuBois said, “it is clear from the evidence that decedent answered question six falsely in at least two respects: (1) there is substantial evidence that decedent failed to disclose his continued use of illegal controlled substances beyond 1990; and (2) decedent failed to disclose significant addiction treatment … including prescriptions for Antabuse and Prozac.”

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