Coulter v Co-operators Life Insurance Company, 2014 ABQB 689

Court of Queen ’ s Bench of Alberta Citation: Coulter v Co-operators Life Insurance Company , 2014 ABQB 689 Date: 20141112 Docket: 0703 04234 Registry: Edmonton Between: Sandi Coulter and Tenille Coulter Plaintiffs - and - Co-operators Life Insurance Company Defendant _______________________________________________________ Reason for Decision of the Honourable Madam Justice M.G. Crighton _______________________________________________________ I.

Introduction [ 1 ] On November 5, 2003, the Defendant, Co-operators Life Insurance Company, issued a versatile ten year renewable life insurance policy whereby Co-operators agreed to pay $500,000.00 on the death of Sanford Coulter to the designated beneficiaries. [ 2 ] On February 7, 2005, Mr. Coulter applied for an additional $250,000.00 of life insurance to be added to his existing policy. As part of the application for the additional coverage, Co-operators required Mr. Coulter complete a medical questionnaire called a

Paramedical Plus Form. Mr. Coulter completed the form with the assistance of a nurse on February 17, 2005. [ 3 ] Co-operators added the $250,000.00 Rider to the existing Policy of Insurance on March 5, 2005. [ 4 ] On April 4, 2006 Mr. Coulter designated his wife and daughter, Sandi and Tenille Coulter, as his beneficiaries. [ 5 ] Mr. Coulter died of cancer of the colon, lung and abdomen on April 5, 2006.

On April 19 and 21 respectively, Sandi and Tenille Coulter made claims for payment under the original policy and under the Rider. [ 6 ] Co-operators paid out under the original Policy but refused payment under the Rider because, according to Co-operators, Mr. Coulter failed to disclose his medical history in the Paramedical Plus Form.

Had he done so, Co-operators would have postponed his Rider application pending the results of further testing and a favourable diagnosis. [ 7 ] Co-operators refunded the premiums paid for the Rider and advised Sandi and Tenille Coulter that the Rider was void. [ 8 ] Sandi and Tenille Coulter sued to enforce the Rider contract. They maintain that the questions in the Paramedical Plus Form are ambiguous and are designed to confuse. They also maintain that Mr. Coulter disclosed what he knew in response to the specific questions he was asked.

Accordingly, Tenille and Sandi Coulter say the Rider is valid and the benefit is payable. II. The Evidence at Trial [ 9 ] The parties agreed on many of the facts and the supporting documents in a comprehensive Agreed Statement of Facts. I do not propose to restate those facts as part of this decision. The Agreed Facts are, however, attached as Appendix A. [ 10 ] There were only three witnesses in this trial: • Sandi Coulter, • Brenda Todesco, the nurse who attended upon Mr. Coulter to complete the Paramedical Plus Form, and • Peter J. Speers, an underwriting expert called by Co-operators. [ 11 ] A

summary of that evidence follows. A. Sandi Coulter’s Evidence [ 12 ] Sandi Coulter testified regarding her relationship with her husband, how they came to apply for their first life insurance policy and the additional coverage, about her husband’s previous history with gallstones and kidney stones, and about his medical visits and testing in 2005. [ 13 ] Mrs. Coulter testified that she had always been responsible for household matters. She did the books for Mr. Coulter’s business and for their Elk farm.

She attended to all of their insurance needs, and in doing so, enjoyed a longstanding business arrangement with Co-operators who was their sole insurance provider. [ 14 ] Following an extensive renovation to their home in December 2004, it was decided to increase Mr. Coulter’s insurance because he was not covered by the bank’s group policy. She testified that she requested the application form and gave it to Mr. Coulter to sign. Nothing turns on this evidence given the fact that Mr. Coulter signed the application form.

In doing so, he acknowledged he understood the language in which it was written and agreed with the requirements applicable to a Change Application. [ 15 ] Mrs. Coulter outlined Mr. Coulter’s medical attendances in 2005. Mr. Coulter went to see his regular doctor on January 17, 2005 because he was having low back pain similar to the pain he had before he had his gallbladder surgery in 2004. Mrs. Coulter testified she was aware of the Renal Colic Protocol Test Mr. Coulter had on January 28, 2005, as well as the sigmoidoscopy performed on February 14, 2005.

She testified they did not discuss the results of either test and she did not know if Mr. Coulter knew what the results were. Mrs. Coulter did not recall specifically discussing the colonoscopy, but she had no major concerns about Mr. Coulter’s health. Mrs. Coulter also testified that neither she nor Mr. Coulter had seen any of his medical records before he died. [ 16 ] Mrs. Coulter testified that on February 17, 2005 a nurse from Co-operator’s came to the Coulter’s home to help complete the Paramedical Plus Form. Mrs. Coulter was in and out of the kitchen during that process. She and Mr.

Coulter had twin toddlers at the time and she was trying to put them to bed. She did recall Mr. Coulter telling Ms. Todesco a funny story about the paper funnel he was using at the time to see if his kidney stones were passing on their own. [ 17 ] Mrs. Coulter acknowledged in cross-examination that Mr. Coulter never mentioned to her that he had been experiencing abdominal pain. [ 18 ] The Coulters’ counsel argues that the long term relationship the Coulters had with the Co-operators and the reason given for Mr. Coulter’s application for increased coverage should be significant factors in this case.

I disagree they are factors at all given the uberrimae fidei nature of a life insurance contract. The duty to disclose is codified in the Insurance Act and it was specifically included in the application form Mr. Coulter signed. Neither is it significant that Mr. Coulter did not believe there was anything wrong with him. B. Brenda Todesco’s Evidence

[ 19 ] Co-operators called Brenda Todesco to testify about the Paramedical Plus Form. Ms. Todesco testified that she had been performing medicals for insurance companies, banks and mortgage companies since 2004. Before that she had worked for 25 years as a registered nurse in the trauma unit [ 20 ] Ms. Todesco confirmed she met with Mr. Coulter on February 17, 2005 for the purpose of completing the Paramedical Plus Form. At that time, she was employed by Medisys Health Group Inc. She recalled the Coulters lived in the country, and she recalled Mr. and Mrs. Coulter.

