Oliver v. MONY Life Insurance Company et al

Filing 46

MEMORANDUM OPINION. Signed by Judge Abdul K Kallon on 12/21/2016. (YMB)

FILED
2016 Dec-21 AM 10:13
U.S. DISTRICT COURT
N.D. OF ALABAMA

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
PATRICK OLIVER,
Plaintiff,

v.
MONY LIFE INSURANCE
COMPANY and DISABILITY
MANAGEMENT SERVICES, INC.,
Defendants.

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Civil Action Number
2:15-cv-00905-AKK

MEMORANDUM OPINION
Patrick Oliver filed this action against MONY Life Insurance Company
(“MONY”) and Disability Management Services, Inc. (“DMS”), alleging claims of
fraud (Count I), suppression of material facts (Count II), breach of contract (Count
III), bad faith failure to pay insurance (Count IV), negligence and wantonness
(Count V), and trespass to property (Count VI). Doc. 1-1. Defendants timely
removed the action to this court on the basis of diversity jurisdiction. See doc. 1.
The court has for consideration Oliver’s motion for summary judgment as to
Counts III and IV, doc. 27, MONY’s motion for summary judgment as to all
counts, doc. 30, and DMS’s motion for summary judgment as to all counts, doc.
32. The motions are fully briefed, docs. 28; 31; 33; 38; 39; 42; 43; 44, and ripe for

review. For the reasons stated below, Oliver’s motion is due to be denied, and
MONY’s and DMS’s motions granted.
I.

STANDARD OF REVIEW

Under Federal Rule of Civil Procedure 56(a), summary judgment is proper
“if the movant shows that there is no genuine dispute as to any material fact and
the movant is entitled to judgment as a matter of law.” “Rule 56(c) mandates the
entry of summary judgment, after adequate time for discovery and upon motion,
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. v. Catrett, 477 U.S. 317, 322 (1986)
(alteration in original). The moving party bears the initial burden of proving the
absence of a genuine dispute of material fact. Id. at 323. The burden then shifts to
the non-moving party, who is required to go “beyond the pleadings” to establish
that there is a “genuine issue for trial.” Id. at 324 (internal citations and quotation
marks omitted). A dispute about a material fact is “genuine” if “the evidence is
such that a reasonable jury could return a verdict for the nonmoving party.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
The court must construe the evidence and all reasonable inferences arising
from it in the light most favorable to the non-moving party. Adickes v. S.H. Kress
& Co., 398 U.S. 144, 157 (1970); see also Anderson, 477 U.S. at 244 (all
2

justifiable inferences must be drawn in the non-moving party’s favor). Any factual
dispute will be resolved in the non-moving party’s favor when sufficient competent
evidence supports that party’s version of the disputed facts. But see Pace v.
Capobianco, 238 F.3d 1275, 1276–78 (11th Cir. 2002) (a court is not required to
resolve disputes in the non-moving party’s favor when that party’s version of
events is supported by insufficient evidence). However, “mere conclusions and
unsupported factual allegations are legally insufficient to defeat a summary
judgment motion.” Ellis v. England, 432 F.3d 1321, 1326 (11th Cir. 2005) (citing
Bald Mountain Park, Ltd. v. Oliver, 863 F.2d 1560, 1563 (11th Cir. 1989)).
Moreover, “[a] mere ‘scintilla’ of evidence supporting the opposing party’s
position will not suffice; there must be enough of a showing that a jury could
reasonably find for that party.” Walker v. Darby, 911 F.2d 1573, 1577 (11th Cir.
1990) (citing Anderson, 477 U.S. at 252).
II.

