Case Name: Leonor v. Provident Life and Accident Company and Paul Revere Life Insurance Company
Court: United States Court of Appeals for the Sixth Circuit, on appeal from the United States District Court for the Eastern District of Michigan
Type of Claim: Long Term Disability
Claimant’s Employer: Self-Employed
Claimant’s Occupation / Job Position: Dentist
Disabilities: Status Post Cervical Spine Surgery (Neck Pain)
Definition of Disability: There were three disability policies at issue in this case. The primary policy, policy number 0102450113 (“the 0113 policy”) issued by Paul Revere Life Insurance Company, provided benefits in the event that Leonor became totally disabled, defining “total disability” as follows:
“Total Disability” means that because of Injury or Sickness:
You are unable to perform the important duties of Your Occupation; and
You are under the regular and personal care of a physician.
“Your Occupation” is defined as “the occupation in which You are regularly engaged at the time You become Disabled.” The policy provides reduced benefits in the event of “residual disability,” defined as follows:
“Residual Disability,” prior to the Commencement Date, means that due to Injury or Sickness:
(1) You are unable to perform one or more of the important duties of Your Occupation; or
(2) You are unable to perform the important duties of Your Occupation for more than 80% of the time normally required to perform them; and
Your loss of Earnings is equal to at least 20% of your prior earnings while You are engaged in Your Occupation or another occupation; and
You are under the regular and personal care of a Physician.
As of the Commencement Date, Residual Disability means that due to the continuation of that Injury or Sickness:
Your Loss of Earnings is equal to at least 20% of Your Prior Earnings while You are engaged in Your Occupation or another occupation; and
You are under the regular and personal care of a Physician.
Residual Disability must follow right after a period of Total Disability that lasts at least as long as the Qualification Period, if any.
The other two disability policies with similar language but less at stake were also at issue in this case. These two policies contain language that is arguably more favorable to the insurers than the 0113 policy, but the insurers explicitly decline to rely on language contained in those two policies but not in 0113.
Benefits Paid? Yes, initially. But subsequently, LTD benefits were terminated.
Procedural history: The doctor suffered an injury that prevented him from performing dental procedures. At the time of his injury, he spent approximately two-thirds of his time performing dental procedures and approximately one third managing his dental practices and other businesses that he owned. After initially granting coverage, his insurers denied total disability benefits after they discovered the extent of his managerial duties. They argued that, because his occupation at the time of his injury included his managerial duties and because he could still perform those duties after his injury, he was not totally disabled under the policies.
The doctor “tried to use the insurers’ internal channels to reverse these determinations, but failed.”
After discovery and cross-motions for summary judgment by the dentist and the insurers, the district court granted summary judgment to Leonor on his contract claim. With respect to the 0113 Policy, the court first determined that any reasonable jury would find that Leonor had been “under the regular and personal care of a Physician” since his injury. The district court then turned to the question of whether Leonor was “unable to perform the important duties of [his] Occupation” under the 0113 Policy. The court described the doctor’s “Occupation” as “two thirds of his time spent performing dentistry and one third of his time managing and overseeing his practices.” The court noted the insurers’ argument that the definition of Residual Disability in the policy suggested that “the important duties of Your Occupation” in the Total Disability definition necessarily referred to “‘all’ of the important duties,” and that a number of federal district courts located in other states had reached this conclusion. However, the court adopted the analyses of the Eleventh and Eighth Circuits to hold that the scope of the phrase “the important duties of Your Occupation” was ambiguous and could plausibly refer to fewer than all of the important duties. Following Michigan law, the court construed the ambiguity in favor of the dentist, the insured. The court therefore concluded that the dentist was Totally Disabled under the policy because he was unable to perform duties that had taken up two-thirds of the time spent in his pre-injury occupation.
The insurers appealed, arguing only that the district court erred by finding the phrase “the important duties” ambiguous.
Issues: The insurance companies argued that, as a matter of grammar, “the important duties” has necessarily the same meaning as “all the important duties.”
Holding: “In the context of disability insurance, reading “unable to perform the important duties of Your Occupation” to refer to each and every important duty does not serve any apparent purpose of the parties. A person is unemployable in a particular profession so long as she cannot perform a substantial proportion of that profession’s important duties. At that point, it does not matter whether there are a few important duties that she can perform, because she will still be unable to function in that profession. The insurers’ proposed interpretation appears disconnected from the risk insured against—the possibility that injury will force the insured to quit his occupation. This analysis justifies the approach of the Eighth Circuit (applying Minnesota law) and the Eleventh Circuit (applying Georgia law). Those courts have held that “‘most’ or the ‘majority’ of the [important] duties is . . . a reasonable interpretation if an insured is unable to engage in his regular occupation as a result of his inability to perform most or the majority of those duties.” Giddens v. Equitable Life Assur. Soc. of U.S., 445 F.3d 1286, 1298 (11th Cir. 2006); see Dowdle v. Nat’l Life Ins. Co., 407 F.3d 967, 968, 970 (8th Cir. 2005).
Leonor thus can reasonably be said to have become ‘unable to perform the important duties of [his] Occupation.’”
Noteworthy: ”That the insurance policies in the present case included a separate definition of “residual disability” that was less severe than total disability does not eliminate enough ambiguity to exclude Leonor from Total Disability coverage.”
Summary: The Court affirmed the district court’s grant of summary judgment to the doctor on his contract claim.