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Woods v. National Life & Accident Ins. Co.

filed: July 7, 1967.


Biggs, Hastie, and Forman, Circuit Judges.

Author: Forman

FORMAN, Circuit Judge:

This is the second appeal in an action by Odessa Woods, beneficiary of an insurance policy issued on the life of her late husband, Emmett F. Woods, to recover the proceeds thereof from the insurer, National Life and Accident Insurance Company. The issue is whether Mr. Woods knowingly gave materially false answers in his application for insurance, which under Pennsylvania law would preclude recovery by his beneficiary. In the first appeal, reported at 347 F.2d 760 (1965), we reversed a judgment in favor of the beneficiary because certain evidence had been excluded by the trial court to the detriment of the insurer, and remanded for a new trial. The majority opinion did not reach the issue of whether the insurance company was entitled to a directed verdict because it had failed to file a motion for judgment n.o.v. in the trial court. In the second trial by jury, a verdict was again returned in favor of the beneficiary and judgment entered thereon. This is the appeal of the insurance company from an order of the District Court denying its motion for judgment n.o.v. or for a new trial. Because the facts of this case are detailed in the first opinion, we shall make reference to them thereafter only as may be necessary for consideration of the present issues or to indicate evidence different from that in the first trial.

The first error alleged is the failure of the Trial Judge to admit all four pages of Exhibit G, which was a "Report of Medical Examiner for Disability Evaluation" regarding one Emmett F. Woods, prepared by Dr. Harold T. Brown, who was chief of the pulmonary disease unit of the Veterans Administration Regional Office in Pittsburgh. Only the first page of the document was admitted into evidence. The content of the excluded second and third pages was so sparse, however, that their inclusion or exclusion would have been harmless error, and we shall not hereafter make mention of them. The fourth page, which contained important diagnostic conclusions, was excluded by the Trial Judge on the ground that "medical opinions from files are not good,"*fn1 in express reliance upon this court's decision in Masterson v. Pennsylvania R.R. Co.*fn2

Page 4 revealed that an x-ray of the patient's chest showed a "finely nodular involvement upper 2/3 of both lungs including apices" and the further notation "Timed vital capacity: one sec. 83%; 3 sec. 90%; total 59% of predicted. Marked restrictive defect, consistent with any of conditions noted under 46. Hospitalization for study advised." Under "46. DIAGNOSIS," the entry read, "Pulmonary infiltration, unknown origin, sarcoidosis, pulmonary mycosis, and bronchiolitis to be ruled out." It further revealed that the examinee would not accept hospitalization. The report was signed in handwriting as "Harold T. Brown," and the date "December 29, 1960," was stamped under the heading " DATE SIGNED," indicating its execution contemporaneously with the physical examination, and a second stamp dated January 9, 1961 showed the receipt of the report by the Veterans Administration Adjudication Division.

In the prior appeal the majority opinion stated that the exclusion of Exhibit G was "highly prejudicial to the defendant's defense"*fn3 without distinguishing between the various pages of the medical report. However, consideration of the objection here posed to the fourth page is not foreclosed by the decision in the prior appeal since the appellee's objection in the first trial was on the different ground of privileged communications, and there was no reason for the appellee to have made additional objections because its first was sustained by the trial court.*fn4

In the Masterson case, supra, an action by an injured railroadman against his employer under the Federal Employers' Liability Act, it was held that two letters sent to the railroad's chief medical examiner, purporting to be signed by two doctors, were inadmissible under both the Federal Business Records Act*fn5 and the analogous Pennsylvania statute,*fn6 though in the circumstances of that case we found the error to have been harmless. "Each letter indicated that the plaintiff had been examined by the writer and stated certain facts with respect to his history and condition together with the writer's findings and conclusions."*fn7 The clarity with which the Masterson opinion specifies its grounds for decision permits a ready demonstration of the radical difference between the character of the proffer there and that of the present case. The two letters involved were not business records of the railroad, having been sent to it by outsiders; nor were the letters in form original business records of the writing physicians. In contrast, the medical report here is manifestly a business record of the Veterans Administration. Also the physicians there were not made available for cross-examination, while here Dr. Brown was examined and cross-examined at the first trial and a transcript of that testimony was read to the jury at the second trial when it was established that Dr. Brown was in retirement in Florida and was not in sufficient health to return to testify again.*fn8 Furthermore, it was not established in the Masterson case that the letters were prepared by or under the direction of the physicians, while here the report was identified by Dr. Brown as his own and in his handwriting.*fn9 Finally, the letters in Masterson were the purported business records of private persons and required special testimony as to contemporaneous recording and regularity of procedure under 28 U.S.C. § 1732 to permit admission into evidence. Here, however, Exhibit G was shown by its custodian to have been an official record of a department of the federal government and was entitled to a presumption of authenticity under a long standing rule of evidence enunciated by this court that "when a public officer is required, either by statute or by the nature of his duty to keep records of transactions occurring in the course of his public service, the records thus made are . . . ordinarily admissible."*fn10 We therefore conclude that it was error not to have admitted page four of Exhibit G.