FACTUAL BACKGROUND

Oliver purchased a disability income policy from MONY in 1987. Doc. 291 at 27. The policy defines “incapacity,” in relevant part, as follows: “due to the
Injury or Sickness, you are not able to perform the substantial and material duties
of your Regular Occupation, you are not gainfully employed in another occupation,
and you are under the Regular Care of a Physician because of that Injury or
Sickness. . . . .” Doc. 34-4 at 7. “Regular Occupation” means the “occupation in
3

which you were most recently engaged at the start of your Incapacity.” Id. Oliver
last worked in 2006 as a home inspector. Docs. 34-4 at 7; 34-1 at 503–05. Seven
years after abandoning his profession, Oliver sustained a back injury while
“hooking up a dryer.” Doc. 34-3 at 16. After receiving treatment from Dr. Lloyd
Johnson, a board-certified orthopedic specialist, Oliver submitted a claim to
MONY, along with an “attending physician’s initial disability statement form,” see
id. at 23, in which Dr. Johnson “certified [Oliver as having] Total
Disability/Incapacity due to lumbar degenerative disc disease, radiculitis and
spondylolisthesis.” Docs. 29-2 at 3; 34-1 at 797.
DMS, a “third-party administrator for disability plans,” is the entity with
authority to approve or deny claims submitted to MONY. See docs. 1-4 at 2; 29-3
at 9; 29-5 at 10. In early 2014, DMS presented Oliver’s claim file to its Medical
Consultant, Michelle Licciardello.

Doc. 29-5 at 9.

Licciardello, a licensed

physical therapist, found Oliver’s medical records inconclusive as to “functional
restrictions” or “tolerances for activities.” See id. at 12; doc. 34-1 at 529–31, 618,
620. Licciardello noted that Oliver did not “seek regular and appropriate care . . .
as one would expect if his complaints were as high and as significant as reported.”1
Doc. 29-5 at 18.

1

Although the medical records indicated Oliver did not seek care because of personal
obligations related to his wife’s cancer treatment, Licciardello did not include this information in
4

Sometime after Licciardello’s review, Brian Hayes, the claims adjuster
assigned to Oliver’s file, contacted Oliver in April 2014. Hayes informed Oliver
that:
[U]nder the terms of your policy, we are unable to determine if you
have an Incapacity . . . that prevents you from performing the
substantial and material duties of your Regular Occupation . . .
because you were not engaged in a Regular Occupation against which
an alleged Incapacity from performing that occupation may be
evaluated. In such a circumstance it would therefore be reasonable to
determine if you have an Incapacity from engaging in the daily
activities that were substantial and material to you prior to the Onset
Date of disability.
Doc. 29-2 at 3 (emphasis added). In other words, although Oliver’s policy only
references a “regular occupation,” MONY and DMS nonetheless decided to
examine Oliver’s general functionality, or ability to perform his daily activities,
due to Oliver’s lack of an occupation as of or immediately prior to the onset date.
See id.
Shortly after Hayes’s letter, DMS and MONY issued Oliver a “good will”
payment of $4,946.67 covering September, October, and November 2013. DMS
authorized the partial payment because the medical records reflected a period of
time where Oliver “may have had problems performing” his “activities of daily
living [ADLs].”

See doc. 29-4 at 11.

However, according to Licciardello,

defendants made no payments after November 2013 because “Dr. Johnson’s
her report because she “cannot comment on an insured’s . . . outside home life or complications
or life events.” Doc. 29-5 at 14, 18.
5

records from November 21st, 2013 and December 19th, 2013 . . . indicate[d]
improvement.” Docs. 29-5 at 11; 34-18 at 11; 34-1 at 503–05. The finding of an
improvement was based on Oliver’s report that his pain rated at a 3 or 4 out of 10
during his November and December medical appointments, down from an “8 out
of 10” in September of 2013. Doc. 29-5 at 11. Licciardello also emphasized that
Dr. Johnson had noted “no instability” 2 on Oliver’s MRI report, id. at 31; doc. 34-1
at 531, 619, 622–23, and that Oliver’s radiologist did not identify some of the “disk
protrustion[s]” noted by Dr. Johnson, doc. 29-5 at 35. Although DMS scheduled a
call with Dr. Johnson in May 2014 to clarify his report, “when Licciardello
attempted the call . . ., Dr. Johnson’s staff informed her that Dr. Johnson would not
speak with her.” Doc. 31 at 8 (citing doc. 34-1 at 464).
In July 2014, DMS and MONY offered Oliver $33,600 3 to “buy back” the
policy. See doc. 34-3 at 93. Oliver rejected the offer, and defendants continued to
process Oliver’s claim. See docs. 34-1 at 413; 34-3 at 93. Around this time,
MONY received additional records from Oliver’s new pain management specialist
2

