Campa v. United of Omaha Life Insurance Company

Background

Corina Campa sued United of Omaha Life Insurance Company under California law for breach of contract and breach of the implied covenant of good faith and fair dealing. The dispute concerns unpaid death benefits under an individual life-insurance policy that United issued in January 2021 with a $100,000 death benefit for Campa’s son, Juan Carlos Campa. He died on November 12, 2021.

United treated the claim as contestable because the policy was less than two years old. During its investigation, United reviewed medical records, including a July 26, 2020 emergency-room note stating that Juan Carlos Campa was a “current some day smoker.” Other records either did not discuss tobacco use or described his status as unknown or as that of a never smoker. Campa maintained that her son never smoked or used tobacco products.

On April 18, 2023, United told Campa that it had rescinded the policy based on the alleged tobacco-use misrepresentation and its understanding that Juan Carlos Campa had not signed the application. After further investigation, United reversed the rescission based on the alleged failure to sign but continued to rely on the alleged material misrepresentation about tobacco use. United argued that it would not have issued the policy had it known about the alleged tobacco use.

Claims and arguments

Campa alleged that the policy remained in force when her son died and when United denied benefits, so United breached its payment obligations. She also alleged that United acted in bad faith by arbitrarily denying the claim, failing to investigate it objectively, and using improper standards.

United argued that it was entitled to judgment because it properly rescinded the policy based on a material misrepresentation in the application. It also argued that Campa’s bad-faith claim could not proceed if the policy had been rescinded. Both parties moved for summary judgment, which asks the court to rule before trial when no genuine dispute about an important fact exists and one side is entitled to judgment as a matter of law.

Court’s analysis

The court held that the cross-motions turned on disputed facts. The medical records did not establish whether Juan Carlos Campa ever smoked, much less whether he used tobacco during the 12 months before the application. The court also found a genuine dispute about whether United acted in good faith when investigating Campa’s claim and communicating its rescission decision.

The court noted that the record left significant unanswered questions, including what information United had before issuing the policy, who entered the “current some day smoker” notation, what that notation meant, and how United reconciled it with the other records.

Ruling

Judge Noél Wise denied Campa’s motion for summary judgment and denied United’s cross-motion for summary judgment. The court found that sufficient evidence supported each side as the nonmoving party such that a reasonable jury could return a verdict for either party. The opinion therefore did not resolve whether the tobacco-use statement was a material misrepresentation or whether United acted in bad faith.