Duquette v. National Life Insurance Company

Filing 32

MEMORANDUM OPINION. Signed by Judge R David Proctor on 8/11/2016. (AVC)

FILED
2016 Aug-11 PM 04:33
U.S. DISTRICT COURT
N.D. OF ALABAMA

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION

GEORGE R. DUQUETTE, M.D.,
Plaintiff,
v.
NATIONAL LIFE INSURANCE
COMPANY.,
Defendant.

}
}
}
}
}
}
}
}
}
}

Case No.: 2:15-cv-0316-RDP

MEMORANDUM OPINION
I.

Introduction
This case is before the court on Plaintiff’s Motion for Partial Summary Judgment (Doc. #

21) and Defendant’s Motion for Partial Summary Judgment (Doc. # 24), both of which were
filed on March 31, 2016. The Motions are fully briefed and supported by the parties’ evidentiary
submissions. (Docs. # 22, 23, 25, 26, 28, 29, 30, 31).
In this case, Plaintiff alleges Defendant violated its contractual obligations, acted in bad
faith in denying one of his claims, and seeks a Declaratory Judgment that he is entitled to
benefits from Defendant. (Doc. # 1-1, ¶ 9-11). Plaintiff contends that the undisputed facts show
that Plaintiff’s debilitating condition was caused by an accident (Doc. # 22, p. 11), and that
Plaintiff is entitled to his partial/residual claim if a jury concludes that his notice was reasonable
(Doc. # 22, p. 13). Defendant contends that Plaintiff failed to satisfy the notice requirement of
the policies on his partial/residual claim (Doc. # 25, pp. 17-23), Defendant is entitled to
Summary Judgment as a matter of law on the issue of bad faith (Doc. # 25, pp. 23-29), and
Plaintiff is not entitled to future benefits (Doc. # 25, pp. 29-30). After careful review, the court

finds that Plaintiff’s partial motion for summary judgment is due to be denied and Defendant’s
partial motion for summary judgment is due to be granted.
II.

Relevant Undisputed Facts 1
Plaintiff has been a board certified plastic surgeon working in the Birmingham area for

many years. (Doc. # 1-1). Plaintiff turned 65 on April 13, 2016. (See Doc. # 1-1, p. 6).
Beginning in the 1980’s, Plaintiff purchased six National Life disability insurance policies.
(Docs. # 23-1; 23-2). The total monthly payout on these policies, upon a finding of total
disability, would equal $14,100.00. (Doc. # 23-10, p. 5). Two of the six policies require notice
of disability within twenty days after the commencement of any disability. (Doc. # 23-2). The
remaining four policies require notice within thirty days. (Id.). All six policies allow for an
exception to the notice requirement if notice cannot reasonably be given in the time specified, so
long as the notice of disability is given as soon as possible. (Id.). All six policies agree to pay
out their full amount if Plaintiff is totally disabled due to accident or sickness, so long as Plaintiff
is under age 65. (Id.). For total disability due to sickness, the policies pay a reduced benefit
amount after age 65. (Doc. # 23-1). That reduction is equal to 50% or 35% of the benefit,
depending on Plaintiff’s age at the total disability date. (Id.). If total disability occurs due to an
accident, the total disability benefits are not reduced after age 65. (Doc. # 23-2).
In 1996, Plaintiff began experiencing neck pain and stiffness. (Doc. # 26-2, p. 2). This
condition worsened, eventually requiring a two-level cervical fusion surgery at C5-7. (Id.).
After the surgery, Plaintiff maintained a full and active surgical practice until April 2009. (Id.).

1

The facts set out in this opinion are gleaned from the parties’ submissions of facts claimed to be
undisputed, their respective responses to those submissions, and the court’s own examination of the evidentiary
record. All reasonable doubts about the facts have been resolved in favor of the nonmoving party. See Info. Sys. &
Networks Corp. v. City of Atlanta, 281 F.3d 1220, 1224 (11th Cir. 2002). These are the “facts” for summary
judgment purposes only. They may not be the actual facts that could be established through live testimony at trial.
See Cox v. Admr. U.S. Steel & Carnegie Pension Fund, 17 F.3d 1386, 1400 (11th Cir. 1994).

2

Starting in April 2009, Plaintiff began having increased pain in his neck, muscle spasms, and
began losing his full range of motion. (Id.). Between 2009 and 2011, Plaintiff began reducing
his practice because of how difficult his condition made performing surgery. (Id.). At this time,
Plaintiff did not inform Defendant that he was partially disabled because he did not want to be
forced to end his practice. (Docs. #23-7, p. 36).
On December 25, 2011, Plaintiff was involved in an automobile accident which caused
his condition to worsen, at least temporarily. (Doc. # 26-2, p. 2). This further limited his ability
to perform surgeries and resulting in increased loss of income. (Id.). Plaintiff began experiencing
paresthesia in his right arm and hand, though these symptoms eventually subsided. (Doc. # 262). Plaintiff then developed continuing pain, severe spine movement limitations, and paresthesia
in his left arm and hand.

