# Certain Underwriters at Lloyd's, London v. Cohen

> Court of Appeals for the Fourth Circuit · May 5, 2015 · 785 F.3d 886

URL: https://www.frixlaw.com/law-library/cases/2798758

## Case

- **Full name:** CERTAIN UNDERWRITERS AT LLOYD’S, LONDON, Subscribing to Certificate Nos. 1149760, 1149761, and 1149763, Plaintiff-Appellee, v. Max Harry COHEN, M.D.; Max Harry Cohen, M.D., Chtd., Defendants-Appellants
- **Court:** Court of Appeals for the Fourth Circuit
- **Decided:** May 5, 2015
- **Citations:** 785 F.3d 886; 2015 U.S. App. LEXIS 7423; 2015 WL 2040764
- **Precedential status:** Published
- **Opinion:** Opinion by Motz
- **Judges:** Motz
- **Cited by:** 16 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/2798758

## How later opinions describe it (automated extraction)

- stating that the insurer can demonstrate falsity as a matter of law by clear and convincing evidence

## Opinion text

PUBLISHED

UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 14-1227

CERTAIN UNDERWRITERS AT LLOYD’S, LONDON, Subscribing to
Certificate Nos. 1149760, 1149761, and 1149763,

Plaintiff - Appellee,

v.

MAX HARRY COHEN, M.D.; MAX HARRY COHEN, M.D., CHTD.,

Defendants - Appellants.

Appeal from the United States District Court for the District of
Maryland, at Greenbelt. Jillyn K. Schulze, Magistrate Judge.
(8:13-cv-00311-JKS)

Argued: March 25, 2015 Decided: May 5, 2015

Before MOTZ and GREGORY, Circuit Judges, and Mary G. LEWIS,
United States District Judge for the District of South Carolina,
sitting by designation.

Reversed and remanded by published opinion. Judge Motz wrote
the opinion, in which Judge Gregory and Judge Lewis joined.

ARGUED: Erik David Frye, Upper Marlboro, Maryland, for
Appellants. Neal Richard Novak, NOVAK LAW OFFICES, Chicago,
Illinois, for Appellee. ON BRIEF: Steven E. Leder, Julie Furst
Maloney, LEDER LAW GROUP, PC, Baltimore, Maryland, for Appellee.
DIANA GRIBBON MOTZ, Circuit Judge:

Certain Underwriters at Lloyd’s of London brought this suit

against Dr. Max Harry Cohen, a general surgeon, and Max Harry

Cohen, M.D., Chtd., the corporate entity under which his

practice operated (collectively, “Dr. Cohen”), seeking a

declaration that they properly rescinded his disability

insurance policies. The magistrate judge held that Dr. Cohen

made material misrepresentations on his policy applications and

so granted summary judgment to the Underwriters. For the

reasons that follow, we reverse and remand for further

proceedings consistent with this opinion.

I.

On April 1, 2011, Dr. Cohen submitted several initial

applications for disability insurance to Petersen International

Underwriters, a surplus-lines broker authorized by the

Underwriters to enter into insurance contracts on their behalf.

Each four-page insurance application consists of questions

pertaining to an applicant’s personal, financial, and medical

information.

At issue here are Dr. Cohen’s responses to three of those

questions. When asked “Are you actively at work?,” Dr. Cohen

checked the “Yes” box. In response to the question “Are you

aware of any fact that could change your occupation or financial

2
stability?,” Dr. Cohen checked the “No” box. When asked “Are

you party to any legal proceeding at this time?,” Dr. Cohen

again checked the “No” box. Dr. Cohen signed final applications

with these answers on August 8, 2011, and the policies became

effective on that date.