She did not, however, recall anything about their house. [ 21 ] Ms. Todesco described her normal procedure for completing the form and confirmed that with the exception of Mr. Coulter’s signature on the form, all of the handwriting is hers. She further confirmed she obtained the information recorded in the form from Mr. Coulter. She testified she asked the questions noted in the form and the entire process, including blood, urine and paperwork, usually took about 45 minutes to complete. [ 22 ] In cross-examination, Ms.

Todesco confirmed her instructions from Co-operators were to read the questions as they appear on the form. Counsel asked Ms. Todesco specifically how she read questions 18(

e) and 18(

f) to Mr. Coulter. Ms. Todesco testified she would have asked Mr. Coulter if he had ever had, or been told that he had, or received treatment or advice for stomach disorders including: intestinal bleeding; colitis; disorder of the pancreas, stomach or intestines (including colon and rectum); or other disorder of the digestive system? She testified she added “stomach disorders” to the beginning of question 18(

e) because most people do not understand the medical terms. She initially told the Coulters’ counsel that she read the questions verbatim including the beginning question in question 18, but later indicated that applicants answering question 18 know the question refers to whether they have ever had something in their life and question 19 is restricted to the past 5 years. I conclude from her evidence that she read question 18(

e) verbatim, but added “stomach disorder” to the front of the question to make it understandable. [ 23 ] She testified that Mr. Coulter appeared to understand the questions and presented as an educated man. She acknowledged she did not know how much education he had. Her knowledge of Mr. Coulter’s educational background is not really relevant given the absence of evidence to suggest that his comprehension was in any way impaired. [ 24 ] Ms. Todesco confirmed she did not circle a condition when answering “yes” to question 18(

e) because “gallbladder” did not appear in the question. However, she knew about Mr. Coulter’s gallbladder surgery from his answer to question 11. [ 25 ] Ms. Todesco testified that she used only one line entry to explain yes answers to questions 18(

e) and 18(

f) because Mr. Coulter told her he had kidney stones at the same time he had his gallbladder removed. She also testified that she filled in question 20 based on the information she received in answer to questions 11 and 18. She testified that applicants are often not aware she is completing question 20 when she completes it, but they are required to read everything before they sign the document. [ 26 ] Ms. Todesco did not recall a discussion about a paper funnel and she did not recall the couple had young children. Ms.

Todesco confirmed she worked seven days a week and was on the road from 6:00 a.m. until 10:00 p.m. and probably completed 10 Paramedical Plus Forms a day. In read-ins from Questioning, Ms. Todesco testified that she probably completed 15 Paramedical Plus Forms a day. [ 27 ] Counsel cross-examined Ms. Todesco regarding what appeared to be page numbers missing from the Paramedical Plus Form. Ms.

Todesco testified that she did not know whether there were pages missing, but if there were, she did not know why they would be missing or what they would say. [ 28 ] No deficiency in the Paramedical Plus Form is raised in the pleadings in this action and I confirmed with the parties in argument that the authenticity of the Paramedical Plus Form was never raised in the Affidavits of Record. The form that is the subject of this lawsuit is five pages long and it contains consecutively numbered paragraphs without noticeable gaps. It bears mentioning that counsel agree Ms.

Todesco was never examined on the issue before trial. Accordingly, nothing will turn on the trial suggestion that relevant pages are missing from the Paramedical Plus Form absent evidence to demonstrate they are in fact missing and contain relevant information. [ 29 ] Further, I reject the Coulters’ counsel’s argument that I should discount Ms. Todesco’s evidence because she did not recall specific aspects of visiting the Coulters’ residence, such as the paper funnel story, and their children. I also do not think it is relevant that in Questioning Ms.

Todesco said she would fly through the questions and acknowledged she paraphrased Mr. Coulter’s responses to questions 11(

b) and (c). [ 30 ] Ms. Todesco testified regarding her standard practice which included modifying the questions within question 18 to place the disorder such as “stomach disorder” at the front of the question and to include the list as it appears in the question. She also admitted to paraphrasing the answers Mr. Coulter gave her in response to question 11. She testified that Mr. Coulter told her he had a gall bladder surgery in July, 2004 and that he had been to the doctor in January 2005 to have it checked. He said everything was good. I accept that evidence and on that basis, I accept Ms.

Todesco’s paraphrasing was accurate. [ 31 ] Ms. Todesco agreed with the Coulters’ counsel that she could not recall a lot of detail around the completion of the form except that she did recall the people and that their house was in the country. I do not consider the 45 minutes that Mrs. Coulter and Ms. Todesco both recall was required to complete the form to have been inordinately fast and the repeated nature of Ms. Todesco’s work activities I do not find it unusual that Ms.

Todesco would not recall much about completing the form beyond her standard practice. [ 32 ] She testified there were no casual conversations while they were completing the form because she tried to complete it as quickly as possible. She moved quickly through the “no” answers and provided detail for the “yes” answers. I infer from her evidence that she was focussed on her task and made efforts to be as efficient as possible. There is nothing to support the inference she was careless, notwithstanding she prepared many Paramedical Plus Forms in a day and worked 7 days a week. C. Peter Speers’ Evidence

[33] Mr. Speers was qualified as a life insurance underwriter qualified to give expert opinions on the underwriting practices andprocedures in assessing information that is material to a life insurance risk. [34] Mr. Speers testified that he has worked as a life insurance underwriter for 29 years, serving in various capacities with variousinsurers, but excluding Co-operators. Based on his review, particularly of the medical information between January 17, 2005 andFebruary 15, 2005, Mr. Speers testified that an underwriter presented with that information would have postponed Mr.

Coulter’sapplication for additional coverage because the cause of his abdominal pain had not been resolved and further testing had beensuggested. Mr. Speers testified that an insurer would not look at Mr. Coulter’s application again until those tests were done and theresults provided. [35] Mr. Speers referred to a resource, R. D. C. Brackenridge, W. John Elder, Medical Selection of Life Risks, 4th ed (London,Nature Publishing Group: 1998), as one that is used by underwriters globally. Of particular relevance is the discussion pertaining tolymphadenopathy. Mr.