(Doc. # 23-11, pp. 9-10).

Because of these issues, Plaintiff

discontinued working and closed his office on June 28, 2013. (Doc. #26-2). Plaintiff asserts that
he became totally disabled on June 28, 2013, eighteen months after the accident, and that he
continues to be totally disabled. (Doc. # 23-8, p. 19).
Plaintiff provided notice of his claim on July 20, 2013. (Doc. #26-2). Plaintiff asserted
both a claim for residual disability benefits from January 1, 2009 to the date of his total
disability, and a total disability claim based on his last day of work: June 28, 2013. (Id.).
Defendant evaluated Plaintiff’s total disability claim, and found him to be totally disabled due to
the limitations Plaintiff had with his left arm. (Doc. # 23-10, pp. 6-7, 13-14).
Many medically trained experts have examined either Plaintiff or his medical records in
an attempt to conclude whether Plaintiff’s left arm issues were caused by his automobile
accident. Plaintiff relies primarily on the testimony and opinion of his treating orthopedic
surgeon, Dr. Jeffrey Wade. (See Doc. # 22, p. 4). Defendant relies on the testimony of Dr.

3

Wade, Dr. Kenneth Jaffre (Dr. Wade’s partner), and Dr. Edward Dunn, a Fellow of the American
Academy of Orthopedic Surgeons. (See Doc. # 25, p. 12).
These experts agree that Plaintiff’s paresthesia, on either his left or right arm, did not
exist prior to his accident. (Docs. # 23-8, pp. 9-10; 23-11, pp. 8-10). Drs. Dunn and Wade, the
medical experts who spoke on the issue, agree that Plaintiff’s pre-existing medical condition,
degenerative disc disease, made Plaintiff more vulnerable to the exacerbation of his existing
condition as a result of an injury, such as one sustained in an automobile accident. (Docs. # 238, p. 14; 23-11, p. 10).
After reviewing his claim, Defendant concluded that Plaintiff’s total disability in June
2013 was caused by his degenerative disc disease, and not by his December 2011 automobile
accident. (Doc. # 26-6, p. 19). Defendant made this determination after conducting its claim
investigation, and reviewing the materials Plaintiff provided, his medical records, and the
medical expert testimony submitted. 2 (Doc. # 26-6, pp. 19-20). Defendant did not evaluate
Plaintiff’s residual claim because Defendant believed that Plaintiff’s four-and-a-half year delay
in reporting that claim was not supported by a reasonable explanation. (Doc. # 23-10, p. 9).
III.

Summary Judgment Standard
Under Federal Rule of Civil Procedure 56(c), summary judgment is proper “if the

pleadings, depositions, answers to interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any material fact and that the moving
party is entitled to judgment as a matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317, 322
(1986).

The party asking for summary judgment always bears the initial responsibility of
2

Plaintiff’s second count alleges that Defendant acted in bad faith when it concluded that sickness, and not
injury, caused Plaintiff’s total disability. (Doc. # 1-1). Plaintiff contends that Defendant could not have used these
sources to conclude that Plaintiff’s total disability was caused by sickness because no reasonable person could make
that conclusion based upon the objective evidence and facts. For reasons explained below, the court disagrees with
this assertion.

4

informing the court of the basis for its motion and identifying those portions of the pleadings or
filings which it believes demonstrate the absence of a genuine issue of material fact. Id. at 323.
Once the moving party has met its burden, Rule 56(c) requires the non-moving party to go
beyond the pleadings and – by pointing to affidavits, or depositions, answers to interrogatories,
and/or admissions on file – designate specific facts showing that there is a genuine issue for trial.
See id. at 324.
The substantive law will identify which facts are material and which are irrelevant. See
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986) (“Anderson”). All reasonable doubts
about the facts and all justifiable inferences are resolved in favor of the non-movant. See Allen v.
Bd. of Pub. Educ. For Bibb Cty., 495 F.3d 1306, 1314 (11th Cir. 2007); Fitzpatrick v. City of
Atlanta, 2 F.3d 1112, 1115 (11th Cir. 1993). A dispute is genuine, “if the evidence is such that a
reasonable jury could return a verdict for the nonmoving party.” Anderson, 477 U.S. at 248. If
the evidence is merely colorable, or is not significantly probative, summary judgment may be
granted. See id. at 249.
When faced with a “properly supported motion for summary judgment, [the non-moving
party] must come forward with specific factual evidence, presenting more than mere
allegations.” Gargiulo v. G.M. Sales, Inc., 131 F.3d 995, 999 (11th Cir. 1997). As Anderson v.
Liberty Lobby, Inc., teaches, under Rule 56(c) a plaintiff may not simply rest on her allegations
made in the complaint; instead, as the party bearing the burden of proof at trial, she must come
forward with at least some evidence to support each element essential to her case at trial. See
Anderson, 477 U.S. at 252. “[A] party opposing a properly supported motion for summary
judgment ‘may not rest upon the mere allegations or denials of [her] pleading, but . . . must set
forth specific facts showing that there is a genuine issue for trial.’” Id. at 248 (citations omitted).