Licciardello testified that “[t]he instability at L4-5 would provide a greater correlation
between his findings and the complaints reported; that instability would be expected to
contribute to symptoms with flexion, with extension, with sitting — he would have symptoms
more with global activities versus the degenerative changes and the degenerative disk disease,
which is identified, which you would expect to cause an increase in symptoms, most
significantly with standing, walking and extension activities.” Doc. 29-5 at 31.
3

This sum was the equivalent of twelve months of Oliver’s benefits, doc. 29-3 at 15, but
“the $33,600 lump sum ha[d] no relationship to any of the present value calculation for Mr.
Oliver’s policy,” id. at 14.
6

and Dr. Johnson. See doc. 34-1 at 419, 421–36. After reviewing the new records,
Licciardello noted on September 10, 2014 that the MRI did not corroborate the
degree of complaints and severity of Oliver’s reported limitations, and that Oliver
could still perform certain ADLs, including self-care activities, household tasks,
and caring for his wife. See id. at 405–06, 426–30; doc. 34-5 at 34. Because Dr.
Johnson “continued to certify disability” for Oliver as of October 2014,
Licciardello recommended an independent medical examination (“IME”). Docs.
29-5 at 18; 34-1 at 362–63.
DMS’s IME coordinator attempted to contact “over 50 physicians” to
perform the IME, but none of these physicians were “willing to perform the
examination.” Doc. 34-7 at 3. After DMS finally succeeded in scheduling an IME
in Birmingham, Alabama with Dr. Spain Hodges, Dr. Hodges subsequently
cancelled the appointment.

Docs. 29-5 at 28; 29-1 at 49; 34-7 at 4.

The

cancellation prompted Brian Hayes to send Licciardello resumes for Dr. Geoffrey
Connor in Homewood, Alabama, and Dr. Curt Freudenburger in Huntsville,
Alabama.

See doc. 34-7 at 4.

Although it would require Oliver to travel,

Licciardello selected Dr. Freudenbuger, because unlike Dr. Connor, a “general
orthopedist . . . [whose] CV didn’t indicate extensive spine work, . . . Dr.
Freudenburger [was] a spine specialist.” Doc. 29-5 at 29. See doc. 34-7 at 4–5.
Oliver, who lives in the greater Birmingham area, refused to travel to Huntsville
7

despite defendants’ offer to pay for his travel and defendants’ right under the
policy to request an IME. See docs. 34-7 at 4–5; 34-3 at 45; 34-4 at 11. Oliver
filed this lawsuit instead.
After filing his lawsuit, at defendants’ request, Oliver underwent a physical
examination by Dr. Stephen Nichols pursuant to Federal Rule of Civil Procedure
35. According to Licciardello, Dr. Nichols “identified an instability which Dr.
Johnson had failed to identify.” Doc. 29-5 at 37. Dr. Nichols reported, among
other things, that Oliver’s “complaints correlate[d] with [the] objective findings.”
Doc. 34-15 at 29. Based on Dr. Nichols’s report, see id. at 28–30, DMS finally
approved Oliver’s claim on July 12, 2016. See doc. 29-4 at 12.
III. ANALYSIS
At issue in this lawsuit is Oliver’s contention that defendants wrongfully
delayed payment of his claim despite Dr. Johnson’s certification of Oliver as
totally “incapacit[ated]” or “disab[led].” See doc. 28 at 24. Defendants counter
that they had arguable reasons to continue investigating the claim, that Oliver
failed to submit to an IME (and thus failed to perform under the contract), and that
Oliver “premature[ly]” resorted to litigation before defendants had all the
information necessary to resolve Oliver’s claim. See doc. 31 at 3. The court
addresses the parties’ motions for summary judgment as to each claim below, in
sequential order based on the complaint.
8

A. Fraud (Count I)
In Count I, Oliver pleads that defendants committed fraud “by representing .
. . that [Oliver] would receive disability insurance coverage as a result of [Oliver’s]
inability to work,” that defendants “accepted [Oliver’s] premium payments for said
insurance coverage,” but then “defendants denied coverage and refused to pay the
claim.”

