                                                                               F I L E D
                                                                        United States Court of Appeals
                                                                                Tenth Circuit

                                                                               APR 13 1999
                         UNITED STATES COURT OF APPEALS

                                     TENTH CIRCUIT                         PATRICK FISHER
                                                                                     Clerk


 TERRENCE EDWARDS MURPHY,

           Plaintiff-Appellant,
 v.
                                                             No. 98-6290
 JEFFERSON-PILOT LIFE INSURANCE                       (D.C. No. CIV-97-1747-C)
 COMPANY, a North Carolina                          (Western District of Oklahoma)
 Corporation,

           Defendant-Appellee.




                                  ORDER AND JUDGMENT*


Before PORFILIO, MCKAY, and TACHA, Circuit Judges.




       Dr. Terrence Edwards Murphy initiated a state court action against Jefferson-Pilot

Life Insurance Company for failure to pay benefits under a disability insurance contract.

The case was removed to federal district court and Jefferson-Pilot moved for summary

judgment based on omissions or fraudulent statements Dr. Murphy made in his



       *
         This order and judgment is not binding precedent, except under the doctrines of
law of the case, res judicata, and collateral estoppel. This court generally disfavors the
citation of orders and judgments; nevertheless, an order and judgment may be cited under
the terms and conditions of 10th Cir. R. 36.3.
application for insurance. Dr. Murphy appeals the district court’s grant of summary

judgment in favor of Jefferson-Pilot. We affirm.

                                             I.

       In early 1988, Dr. Murphy spent several days at a drug and alcohol treatment

program in Florida. Later that year, the Alabama State Board of Medical Examiners filed

a complaint concerning Dr. Murphy’s inability to practice medicine because of his

excessive use of drugs, narcotics, alcohol, or other substances. As a result of the

Alabama complaint, Dr. Murphy consented to enter a substance abuse treatment program,

submit to monitoring by a psychiatrist and regular blood and urine sampling, and accept a

year’s suspension and term of probation following the suspension. The Alabama medical

board later declined to reinstate his license finding insufficient evidence he had complied

with its orders. In Oklahoma, Dr. Murphy agreed to a five-year probation during which

he would refrain from using substances, undergo blood and urine tests for substance use,

continue his treatment, and report quarterly to the state medical board. In 1988 and 1989,

Dr. Murphy had drug screening tests and at least ten months of weekly or bimonthly

consultations with Dr. Gary Borrell.

       In 1993, Dr. Murphy applied for, and was issued, a disability income insurance

policy from Jefferson-Pilot. This original policy provided a monthly benefit in the event

Dr. Murphy became disabled and was unable to perform the substantial and material

duties of his profession. In 1994, Dr. Murphy applied to increase the monthly disability


                                            -2-
coverage.1 He completed the application on March 12, 1994, at which time he answered

“no” to the following questions.

              6.     Have you within the past 7 years:

                     (a)    Sought medical advice or been medically
                            treated for the use of alcohol or other drugs?
                     (b)    Been advised by a physician to reduce your
                            consumption of alcohol?
                            ….

              7.     Other than the above, have you within the past 7 years:
                     (a)    Had a medical … consultation …?
                     (b)    Been a patient in a hospital, clinic, sanatorium,
                            or other medical facility?
                     (c)    Had an … other diagnostic test?
                     (d)    Been advised to have any diagnostic test,
                            hospitalization … which was not completed?

At the request of Jefferson-Pilot, Dr. Murphy had a medical exam and answered

additional medical questions on or about April 11, 1994. Before issuing the policy,

Jefferson-Pilot requested details concerning the suspension and probations of Dr.

Murphy’s medical license. Dr. Murphy responded, “My license to practice Medicine in

the State of Alabama was under suspension for one year in 1987, due to a hearing on

hospital staff charges which were later dropped due to no validity of any charges. I have

practiced in Oklahoma since 1988 to present time, under Oklahoma license.” Jefferson-


       1
         The parties appear to dispute whether the 1994 application resulted in an increase
in monthly disability benefit coverage. The district court made no findings on this issue,
and it does not influence our analysis. Neither party contests that Dr. Murphy sued to
collect benefits under the terms of the 1994 policy, which was renewed later that year and
in 1995.

