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Affirmed and Memorandum Opinion filed April 3, 2007.


In The


Fourteenth Court of Appeals



NO. 14-05-00956-CV










On Appeal from the 152nd District Court

Harris County, Texas

Trial Court Cause No. 02-59082



M E M O R A N D U M   O P I N I O N

Iris Reyes Soto purchased medical insurance from International Medical Group (AIMG@) while she worked for the Honduran Consulate in Houston, Texas.  She submitted application materials indicating that she had no health problems.  Subsequent to her application, Ms. Reyes underwent a hysterectomy.  IMG rescinded Ms. Reyes=s insurance coverage for all of her medical bills due to what they deemed material misrepresentations on her application for insurance.  Ms. Reyes filed suit raising numerous grounds for relief.  A bench trial was held, and the trial court entered findings of fact and conclusions of law after determining that Ms. Reyes had no valid claim.  Ms. Reyes now appeals some of those findings and conclusions.  We affirm.

Factual and Procedural Background

Iris Reyes Soto,[1] appellant, is a citizen of Honduras.  In 1999, Ms. Reyes moved to Houston to work for the Honduran Consulate.  She remained in that office until the end of 2002, when she returned to Honduras.  In July 2000, Ms. Reyes applied for insurance coverage that was specifically targeted to individuals residing or traveling for an extended period of time outside of their home countries, known as Global Medical Insurance (AGMI@).  Ms. Reyes submitted a Aclean@ applicationCthat she had no medical history to reportCand IMG approved coverage.

IMG is an Indiana Corporation and serves as managing general underwriter and insurance plan administrator for various insurance companies, including Sirius.  Sirius, a Swedish Corporation, is the insurance company for whom IMG manages GMI.  IMG issues the master GMI policy to a trust in Indiana, and then issues certificates and declarations of insurance.  Ms. Reyes received such a certificate.  We will refer to the appellees collectively as AIMG.@

Ms. Reyes learned of GMI through Rodolfo Beltran, an independent insurance broker based in Texas.  Mr. Beltran offered the insurance to the workers at the Consulate, and conducted all explanations in Spanish.  Ms. Reyes decided to apply for coverage under GMI, and Mr. Beltran provided a copy of the application in Spanish.  The application asked for answers concerning the applicant and each family member.  Ms. Reyes testified that she understood the application sought information about her, as well as her family=s, medical history.  In response to the questions regarding medical history, Ms. Reyes answered that she was in good health, without any recent medical consultations or diagnoses. 

Upon the basis of Ms. Reyes=s clean application, IMG decided to approve insurance on her behalf.  According to IMG, if a clean application is received, it is approved without further underwriting decision making.  Approximately one year later, Ms. Reyes ratified her original statements of good health.  However, an IMG examination of Ms. Reyes=s medical records belied those claims.

Although Ms. Reyes claimed that she had no knowledge of the medical diagnoses described in her medical records, the evidence indicated that her doctors discussed some of the problems with her.  The most serious problems not disclosed on her application, according to IMG=s medical expert, were the complications surrounding the female climacteric, or menopause, and her bouts of depression.  Ms. Reyes, however, attempted to discredit those diagnoses, which included vaginitis, abnormal vaginal discharge and bleeding, and a pelvic ultrasound revealing fibroid tumors. 

Due to what IMG deemed to be material misrepresentations on Ms. Reyes=s application, it rescinded her insurance coverage.  Ms. Reyes filed suit for compensatory and exemplary damages, asserting claims under the Texas Insurance Code, the Deceptive Trade Practices Act (ADTPA@), and common law claims of breach of contract, breach of express and implied warranties, breach of the duty of good faith and fair dealing, fraud, and negligence per se.  Before trial, IMG negotiated reduced payments for Ms. Reyes=s medical bills and obtained releases on its and Ms. Reyes=s behalf.  The trial court found that Ms. Reyes had made material misrepresentations to IMG and therefore that IMG was not liable under any of Ms. Reyes=s theories. 