Doc. 1-1 at 8.

To prove fraud, Oliver must show “(1) a false

representation (2) of a material existing fact (3) reasonably relied upon by [Oliver]
(4) who suffered damages as a proximate consequence of the misrepresentation.”
Exxon Mobil Corp. v. Ala. Dep’t of Conservation & Natural Res., 986 So. 2d 1093,
1114 (Ala. 2007) (citing, e.g., Saia Food Distribs. & Club, Inc. v. SecurityLink
from Ameritech, Inc., 902 So. 2d 46, 57 (Ala. 2004)). This claim fails, in part,
because Oliver testified that MONY did not make any misrepresentations to him.
See doc. 34-3 at 46 (Q: “Do you claim that anyone from [MONY] made any
misrepresentations to you?” . . . A: “No. I can’t say – I can’t say that they had
anything to do with it.”). Moreover, as to DMS, Oliver failed to identify any
specific misrepresentations DMS purportedly made. See id. Facts, rather than
rank speculation, are necessary to defeat summary judgment.

Cordoba v.

Dillard’s, Inc., 419 F.3d 1169, 1181 (11th Cir. 2005) (quoting Hedberg v. Ind.
Bell. Tel. Co., 47 F.3d 928, 931–32 (7th Cir. 1995)) (“‘[U]nsupported speculation .
. . does not meet a party’s burden of producing some defense to a summary
9

judgment motion. Speculation does not create a genuine issue of fact; instead, it
creates a false issue, the demolition of which is a primary goal of summary
judgment.’”) (emphasis in Hedberg). Oliver’s failure to offer specifics to support
his claim dooms this claim, and summary judgment is due on Count I for
defendants. 4
B. Suppression of Material Facts (Count II)
In Count II, based on the April 2014 initial partial payment and the July
2014 lump sum settlement offer, Oliver contends that defendants “suppressed
and/or concealed the facts that [Oliver’s] disability claims would only be paid on a
reduced value . . . .” Doc. 1-1 at 8–9. Oliver further alleges that “[o]n October 16,
2014, [DMS] and MONY represented to [Oliver] that [DMS] and MONY had not
completed the evaluation of [Oliver’s] claim,” when they had “in fact previously
approved [Oliver’s] claim in April 2014 and July 2014.” Id. These contentions
fail to establish a suppression claim because there is no evidence that the partial
payment or the settlement offer induced Oliver to act to his detriment.

See

Foremost Ins. Co. v. Parham, 693 So. 2d 409, 423 (Ala. 1997) (citing Wilson v.
Brown, 496 So. 2d 756 (Ala. 1986)) (a suppression claim requires “1) a duty to
4

To the extent Oliver’s fraud claim is based on the alleged breach of the contract, such a
claim is not recognized under Alabama law. See, e.g., Hanners v. Balfour Guthrie, Inc., 564 So.
2d 412, 414 (Ala. 1990) (stating that to prevail, the plaintiff needs “evidence . . . that, at the time
. . . the promises of future action or abstention were made, the promisor had no intention of
carrying out the promises,” and that “[t]he failure to perform, alone, is not evidence of intent not
to perform at the time the promise was made. If it were, a mere breach of contract would be
tantamount to fraud.”) (citations and quotation marks omitted).
10