Coulter’s Renal Colic Protocol, completed on January 28, 2005, identified “some questionable retroperitoneallymphadenopathy” and suggested that a dedicated abdominal study be performed with IV and oral contrast. [36] In cross-examination, Mr. Speers confirmed that apart from a recent retainer by advisors on behalf of an insured, he hasconsulted exclusively to the insurance industry since 2011. Mr.

Speers also acknowledged having testified in British Columbia in thecase of Maryn v Unum Life Insurance Co of America (1999), 9 CCLI (3d) 1; [1999] ILR I-3713 (BCSC) and to participating in paneldiscussions as part of industry education. In that regard, he acknowledged that he likely stated in the past that at least 50% of applicationsare incomplete or incorrect. [37] Mr. Speers agreed that he considered questions 11, 18(e), and 19(a), 19(

b) and 19(

e) were relevant to his opinion. He did notconsider 18(

f) to be relevant because Mr. Coulter had answered “yes” to that question. He agreed he noticed questions 18(

e) and 18(f)were given the same details, but he did not consider whether that caused any confusion. [38] In Mr. Speers’ expert report, he quotes from various medical records and there was a great deal of discussion about what Mr.Speers omitted in quoting from those records. Mr. Speers acknowledged the omissions and told counsel he did not consider theinformation to be relevant because the information was insignificant from a risk perspective.

I accept his evidence that what a doctormay say about certain things is not necessarily relevant from a risk perspective, especially where testing is continuing and, therefore, theprocess of diagnoses is incomplete. [39] Mr. Speers agreed with counsel that Dr. Walz’ report was not transcribed until February 24, 2005 which would have beenafter the Paramedical Plus Form was completed. That is not relevant to the issue of disclosure where disclosure of known facts wouldnaturally have led the insurance company to information that is relevant to their decision whether to insure the risk and on what basis. [40] Mr.

Speers confirmed every insurance company uses a different questionnaire, but when the Coulters’ counsel asked himwhether there was one standard approach to the application process and described the process used by Ms. Todesco to clarify thequestion, Mr. Speers testified that what Ms. Todesco did was a normal process and that questions in a Paramedical exam are generallyconsistent, even though they are not always worded the same. [41] Mr. Speers confirmed that while some insurance companies requested a medical, all of the insurance companies reserve theright to obtain medical records if they want them.

Typically an insurer would seek out those records during a postponement of a lifeinsurance policy application. [42] I do not consider Maryn v Unum to be at all relevant to the weight I should attach to Mr. Speers’ evidence. In Maryn vUnum, the Court found that Mr. Speers was not an impartial, objective witness because of his personal relationship with the chiefexecutive officer of the defendant insurer: at para 28. More importantly, neither expert’s opinion in that case was supported by the factsproven at trial: para 29. That is not the case here. Mr.

Speers is an experienced underwriter in life policies and has no connection to Co-operators. Further, the Coulters offer no evidence to rebut Mr. Speers’ opinions. And of course, if Mr. Coulter did disclose the materialfacts known to him then there would be no basis in fact for Mr. Speers’ opinions in this case, too. III. The Relevant Legal Principles [43] There is no real dispute between the parties regarding the applicable law.

Nevertheless, there are certain trite principles thatrelate to life insurance that are particularly relevant and bear restating. [44] First, the parties agree that the combined effect of Insurance Act, RSA 2000 c I-3, ss 567-568, as those sections existed inFebruary 2005 and April 2006, imposes an obligation on the insured to disclose every fact within the insured’s knowledge that ismaterial. A failure to disclose or a misrepresentation of such a fact renders the contract voidable by the insurer. Further, because theRider in this case had not been in effect for two years during Mr.

Coulter’s lifetime, his motives or intentions either in failing to discloseor in misrepresenting a material fact within his knowledge is irrelevant. [45] Second, contracts of life insurance are uberrimae fidei, made in the “utmost good faith”, and accordingly they impose a dutyupon the parties seeking insurance to make true and full representations of fact that are material to the insurance risk.

That is because thefacts which establish the insurance risk the insurer is being asked to take are usually known in full detail only to the parties seeking to beinsured, and are not readily available to the insurer: David Norwood, Norwood on Insurance Law in Canada, 3d ed (Toronto: Carswell:2002) at p 376. [46] Third, the insurer has the burden to prove information given during an insurance application is incorrect: Ontario MetalProducts Company v Mutual Life Insurance Co. of New York, (SCC), [1924] SCR 35, [1924] 1 DLR 127. [47] Fourth, what is or is not material is considered from the point of view of the insurer, rather than from the point of view of the

insured.

As stated in Norwood: ... good faith upon the part of the insured or the life insured arising from his or her innocent failure to appreciate the materiality of thematter in question is not considered to be a defence against a misrepresentation which is challenged as a ground for voiding the contract,if the matter is demonstrated to be material to the risk from the point of view of a reasonable insurer. [Emphasis added.] [48] The test for materiality is therefore whether the insurer would have accepted the risk without further investigation, had itknown the misrepresented or non-disclosed facts: Norwood, at p 379. [49] Fifth, evidence brought by a particular insurer of its own underwriting rules and practices will be given considerable weight,as will supporting evidence of the practice of other insurers, but it is not conclusive.

On the other hand, absence of evidence led by theclaimant of other insurers’ underwriting practices may persuade the Court that the defending insurer’s underwriting rules should be heldto be reasonable: Norwood, at p 380. [50] Sixth, generally, if a question is asked, on an application form, the uberrimae fidei nature of the contract makes the answermaterial: Van Schilte v Gore Mutual Insurance Co (1988), (BC CA), 23 BCLR (2d) 201 at 207, 29 CCLI 181(BCSC); Kehoe v British Columbia Insurance Co (1993), (BC CA), 28 BCAC 68 at para 35, 79 BCLR (2d) 241(BCCA). IV. Analysis A.