Ms. Reyes timely filed notice of appeal and raises several issues relating to the judgment below.  She has listed her issues as: (1) defendants failed to plead and prove right to recision; (2) defendants are estopped from claiming, or waived any misrepresentation; (3) defendants= plea of payment obligates them for attorney=s fees; (4) the court=s denial of mental anguish damages to Ms. Reyes was against the great weight and preponderance of the evidence; (5) defendants violated the Texas Insurance Code and Deceptive Trade Practices Act as a matter of law; and (6) a plea of payment is no defense to attorney=s fees and to additional damages under Insurance Code section 21.55.  Within these grounds, Ms. Reyes raises several sub-issues.  To better facilitate resolution of her claims, and for the sake of clarity, we have consolidated and reorganized her issues as follows: (1) it was IMG=s burden to prove fraud necessary for recision and it failed to do so; (2) the evidence of materiality of the misrepresentation should have been excluded; (3) materiality requires expert testimony, which was not presented; (4) IMG=s failure to establish a claim for recision entitles Ms. Reyes to damages under the Insurance Code and for attorney=s fees; and (5) the case should be remanded to the trial court on questions of extracontractual damages and mental anguish.

We affirm because  the record supports the trial court=s findings and conclusions that Ms. Reyes materially misrepresented her medical condition to IMG and therefore cannot recover under any of her theories.


I.        Proving the Misrepresentation

Ms. Reyes raises numerous arguments related to the trial court=s misrepresentation findings.  We will address her claims: that IMG did not plead any elements of recision, certain evidence should have been excluded, certain expert testimony was required to prove  materiality, language used in the application did not apply to her, and finally that the evidence does not support the judgment. 



A.      IMG Pled Recision

Ms. Reyes claims that IMG failed to plead recision.  However, her argument is two fold.  First, she argues that IMG failed to plead any elements of recision.  Second, she contends that because IMG also pled accord and satisfaction, and payment, recision was not properly pled as it is inconsistent with those other pleadings.  We disagree with Ms. Reyes.

IMG=s second amended answer sets out as its second, third and eleventh defenses the affirmative defenses of material misrepresentation, fraud, and recision under the insurance contract.  That pleading complies with Texas Rule of Civil Procedure 94 concerning affirmative defenses.  Ms. Reyes has cited no authority whatsoever that would support her contention that the defense was deficiently pled.  The only authority she cites concerns the necessity of specifically pleading recision.  See Argee Corp. v. Solis, 932 S.W.2d 39, 66 (Tex. App.CBeaumont 1995), rev=d on other grounds, 951 S.W.2d 384 (Tex. 1997); Burnett v. James, 564 S.W.2d 407, 409 (Tex. Civ. App.CDallas 1978, writ dismissed); Freeman v. Anderson, 119 S.W.2d 1081, 1083 (Tex. Civ. App.CWaco 1938, no writ).  Those cases do not mandate that a party plead each particular element of recision, as Ms. Reyes contends.  Rather, they require that recision be pled specifically, rather than allowing it to be included in a general prayer for relief.  In this case, recision was specifically listed as an affirmative defense.  Therefore, Ms. Reyes=s argument of failure to specifically plead recision fails.

Alternatively, Ms. Reyes contends IMG cannot prevail on its assertion of recision because it is a remedy inconsistent with IMG=s assertion of accord and satisfaction, and payment.  In support of her argument, she cites Abilene Nat=l Bank v. Fina Supply, Inc., 706 S.W.2d 737 (Tex. App.CEastland 1986), affirmed in part, disapproved in part, Fina Supply, Inc. v. Abilene Nat=l Bank, 726 S.W.2d 537 (Tex. 1987).  According to Ms. Reyes, IMG=s pleadings were defective in that it allegedly failed to plead affirmative defenses in the alternative.  However, her reasoning is flawed in several respects. 

The Eastland Court of Appeals specifically noted that a party may plead, present evidence, and obtain special issues on inconsistent theories.  Abilene Nat=l Bank, 706 S.W.2d at 739.  Yet, the court held that the party must make an election of remedies.  Id.  That ruling was not connected to pleading requirements.  The Texas Supreme Court then considered the case, and determined that the court of appeals had erred in its analysis of that issue.  Fina Supply, 726 S.W.2d at 541.  The supreme court explained that the doctrine of election of remedies is designed to prevent a party that has obtained a specific form of remedy from obtaining a different and inconsistent remedy for the same wrong.  Id.  The supreme court also noted that the doctrine is not favored and its scope should not be extended.  Id.  The supreme court=s reasoning did not affect or alter pleading requirements.