disclose the facts, 2) concealment or nondisclosure of material facts by the
defendant, 3) inducement of the plaintiff to act, and 4) action by the plaintiff to his
injury”). Accordingly, defendants’ motions as to Count II are due to be granted.
C. Breach of Contract (Count III)
In Count III, Oliver contends that defendants breached the insurance contract
by constructively denying his claim. See doc. 28 at 18. The claim against DMS
fails, because, under Alabama law, a third party adjuster who is not a party to an
insurance contract cannot breach that contract. See Ligon Furniture Co. v. O.M.
Hughes Ins., Inc., 551 So. 2d 283, 285 (Ala. 1989). Therefore, DMS’s motion is
due to be granted.
As to Oliver’s contention that MONY breached the insurance contract, to
prevail, Oliver must prove: (1) a valid contract; (2) Oliver’s performance; (3)
MONY’s breach; and (4) damages. See Armstrong Bus. Servs. v. AmSouth Bank,
817 So. 2d 665, 673 (Ala. 2001); Employees’ Benefit Ass’n v. Grissett, 732 So. 2d
968, 975 (Ala. 1998). Where, as here, Oliver is proceeding on a constructive denial
theory, he “can establish a constructive denial [claim] in two ways: (1) by showing
that the passage of time is so great that the delay alone creates a denial; or (2) by
showing sufficient delay in payment coupled with some wrongful intent by the
insurance company.” Cong. Life Ins. Co. v. Barstow, 799 So. 2d 931, 938 (Ala.
2001) (quoting State Farm Fire & Cas. Co. v. Slade, 747 So. 2d 293, 317 n.6 (Ala.
11

1999)). For the reasons stated below, the court finds that Oliver has failed to prove
his claim.
Although Oliver is pursuing both theories of constructive denial, 5 the court
will analyze his claims jointly since they rely on the same basic contention, i.e.,
that defendants unreasonably delayed approving his claim even though the medical
evidence supported his contention of incapacity. For its part, MONY counters that
it never denied or ceased processing Oliver’s claim, that Oliver has suffered no
damages, and that Oliver’s refusal to travel to Huntsville for an IME in May 2015
contributed to the delay. Doc. 39 at 11–12. Indeed, MONY is correct that the
policy entitles it to request an IME, see doc. 34-4 at 11, and in fact Oliver does not
challenge the requirement for an IME. Oliver states instead that MONY acted
unreasonably in requiring that he travel to Huntsville. While MONY is correct that
Oliver “regularly traveled 60 miles from his home to his lake house and
acknowledged that he had taken three trips to Orange Beach, Alabama, since the
5

Oliver states that the passage of “more than thirty-one (31) months from November
2013 through July 2016 supports a finding of constructive denial.” Doc. 28 at 18 (footnote
added). Also, Oliver says that the following undisputed facts support a finding of “wrongful
intent”: (1) no licensed medical doctor ever disputed Dr. Johnson’s certification of
incapacity/disability; (2) defendants failed to conduct any occupational or vocational analysis or
a functional capacity exam; (3) in March 2014, DMS offered Oliver a $33,600 “extracontractual” buy back of Oliver’s policy if Oliver would sign a release of all claims; (4)
Licciardello’s May 1, 2014 medical report faulted Oliver for not seeking treatment for his pain
during the period when Oliver provided care for his wife who was undergoing chemotherapy; (5)
Licciardello did not include Dr. Johnson’s disability certification and attending physician
statements in her reports to DMS; and (6) after Oliver refused to travel to Huntsville for the IME,
DMS rejected Dr. Freudenberger’s offer to conduct a “peer review” of Dr. Johnson’s findings.
Doc. 28 at 20–21.
12

start of his alleged incapacity,” doc. 39 at 13 (citing doc. 34-3 at 43), and that some
courts have found that requiring a plaintiff to travel 100 miles is not unreasonable,
see Woodard v. Walmart Stores East, LP, No. 5:09-cv-428(CAR), 2010 WL
3455342, at *3 (M.D. Ga. 2010) (holding that requiring the plaintiff to travel “100
miles” was not unreasonable in light of the plaintiff’s travel habits during the
relevant time period and the defendants’ offer to cover any travel costs); Driggers
v. Vezer’s Precision Indus. Constr. Int’l, No. 1:05-cv-201-SPM/AK, 2007 WL
1655612 (N.D. Fla. 2007) (not unreasonable to require plaintiff to travel
approximately 150 miles and outside of the federal district for Rule 35 medical
examination), by focusing on the refusal to travel, MONY ignores that Oliver
contends that MONY purportedly unreasonably delayed for approximately 18
months before arranging the IME in Huntsville. Moreover, Oliver contends that
this delay purportedly occurred despite Dr. Johnson’s certification of total
incapacity/disability and MONY’s failure to conduct any vocational analysis
pursuant to the plain language of the policy, see doc. 34-4 at 7.
Unfortunately for Oliver, a constructive denial theory does not eliminate the
damages component of the elements of a breach of contract claim. In that respect,
even if a factual dispute exists with regard to the reasonableness of asking Oliver
to travel or whether defendants unnecessarily delayed in processing the claim,