The appellee nevertheless contends that the exclusion of page four was harmless error in light of the reading of the testimony of Dr. Brown given at the first trial. We agree. Dr. Brown's testimony at the first trial included and expanded upon substantially all the information contained on page four. The primary importance of Exhibit G that caused the prior majority opinion to term its exclusion prejudicial was the signature of Emmett Woods on the first page of the exhibit, which, when compared with the signature on the application for life insurance showed that the insured party and the person examined by Dr. Brown were one and the same. Page one was admitted into evidence at the second trial. Moreover, the corroborative value of the writing insofar as Dr. Brown's diagnosis was concerned was much weakened, because Dr. Brown used that very document to refresh his memory, and thus to the extent he did so and relied upon the document, the purported corroboration would have been merely circular support. Finally, it should be noted that the document has importance over and above the identical oral testimony of Dr. Brown for the purpose of a directed verdict only if this court were bound by the Pennsylvania rule that where fraudulent representations do not appear from the testimony of the beneficiary's own witnesses, a directed verdict is available solely on uncontradicted documentary evidence.*fn11 This issue is, however, academic in present circumstances since it appears that on all the evidence a judgment n.o.v. is not appropriate.

We grant at the outset that the issue of identity was conclusive in the insurer's favor -- that is, comparing signatures, birthdates and birthplaces and addresses, and utilizing the Veterans Administration claim number, there is no doubt that the Emmett F. Woods involved in the following transactions is one and the same. Supporting the same conclusion is the authorization by Mr. Woods, on page one of Exhibit G, for the release of medical reports to Dr. C.E. Greenlee of 6547 Frankstown Avenue, Pittsburgh. With that established, the facts are that on September 6, 1960 Mr. Woods visited Dr. Charles E. Greenlee, whom he told that he had pleurisy before leaving the service and was then suffering from a violent cough upon arising each morning. Dr. Greenlee detected "high pitched rales" in the patient's chest due to some undetermined bronchial constriction, and gave Mr. Woods a prescription for a solution containing potassium iodide and for acromyacin. But, Dr. Greenlee testified that he did not thereafter see the patient and that from the appearance of his records he did not believe that Mr. Woods had "much wrong with him"; and that he did not remember telling the patient anything, and that he didn't think the problem was "a serious matter."

Approximately three and a half months later, Mr. Woods was examined by Dr. Harold T. Brown at the Veterans Administration Hospital in Pittsburgh, at which time he complained of an "irritative cough, short of breath on exertion."

Among the abnormalities noted in Dr. Brown's examinations were "a finely nodular involvement" or "infiltration" of the lungs, and a lessened "vital capacity." He recorded a diagnosis, qualified in oral testimony as a "tentative diagnosis," of "sarcoidosis, pulmonary mycosis, and bronchiolitis to be ruled out." Dr. Brown testified that pulmonary sarcoidosis was "a very chronic and progressive disease. Becomes disabling in time and ten percent of the time it will kill the patient ultimately"; that pulmonary mycosis is "a fungus disease of the lung"; and that bronchiolitis "is really a symptom. Means only you have a cough." He advised Mr. Woods to go to a hospital for further study, but the examinee declined. Less than three months later, on March 7, 1961, Mr. Woods filled out an application for life insurance with the appellant in which he gave a negative answer to Question 51(b) "Have you ever had any ailment or disease of . . . heart or lungs?" And in response to Question 55, "State names and addresses of physicians you have ever consulted and give the occasion by reference to question numbers and letters above," he replied "None." On March 13, 1961, Mr. Woods was examined by the insurance company's own doctor who found "the respiratory murmur clear and distinct over both lungs," found "all organs of respiration . . . free of evidence of disease, either past or present," and rated Mr. Woods as a "first class" risk. The insurance policy was issued on March 21, 1961.

On August 31, 1962, within the two year contestable period of the policy, Mr. Woods died as a result of an attack of infectious hepatitis. There was no testimony linking the cause of death with the alleged concealed ailment.*fn12

The relevant Pennsylvania law is set forth in the decision of the prior appeal:*fn13

" . . . The situations under which false statements in an application will bar recovery on the policy are set forth in § 622 of the Pennsylvania Insurance Company Law of May 17, 1921, P.L. 682, art. VI, 40 P.S. § 757. This section provides: 'The falsity of any statement in the application for any policy * * * shall not bar the right to recovery thereunder, unless such false statement was made with actual intent to deceive, or unless it materially affected either the acceptance of the risk or the hazard assumed by the insurer.' To prove that a 'false statement was made with actual intent to deceive' all the insurer need show is that ...

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