                                           -3-
Pilot also requested information such as tax returns and medical records of treatment

given by Dr. Chestnut, Dr. Murphy’s sister. Dr. Murphy did not provide the tax returns,

and Dr. Chestnut indicated she had no record of treating Dr. Murphy. Jefferson-Pilot also

became aware during the underwriting process that Dr. Murphy had visited Dr. D.L. Trent

in June 1992 following a car accident and that this information had not been included in

Dr. Murphy’s responses to questions on the 1994 application for disability insurance.

      Based on his application and the other information furnished, Jefferson-Pilot

provided Dr. Murphy disability coverage with a benefit amount of $5,000 per month and

a residual disability rider provision for which Dr. Murphy paid an additional premium; the

new policy became effective on June 1, 1994. The policy clearly stated:

             NOTICE – PLEASE READ! THIS POLICY MAY NOT
             APPLY WHEN YOU HAVE A CLAIM! This policy was
             issued based on the information entered in your application, a
             copy of which is attached to the policy. If you know of any
             misstatement in your application, or if any information
             concerning the medical history of any insured person has been
             omitted, you should write us immediately regarding the
             incorrect or omitted information; otherwise, your policy may
             not be a valid contract.

Dr. Murphy allowed his disability policy to lapse for nonpayment in October 1994 and

April 1995. Both times, Jefferson-Pilot instructed Dr. Murphy to fill out a reinstatement

application and pay all past due premiums. On the April 18, 1995 reinstatement

application, Dr. Murphy answered “no” to the following questions:

             3.     Are you taking any medication or treatment, or on any
                    special diet?

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              4.     Have you received any medical attention or advice in
                     the past 5 years?

He answered “yes” to the question:

              5.     To the best of your knowledge and belief, are you and
                     all persons named for coverage under this policy now
                     in good health and free from mental and physical
                     impairment or deformity.

The application stated he had read the foregoing answers, understood them to be true and

complete, and knew reinstatement was in accordance with the answers. The record

showed on January 9 and February 6, 1995, Dr. Murphy had consulted with Dr. Charles

Cobb who diagnosed him with Attention Deficit Disorder and prescribed Dexedrine.

       On June 16, 1995, Dr. Murphy was diagnosed as suffering from a “major

depressive order” and thereby was totally disabled and unable to return to work. He

timely submitted a disability insurance claim to Jefferson-Pilot after the contractual

ninety-day elimination period on November 3, 1995. Jefferson-Pilot responded four

months later but did not make payments. By letter of March 7, 1996, Jefferson-Pilot

notified Dr. Murphy that it was rescinding his policy and returning all previously paid

premiums. The letter indicated Jefferson-Pilot had received information Dr. Murphy had

previous treatment for a medical condition; several questions on Dr. Murphy’s

application, medical exam and reinstatement application were incorrect; and Jefferson-

Pilot believed Dr. Murphy had psychiatric treatment and hospital confinement for

substance abuse in 1988.

                                            -5-
       Arguing Jefferson-Pilot unlawfully breached the insurance contract and its duty to

deal fairly and in good faith with its insured, Dr. Murphy sued Jefferson-Pilot for

disability benefits and other damages. The district court granted summary judgment in

favor of Jefferson-Pilot.

       We review the grant of summary judgment employing the same standard used by

the district court: summary judgment is only appropriate if there is no substantial

controversy about any material fact and the moving party is entitled to judgment as a

matter of law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). The court

draws all justifiable inferences in favor of the nonmoving party. Eastman Kodak Co. v.

Image Technical Services, Inc., 504 U.S. 451, 456 (1992). Further, “the party opposing

the motion for summary judgment bears the burden of responding only after the moving

party has met its burden of coming forward with proof of the absence of any genuine

issues of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).