Misrepresentation [51] What is the alleged misrepresentation in this case? Co-operators alleges that Mr. Coulter did not disclose all of the facts thatwere known to him, particularly in answering questions 13, 18(e), 19 and 20. In addition, Mr. Speers included question 11 in forming hisopinion that an insurer would have postponed Mr. Coulter’s application had Mr. Coulter fully disclosed the facts known to him onFebruary 17, 2005. The questions and Mr. Coulter’s answers follow: A. Question 11. Do you have a regular physician? Mr. Coulter answered “yes” to this question and provided the name and address of Dr.

Holmes, his primary physician. (

a) When was your last visit? Mr. Coulter answered “0105” to this question. (

b) What was the reason? Mr. Coulter answered “post-op recheck – gall bladder (July/04)”. (

c) What were the results/treatment/medication/diagnosis? Mr. Coulter answered “Healed well”. B. Question 13. Are you now under observation or receiving advice or treatment from any physician or Alternative Health CareProvider or taking medication for any ailment or condition? (Alternative Health Care Provider includes herbalist, acupuncturist,chiropractor, or practitioner of homeopathy or naturopathy, etc.) Mr. Coulter answered “no”. C. Question 18. This question begins with an overall statement: For all questions answered “yes”, circle condition and give details in

section 20 below:

Question 18 (

e) is as follows: Have you ever had, or been told you had, or received treatment or advice for ... (e). Intestinal bleeding; colitis; disorder of the pancreas, stomach or intestines (including colon and rectum); or other disorder of the digestive system ? Mr. Coulter answered this question “yes”. D. Question 19 is as follows: Other than is listed in the answers above, in the past five years have you: (

a) Had any other illness, ailment or condition? Mr. Coulter answered “no”. (

b) Had any check-up, consultation, or treatment from any physician or any Alternative Health Care Provider as previously defined? Mr. Coulter answered “no”. (

e) Had an electrocardiogram, X-ray, blood tests or other diagnostic tests? Mr. Coulter answered “no”. E. Question 20 is for the details regarding any “yes” answers . Mr. Coulter provided the following details for his “yes” answer to questions 18(

e) and (f), although (

f) is not relevant to anything in this case. For the date, Mr. Coulter noted “July/04”; for the diagnosis he noted “kidney stone and gall bladder removal”; for the type of treatments/names of medication, Mr. Coulter noted “surgery”; for frequency and duration, Mr. Coulter noted “once”; for results/outcome, Mr. Coulter noted “good results”; and for physician or hospital, Mr. Coulter answered “Dr. Hall, Red Deer, Alberta”. [ 52 ] The Coulters’ counsel argues that Mr. Coulter’s answers to the questions, as he understood them in the circumstances, were accurate on February 17, 2005.

He also argues that the questions are drafted using inconsistent language and they are, therefore, ambiguous. [ 53 ] With respect to question 11, the Coulters’ counsel argues that question 11 does not ask Mr. Coulter about all of his visits, but only about his last visit. He argues that Mr. Coulter may have thought his last visit was in January 2005. That is difficult to rationalize given the relatively temporal connection between his last visit and Ms. Todesco’s attendance at his home ten days later. In any event, question 11 consists of four straightforward questions. It is clear from Mr.

Coulter’s answer to question 11(

c) that he understood the question in lay terms to mean “what happened?” He answered “healed well” as paraphrased by Ms. Todesco. [ 54 ] The evidence shows that February 7, 2005 was Mr. Coulter’s last visit to his regular physician, not January 2005. February 7 th was only ten days prior to the completion of his Paramedical Plus Form. The notes of that visit reflect that while kidney stones are referenced, Mr. Coulter went to the doctor because he was experiencing occasional blood in his stool. He may even have thought that was kidney related. The notes from his February 7, 2005 attendance state that Mr.

Coulter was being referred to Dr. Walz, a urologist with whom he had an appointment on February 15, 2005, to Dr. Heisler, a surgeon, and a CT scan is noted.

[ 55 ] It can be inferred from Dr. Holmes’ letter to Dr. Heisler on February 9, 2005 that Mr. Coulter had advised Dr. Holmes either on January 17, 2005 or on February 7, 2005, that his abdominal pain was recently becoming worse. I can also infer from Dr. Walz’ report transcribed on February 24, 2005 that Mr. Coulter had already been booked for a colonoscopy by the time Mr. Coulter saw him on February 15, 2005 because that information is discussed in what appears to be the patient history part of his report before Dr. Walz performed his physical exam.

I infer from these records that all of that information was within Mr. Coulter’s knowledge and he failed to disclose it. [ 56 ] The evidence also shows that Mr. Coulter’s stated reason for the visit in January, 2005 is inaccurate. While his gall bladder surgery is referenced in the note of that visit, I infer from the note that his purpose in attending that day was not to recheck his gall bladder surgery, but rather because he had been experiencing low back and lower abdominal pain on both sides for three to four weeks and had been experiencing soft stool for months since his gall bladder surgery.

That hardly accords with “post-op recheck” and “healed well”. [ 57 ] I agree with counsel that question 11 would not necessarily have prompted Mr. Coulter to disclose his appointments with Dr. Heisler on February 14 th , with Dr. Walz on February 15 th , or his renal colic protocol scan on January 28, 2005 because the question relates solely to visits with a regular physician. [ 58 ] However, had he disclosed the February 7, 2005 visit and the reasons for it, question 11(

b) and (

c) would have prompted his disclosure of the occasional blood in his stool and the follow-up steps that were being taken. In the read-ins from Ms. Todesco’s Questioning, she specifically states that rectal bleeding is a symptom she would record if it were disclosed. [ 59 ] Regarding question 13, counsel for the Coulters argues that question 13 was not included in Co-operators’ letter as a reason for refusing to pay or in Mr. Speers’ report to support his opinion.

It is, however, in the Amended Statement of Defence and I am unaware of any objection taken when the amendment was filed. [ 60 ] Counsel also argues that because question 13 refers to “ailment” or “condition” rather than “symptom”, and because it suggests active treatment or advice, it is understandable how Mr. Coulter could have answered “no” to question 13 in the circumstances. Counsel offered no explanation as to why that would be so and I reject this argument. [ 61 ] There is nothing dubious about the language used in question 13.

