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Ball v. USAA Life Insurance Co.

United States District Court, D. South Carolina, Charleston Division

September 18, 2017

CHERYL BALL, individually and on behalf of the ESTATE OF JAMES MICHAEL BALL, Plaintiff,



         The following matters are before the court on defendant USAA Life Insurance Company's (“USAA”) motion for summary judgment, ECF No. 65, plaintiff Cheryl Ball's (“plaintiff”) motion for partial summary judgment, ECF No. 69, and plaintiff's motion in limine. ECF No. 70. For the reasons set forth below, the court grants in part and denies in part USAA's motion for summary judgment, denies in full plaintiff's motion for summary judgment, and grants in part and denies in part plaintiff's motion in limine.

         I. BACKGROUND

         Plaintiff alleges that her husband, James Michael Ball (“Ball”), served in the Army for 27 years prior to retiring from active duty. Compl. ¶ 4. Ball applied for life insurance with USAA on April 17, 2012, id. ¶ 5, and on April 18, 2012, Ball completed a medical questionnaire via telephone with a representative of USAA, ECF No. 75 at 1. During this questionnaire, Ball disclosed a number of medical symptoms he had experienced and treatments he had undergone-including acid reflux, esophagus and stomach examinations, gallstones, gallbladder problems, digestive problems, laparoscopic surgery, and an EKG. Id. at 2. Ball also notified USAA of the location of his medical records, and signed a “HIPPA COMPLIANT” Authorization form, allowing USAA to obtain said medical records in order to evaluate his eligibility for a life insurance policy. Id. USAA did not conduct any additional investigation into Ball's medical history, and Ball was approved and received two life insurance policies on May 20, 2012. Compl. ¶ 5.

         On December 13, 2013, Ball was killed in a hit and run motor vehicle accident. Id. ¶ 6. After Ball's death, plaintiff submitted a claim for life insurance benefits. Id. ¶ 7. USAA responded with a letter explaining that because Ball's death occurred within the two year “contestability period” it would need to review Ball's medical history and the circumstances surrounding his death before making a coverage decision. ECF No. 75-1, Claim File at 29-30. On November 25, 2014, USAA notified plaintiff that it was denying coverage and would seek to rescind the two policies based on “multiple omissions and misstatements” contained in Ball's applications for life insurance. Id. at 36. USAA specifically noted Ball was asked whether he had ever consulted with a health care provider for[] [s]eizures, paralysis, stroke, depression, anxiety, or other mental or nervous system disorder (sic), ” to which Ball answered, “no.” Id. at 36. Ball also failed to disclose his treatment for “depression, PTSD, sleep apnea, memory problems/headaches and traumatic brain injury” when he was asked if he had “consulted a health care professional for any reason not previously disclosed.” Id. at 37. At the time, USAA was aware that Ball had received treatment for an episode of “Major Depression” on August 11, 2010. ECF No. 79 at 7-8. Further discovery has revealed that Ball received treatment for a variety of mental health-related issues from January 2008 until around May 2012. See ECF No. 65-1 at 4-8 (summarizing Ball's treatment history). USAA has maintained that it has the right to rescind the policies based on Ball's failure to disclose this treatment during the telephone interview.

         Plaintiff filed her complaint on October 27, 2015 in the Court of Common Pleas for Dorchester County, bringing the following causes of action: (1) breach of contract; (2) insurance bad faith; and (3) attorney's fees pursuant to South Carolina Code § 38-59-40. USAA filed a notice of removal on January 7, 2016. The parties filed cross-motions for summary judgment on April 21, 2017. ECF Nos. 65, 69. Plaintiff also filed a motion in limine to exclude expert testimony the same day. ECF No. 70. The parties filed their respective responses to all three motions on May 5, 2017, ECF Nos. 73-75, and their replies on May 12, 2017. ECF Nos. 77-79. The matters are now ripe for the court's review.

         II. STANDARD

         A. Rule 702 and Daubert

         Federal Rule of Evidence 702 provides:

A witness who is qualified as an expert by knowledge, skill, experience, training, or education may testify in the form of an opinion or otherwise if:
(a) the expert's scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue;
(b) the testimony is based on sufficient facts or data;
(c) the testimony is the product of reliable principles and methods; and
(d) the expert has reliably applied the principles and methods to the facts of the case.

         District courts serve as gatekeepers for expert testimony. The court has a “special obligation” to ensure that expert testimony is relevant and reliable. Kumho Tire Co. v. Carmichael, 526 U.S. 137, 147 (1999).

