When they applied for life insurance from Farm Bureau Life Insurance Company ("Farm Bureau") in 1999 Wyoming resident Gary Pehle and his wife Renna did not know they were infected with the Human Immunodeficiency Virus ("HIV"). Farm Bureau collected the initial premium and arranged for the Pehles to obtain blood tests as part of the application process. Farm Bureau forwarded the blood samples for analysis to LabOne, an independent laboratory, which reported the Pehle’s HIV status to the insurance company. Farm Bureau then rejected the Pehle’s application and advised them that it would disclose the reason for their rejection to their physician if they desired. The Pehle’s did notfollow up to learn the reason for the rejection.

Two years later Renna Pehle was diagnosed with AIDS. They looked into their medical records and learned that Farm Bureau had known of their HIV-positive status when it rejected their life insurance application. The Pehles sued Farm Bureau, LabOne, and LabOne’s medical director Dr. J. Alexander Lowden for negligence,for failing to tell themthey were HIV-positive. The District Court found that Wyoming law recognized no duty running from a life insurance company to its applicants or from a laboratory hired by the life insurance company to its applicants. The court granted summary judgment in favor of all three defendants. The Pehles appealed.

Questions:

1. Did Farm Bureau, LabOne, and Dr. Lowden have a duty to notify the Pehles of their HIV-positive status?

2. What is summary judgment?

3. Why did Farm Bureau distinguish between misfeasance—acting wrongfully—and nonfeasance—failing to act?

4. Did the court agree?

5. It appears that the Pehles never asked Farm Bureau why it rejected their application. If they had shown the slightest curiosity about the reason, isn’t it likely that they would have learned then of their HIV status?

6. This case involves a federal court applying Wyoming law and ruling on a question that the Wyoming Supreme Court has not considered. Is that appropriate?

7. Doesn’t this case create a troubling precedent for life insurance companies? How can they know which medical conditions uncovered during blood work will impose on the company a duty to notify the applicant?

8. But couldn’t a future plaintiff use this case as precedent if an insurance company failed to notify the plaintiff that it discovered some other serious disease during a blood test?