A layman could only understand the question to be whether the applicant was currently being observed by or seeing any physician about any medical problem. Implicitly, the question asks about physicians other than the applicant’s regular physician, who is the subject of question 11. [ 62 ] I reject the argument that because question 13 is drafted in the present tense, Mr. Coulter would not have been prompted to disclose the appointments he had already attended. I agree with the Coulters’ counsel that Mr. Coulter likely had not seen the reports of either Dr. Walz or Dr.

Heisler before he filled out the Paramedical Plus Form. Further, I infer that Mr. Coulter did not yet have the results of the sigmoidoscopy, and he probably did not have the advice he was sent to those doctors to obtain. It can also be inferred from Dr. Walz’ report that Mr. Coulter had already been booked for a colonoscopy that was unrelated to Mr. Coulter’s kidney issues because Dr. Walz states that he had scheduled Mr. Coulter for a follow-up test and visit two months later because he knew Mr. Coulter would be busy with investigations for his bowel difficulties. Mrs. Coulter was not asked if Mr.

Coulter was booked for his colonoscopy before he completed the form, but the report states that he was, and given the stated urgency of the referrals it is probable that Mr. Coulter was aware of his appointment before February 17, 2005. [ 63 ] Regarding question 18, the Coulters’ counsel argues that because Ms. Todesco acknowledged she helped Mr. Coulter answer the question based on his answers to question 11, and because she admitted to some rephrasing of question 18(e), absent anything being circled in question 18(e), it cannot be known for certain what Ms. Todesco exactly asked Mr.

Coulter or why he answered “yes”. [ 64 ] As I have already stated, I infer from Ms. Todesco’s evidence that she asked Mr. Coulter if he ever had, or been told he had, or received treatment or advice for stomach disorders including: intestinal bleeding etc. because most people do not understand the medical terminology used in that question on the form. [ 65 ] It is possible Mr. Coulter was answering “yes” to everything included in question 18(e), but unlikely given his answers to question 11 and the corresponding detail recorded in answer to question 20. I accept Ms. Todesco’s evidence that Mr.

Coulter’s gall bladder disclosure prompted a “yes” answer to question 18(

e) and the detail recorded in answer to question 20 confirms her evidence. [ 66 ] Further, notwithstanding Ms. Todesco filled in the detail in question 20 for Mr. Coulter’s “yes” answer to question 18(e), Mr. Coulter’s non-disclosure began earlier, with his answers to questions 11 and 13. That non-disclosure was compounded by the detail Ms. Todesco recorded in answer to question 20. [ 67 ] It is probable that an accurate and complete answer to question 11 would have prompted disclosure of the facts Mr. Coulter knew about his February 7, 2005 attendance and the follow-up steps that had been taken.

He had been referred to Dr. Walz and to Dr. Heisler; he had attended for a renal colic protocol and a sigmoidoscopy, and he had been scheduled for a colonoscopy. [ 68 ] I find that Mr. Coulter did fail to disclose facts within his knowledge when he answered question 18(

e) and when he signed the declaration at the end of the form confirming that all of the statements and answers he provided were true and complete including the detail provided in question 20. [ 69 ] Finally, the Coulter’s counsel argues that question 19 is ambiguous because it is retrospective and asks for something other than as listed in question 18. Counsel argues that if all Mr. Coulter knew is that he had kidney stones and gall bladder removal, then he had already disclosed what he knew and the follow-up testing was related to that disclosure. [ 70 ] I do not understand this argument.

There is no doubt the question is retrospective and that question 19 is asking for something that is not included in the answers to questions 11 through 18. However, question 19 is a broadly worded catch-all question. That same language was considered by the British Columbia Court of Appeal in Quinn v Canada Life Assurance Co. , 2006 BCCA 585 at para 31 ,

234 BCAC 108 wherein the Court said the following: There is nothing ambiguous in the words "other than the above" in either of the questions. It is not the function of courts, when construing a document, to search for an ambiguity. The words in question in the case at bar have an obvious meaning and purpose, and they must be taken in the way that they were intended. It is clear that they were intended to shorten the application process by eliminating repetition. That is, if there was disclosure in an earlier

section of the application, the same information did not have to be repeated. [ 71 ] Mr. Coulter disclosed his gall bladder and kidney stone issues in answer to question 18 and he disclosed a visit to his primary physician in answer to question 11. I disagree with the Coulters’ counsel that Mr. Coulter would not have disclosed anything further in answer to question 19 because he believed the visits to specialists and the diagnostic testing was all related to his kidney stones and gallbladder surgery. Question 18 speaks of advice or treatment Mr.

Coulter received for those disorders and symptoms listed whereas question 19 speaks of anything not listed in answer to question 18, like other illnesses, ailments or conditions; visits to other physicians; and diagnostic testing. [ 72 ] In answer to question 13, Mr. Coulter disclosed no information about the current observation or advice he was receiving from any physician notwithstanding he had been to Drs. Walz and Heisler, a colonoscopy had been scheduled, and he apparently had no results from any of the testing that had already been completed.

In answer to question 19(a), he failed to disclose the blood in his stool for which he sought medical advice. Even assuming he believed question 13 was intended to elicit current observations, advice or treatment, and therefore, did not apply to his appointments with Drs. Heisler and Walz which had already occurred, question 19(

b) asks Mr. Coulter if, in the past 5 years, he had had any check-up, consultation or treatment from any physician. [ 73 ] Mr. Coulter did not disclose his appointments with Drs. Walz and Heisler notwithstanding he attended them only days before he completed the Paramedical Plus Form. Finally, in answer to question 19(e), Mr. Coulter failed to disclose the sigmoidoscopy performed on February 14, 2005 or the renal colic protocol performed on January 28, 2005. [ 74 ] Even assuming Mr. Coulter did not have the results of his testing or of his visits to the specialists, that they occurred were facts within Mr.

