Say you apply for life insurance.  The insurer tests your blood and urine and finds that you have too much of two chemicals — alkaline phosphatase and creatinine.  The first puts you at higher risk for several diseases, but the second reflects poor kidney function.  The insurer discloses to you the alkaline phosphatase but not the creatinine.  It issues you a policy at a "non-preferred rate due to the high alkaline phosphatase levels".  Your kidney disease continues to progress, and eventually you suffer kidney failure, necessitating a transplant.

Do you have a negligent misrepresentation claim against the insurer for disclosing one problem but not a worse one?  Not according to the Fifth Circuit.  Applying Louisiana law, the court held as a matter of law that "[a] reasonable person would have thought that New York Life did the tests only for its benefit and reported only what it thought actuarially relevant, not medically relevant."  McLachlan v. New York Life Ins. Co., No. 06-30449 (5th Cir. May 30, 2007).

Blawgletter doesn’t share the court’s Olympian view of what a reasonable person would have thought.  That strikes us as a prototypical jury question.  And we can imagine a fair and honest jury finding that Michael J. McLachlan reasonably believed that New York Life’s report of one "actuarially relevant" condition implied the non-existence of another, even more pertinent one.

Barry Barnett

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