         Under Daubert, the court must address two questions: first, whether the expert's testimony is based on “scientific knowledge”; and second, whether the testimony “will assist the trier of fact to understand or determine a fact in issue.” 509 U.S. at 592. The first question is answered by assessing “whether the reasoning or methodology underlying the testimony is scientifically valid.” Id. at 592-93. Several factors should be considered when determining the reliability of a particular scientific theory or technique: whether it (1) can be and has been tested; (2) has been subjected to peer review and publication; (3) has a known or potential rate of error; and (4) has attained general acceptance in the pertinent scientific community. See id. at 593-94. In considering these factors, the focus “must be solely on principles and methodology, not on the conclusions that they generate.” Id. at 595. These factors are not exclusive; what factors are relevant to the analysis “depends upon the particular circumstances of the particular case at issue.” Kumho Tire, 526 U.S. at 150.

         The second inquiry “goes primarily to relevance.” Daubert, 509 U.S. at 591. Relevance is determined by ascertaining whether the testimony is sufficiently tied to the facts of the case such that it will aid the jury in resolving a factual dispute. Id. at 593. “A review of the caselaw after Daubert shows that the rejection of expert testimony is the exception rather than the rule.” Fed.R.Evid. 702 advisory committee's note to 2000 amendments. “Daubert did not work a ‘seachange over federal evidence law, ' and ‘the trial court's role as gatekeeper is not intended to serve as a replacement for the adversary system.'” Id. (quoting United States v. 14.38 Acres of Land Situated in Leflore Cnty., 80 F.3d 1074, 1078 (5th Cir.1996)).

         B. Motion for Summary Judgment

         Summary judgment shall be granted “if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine dispute as to any material fact and that the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c). “By its very terms, this standard provides that the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). “Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment.” Id. at 248. “[S]ummary judgment will not lie if the dispute about a material fact is ‘genuine, ' that is, if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id.

         “[A]t the summary judgment stage the judge's function is not himself to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial.” Id. at 249. When the party moving for summary judgment does not bear the ultimate burden of persuasion at trial, it may discharge its burden by demonstrating to the court that there is an absence of evidence to support the non-moving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). The non-movant must then “make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Id. at 322. The court should view the evidence in the light most favorable to the non-moving party and draw all inferences in its favor. Anderson, 477 U.S. at 255.


         A. Motion in Limine to Exclude DiLisio's Testimony

         Plaintiff moves to exclude the testimony of USAA's claims procedures expert, Robert DiLisio (“DeLisio”). To understand plaintiff's objections to DeLisio's testimony, it is important to understand the context of this testimony. Plaintiff has brought a bad faith claim based on USAA's refusal to pay benefits under the policies. “An insured may recover damages for a bad faith denial of coverage if he or she proves there was no reasonable basis to support the insurer's decision to deny benefits under a mutually binding insurance contract.” Cock-N-Bull Steak House, Inc. v. Generali Ins. Co., 466 S.E.2d 727, 730 (S.C. 1996) (quoting Dowling v. Home Buyers Warranty Corp., 400 S.E.2d 143, 144 (S.C. 1991)). USAA has identified DeLisio as an expert in insurance claims handling and offers his testimony to demonstrate “the reasonableness of the procedures employed by USAA [] in regard to [p]laintiff's claim for benefits.” ECF No. 73 at 3. Though the parties have only provided a portion of DeLisio's initial and supplemental reports, ECF Nos. 70-1, 70-2, DeLisio's offered the following opinions during his deposition:

(1) “[T]he telephone interview process was reasonable.”
(1) “USAA's performance of a contestability investigation was reasonable and consistent with industry standards[, ] custom[, ] and practice.”
(2) “[T]he time period required in this case to complete the investigation was reasonable.”
(3) “[USAA's] communications with [plaintiff] . . . met or exceeded industry standards[, ] practice[, ] and custom.”
(4) “[I]t was reasonable for USAA to determine that [the misrepresentations contained in Ball's answers during the telephone interview] were material.”
(5) “USAA had a reasonable basis to conclude that they were intentional.”
(6) “[I]n my opinion, they got it right, that he, Mr. Ball, did intend to deceive.”

ECF No. 73-1, DeLisio Dep. 40:16-17, 51:10-53:8. DeLisio also responded to certain opinions offered by plaintiff's expert, Stephen Burgess (“Burgess”), explaining that: (1) Ball should not be excused for his misstatements based on USAA's conduct; (2) even if Ball had been uncertain about certain questions, his failure to provide full disclosure should not be excused; (3) USAA should not be criticized for failing to tell Ball that it would not be obtaining his medical records during the initial investigation; (4) USAA conducted a “fair” contestability examination. Id. at 53:9-55:21.

         Plaintiff seeks to exclude DeLisio's testimony because, in her view, a number of his opinions fall outside the scope of his “specialized knowledge, skill, experience, training[, ] or understanding.” ECF No. 70 at 1. Specifically, plaintiff argues that DeLisio has no expertise in the area of life insurance applications, life insurance underwriting, the materiality of different health conditions, or Ball's intent. Id. at 4- 18. USAA takes the position that DeLisio is qualified to offer opinions of the claims investigation process, which necessarily touches on issues relating to the application process, underwriting, and intent. ECF No. 73 at 2-5. USAA ...

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