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Rubes v. Mega Life And Health Ins. Co., Inc.2/27/2002
This declaratory judgment action concerns plaintiff Stephen Rubes' coverage for health and medical expenses under a policy of insurance issued by defendant MEGA Life and Health Insurance Company, Inc. (MEGA). Resolution of the controversy hinges on the application of competing equitable theories to a disputed factual record: Whether Rubes materially misrepresented his health history so as to justify rescission by MEGA and, if so, whether MEGA should be equitably estopped from rescinding because its decision was not conveyed until Rubes' costly--*266 but lifesaving--liver transplant operation was complete.
The parties agree the case sounds in equity and thus our review is de novo. See Ralfs v. Mowry, 586 N.W.2d 369, 371 (Iowa 1998) (standard of review rests on predominantly equitable nature of theories at issue). Under that review standard, we are not bound by the district court's factual findings but we may give them weight, especially with regard to the credibility of witnesses. Perkins v. Madison County Livestock & Fair Ass'n, 613 N.W.2d 264, 266 (Iowa 2000).
As in many cases, credibility determinations are crucial here. Yet our ability to apply the usual deferential standard is undermined by the court's verbatim adoption of Rubes' proposed factual findings and legal conclusions on this point. We have in the past cautioned trial courts about the perils of such practice. Kroblin v. RDR Motels, Inc., 347 N.W.2d 430, 435 (Iowa 1984). We do so again because the customary deference accorded trial courts cannot fairly be applied when the decision on review reflects the findings of the prevailing litigant rather than the court's own scrutiny of the evidence and articulation of controlling legal principles. See id.; see also Phoenix Eng'g & Supply Inc. v. Universal Elec. Co., 104 F.3d 1137, 1140 (9th Cir.1997) (close scrutiny of record required where trial court adopts one party's proposed findings); In re Las Colinas, Inc., 426 F.2d 1005, 1009, 1010 (1st Cir.1970) (practice of adopting proposed findings should be limited to "extraordinary cases" of a "highly technical nature requiring expertise" not possessed by trial court; to extent decision does not reflect independent work, "the more careful we are obliged to be in our review").
We are convinced from our independent review of the trial testimony and exhibits that MEGA lawfully rescinded Rubes' contract of insurance. We further conclude that the company's decision to do so, although regrettably late, was not without fair warning to Rubes well in advance of surgery. We therefore reverse the contrary judgment of the district court and remand for entry of a judgment rescinding the contract.
I. Background Facts and Proceedings.
This case centers on information conveyed by Rubes to his health insurer, MEGA, on an application for insurance dated July 15, 1998. For over a year before submitting this application, Rubes had been uninsured. Before that time, Rubes--who practices law as a sole practitioner--had been covered under a policy furnished by his wife's employer. Rubes' marriage was dissolved in April 1997. He put off securing his own policy until the illness and hospitalization that started this controversy.
On May 31, 1998, Rubes visited a physician in Council Bluffs complaining of fever, chills and shortness of breath. The physician suspected pneumonia. Rubes was then admitted to St. Joseph's hospital in Omaha for intravenous antibiotics and further tests. The hospital's admitting notes indicate that Rubes reported "a history of alcohol abuse" including outpatient treatment for alcoholism but no other serious health history. Lab work performed at the hospital revealed extremely low white blood cell and platelet counts. These results prompted screening for HIV and hepati
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