Ms. Reyes has not explained in what way the doctrine of election of remedies is implicated in this case.  Indeed, we cannot discern in what way the trial court=s ruling allows for two different and inconsistent remedies for the same wrong.  Additionally, to accept Ms. Reyes=s argument would expand the scope of the doctrine beyond its intention so as to affect pleading requirements.  Clearly, that is not favored.  See id.  We overrule this issue.

B.      Trial Court did not Abuse its Discretion in Admitting Evidence

Ms. Reyes argues that Dr. Kete Cockerel=s testimony should have been excluded because he was allegedly not designated as an expert prior to trial, and IMG failed to disclose his mental impressions and opinions prior to trial.[2]  IMG counters that its disclosure was in compliance with the docket control order because it designated Dr. Cockerel as an expert,  disclosed the topic of his testimony, and gave the basis for his testimony at trial.  IMG also notes in its brief that Ms. Reyes had almost an entire year to depose Dr. Cockerel, but chose not to do so.

Whether to admit or exclude evidence is within the trial court=s sound discretion.  State v. Bristol Hotel Asset Co., 65 S.W.3d 638, 647 (Tex. 2001).  A trial court abuses its discretion when it acts without regard to any guiding rules or principles.  Id.  Determining if a trial court abused its discretion in making an evidentiary ruling is a question of law.  Id.  Of course, even if the trial court abused its discretion in admitting the evidence, we will not reverse unless the error probably caused the rendition of an improper judgment.  See Moore v. Memorial Hermann Hosp. Sys., Inc., 140 S.W.3d 870, 873 (Tex. App.CHouston [14th Dist.] 2004, no pet.).

Texas Rule of Civil Procedure 194.2(f) requires the following disclosures for any testifying expert:

(1) the expert=s name, address, and telephone number;

(2) the subject matter on which the expert will testify;

(3) the general substance of the expert=s mental impressions and opinions and a brief summary of the basis for them, or if the expert is not retained by, employed by, or otherwise subject to the control of the responding party, documents reflecting such information;

(4) if the expert is retained by, employed by, or otherwise subject to the control of the responding party:

(A) all documents, tangible things, reports, models, or data compilations that have been provided to, reviewed by, or prepared by or for the expert in anticipation of the expert=s testimony; and

(B) the expert=s current resume and bibliography


Tex. R. Civ. P. 194.2(f).

Ms. Reyes=s chief complaint relates to the alleged failure to designate Dr. Cockerel as an expert and the alleged failure to provide the Ageneral substance of the expert=s mental impressions and opinions and a brief summary of the basis for them . . . .@  Id.  The trial court entered a docket control order regarding this, and other discovery issues and stated that a failure to comply would be governed by rule of civil procedure 193.6.  See Tex. R. Civ. P. 193.6.  Under Rule 193.6, a party who fails to make, amend or supplement a discovery response in a timely manner may not introduce in evidence the material or information that was not timely disclosed or offer the testimony of a witness who was not timely identified.  Tex. R. Civ. P. 193.6(a).

IMG disclosed the following description of the areas of Dr. Cockerel=s testimony: APlaintiff=s medical history and condition@ and A[t]hat plaintiff suffered from various pre-existing medical conditions that had they been disclosed to defendants, would have disqualified plaintiff from participation under the GMI policy.@  This description put Ms. Reyes on notice as to the general substance of Dr. Cockerel=s opinion and mental impression concerning her insurability under the GMI plan, and that the basis for that belief was her prior undisclosed medical history and condition.  Therefore, IMG complied with Rule 194.2(f).  The record does not indicate Ms. Reyes attempted to depose Dr. Cockerel regarding his impressions and the basis of those impressions, and so her claims of unfair surprise or prejudice are not convincing.  As IMG complied with Rule 194.2(f), the trial court did not abuse its discretion in allowing Dr. Cockerel=s testimony.  We overrule Ms. Reyes=s issue.

C.      Adequate Testimony was Admitted on the Issue of Materiality

In her next issue, Ms. Reyes posits that an actuary was required in order for IMG to prove materiality.  Additionally, she argues that Dr. Cockerel, who testified regarding the materiality of Ms. Reyes=s misrepresentations, provided merely conclusory opinions and cannot support the judgment.  These arguments relate to arguments regarding burden of proof, what proof was offered, and the sufficiency of that proof.  We disagree with Ms. Reyes=s contention that an actuary was required to testify, and also her characterization of Dr. Cockerel=s testimony.

