On appeal from the Superior Court, Law Division, Bergen County.
Gaulkin, Havey and Stern. The opinion of the court was delivered by Havey, J.A.D.
[266 NJSuper Page 36] Plaintiff Paul Revere Life Insurance Company appeals from a summary judgment dismissing its complaint against its insured, defendant Gilbert K. Haas. The gravamen of plaintiff's complaint is that its disability insurance policy issued to defendant should be rescinded because of material misrepresentations made by him in his application for insurance. Alternatively, plaintiff seeks a
declaration that the policy does not cover defendant's medical condition, retinitis pigmentosa. In dismissing plaintiff's complaint, the trial court concluded that the policy's incontestability clause barred plaintiff's action. The incontestability clause provides:
a. After Your Policy has been in force for two years, excluding any time You are disabled, We cannot contest the statements in the application.
b. No claim for loss incurred or disability beginning after two years from the Date of Issue will be reduced or denied because a disease or physical condition existed before the Date of Issue unless it is excluded by name or specific description.
We hold that the incontestability clause bars an action to rescind instituted after two years from the inception of the policy, even if the insured's representations are fraudulent. We also conclude that the clause precludes the carrier from denying coverage based on the policy's definition of "sickness" and on its preexisting condition exclusion. However, if defendant becomes disabled during the period of contestability, part (a) of the incontestability clause, by its terms, tolls the running of the two-year period, and part (b) has no application. We therefore affirm in part, but reverse in part for a determination as to when defendant became disabled.
On January 20, 1987, defendant applied for disability insurance with plaintiff. In response to questions in the application concerning his "medical history," he answered that he was not under observation or treatment, had not be examined by or consulted a physician in the last five years, and never had any known indication of, or been treated for, any disease or impairment of the eyes. Defendant also answered "no" to the question: "Has any person had any surgical operation, treatment, special diet, or any illness, ailment, abnormality, or injury, not mentioned above, within the past five years?" On March 5, 1987, plaintiff issued the disability policy to defendant.
On December 1, 1990, defendant notified plaintiff of his intention to file a disability claim. On January 7, 1991, he executed a proof of claim form, stating that on December 1, 1990, he became
totally disabled as a result of retinitis pigmentosa, a loss of central vision. Defendant also submitted a "disability attending physician statement," completed by Dr. Leo Masciulli, stating that defendant's symptoms first appeared on November 1, 1989. Dr. Masciulli responded "yes" to the question: "Has patient ever had same or similar condition?" and listed "Dr[s]. Sidarsky [sic] & Poole [New York City] 1985" as defendant's treating physicians. Dr. Masciulli also reported that when defendant came to him on November 1, 1990, he was seeking a "second opinion."
Plaintiff's investigation of the claim revealed that beginning on October 20, 1983, defendant had been evaluated in the New York University Retinal Clinic. Dr. Ronald E. Carr, one of defendant's physicians, stated in a letter to Dr. Sudarsky dated August 9, 1984, that defendant "had been told of retinitis pigmentosa in the past and indeed shows findings quite typical for this problem." It is also undisputed that defendant's medical records, dating back to 1985, disclosed that he has had a history of retinitis pigmentosa since at least that date. On or about October 17, 1991, plaintiff filed the present complaint.
For the purposes of defendant's summary judgment motion, he admitted that his misrepresentations in the application were fraudulent. The trial Judge nevertheless granted the motion, concluding:
I don't find that there is any way that you can get around the fact that [defendant] fits right into the mold of the person who is [saved] by the incontestable clause, and I find that the clause ...