On April 12, 2011, shortly after submission of his initial

applications and prior to submission of his final applications,

Dr. Cohen signed a Consent Order with the Maryland State Board

of Physicians (the “Board”), which suspended his license to

practice medicine in Maryland. The Consent Order provided that

Dr. Cohen’s suspension would begin on August 2, 2011, and

continue for a period of three months. Dr. Cohen agreed in the

Consent Order to wind down his practice and refer all patients

to other doctors during the three-month period prior to his

suspension, and supply the Board with sixty days’ notice of his

intent to become clinically active following his suspension.

The Consent Order further provided that if Dr. Cohen returned to

active practice, he would be on probation for five years, and

would be supervised for the first year. 1

On September 8, 2011, one month after the disability

policies went into effect, Dr. Cohen sought medical treatment

1
On December 19, 2012, the District of Columbia Board of
Medicine also issued an order placing Dr. Cohen on probation for
five years. It, too, imposed various limitations and
restrictions on his ability to practice medicine.

3
for injuries to his thumb and leg resulting from a fall. Later

that month, Dr. Cohen’s insurance agent provided the

Underwriters with notice of a possible claim. The Underwriters

retained Disability Management Services, Inc. to investigate and

adjust the potential claim. That investigation uncovered the

Consent Order. The Underwriters then notified Dr. Cohen that

they intended to rescind the policies, and issued a check

refunding his premium payments.

Dr. Cohen initiated the policies’ grievance procedures,

under which the rescission was affirmed. He requested an

informal review, and the rescission was again upheld. The

Underwriters, which are incorporated under the laws of England

and Wales, and have their principal places of business in

London, subsequently brought this diversity action against

Dr. Cohen, a Maryland citizen. The Underwriters asserted that

Dr. Cohen made material misrepresentations on his applications

for insurance and sought a declaration that they properly

rescinded his policies. The parties agreed to proceed before a

magistrate judge.

Dr. Cohen filed a motion in limine to exclude all

references to any proceedings, records, files, or orders by the

Board. After a telephonic hearing, the magistrate judge orally

denied the motion, concluding that the Consent Order was

admissible. The parties then filed cross-motions for summary

4
judgment. In a memorandum opinion, the magistrate judge granted

summary judgment to the Underwriters and denied Dr. Cohen’s

cross-motion. The court concluded that the Underwriters validly

rescinded the insurance policies because Dr. Cohen made material

misrepresentations in his applications.

Dr. Cohen timely noted this appeal, challenging both the

magistrate judge’s grant of summary judgment to the Underwriters

and denial of his motion in limine to exclude all references to

the Consent Order.

II.

We first address the court’s grant of summary judgment to

the Underwriters, which we review de novo. Bland v. Roberts,

730 F.3d 368, 373 (4th Cir. 2013). In doing so, we “apply[] the

same legal standards as the district court,” and “view[] all

facts . . . in the light most favorable to the nonmoving party.”

T-Mobile Ne. LLC v. City Council of City of Newport News, Va.,

674 F.3d 380, 385 (4th Cir. 2012) (internal quotations marks and

citation omitted). We can affirm a grant of summary judgment

only where there is “no genuine dispute as to any material fact

and the movant is entitled to judgment as a matter of law.”

Young v. United Parcel Serv., Inc., 135 S. Ct. 1338, 1355 (2015)

(citing Fed. R. Civ. P. 56(a)).

5
The Underwriters contend that Dr. Cohen provided materially

false answers to three questions on his policy applications:

“Are you actively at work?” (to which he answered “Yes”); “Are

you aware of any fact that could change your occupation or

financial stability?” (to which he answered “No”); and “Are you

a party to any legal proceeding at this time?” (to which he

answered “No”).

Under Maryland law, which the parties agree applies here, a

material misrepresentation on an insurance policy application

justifies the rescission of a policy issued on the basis of that

application. Stumpf v. State Farm Mut. Auto. Ins. Co., 251 A.2d

362, 367 (Md. 1969). To decide whether an insurer has validly

rescinded a policy, a court must first determine whether the

policyholder made a false statement on the application.

Monumental Life Ins. Co. v. Taylor, 129 A.2d 103, 106 (Md.