As a preliminary matter, we must consider Ms. Reyes=s claim that an expert is required to testify regarding materiality.  Neither party has cited any binding authority on the question of whether or not an expert is required on the issue of materiality; certainly, neither party has provided any authority on whether actuarial testimony is required.  In our research, we have found no Texas case requiring any particular expertise on the question of materiality.  Indeed, the test for whether a representation is material is whether it actually induced the insurance company to assume the risk.  See Darby v. Jefferson Life Ins. Co., 998 S.W.2d 622, 628 (Tex. App.CHouston [1st Dist.] 1995, no writ).  That test contains no requirement of expert testimony, much less that of an actuary.  As we explain below, there was ample evidence for the proposition that Ms. Reyes=s misrepresentations caused IMG to provide her insurance without further investigation. 

Although there is no particular expert testimony requirement on the issue of materiality, IMG provided testimony from Dr. Cockerel, who makes all final underwriting decisions for IMG when an applicant=s medical history is an issue.  Although IMG will automatically underwrite an applicant when, as here, the applicant warrants that her health history is perfect, it will conduct further review depending on what medical problems are revealed in the application.  Dr. Cockerel makes those final determinations and testified that in this case, without question, had IMG known about Ms. Reyes=s problems surrounding the female climacteric and her history of depression, he would not have approved her application. 

Dr. Cockerel=s testimony was not merely conclusory; he discussed each one of Ms. Reyes=s undisclosed medical problems.  Dr. Cockerel then explained that some of the problems would not have prevented approval of her application, while twoCdepression and the female climacteric[3]Cwould have.  Although Ms. Reyes took issue with Dr. Cockerel=s conclusions, she did not try to rebut his conclusions except to argue that Dr. Cockerel was not an actuary.  However, Dr. Cockerel provided the testimony required: the misrepresentation of perfect health actually induced IMG to assume a risk it otherwise would not have assumed.  Dr. Cockerel=s testimony was not merely subjective, but rather was based on his experience, training, and experience as a physician and the person who makes final underwriting decisions.  The trial court was free to accept or reject his testimony.  We overrule this issue.

D.      The Language in the Application Applied to Ms. Reyes

Next, Ms. Reyes contends within her argument that there was no proof of a misrepresentation that the Spanish version of the application referred only to her family, and not to her, and therefore she did not make any misrepresentations.  However, the trial testimony and application language clearly indicated that the application asked for questions to be answered for each person listed on the applicationCincluding the applicant.  Additionally, Ms. Reyes testified that she understood the application questions to apply to her.  She testified, however, that she believed herself to be in good health and that she had no medical history to report.  Therefore, her testimony established that she gave the answers with the intent that the insurance company rely on them regarding her personal medical history; she reaffirmed those same answers later when the insurance company asked her to ratify her original statement of good health.  Cf. Darby, 998 S.W.2d at 628 (stating that intent to deceive may be established as a matter of law when the applicant warrants the representations to be true).  We overrule Ms. Reyes=s issue.

E.      The Evidence Supports the Trial Court=s Judgment

Finally, although Ms. Reyes does not brief any issue specifically as a legal-sufficiency challenge, we will address her fragmented claims that IMG did not carry its burden of proof and that there was no evidence that her medical condition prior to insurance coverage amounted to a material misrepresentation.  Ms. Reyes= issue relates to her assertion that actuarial evidence was required, that she made no misrepresentation pursuant to the language of the questionnaire, and that IMG never proved she made any material misrepresentations.  We have already addressed this issue to some extent.  However, we will set out the appropriate standard of review for a no-evidence challenge, and highlight the evidence supporting the trial court=s judgment.

A trial court=s findings are reviewable for legal and factual sufficiency by the same standards that are applied in reviewing evidence supporting a jury=s answer.  Catalina v. Blasdel, 881 S.W.2d 295, 297 (Tex. 1994).  In determining whether legally sufficient evidence supports the trial court=s findings of fact, we consider the evidence in the light most favorable to the challenged finding and indulge every reasonable inference that would support it.  See City of Keller v. Wilson, 168 S.W.3d 802, 822 (Tex. 2005).  We must credit favorable evidence if a reasonable factfinder could and disregard contrary evidence unless a reasonable factfinder could not disregard it.  See id. at 827.  We must determine whether the evidence at trial would enable a reasonable and fair‑minded person to find the facts at issue.  See id.  The factfinder is the sole judge of the credibility of the witnesses and the weight to give their testimony.  See id. at 819.  Evidence is conclusive only if reasonable people could not differ in their conclusions.  See id. at 816.