13

Oliver’s only damages are mental anguish associated with the delay in approving
his claim. Oliver described these damages as follows:
I’m losing my house because of it. I’m not able — I wasn’t
able to afford to take care of my wife who needed me more than any
time in her life. I couldn’t afford a sitter. She needed twenty-four
hour care and had I received my benefits I could have gotten through
this a whole lot better. . . . .
Q.

I want to know how it’s affected you. Anything else?

A.
The anxiety and misery, I can’t even calculate how you would
put that on a man.
Doc. 34-3 at 46. These “damages” may not be enough because the general rule is
that “the law in [Alabama] does not permit recovery for . . . mental anguish and
suffering in an action for breach of an insurance contract.” Vincent v. Blue CrossBlue Shield, Inc., 373 So. 2d 1054, 1056 (Ala. 1979).
There is an exception to the general rule, however, “where the contractual
duty or obligation is so coupled with matters of mental concern or solicitude, or
with the feelings of the party to whom the duty is owed, that a breach of that duty
will necessarily or reasonably result in mental anguish or suffering.” Liberty
Homes, Inc. v. Epperson, 581 So. 2d 449, 454 (Ala. 1991) (quoting F. Becker
Asphaltum Roofing Co. v. Murphy, 141 So. 630, 631 (Ala. 1932)). Oliver argues
that his circumstances fit within this exception, see doc. 42 at 7, and directs the
court to Mechler v. John Hancock Life Ins. Co., No. 07-0724-CB-M, 2008 WL
4493230 (S.D. Ala. Sept. 30, 2008). Mechler involved a breach of contract claim
14

for mental anguish due to an insurance company’s failure to pay benefits to allow
the plaintiff’s mother to obtain home health care.

Due to the denial, while

unattended at home, the plaintiff’s mother fell and broke her hip. Id. at **1, 4.
Based on these facts, the Mechler court found that “[a] long-term care insurance
policy providing for home healthcare benefits implicates sensitive subject matter
— that is, a person’s ability to live safely, independently, and with dignity in her
own home,” and that “[t]he ability to remain in one’s home despite the infirmities
that accompany old age is, in this Court’s opinion, one of those matters of ‘mental
concern’ or ‘solicitude’ for which the Becker court carved an exception.” Id. at *6.
Oliver’s reliance on Mechler overlooks that Alabama courts have made it
clear that the exception is a narrow one. As the Eleventh Circuit put it:
The majority of the cases in which a plaintiff has been allowed to
recover damages for mental anguish involved actions on “contracts
for the repair or construction of a house or dwelling or the delivery of
utilities thereto, where the breach affected habitability.” See, e.g.,
Epperson, 581 So. 2d at 454; Orkin Exterminating Co. v. Donavan,
519 So. 2d 1330 (Ala. 1988); Lawler Mobile Homes, Inc. v. Tarver,
492 So. 2d 297 (Ala. 1986); Alabama Power Co. v. Harmon, 483 So.
2d 386 (Ala. 1986). Because a person’s home is said to be his
“castle” and the “largest single individual investment the average
American family will make,” these contracts are “so coupled with
matters of mental concern or solicitude or with the feelings of the
party to whom the duty is owed, that a breach of that duty will
necessarily or reasonably result in mental anguish or suffering.” B &
M Homes, Inc. v. Hogan, 376 So. 2d 667, 671–72 (Ala. 1979). . . . .
A smaller number of cases has permitted such recovery in
actions involving the burial of loved ones, suits based on a physician’s
promises to deliver a child, and claims based on the breach of a new
15