1957). If so, a court then considers whether the false

statement was material to the risk assumed by the insurer. Id.

“Ordinarily and generally, whether a representation is true or

false, or material to the risk, is for the jury to determine,”

but when the insurer demonstrates falsity and materiality “by

uncontradicted or clear and convincing evidence[,] the question

may be one of law.” Id. at 106-07 (internal quotation marks and

citations omitted).

6
Insurance policies, like other contracts, must be construed

“as a whole to determine the parties’ intention.” Beale v. Am.

Nat’l Lawyers Ins. Reciprocal, 843 A.2d 78, 89 (Md. 2004)

(internal quotation marks and citation omitted). A court will

“examine the character of the contract, its purpose, and the

facts and circumstances of the parties at the time of

execution.” Pac. Indem. Co. v. Interstate Fire & Cas. Co., 488

A.2d 486, 488 (Md. 1985). Policy terms are given “their

ordinary and accepted meanings,” and “[t]he test is what meaning

a reasonably prudent layperson would attach to the term.” Id.

Policy language is ambiguous if it is “general” and “suggest[s]

two meanings to a reasonably prudent layperson.” Id. at 489

(internal quotation marks and citation omitted).

Applying these principles, 2 we can only conclude that each

of the questions to which Dr. Cohen allegedly gave false answers

is subject to more than one reasonable interpretation, and so is

ambiguous. First, the question “[a]re you actively at work?” is

ambiguous because there are several possible interpretations of

what it means to be “actively at work.” The Underwriters

2
The parties do not dispute that the same rules apply to
ambiguities in a policy application, like that at issue here,
prepared by an insurer and made part of the insurance contract.
Peoples Life Ins. Co. v. Jerrell, 318 A.2d 519, 522 (Md. 1974).
Each policy certificate sent to Dr. Cohen specified that “[t]his
certificate” and “any attached endorsements or other papers make
up the entire contract,” and Dr. Cohen’s policy application was
attached to each certificate.

7
contend that by answering “Yes,” Dr. Cohen represented that he

was “perform[ing] surgery on a daily basis when he was, in fact,

prohibited from performing surgery.” Appellees’ Br. 26.

Dr. Cohen’s interpretation is more expansive. He maintains that

he was “actively at work” during the suspension both because he

was a licensed surgeon in the District of Columbia, and because

he continued to perform various duties related to his Maryland

practice, including administrative work, research, and

professional development. He asserts that, during his

suspension, he often arrived home from being “at work” in the

office after midnight.

Neither of these interpretations is unreasonable; both find

support in the insurance policies. As the Underwriters point

out, on another portion of the application, Dr. Cohen indicated

that his occupation was “surgeon” and his “daily duties” were

“surgery,” possibly suggesting that this was his only “work” --

“work” he lacked the authority to perform in Maryland during his

suspension. Maybe so. But the application does not define the

phrase “actively at work,” does not limit its inquiry to

Maryland work, and does not provide that being “actively at

work” requires performance of the specific “daily duties” an

applicant may have listed in the limited space available for

that response.

8
The second question to which the magistrate judge found

Dr. Cohen had provided a false response -- “[a]re you aware of

any fact that could change your occupation or financial

stability?” -- is also ambiguous. The Underwriters contend that

“financial stability” refers to an applicant’s active income,

not net worth, since disability insurance protects only active

income. Because Dr. Cohen was suspended from performing his

daily duties of “surgery” in Maryland, according to the

Underwriters, he was no longer a “surgeon” and so lacked “active

income.”

As Dr. Cohen notes, however, his Maryland suspension was

temporary, and because he could still practice in the District

of Columbia while suspended in Maryland, his “occupation” as a

“surgeon” was not in danger of changing. Furthermore, the

application does not define “financial stability,” or provide

any guidance on how an applicant would determine whether his

financial stability could “change.” “Financial stability” is a

broad term that could refer to net worth and the record

indicates that Dr. Cohen’s net worth apparently increased during

his suspension.

