On May 5 the Fourth Circuit reversed a District Court decision upholding Lloyd’s of London’s rescission of a Maryland surgeon’s disability policies. Lloyd’s had rescinded the policies because the surgeon gave false answers on the application forms. The 4th Cir. found ambiguity in every question, even though that required defining “ambiguity” in a breathtakingly broad way. Everything, it seems, is ambiguous—if an insurance company wrote it.
You be the judge. The surgeon submitted initial applications on Apr. 1, 2011, answering “Yes” to whether he was actively at work and “No” to whether he was aware of facts that could change his occupation or financial stability and whether he was party to a “legal proceeding.” He signed final applications on Aug. 8, answering the same way.
On Apr. 12—between the initial and final applications—he signed a consent order with the Maryland licensing board suspending his license for three months, beginning Aug. 2.
Thirty days after the policies went into effect, he put Lloyd’s on notice of a potential disability claim because of a fall. Lloyd’s investigation turned up the discrepancies between his application answers and the facts. Lloyd’s moved to rescind and won summary judgment at the trial level.
The surgeon appealed, calling all three questions ambiguous. The 4th Cir. agreed. Its explanation? (1) True, his license was suspended, but he continued to do “administrative work, research, and professional development,” and he remained licensed in D.C. (2) True, he was party to suspension hearings before the Maryland licensing board, but that board isn’t a court and maybe he thought a hearing couldn’t be a “legal proceeding” unless it was in court.
So the 4th Cir. reversed and remanded. The case is Lloyd’s v. Cohen, No. 14-1227 (4th Cir., May 5).