Coulter’s knowledge, and based on Mr. Speers’ evidence, if Mr. Coulter had disclosed those facts, a reasonable insurer would have postponed his application until that testing was completed and the results were known. [ 75 ] I agree with Co-operators’ counsel that the language used in question 19 is amenable to the understanding of an ordinary lay person. The other questions are equally amenable to that same understanding. [ 76 ] It is possible Mr. Coulter forgot about his appointments with Dr. Heisler and Dr.

Walz mere days before he completed the Paramedical Plus Form, and he may have forgotten his renal colic protocol test, and that immediately following his sigmoidoscopy he was scheduled for a colonoscopy. It is undeniable he knew those facts and he did not disclose them in answering question 19. B. Materiality [ 77 ] The only evidence before the Court regarding materiality comes from Mr. Speers. The Coulters’ counsel argues Mr. Speers was very focused on the insurance industry, which is contrary to an expert’s obligation to bring a balanced viewpoint to his expert evidence. Mr.

Speers was very focused on the insurance industry. That is, of course, the scope of his retainer. Mr. Speers was asked to give an opinion about what a reasonable insurer would have done had Mr. Coulter disclosed all of the material facts that were within his knowledge. The scope of his retainer is, therefore, inherently industry focused. Further, while Mr. Speers testified that the identification of lymphadenopathy in Mr. Coulter’s diagnostic testing reports would have prompted postponement of Mr. Coulter’s application, I did not take Mr. Speers to be saying that Mr.

Coulter would have known about the doctor’s concerns regarding lymphadenopathy. Rather, Mr. Speers’ opinion is that if Mr. Coulter had disclosed his February 7, 2005 appointment and the results of that appointment, the other related information would have come to light because the insurer would have postponed Mr. Coulter’s application until that follow-up had run its course. [ 78 ] Generally, questions asked in a Paramedical Plus Form are material ( Kehoe v British Columbia Insurance Co ), so it follows that any facts known to the insured that were not disclosed are also material. [ 79 ] I accept Mr.

Speers’ evidence that a reasonable insurer would have postponed Mr. Coulter’s application had Mr. Coulter disclosed all of the facts that were within his knowledge regarding his medical history. V. Conclusion [ 80 ] In

summary, I have found the following facts: (

a) There is no ambiguity in Paramedical Plus Form questions 11, 13, 18(e), 19(a), (

b) and (

e) or 20; (

b) Mr. Coulter did not disclose all of the material facts that were known to him on February 17, 2005 when he completed the Paramedical Plus Form; and (

c) A reasonable insurer would have postponed Mr. Coulter’s application until after all of the follow-up testing had been completed and the results were known. [ 81 ] In the result, the Rider that added $250,000.00 in additional life insurance coverage would not have issued and the policy is void. [ 82 ] The Coulters’ action is accordingly dismissed with costs to Co-operators which the parties may speak to within 30 days of the

date of this decision. [ 83 ] Heard on October 14, 2014. Dated at the City of Edmonton, Alberta this 12 th day of November, 2014. M.G. Crighton J.C.Q.B.A. Appearances: Louis MH Belzil, QC for the Plaintiffs James T Neilson, QC for the Defendant Appendix A Agreed Statement of Facts 1. The Plaintiff, Sandi Coulter (“Sandi”), is an individual resident of the province of Alberta and, at all times material to this action, was the spouse of Sanford Coulter also known as Sandy Coulter (“Mr. Coulter”). 2.

The Plaintiff Tenille Coulter (“Tenille”), is an individual resident of the province of Saskatchewan and is the natural born child of Mr. Coulter. 3. The Defendant, Co-operators Life Insurance Company (“Co-operators”), was, at all times material to this action, carrying on business in the province of Alberta as an insurer pursuant to the Insurance Act , RSA 2000

Chapter I-3 (the “ Act ”) and, inter alia , issued policies of accident, sickness, and life insurance to residents of the Province of Alberta. 4. On November 5, 2003, Co-operators issued a versatile ten year renewable life insurance policy No. 000971862 (the “Policy”) whereby Co-operators agreed to pay $500,000 upon the death of Mr. Coulter to the beneficiaries designated under the Policy. 5. On or about February 7, 2005, Mr.

Coulter signed an application for change (the “Application for Change”) in order to apply to Co-operators for an additional $250,000 of life insurance (the “Versatile Term Rider”) which would be added to the existing Policy. The handwritten portion of the body of the Application for Change was completed by Brian Boshee (“Mr. Boshee”) of Advantage Insurance

Group Inc in Lacombe, Alberta, Co-operators’ agent. Mr. Boshee was an insurance agent of the Co-operators. 6. The Application for Change was sent by Mr. Boshee to Co-operators on February 10, 2005. 7. As part of the Application for Change, Co-operators required the completion of a medical questionnaire (the “Paramedical Plus Form”). With the exception of the signature on page 7 of the document, the handwritten portions of the Paramedical Plus Form were written by Brenda Todesco, a nurse employed by Medisys Health Group Inc., which was contracted by Co-operators to take the form. 8.

Co-operators added the Versatile Term Rider to the Policy which provided for an additional $250,000 in life insurance coverage effective March 5, 2005. 9. On April 4, 2006, Mr. Coulter executed a Revocable Beneficiary Designation whereby he designated Sandi as 98% beneficiary and Tenille as 2% beneficiary. 10. On April 5, 2006, Mr. Coulter died of cancer, in particular, metastatic carcinoma of the abdomen and lung, as well as carcinoma of the colon. 11.

A written claim for payment of the proceeds of the Policy and the Versatile Rider was signed by the Plaintiff, Sandi on April 19, 2006 and sent to Cooperators [sic]. A written claim for payment of the proceeds of the Policy and the Versatile Rider was signed by Tenille on April 21, 2006 and sent to Cooperators [sic]. 12. By letter dated July 11, 2006, Co-operators forwarded to each of the Plaintiff’s their respective shares of the proceeds of the $500,000 policy.