5

Summary judgment is mandated “against a party who fails to make a showing sufficient
to establish the existence of an element essential to that party’s case, and on which that party will
bear the burden of proof at trial.” Celotex Corp., 477 U.S. at 322. “Summary judgment may be
granted if the non-moving party’s evidence is merely colorable or is not significantly probative.”
Sawyer v. Southwest Airlines Co., 243 F. Supp. 2d 1257, 1262 (D. Kan. 2003) (citing Anderson,
477 U.S. at 250-51).
“[A]t the summary judgment stage the judge’s function is not himself to weigh the
evidence and determine the truth of the matter but to determine whether there is a genuine issue
for trial.” Anderson, 477 U.S. at 249. “Essentially, the inquiry is ‘whether the evidence presents
a sufficient disagreement to require submission to the jury or whether it is so one-sided that one
party must prevail as a matter of law.” Sawyer, 243 F. Supp. 2d at 1262 (quoting Anderson, 477
U.S. at 251-52); see also LaRoche v. Denny’s, Inc., 62 F. Supp. 2d 1366, 1371 (S.D. Fla. 1999)
(“The law is clear . . . that suspicion, perception, opinion, and belief cannot be used to defeat a
motion for summary judgment.”).
IV.

Analysis
Plaintiff advances two arguments in his Partial Motion for Summary Judgment. He

contends that 1) there is no material dispute that his automobile accident was the proximate
cause of his total disability, and 2) he is entitled to his partial/residual claim if a jury concludes
that his failure to notify was reasonable. In support of his first argument, Plaintiff contends that
all relevant medical examiners conclude that the accident was at least a partial cause of
Plaintiff’s injuries. Plaintiff further argues that based on the wording of Plaintiff’s insurance
policies, Defendant should have found that Plaintiff’s total disability was caused by his accident.
In support of his second argument regarding his residual claim, Plaintiff relies upon Southern

6

Guaranty Ins. Co. v. Thomas, 334 So.2d 879, 882 (Ala. 1976) and testimony from the record
indicating that Defendant did not perform a substantial review of Plaintiff’s claim.
Defendant, in turn, makes three arguments in support of its Partial Motion for Summary
Judgment: 1) Defendant is entitled to summary judgment on Plaintiff’s residual disability
benefits because Plaintiff failed to satisfy the notice requirement under his policies, 2) Plaintiff’s
bad faith claims fail as a matter of law, 3 and 3) Plaintiff is not entitled to future benefits. As part
of its first argument, Defendant contends that Plaintiff’s excuses for his late notice are not
objectively reasonable as a matter of law. Defendant’s second argument is based upon the
definition of the tort of bad faith as set forth in State Farm Fire and Casualty Co. v. Brechbill,
144 So. 3d 248 (Ala. 2013). In its third argument, Defendant asserts that Plaintiff is not entitled
to any future monthly payments absent a repudiation of the contract by the obligor party.
A.

The Cause of Plaintiff’s Total Disability is a Jury Question

Plaintiff contends that there is undisputed medical evidence supporting his claim that an
accident caused his total disability. The court disagrees. There exists a genuine dispute of fact
related to the opinions of the medical experts on the question of whether Plaintiff’s total
disability was ultimately caused by his automobile accident or his degenerative disc disease.
In a December 2013 letter to Dr. Dunn, Dr. Wade opined that he believed “it is likely that
[Plaintiff’s] motor vehicle accident in December 2011 exaggerated his symptoms given the fact
that he has preexisting severe and multilevel degenerative stenosis.” (Doc. # 23-3, p. 2). During
a very thorough deposition, Dr. Wade discussed his conclusions regarding Plaintiff’s disability.
Dr. Wade revealed that he believed Plaintiff’s accident could have been a significant cause of his

3

Defendant makes this argument for both Plaintiff’s claim that his residual disability benefits were denied
in bad faith, and Plaintiff’s claim that the determination that his total disability was caused by sickness instead of
from his accident.