       Dr. Murphy contends he met his Rule 56(c) burden by showing that factual

elements charged are disputed. See Anderson, 477 U.S. at 248 (A party opposing a

properly supported motion for summary judgment must offer evidence, in admissible

form, sufficient to raise a genuine issue of material fact which exists only if the evidence

is such that a reasonable jury could return a verdict for the nonmoving party.). He argues

Jefferson-Pilot knew about his alcohol problems and treatment when it issued and

reinstated the policy and, at the very least, the extent of Jefferson-Pilot’s knowledge


                                            -6-
presents a question of fact. Further, he says he intended to provide honest answers to

Jefferson-Pilot. For example, he did not answer “yes” to questions about “treatment”

because he thought he was only being “evaluated” in 1988 to defend against allegations

of substance abuse in order to maintain his medical license and hospital privileges. He

“never perceived” he was a “patient” in a hospital, clinic, sanatorium, or other medical

facility, and therefore his answer was complete and honest.

       To defeat a summary judgment motion, however, the non-movant must do more

than simply show that there is “some metaphysical doubt as to the material facts.”

Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986).

Jefferson-Pilot argues the evidence is so “one-sided one party [Jefferson-Pilot] must

prevail as a matter of law.” Anderson, 477 U.S. at 252. Under Oklahoma law, an insurer

is entitled to avoid its obligation under an insurance policy if the applicant made

misrepresentations in his application that were fraudulent, material to the risk, and the

insurer, had it known the truth, would not in good faith have issued the policy. Okla. Stat.

tit. 36 § 3609 (1991); Burgess v. Farmers New World Life Ins. Co., 12 F.3d 992, 993

(10th Cir. 1993). Intent to deceive is required, and that intent may be inferred from the

facts. See Hays v. Jackson Nat’l Life Ins. Co., 105 F.3d 583, 587 (10th Cir. 1997).




                                            -7-
      Jefferson-Pilot argued Dr. Murphy knew material2 information to be untrue and

knowingly gave that information in violation of prohibitions against “misrepresentation”

in insurance applications. See Okla. Stat. tit. 36 § 3609. He further committed

“concealment” when he intentionally withheld facts of which he should have had

knowledge, Massachusetts Mut. Life Ins. Co. v. Allen, 416 P.2d 935, 940 (Okla. 1965),

and obviously omitted a good deal of crucial information.

      We agree the only reasonable inference is Dr. Murphy intended to conceal his

medical history and deceive the insurance company. Perhaps we can ascribe a few

misrepresentations or omissions to good faith misinterpretation of question terms like

“treatment,” but he made many such errors on several forms. The nature of the

misrepresentations, concealment, and omissions was shown by Jefferson-Pilot through

documentary evidence of Dr. Murphy’s true medical history, substance abuse treatment,

and medical board run-ins. Unlike the plaintiff in Brunson v. Mid-Western Life Ins. Co.,

547 P.2d 970 (Okla. 1976), Dr. Murphy provides no “plausible, innocent explanation,”

for the pervasive omissions and untruths. Hays, 105 F.3d at 589. Moreover, Dr.

Murphy’s argument regarding Jefferson-Pilot’s obligation to investigate obvious half-




      2
        Materiality is shown if, with the correct information, the insurance company
would not have issued the policy. Jefferson-Pilot’s brief states numerous times it would
not have insured Dr. Murphy if it had known of his alcohol problems and treatment. We
note, however, Jefferson-Pilot has provided no example of cases where it has, in fact,
denied insurance on similar grounds.

                                           -8-
truths he supplied on applications has been rejected by Vaugh v. American Nat’l Ins.

Co., 543 P.2d 1404, 1406-07 (Okla. 1975).

       We can empathize with Dr. Murphy whose profession has been gravely harmed by

his alcoholism and understand why he would need disability insurance because of his

condition. Yet, the evidence points only in Jefferson-Pilot’s favor that Dr. Murphy

misrepresented and concealed the truth in his applications. The district court properly

granted summary judgment.

       AFFIRMED.


                                          ENTERED FOR THE COURT

                                          John C. Porfilio
                                          Circuit Judge




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