The total amount paid to the Plaintiffs at that time was $504,177.63 calculated as follows: Sum insured - $500,000.00 Premium refund - $232.65 Interest for delay of payment - $3944.98 13. Co-operators refused to pay the proceeds of the Versatile Rider. 14. On April 16, 2004, Mr. Coulter attended the Red Deer Regional Hospital complaining of right flank (side-back) pain. Mr. Coulter was seen by Dr. Colebrook (emergency medicine). 15. On April 16, 2004, Dr. Playfair (radiology) performed a KUB on Mr. Coulter.

KUB refers to a diagnostic medical imaging technique of the abdomen and stands for an x-ray of the Kidneys, Ureters, and Bladder. A KUB is typically used to investigate gastrointestinal conditions such as a bowel obstruction, constipation, and kidney stones, and may detect the presence of gallstones. For the purposes of this statement of Agreed Facts, the parties agree that if Dr. Playfair was called as a witness during these proceedings, he would testify as to the observations and opinions set out in his report dated April 16, 2004. 16. On April 17, 2004, Mr.

Coulter underwent a CT (Computed Tomography) scan (renal colic protocol) of his abdomen and pelvis. CT scanning combines special x-ray equipment with sophisticated computers to produce multiple images that can be reconstructed by the computer in many ways to give different views of various parts of the insides of the body. These images can then be examined on a computer monitor or printed and are used by radiologists in diagnosing disease. Dr. Playfair was the attending radiologist. For the purposes of this Statement of Agreed Facts, the parties agree that if Dr.

Playfair was called as a witness during these proceedings, he would testify as to the observations and opinions set out in his report dated April 17, 2004 revealing the presence of kidney stones and

gallstones. 17. On June 29, 2004, Mr. Coulter attended at the medical clinic of his family physician, Dr. Holmes. For the purposes of this Statement of Agreed Facts, the parties agree that if Dr. Holmes was called as a witness during these proceedings, he would testify as to the following regarding Mr. Coulter’s appearance on June 29, 2004: a. Mr. Coulter attended his clinic that day complaining of abdominal pain. He presented as being quite tender in the right upper quadrant of his abdomen; b. Mr.

Coulter had been recently diagnosed with gallstones and kidney stones; c. the gallbladder is a small, pear-shaped organ located in the upper-right side of the abdomen that is attached to the underside of the liver.

The gallbladder stores a fluid called bile that is produced by the liver and released into the small intestine through a duct to help digest fats; d. gallstones are hard deposits that can form in the gallbladder; e. if a gallstone lodges in the exit coming out of the gallbladder or in the duct, it can cause a blockage and symptoms may result such as sudden and rapidly intensifying pain in the upper-right portion of the abdomen and pain in the upper-central part of the abdomen which often spreads to the back or right shoulder.

If the duct is blocked, it can also block the outflow of bile from the liver which may result in obstructive jaundice (yellowing of the skin and of the eyes); f. the kidneys are two small organs located near the spine at the small of the back.

The main purpose of the kidney is to separate urea, mineral salts, toxins, and other waste products from the blood as well as excrete excess water from the body and form urine that is stored in the urinary bladder; g. kidney stones are hard deposits that can form inside the kidneys; h. if a kidney stone moves out of the kidney and into the ureter (which is the muscular duct that propels urine down to the urinary bladder) it can cause irritation and may block the flow of urine. Passing kidney stones can be very painful.

The pain typically starts in the flank (side or back), just below the ribs and moves toward the lower abdomen and groin; i. the pain associated with a gallstone may increase or decrease, or disappear entirely if the gallstone is expelled by the body; j. the pain associated with a kidney stone may also increase or decrease or disappear entirely of the kidney stone is expelled by the body; and k. Mr. Coulter was referred by Dr. Holmes to the emergency room at the Red Deer Regional Hospital. 18. On June 29, 2004, Mr. Coulter attended with Dr. Simmonds at the Red Deer Regional Hospital Emergency Room.

For the purposes of this Statement of Agreed Facts, the parties agree that is Dr. Simmonds was called as a witness during these proceedings, he would testify as to the observations and opinions set out in his report dated June 30, 2004. In particular, Dr. Simmonds scheduled Mr. Coulter for an ERCP. 19. ERCP (Endoscopic Retrograde Cholangiopancreatography) is used to diagnose and treat symptoms of the bile ducts, including gallstones. ERCP combines the use of x-rays and an endoscope, which is a long, flexible, lighted tube with a video camera at the tip.

Through the endoscope, the physician can see the inside of the stomach and duodenum, and inject dye into the ducts from the liver, gallbladder, and pancreas so they can be seen on x-rays. In this way, gallstones potentially blocking the duct from the gallbladder and the liver can be identified and removed.

20. On June 30, 2004, Mr. Coulter attended with Dr. Simmonds at the Red Deer Regional Hospital to have an ERCP performed. For the purposes of this Statement of Agreed Facts, the parties agree that if Dr. Simmonds was called as a witness during these proceedings, he would testify as to the observations and opinions set out in his report dated June 30, 2004. 21. On July 1, 2004, Mr. Coulter underwent laparoscopic gallbladder removal surgery also called a “laparoscopic cholecystectomy”. The surgery was performed by Dr. Hardy at the Red Deer Regional Hospital.

For the purposes of this Statement of Agreed Facts, the parties agree that if Dr. Hardy was called as a witness during these proceedings, he would testify as to the observations and opinions set out in his report dated July 1, 2004. 22. On July 3, 2004 Mr. Coulter was discharged from the Red Deer Regional Hospital Centre by Dr. Hardy after the gallbladder removal surgery. For the purposes of this Statement of Agreed Facts, the parties agree that if Dr.

Hardy was called as a witness during these proceedings, he would testify as to the observations and opinions set out in his report dated September 6, 2004 which states that Mr. Coulter was suffering from cholelithiasis and cholecystitis. Cholelithiasis is the presence of gallstones in the gallbladder and cholecystitis is the resultant inflammation of the gallbladder. 23. On January 17, 2005, Mr. Coulter attended at the medical clinic of his regular family physician, Dr. Holmes. For the purposes of this Statement of Agreed Facts, the parties agree that if Dr.