Finally, the Underwriters maintain Dr. Cohen’s answer of

“No” to a third question -- “[A]re you a party to any legal

proceeding at this time?” -- was also materially false. The

magistrate judge did not address whether Dr. Cohen falsely

9
answered this question because the judge concluded that the

question was ambiguous. We agree. The application does not

define “legal proceeding.” And although each party cites to

authority supporting its position as to whether the Board

proceeding is or is not a “legal proceeding,” the standard is

“what meaning a reasonably prudent layperson would attach to the

term.” Pac. Indem. Co., 488 A.2d at 488.

The Underwriters note that in executing the Consent Order,

Dr. Cohen acknowledged representation by counsel and the “legal

authority and jurisdiction of the Board.” Moreover, the Consent

Order seems, on its face, to be a legal document because it

contains findings of fact and conclusions of law. But the Board

proceeding did not involve a court, and a person subject to a

Board proceeding might well conclude, as Dr. Cohen asserts he

did, that by agreeing to the suspension of his medical license,

he would avoid a legal proceeding. Furthermore, at the time

Dr. Cohen submitted his final application, the Board proceeding

was over: he was not then a party to a Board proceeding, legal

or not, at that time. Thus, this question, too, is susceptible

to several interpretations.

In sum, the language of each question at issue here is

ambiguous. Each of these general questions contains undefined

terms susceptible to more than one reasonable interpretation,

making them ill-suited to elicit the specific type of

10
information the Underwriters claim to have requested. The Court

of Appeals of Maryland has repeatedly made clear that an

insurance application, as “a condition precedent” to an

insurer’s reliance on it, “must be reasonably designed to elicit

from [the applicant] the information which he possesses,

material to the risk.” Stumpf, 251 A.2d at 367; see also

Jerrell, 318 A.2d at 522 (noting same).

Because of the ambiguity in the language of the policy

application, we conclude that summary judgment was

inappropriate. We therefore reverse the grant of summary

judgment to the Underwriters and remand the case to the district

court. On remand, the court may consider whether extrinsic or

parol evidence can cure the ambiguity. Cheney v. Bell Nat’l

Life Ins. Co., 556 A.2d 1135, 1138 (Md. 1989) (“[i]n the event

of an ambiguity . . . extrinsic and parol evidence may be

considered”). If the court determines, based on such evidence,

that the language is unambiguous and that Dr. Cohen made

misrepresentations, it must then assess whether such

misrepresentations were material. We express no opinion on that

question. If, on the other hand, extrinsic evidence does not

cure the ambiguity, that ambiguity must be construed against the

insurer as the drafter of the instrument. Id. at 1138. We note

that it is of course within the court’s discretion, on remand,

11
to conduct any further proceedings that it finds appropriate,

including further consideration of summary judgment.

III.

On remand, the district court will have the renewed

opportunity to consider evidence of alleged material

misrepresentations by Dr. Cohen. Thus, we turn to the

magistrate judge’s denial of Dr. Cohen’s motion in limine. The

judge concluded that the Consent Order suspending Dr. Cohen’s

Maryland medical license was admissible in this case. Dr. Cohen

contends that this conclusion is contrary to Maryland law, which

requires express consent of all parties before such an Order can

be admitted in any civil proceeding.

Generally, “[w]e review rulings concerning the admission of

evidence for abuse of discretion.” United States v. White, 405

F.3d 208, 212 (4th Cir. 2005). However, because the magistrate

judge based her decision to admit the Consent Order on a

question of statutory construction, we review her interpretation

of the statute de novo. Clark v. Absolute Collection Serv.,

Inc., 741 F.3d 487, 489 (4th Cir. 2014) (per curiam).

Whether a consent order rendered by the Maryland State

Board of Physicians is admissible in a case like this one is an

issue of first impression. In this diversity case, we consider

this question “as the state court would do if confronted with

12
the same fact pattern.” Roe v. Doe, 28 F.3d 404, 407 (4th Cir.