7

current back problems. 4 (Doc. # 23-8, p. 12). In that same deposition, Dr. Wade was pressed on
how Plaintiff’s new left-side problems could be related to his accident when his original rightside problems were resolved. Dr. Wade testified that although some of Plaintiff’s physiological
changes were likely caused by degeneration, “with this degree of stenosis, I was about to say
would certainly be aggravated by the accident.” (Doc. # 23-8, p. 14).
Dr. Dunn disagrees with Dr. Wade. Dr. Dunn believes that Plaintiff returned to his
“baseline” health that he enjoyed before the accident because he “complained no longer of rightsided problems.” (Doc. # 23-11, p. 9). Although Plaintiff developed left-sided issues, the
accident can be disregarded as a cause of these issues because they developed “sixteen months
later.” (Id.). Dr. Dunn came to this conclusion after looking at Plaintiff’s MRIs from the time of
his accident, and comparing them with MRIs from 2009. (Doc. # 23-11, p. 10). Dr. Dunn
admitted that he and Dr. Wade eventually came to different conclusions after examining the
same evidence. (Doc. # 23-11, p. 12).
Based upon these contradicting medical opinions, the court concludes there is a genuine
issue of material fact as to the cause of Plaintiff’s disability. When two qualified and welltrained doctors reach two different conclusions and opine about them, there is a dispute of fact
for a jury to resolve. Plaintiff’s Motion for Summary Judgment is due to be denied.
B.

Plaintiff’s Partial/Residual Disability Claim was Unreasonably Late

The court now addresses the parties’ arguments regarding the timeliness of Plaintiff’s
partial/residual disability claim. “[U]nder Alabama law there are only two factors to be
considered in determining the reasonableness of a delay in giving notice to an insurer:

4

Dr. Wade reached this opinion without the benefit of an MRI being taken the day before Plaintiff’s
accident. Though this would clarify the true extent of Plaintiff’s exacerbated condition, Dr. Wade opined “I would
say it’s equally as possible that he [Plaintiff] could have some subluxation from the accident as it is that he could
have some further degenerative change.” (Doc. # 23-8, p. 12).

8

the length of the delay and the reasons for the delay.” Southern Guaranty, 334 So. 2d at 883
(emphasis added). “Where the facts are undisputed and only one conclusion is reasonably
possible, the question whether or not the insured under a liability policy complied with the
requirement of notice is a question of law for the court; but where the facts are disputed or more
than one conclusion is reasonably possible, the question is one for the jury.”

Lennon v.

American Farmers Mut. Ins. Co., 208 Md. 424, 431 (1955).
Here, the facts are undisputed. Plaintiff chose not to inform Defendant of his ongoing
health issues for more than four years because he did not want information about his health
condition to affect his practice. Under Eleventh Circuit and Alabama State Court precedent, a
five-month delay in giving notice is sufficiently protracted to require the insured to offer
evidence of a reasonable excuse for the delay. See Phoenix Assurance Co. v. Harry Harless Co.,
303 F. Supp. 867 (N.D. Ala.), aff'd, 414 F.2d 794 (5th Cir. 1969) (four-month delay); Pharr v.
Continental Cas. Co., 429 So. 2d 1018 (Ala. 1983) (eight-month delay); Southern Guaranty, 334
So. 2d 879 (Ala. 1976) (six-month delay). While Plaintiff’s desire to maintain his medical
practice is certainly understandable, the question becomes whether a desire to shield an ongoing
medical issue from patients is a reasonable rationale for not reporting the onset of a disabling
condition to an insurer.
A four-year delay, such as the one that occurred here, is virtually unprecedented. And the
court has no hesitation in concluding that seeking to avoid ending (or affecting) one’s practice
(by not informing his patients of his decreasing ability to perform plastic surgery) is simply not a
reason that is sufficient to justify the lengthy delay in informing an insurer of such a condition
involved here.

9

The court finds that the undisputed facts support the conclusion that Plaintiff was
unreasonably late in notifying Defendant of his decreased capacity to work and did not have a
sufficient reason for that delay.

Based on this determination, the Defendant’s motion for

summary judgment on the issue of partial/residual benefits is due to be granted.
C.