Holmes was called as a witness during these proceedings, he would testify as to the following regarding Mr. Coulter’s appearance on January 17, 2005 [sic]: a. he was Mr. Coulter’s regular family physician; b. Mr. Coulter attended his clinic that day complaining of lower back pain and abdominal pain on both sides; c. Dr. Holmes noted gallbladder surgery (“chole”) in July 2004; d. Dr. Holmes noted Mr. Coulter had a history of bilateral stones in his kidneys; and e. Mr. Coulter reported soft stool for months, since his gallbladder surgery. 24. A CT scan was conducted on Mr. Coulter on January 28, 2005 by Dr. Mamo.

The CT scan conducted on January 28, 2005 was a renal colic protocol which is an x-ray examination of the kidneys and other organs of the abdomen. The medical term “renal colic” refers to a type of abdomen pain commonly caused by kidney stones. For the purposes of this Statement of Agreed Facts, the parties agree that if Dr. Mamo was called as a witness during these proceedings, he would testify as to the following regarding Mr.

Coulter’s appearance on January 28, 2005 giving regard to the following: a. the CT scan was conducted specifically for the detection of radiopaque calculi, which is a medical term for kidney stones; b. kidney stones, also known as calculi, were found in both kidneys; c. Lymphadenopathy is the term for swelling of the lymph nodes – small bean-shaped organs found in the underarm, groin, neck, chest, and abdomen that act as filters for the lymph fluid as it circulates through the body; and d. the term retroperitoneal lymphadenopathy refers to the swelling of lymph nodes in the area behind the abdominal cavity. 25.

On February 7, 2005, Mr. Coulter attended at the medical clinic of his family physician, Dr. Holmes. For the purposes of this Statement of Agreed Facts, the parties agree that if Dr. Holmes was called as a witness during these proceedings, he would testify as to the following regarding Mr. Coulter’s appearance on February 7, 2005:

a. Mr. Coulter attended his clinic that day complaining of blood in his stool; b. Mr. Coulter and Dr. Holmes discussed that Mr. Coulter had a history of kidney stones; and c. the notes show that Dr. Holmes referred Mr. Coulter for: i. an appointment with Dr. Walz, a urologist on February 15, 2005; ii. an appointment with Dr. Heisler, a surgeon; and iii. a CT scan of the abdomen. 26. Pursuant to the referral by Dr. Holmes, Mr. Coulter attended at the Red Deer Regional Hospital Centre on February 14, 2005 and underwent a flexible sigmoidoscopy that was performed by Dr. Heisler. 27.

During a sigmoidoscopy, the physician inserts a short, flexible, lit tube with a video camera in the tip into the rectum and slowly guides it into the lower part of the colon. The tube is called a sigmoidoscope. The sigmoidoscope displays an image of the inside of the rectum and colon, so the physician can carefully examine the lining of these organs. 28. For the purposes of this Statement of Agreed Facts, the parties agree that if Dr.

Heisler was called as a witness during these proceedings, he would testify as to the observations and opinions set out in his report dated February 14, 2005 giving regard to the following: a. obstructive jaundice is a condition caused by obstruction of the bile ducts, as with gallstones; b. the flank area referred to is the side-back; c. adenopathy is another term for lymphadenopathy or swollen lymph nodes; d. “internal hemorrhoids” are hemorrhoids inside of the bowel; e. blood in stool can be explained by internal hemorrhoids; f. the term “polypoid mass” refers to a polyp in the colon; g. the term “colitis” refers to an inflammation of the colon; h.

Dr. Heisler reference to the GI tract refers to the human gastrointestinal tract comprised of the small intestine and large intestine, including the colon and rectum; and i. the reference to pain being “musculoskeletal in nature” is a reference to pain that originates within the muscles, joints and skeleton.

29. Pursuant to the referral by Dr. Holmes, Mr. Coulter attended with Dr. Walz, Urologist, at the Red Deer Regional Hospital Centre on February 15, 2005. For the purposes of this Statement of Agreed Facts, the parties agree that if Dr. Walz was called as a witness during these proceedings, he would testify as to the observations and opinions set out in his report dated February 15, 2005 giving regard to the following: a. Dr.

Walz’ comment that, “... a CT was done, which interestingly showed bilateral renal calculi; however, they were in the calices and did not appear to cause any type of hydronephrosis and there appeared to be no ureteral calculi” means: i. the CT performed showed kidney stones in the calices (singular: “calyx”) of the kidney. The calices are the part of the kidney that collects the urine produced by the kidneys before it travels down the ureters to the urinary bladder. ii. the ureter is a muscular tube that propels urine from the kidney to the urinary bladder.

Kidney stones in the ureter are referred to as ureteral calculi. iii. those kidney stones did not appear to cause any hydronephrosis.

Hydronephrosis is distension (dilation) of the kidney and/or ureter with urine, caused by backward pressure on the kidney when the flow of urine is obstructed either by a kidney stone that has moved from the calyx into the ureter or by external pressure on the ureter. b. the term “organomegaly” refers to the abnormal enlargement of organs. c. the term “KUB” refers to a “kidney, ureter, bladder” x-ray. d. the term “ESWL” is a reference to “Extracorporeal Shock Wave Lithotripsy”, which is the treatment that uses shock waves (high energy sound) to break a kidney stone into small pieces that can more easily travel through the urinary tract and pass from the body. 30.

On April 18, 2005, Mr. Coulter attended with Dr. Heisler at the Red Deer Regional Hospital for a colonoscopy. A colonoscopy is similar to, but not the same as, a sigmoidoscopy. The difference being related to which parts of the colon each can examine. While colonoscopy allows an examination of the entire colon and rectum (measuring four to five feet in length), sigmoidoscopy allows doctors to view only the final two feet of the colon and rectum. 31. For the purposes of this Statement of Agreed Facts, the parties agree that if Dr.

Heisler was called as a witness during these proceedings, she [sic] would testify as to the observations and opinions set out in his report dated April 18, 2005 including the discovery of colon cancer.