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Nolan v. First Colony Life Insurance Co.

November 13, 2001


On appeal from the Superior Court of New Jersey, Law Division, Monmouth County, MON-L- 5709-98.

Before Judges Petrella, Kestin and Alley.

The opinion of the court was delivered by: Petrella, P.J.A.D.

As amended November 29, 2001.


Argued October 9, 2001

This is an appeal by plaintiffs Maria Nolan, as Executrix of the Estate of Guy Nolan, and Maria Nolan, individually, from summary judgment in favor of First Colony Life Insurance Company (First Colony) and dismissal of the second amended complaint sounding in negligence, and originally malpractice.

In connection with his application for a $200,000 life insurance policy from First Colony, Guy Nolan underwent a pre- insurance screening and blood and urine test by Portamedic Services, Inc. (Portamedic), an agency designated by First Colony. Nolan was subsequently diagnosed with and died of liver cancer two years later. Plaintiff*fn1 claims that First Colony violated its duty to the decedent by failing to disclose the results of a blood test, which indicated elevated levels of two liver enzymes. The issue on appeal is whether New Jersey case law requires an insurance company to disclose the results of blood test results above the "normal ranges" to the applicant for insurance.*fn2 Plaintiff also contends that the denial of First Colony's F.R.C.P. 12(b)(6) motion by the federal district court, where the case was initially heard, has res judicata effect, precluding First Colony from denying its duty to disclose the blood test results.

Plaintiff filed a complaint against First Colony, a John Doe, an unknown paramedic, and a James Doe, M.D., an unknown physician, on November 13, 1998. The case was removed to the federal district court for the District of New Jersey based on diversity of citizenship jurisdiction. Defendants moved to dismiss the complaint pursuant to F.R.C.P. 12(b)(6). In denying the motion, the judge examined New Jersey case law and concluded that the physician and the paramedic (factually it developed that no physician or paramedic was involved) may have had a duty of care to the decedent and that a patient-physician relationship could arise based on the alleged factual contentions of the complaint.

Plaintiff amended her complaint to include defendants Domenic Schiraldi (Schiraldi) and Portamedic, thus vitiating federal diversity jurisdiction. The case was remanded to the Superior Court and plaintiff again amended the complaint to add as defendants Clara Maass Medical Center and Eduardo Monteagudo, M.D.*fn3

Both sides moved for summary judgment. The judge granted summary judgment in favor of First Colony, Schiraldi and Portamedic, and denied plaintiff's motion. In so ruling, the judge found that First Colony was not vicariously liable for medical malpractice because no medical doctor examined the decedent; First Colony did not have a duty to disclose the test results to the decedent; and the New Jersey Legislature never imposed such a duty.

Plaintiff's motion for leave to appeal was granted as to the dismissal of the complaint against First Colony. Leave to appeal the dismissal of the complaints against Schiraldi and Portamedic was denied. On January 23, 2001, our Supreme Court decided Reed v. Bojarski, 166 N.J. 89 (2001), and we remanded for reconsideration in light of Reed. The motion judge concluded that Reed did not apply and reaffirmed summary judgment in favor of First Colony. Plaintiff again sought and was granted leave to appeal. We now affirm.

In October 1996, Guy Nolan, born on May 19, 1961, applied for a $200,000 life insurance policy through First Colony. Part of the application process required Nolan to undergo a physical examination. The examination was administered by defendant Portamedic, a company not affiliated with First Colony, on November 11, 1996.*fn4 Portamedic's business involved performing such examinations for insurance companies. Portamedic's employee Schiraldi conducted the examination. Though Schiraldi graduated from podiatric school, he was not a licensed medical doctor. The examination involved having the decedent complete a questionnaire,*fn5 taking measurements of height, weight, blood pressure, heart rate and pulse, and taking blood and urine samples.

The blood sample was sent to an independent laboratory and the results, without medical analysis or conclusions, were sent to First Colony. No medical doctor ever looked at the findings of the lab prior to the issuance of the insurance policy. The report indicated the decedent had low cholesterol and normal GGTP levels, but that his SGOT, SGPT and triglyceride levels were above normal. The SGOT and the SGPT levels were approximately 1.1 and 1.3 times the normal range, respectively.*fn6

Mary Dellinger had been employed by First Colony for eight years, and was the underwriter who screened decedent's application. She had no medical training, but reviewed the laboratory report and compared the raw data to First Colony's underwriting manual. She gave the elevated levels a rating of zero. The file indicated that this would not result in an adverse underwriting decision.*fn7 Dellinger approved the application and First Colony issued the decedent a "Preferred" policy around December 1, 1996. First Colony also had a "Best Preferred," a "Standard" policy and rated policies. Nolan was not issued a "Best Preferred" policy because Dellinger marked off "medical reasons."*fn8

About two years later, in mid-1998, Guy Nolan was diagnosed with metastatic adenocarcinoma of the liver. About October 8, 1998, Nolan requested and received a copy of the blood test result conducted in association with his life insurance application. Apparently, blood test results from a 1993 hospitalization for surgery were also requested and received. Despite treatment of his condition, Nolan died on November 10, ...

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