Pehle v. Farm Bureau Life Insurance

Gary and Renna Pehle (“Appellants”), husband and wife, applied for life insurance with the Farm Bureau Life Insurance Company (“Farm Bureau”) in Wyoming in 1999. As part of the application process, the Pehle’s submitted a blood test. The test was contracted to LabOne, an independent company located in Kansas. Both Appellants tested positive for Human Immunodeficiency Virus (“HIV”). LabOne reported the results to Farm Bureau and the Kansas Department of Health, as required by law.

Farm Bureau contacted the Pehle’s, informing them that their application was denied due to the results of their blood tests and that Farm Bureau would release the results to their physician upon written request. The Pehle’s made no action at the time. In 2001, Renna Pehle was diagnosed with Acquired Immunodeficiency Syndrome (“AIDS”). The Appellants then consented to the release of their blood test and saw the results. Appellants sued Farm Bureau claiming it was negligent in failing to inform them that they were HIV positive when it had knowledge from their test results.

The district court found no duty was owed by Farm Bureau, LabOne, or LabOne’s medical director and thus granted summary judgment for the defendants. Appellants appealed, claiming Farm Bureau owed a duty under Wyoming common law to notify applicants infected with sexually transmitted diseases when the infected status was discovered in the application process, that the notice of consent agreement signed by Appellants created a duty of Farm Bureau and LabOne to inform them of their HIV status, and that the Wyoming statutes imposed negligence per se on LabOne.

The Court held that Wyoming law requires that “if an insurance company, through independent investigation by it or a third party for purposes of determining policy eligibility, discovers that an applicant is infected with HIV, the company has a duty to disclose to the applicant information sufficient to cause a reasonable applicant to inquire further.” The Court stated that for a negligence claim to be successful in Wyoming, defendants needed to owe a duty to the plaintiff and the breach of that duty had to be the proximate cause of the injuries suffered by the plaintiff. Wyoming law imposed a limited duty to disclose on Farm Bureau. The court found that whether or not a breach of that duty by Farm Bureau occurred and was the proximate cause of plaintiff’s injuries was a question for a finder of fact, specifically a jury.

The Court found that Farm Bureau had a duty to the Pehle’s under common law but LabOne and its medical director did not. LabOne had only an attenuated relationship with the Pehle’s and did not have a duty under common law negligence theory. In its determination of the existence of a common law duty of Farm Bureau, the Court attempted to predict what the Wyoming Supreme Court would do and determined that the relationship between Farm Bureau and the Pehle’s was a confidential relationship, that was sufficient to create a limited duty.

The Court found that neither Farm Bureau nor LabOne had a duty under contract to inform the Pehle’s of their HIV status. First, LabOne was not a party to the agreement. Second, the Court found that the words “the Insurer may contact” in the agreement did not make the contacting compulsory.

Finally, the court found that the Appellants could not bring suit against LabOne or its medical director under negligence per se as the Appellants were not members of a “class of persons the statute was intended to protect and [their] injury is [not] of the type the statute was intended to prevent.”

“We do not think that insurance companies must exist to treat or diagnose HIV in order for a duty to arise that necessitates that applicants be properly put on notice to inquire further.” (p. 903).

 “[I]f an insurance company, through independent investigation by it or a third party for purposes of determining policy eligibility, discovers that an applicant is infected with HIV, the company has a duty to disclose to the applicant information sufficient to  cause a reasonable applicant to inquire further.” (p. 903).