1994). Accordingly, we begin by examining the language of the

statute. Jones v. State, 647 A.2d 1204, 1206 (Md. 1994). Under

Maryland law, as elsewhere, “[i]f the words of the statute,

construed according to their common and everyday meaning, are

clear and unambiguous and express a plain meaning, [a court

must] give effect to the statute as it is written.” Id. at

1206-07.

Title 14 of the Maryland Code, Health Occupations Article

establishes the State Board of Physicians as a state agency with

the authority to license, investigate, and discipline physicians

and other health care providers. Md. Code Ann., Health Occ.

§ 14-201 et seq. (2014); What is the Maryland Board of

Physicians?, Department of Health and Mental Hygiene: Maryland

Board of Physicians (last visited Apr. 20, 2015),

http://www.mbp.state.md.us/pages/whatis.html. The provision in

question here, Health Occupations § 14-410, states:

(a) Except by the express stipulation and consent of
all parties to a proceeding before the Board, a
disciplinary panel, or any of its other investigatory
bodies, in a civil or criminal action:
(1) The proceedings, records, or files of the
Board, a disciplinary panel, or any of its other
investigatory bodies are not discoverable and are
not admissible in evidence; and
(2) Any order passed by the Board or disciplinary
panel is not admissible in evidence.
(b) This section does not apply to a civil action
brought by a party to a proceeding before the Board or

13
disciplinary panel who claims to be aggrieved by the
decision of the Board. 3

The plain language of this statute bars the admission of “any

order” of the Board in “a civil or criminal action” except by

consent, or when “a party to a proceeding before the Board”

brings a civil action, claiming to be “aggrieved by a decision

of the Board.” Id. There is nothing in § 14-410, or in any

other portion of the statute, indicating that this admissibility

bar applies only in malpractice actions, or that there is an

exception for insurance coverage matters. Thus, solely by the

“express stipulation and consent of all parties to a proceeding

before the Board” can a Board order be admitted into evidence in

a civil proceeding like this one. Id. There was no consent

here.

Moreover, the legislative history of § 14-410 indicates

that the General Assembly intended the provision to be a

straightforward bar to the admission of all Board orders, except

with express consent of all parties to the underlying Board

proceeding. The predecessor to § 14-410 was § 130(q) of Article

43 of the Maryland Code. The legislature added § 130(q) to

Article 43 for the express “purpose of prohibiting the admission

of certain records of the [Board] into evidence in any civil or

3
The Underwriters do not contend that the sole statutory
exception contained in § 14-410(b) applies here.

14
criminal proceeding, with certain exceptions.” 1976 Md. Laws

1599 (emphasis added). 4 In Unnamed Physician v. Commission on

Medical Discipline, the Court of Appeals of Maryland noted that

§ 130(q) did just that: it “forbids the record of [Board]

proceedings to be admitted into evidence in any proceeding,

civil or criminal, except by the express consent of the

parties.” 400 A.2d 396, 397 (Md. 1979).

Nor, contrary to the Underwriters’ contention, does the

fact that the Consent Order is public somehow render it

admissible in a judicial proceeding. The Consent Order states

on its face that it “shall be a public document” under the

Maryland Public Information Act. See Public Information Act,

Md. Code Ann., Gen. Prov. §§ 4-101 - 4-601 (2014). That statute

“allows generally for the inspection and receipt of copies of

public records.” Waterkeeper Alliance, Inc. v. Md. Dep’t of

4
Section 130(q) provided, in relevant part:
The records of any proceeding before the [Board] or of
any of its investigatory bodies or any order passed by
the [Board] may not be admitted into evidence in any
proceeding, civil or criminal, except by the express
stipulation and consent of all parties to the
proceeding.
1976 Md. Laws 1599.