Plaintiff’s Bad Faith Claims Fail as a Matter of Law

Count Two of Plaintiff’s Complaint asserts a bad faith claim. A party asserting a bad
faith claim has the burden of proving the following:
(a)

an insurance contract between the parties and a breach thereof by the insurer;

(b)

an intentional refusal to pay the insured’s claim;

(c)

the absence of any reasonably legitimate or arguable reason for that refusal (the
absence of a debatable reason);

(d)

the insurer’s actual knowledge of the absence of any legitimate or arguable
reason; and

(e)

if the intentional failure to determine the existence of a lawful basis is relied upon,
the insured must prove the insurer’s intentional failure to determine whether there
is a legitimate or arguable reason to refuse to pay the claim.

Ex parte Alfa Mut. Ins. Co., 799 So.2d 957, 962 (Ala. 2001); National Security Fire & Cas. Co.
v. Bowen, 417 So.2d 179, 183 (Ala. 1982); Cool Temp, Inc. v. Pennsylvania Nat. Mut. Cas. Ins.
Co., 148 So.3d 448, 454-55 (Ala.Civ.App. 2013)
The third element of the tort of bad faith requires proof of the absence of legitimate
reason for denying the claim. ‘[I]f a lawful basis for denial actually exists, the insurer, as a
matter of law, cannot be held liable in an action based upon the tort of bad faith.” State Farm
Fire and Cas. Co. v. Brechbill, 144 So.3d 248, 258 (Ala. 2013) (quoting Gulf Atlantic Life Ins.

10

Co. v. Barnes, 405 So.2d 916, 924 (Ala. 1981)). Furthermore, the Alabama Supreme Court has
held that, where the “[insurer’s] investigation established a legitimate or arguable reason for
refusing to pay [the insured]’s claim, [that] is all that is required.” Weaver v. Allstate Insurance
Co., 574 So.2d 771, 774 (Ala. 1990); see also Bowers v. State Farm Mut. Auto. Ins. Co., 460
So.2d 1288, 1290 (Ala. 1984) (“[W]here a legitimate dispute exists as to liability, ... a tort action
for bad faith refusal to pay a contractual claim will not lie.”).
a.

Partial Disability Claim

It is undisputed that over a four year period Plaintiff did not inform Defendant of the
onset of his partial disability. It is further undisputed that Plaintiff’s policies required that he
inform Defendant of a disability within two-to-three weeks (or within a reasonable time) of its
onset. The four-year delay in reporting the onset of his partial disability is at least a legitimate or
arguable reason for denying Plaintiff’s residual claim under the contracts’ notice provisions.
And because Defendant had at least an arguable reason to deny the partial disability claim,
Plaintiff cannot establish an essential element of his bad faith claim. Therefore, Defendant’s
Motion for Summary Judgment on this issue is due to be granted.
b.

Total Disability Claim

There is no dispute that Defendant investigated Plaintiff’s total disability claim. For
Plaintiff to be entitled to unreduced total disability benefits past age 65, the cause of Plaintiff’s
total disability must be an accident.

As the court has already explained, Defendant’s

investigation into Plaintiff’s total disability claim revealed conflicting expert testimony as to
whether an accident or degenerative disc disease caused Plaintiff’s total disability. Thus, there is
a legitimate dispute as to the cause of Plaintiff’s total disability. The medical expert testimony
opining that degenerative disc disease caused Plaintiff’s total disability constitutes at least a

11

legitimate or arguable reason for denying Plaintiff’s total disability claim.

And because

Defendant had at least an arguable reason to deny the total disability claim, Plaintiff cannot
establish an essential element of his bad faith claim.

Therefore, Defendant’s Motion for

Summary Judgment on this issue is due to be granted.
D.

Plaintiff is Not Seeking Future Damages

Defendant further argues that Plaintiff is not entitled to recover damages for any alleged
period of disability extending beyond the date of the verdict in this case. (Doc. # 25, p. 29).
Defendant is correct in its assertion that a party in Alabama cannot recover future benefits that
have yet to accrue under a contract absent repudiation or breach by the obligor party. See Box v.
Metropolitan Life Ins. Co., 168 So. 220 (Ala. 1936). However, Plaintiff is not seeking future
damages and this court will not issue what would be an advisory decision on that issue.
V.

Conclusion
For all of these reasons, the court concludes that no question of material fact exists

regarding Plaintiff’s claim to partial/residual disability benefits. Plaintiff has failed to provide
any evidence that his delayed notice was reasonable. Plaintiff’s bad faith claim also fails as a
matter of law. The record establishes that Defendant had at least an arguable basis to deny both
types of disability claims asserted by Plaintiff. Therefore, Plaintiff’s partial motion for summary
judgment is due to be denied and Defendant’s partial motion for summary judgment is due to be
granted.
A separate order will be issued.
DONE and ORDERED this August 11, 2016.

_________________________________
R. DAVID PROCTOR
UNITED STATES DISTRICT JUDGE
12