In this case, there was definitive evidence that Ms. Reyes had numerous medical conditions diagnosed at the time she submitted her application to IMG.  These conditions included: (1) treatment of the female climacteric involving several complicating diagnoses such as fibroid tumors, vaginal prolapse, and abnormal bleeding; (2) depression; (3) gastro-esophageal reflux; (4) irritable colon; (5) migraines; (6) hypertension; (7) gastritis; and (8) iron deficiency anemia.  Ms. Reyes did not disclose any of these diagnoses to IMG, though she testified that she understood IMG was interested in her medical history. 

Ms. Reyes testified that she disagreed with some of the diagnoses, and she also testified that she did not know of others.  However, the medical records indicated that the treating physicians informed Ms. Reyes of these medical conditions.  Further, Ms. Reyes=s  testimony was somewhat contradictory in that she claimed not to know about certain diagnoses, while at the same time re-characterizing those same diagnoses as known but simply not serious, thus, not worthy of disclosure to IMG.  However the application language applied to each person listed on the application, and Ms. Reyes understood the application wanted to know about her medical history.  The trial court, therefore, could conclude that Ms. Reyes understood that she had received these various diagnoses and simply chose not to disclose them.

There is evidence to support the finding Ms. Reyes specifically disputes: none of the pre-existing medical conditions Awas of a degree or nature to increase insurer=s risk.@  Dr. Cockerel provided the only testimony concerning IMG=s risk relative to the pre-existing conditions.  That uncontroverted testimony was that the problems surrounding her treatment for the female climacteric and her depression made her uninsurable under the GMI plan.  Moreover, the evidence was clear that Ms. Reyes=s complications during menopause were worsening and were not responding to treatmentCultimately leading to the very surgery at issue in this case.  The evidence was legally sufficient.  Rather than having no evidence to support the trial court=s judgment, the evidence was almost exclusively in support of the trial court=s judgment.  We overrule this issue.



II.       Ms. Reyes cannot Receive Damages

Ms. Reyes finally asks this court to provide her with damages, or at minimum a remand for a determination of statutory extracontractual damages and attorney=s fees.  However, because we affirm the trial court=s determination that the insurance contract was properly rescinded, Ms. Reyes is not eligible for damages.  Therefore, we overrule Ms. Reyes=s remaining issues, which we have restyled as issues four and five.


Having overruled all of appellant=s issues, we affirm the judgment of the trial court.






/s/      John S. Anderson






Judgment rendered and Memorandum Opinion filed April 3, 2007.

Panel consists of Justices Yates, Anderson, and Hudson.

[1]  At trial, appellant made clear that she preferred to be addressed as Ms. Reyes.  Therefore, we refer to her by that name in this opinion.

[2]  Along this line of argument, Ms. Reyes contends that IMG never disclosed exactly what misrepresentation IMG alleged she had made.  This issue goes specifically to her estoppel and waiver argument.  However, that claim was rejected by the trial court, a ruling which is supported by the record.  First, IMG informed her of which treating doctors= conclusions were in conflict with her answers on the application.  Second, Ms. Reyes=s testimony at trial indicated that, at a bare minimum, she knew at the time of her correspondence that she had been diagnosed with fibroid tumors, and she disagreed with that medical evaluation.  Her testimony, therefore, indicates that she had full knowledge of what was in her medical records, and further understood that those records did not support her claims of good health.  Finally, as we discuss in this issue, IMG disclosed that it would rely on Dr. Cockerel to prove up the material misrepresentations, and Ms. Reyes never deposed him to explore his conclusions or the bases for those conclusions.

[3]  Ms. Reyes asserts in her brief, under her second issue, that menopause is a normal occurrence for women her age.  Therefore, because IMG should have been aware of the condition, it is not a valid ground upon which coverage could be denied.  However, Ms. Reyes was not experiencing normal menopause.  She suffered from numerous complications listed in her medical records and eventually required surgery.  Therefore, it is inaccurate to portray her condition as a normal medical condition that IMG should have understood and foreseen from her answers of good health.