15
Agric., 96 A.3d 105, 108 (Md. 2014). 5 Each disciplinary order is

also publicly available on the Internet. See Md. Code Ann.,

Health Occ. §§ 14-411.1(b)-(d)(2) (requiring the Board to

“create and maintain a public individual profile” on each

licensed physician, available to the public on the Internet,

which includes “[a] description of any disciplinary action taken

by the Board . . . within the most recent 10-year period” and

“includes a copy of the public order”). But nothing in either

the Public Information Act or Title 14 of the Health Occupations

Article requires that public documents be admissible in judicial

proceedings.

The Underwriters certainly cite no authority for the

general proposition that a document is admissible solely because

it is public. Nor can they. That a document is public does not

remove it from the purview of the rules of evidence, or a

statute explicitly governing its admissibility. See The Md.

Inst. for Continuing Prof. Ed. of Lawyers, Inc., Maryland Trial

Judges’ Benchbook, Evidence, § 4-804(g)(1) (1999) (noting that

“[s]ome public records . . . must meet specific statutory

requirements to be admissible”); 10 Eric. C. Surette & Susan L.

5
The Consent Order cited to the 2009 codification of the
Public Information Act. While this appeal was pending, the
Maryland General Assembly recodified the Act at §§ 4-101 – 6-601
of the Code’s General Provisions Article, but made no changes
affecting Board orders being public documents. See 2014 Md.
Laws Ch. 94 (H.B. 270).

16
Thomas, Maryland Law Encyclopedia, Evidence, § 95 (2015) (noting

that the “admissibility of public records is subject to the

general rules of evidence” governing, for example, relevancy,

competency, materiality, and authenticity). And if a document’s

public nature does not render that document automatically

admissible, then the fact that Dr. Cohen agreed to the Order’s

being public does not mean, as the Underwriters assert, that he

“broadly consented” to its admissibility. Appellees’ Br. 16.

In sum, no statutory language or legislative history in

either the Maryland Public Information Act or Title 14 of the

Health Occupations Article or any other Maryland law indicates

that by making Board orders public, the legislature intended to

repeal or otherwise limit the admissibility bar that § 14-410 so

explicitly establishes. See Comm’n on Med. Discipline v.

Bendler, 373 A.2d 1232, 1234 (Md. 1977) (noting that “the law

does not favor repeal by implication.”). It is axiomatic that

“all statutory provisions which relate to the same subject

matter . . . should be construed together and harmonized as far

as possible.” Unnamed Physician, 400 A.2d at 401; see also

Bendler, 373 A.2d at 1234 (noting same). This well-established

approach applies here and thus requires a court to hold that,

while public, Board orders are not admissible in a civil or

criminal action absent consent, except for in an action brought

by a party aggrieved by a Board decision.

17
We note that our conclusion not only comports with the

plain language of the Maryland statutes at issue here and reads

those provisions in harmony -- it also makes good practical

sense. Requiring disciplinary orders to be public gives people

access to essential information about the qualifications of

their physicians. Barring the admission of Board disciplinary

orders in later civil and criminal actions encourages physicians

to cooperate during Board proceedings. Such cooperation

strengthens the Board’s ability to conduct proceedings that are

thorough and fair, and thereby advances the Board’s efforts to

protect the health and safety of the public. 6

IV.

For the foregoing reasons, the judgment of the district

court is reversed and the case is remanded for further

proceedings consistent with this opinion.

REVERSED AND REMANDED

6
If, on remand, the district court determines that
extrinsic evidence submitted by the parties cures the ambiguity
in the policy application questions, the court may also need to
consider whether references to the inadmissible Order or to the
Board’s proceedings against Dr. Cohen are also inadmissible.
Because the court found the Order to be admissible, that
question was neither addressed below nor properly briefed before
us. Thus, we decline to resolve it in the first instance. That
said, if the court concludes that references to the Order are
indeed inadmissible, we believe redaction may be a prudent use
of the district court’s discretion.

18

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/2798758. Public record. Not legal advice.