## Facts

- Joseph Harper obtained a $63,000 life insurance policy from Fidelity and Guaranty Life Insurance Company, naming his wife, Gail Harper, as beneficiary.
- Fidelity issued the policy through a simplified underwriting process that relied on the written application and a Medical Information Bureau (MIB) report.
- The application represented that answers were complete and true and reported Harper’s height and weight as 5'11" and 275 pounds; the MIB reflected a higher weight, which the underwriter treated as consistent with possible recent weight loss.
- Fifty days after issuance, Harper died; the death certificate listed sudden cardiac arrest with hypertensive cardiovascular disease and hypertriglyceridemia among the causes.
- During the policy’s two-year contestability period, Fidelity investigated the claim and obtained medical records showing undisclosed or inconsistent information, including a history of transient ischemic attack, alcohol abuse with abnormal liver testing, hospitalization for chest pain/heart fluttering, and morbid obesity with recorded weight around 350 pounds.
- Fidelity denied the claim, rescinded the policy, and refunded premiums, asserting material misrepresentations and omissions in the application.
- Gail Harper sued for breach of contract and asserted reasonable expectations, estoppel, and breach of the implied covenant of good faith and fair dealing.

## Issues

1. Whether the insurer could rescind the life insurance policy under Wyo. Stat. § 26-15-109 based on material misrepresentations and omissions in the application.
2. Whether genuine disputes of material fact existed regarding misrepresentation, materiality, or the insurer’s reliance sufficient to defeat summary judgment.
3. Whether the insurer had a pre-issuance duty to investigate beyond the application and MIB information.
4. Whether investigating and rescinding during the contestability period constituted impermissible post-claim underwriting.
5. Whether reasonable expectations, estoppel, or the implied covenant of good faith and fair dealing barred rescission or created liability.

## Decision

- The Wyoming Supreme Court affirmed summary judgment for Fidelity.
- The court held the application contained material misrepresentations and omissions permitting rescission under Wyo. Stat. § 26-15-109.
- The court found no genuine issue of material fact on materiality or rescission because the record evidence showed the undisclosed conditions would have affected issuance or terms.
- The court held Fidelity had no general duty to investigate beyond the application absent a clear reason to suspect misrepresentation.
- The court rejected the post-claim underwriting argument, concluding the contestability-period investigation was authorized by the policy and statute.
- The court held reasonable expectations, estoppel, and implied covenant claims failed as a matter of law once rescission was proper.

## Legal Principles

- Under Wyo. Stat. § 26-15-109, an insurer may rescind a policy for an application misrepresentation or omission that is material to the risk or to issuance; intent to deceive is not required.
- A misrepresentation is material if truthful information would have led the insurer to decline coverage or issue it only on different terms or at a different premium.
- An insurer is generally entitled to rely on the truthfulness of an applicant’s answers and has no affirmative duty to verify them absent a specific reason to doubt accuracy.
- Using a contractual/statutory contestability period to obtain records and contest a claim based on misrepresentation is permissible and is not, by itself, wrongful post-claim underwriting.
- Equitable theories (reasonable expectations and estoppel) and the implied covenant of good faith and fair dealing cannot negate a statutorily authorized rescission based on material misrepresentation.

## Conclusion

The court upheld rescission of a life insurance policy where the insured’s application omitted and misstated significant health information that would have affected underwriting, concluding the insurer could rely on the application, investigate during the contestability period, and defeat contract and bad-faith-type claims once rescission was established as a matter of law.


Harper v. Fid. & Guar. Life Ins. Co., 234 P.3d 1211 (Wyo. 2010)