car warranty where the owner suffers significant fear, anxiety, and
embarrassment. See Taylor v. Baptist Medical Center, Inc., 400 So.
2d 369 (Ala. 1981); Volkswagen of America, Inc. v. Dillard, 579 So.
2d 1301 (Ala. 1991).
The Alabama Supreme Court has made very clear, however,
that all these cases represent an exception to the general rule
prohibiting mental anguish damages for breach of contract. These
cases deserve special treatment because it is highly foreseeable that
egregious breaches of certain contracts — involving one’s home or
deceased love one, for example — will result in significant emotional
distress. See Sexton v. St. Clair Federal Sav. Bank, 653 So. 2d 959,
962 (Ala. 1995).
Ruiz de Molina v. Merritt & Furman Ins. Agency, Inc., 207 F.3d 1351, 1359–60
(11th Cir. 2000). Although Oliver claims he is losing his home and that the delay
impacted his ability to provide the best care for his wife, Oliver last worked in
2006. As such, at the time he applied in 2013 for benefits under the policy, the
benefits were not the standard replacement of income benefits that would allow the
court to find that defendants should have known that the delay in approval would
impact Oliver’s ability to stay in his home or provide care for his wife. Based on
the record before this court, the court cannot find that the damages Oliver identifies
go to the heart of his disability policy, such that it was highly foreseeable that a
breach of the insurance contract would result in these damages.
In light of Oliver’s failure to satisfy the last element of his breach of contract
claim, MONY’s motion as to Count III is due to be granted, and Oliver’s motion
denied.
16

D. Bad Faith Failure to Pay Insurance Claim (Count IV)
In Count IV, Oliver pleads that defendants committed bad faith because they
“knew that the claim file contained medical information from qualified medical
doctors confirming [his] disabling condition” and, therefore, “did not have a
reasonable basis to deny the claim.” Doc. 1-1 at 11. As an initial matter, because a
bad faith claim requires a direct contractual relationship between the parties 6 and it
is undisputed that no contractual relationship exists between Oliver and DMS, doc.
33 at 4, the claim against DMS fails. See Williams v. State Farm Mut. Auto. Ins.
Co., 886 So. 2d 72, 75–76 (Ala. 2003); see also Metmor Financial, Inc. v.
Commonwealth Land Title Ins. Co., 645 So. 2d 295, 297 (Ala. 1993) (for tort cause
of action for bad faith to arise, “[a]n insurer-insured relationship must exist”);
Ligon Furniture Co., 551 So. 2d at 285 (“The tort of ‘bad faith’ is not a cognizable
cause of action in Alabama, except in the context of a breach of an insurance

6

Bad faith has four elements, plus a conditional fifth element:

(a) an insurance contract between the parties and a breach thereof by the
defendant; (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; (e) if the intentional failure to determine the
existence of a lawful basis is relied upon, the plaintiff must prove the insurer’s
intentional failure to determine whether there is a legitimate or arguable reason to
refuse to pay the claim.
State Farm Fire & Cas. Co. v. Brechbill, 144 So. 3d 248, 257 (Ala. 2013) (quoting National Sec.
Fire & Cas. Co. v. Bowen, 417 So. 2d 179, 183 (Ala. 1982)).
17

contract, by a party to that insurance contract.”) (citations omitted, emphasis
added).
Based on Oliver’s brief, it seems Oliver is pursuing an abnormal bad faith
claim against MONY. See doc. 28 at 24, 26 (stating MONY “created its own
debatable reason” to constructively deny his claim and/or “relied on an ambiguous
portion of the policy,” i.e., the definition of “Regular Occupation,” to do so). The
complaint does not mention these allegations or this theory of bad faith, however,
see doc. 1-1 at 10–12, and “[i]t is well-settled in this circuit that a plaintiff may not
amend the complaint through argument at the summary judgment phase of
proceedings.” GeorgiaCarry.org, Inc. v. Georgia, 687 F.3d 1244, 1258 n.27 (11th
Cir. 2012); see also Gilmour v. Gates, McDonald and Co., 382 F.3d 1312, 1315
(11th Cir. 2004). Nonetheless, to briefly address Oliver’s abnormal bad faith
theory, to the extent MONY processed the claim beyond Oliver’s purported
“regular occupation” as a home inspector, Oliver still must show that MONY
lacked a legitimate or arguable reason to deny the claim. Nat’l Ins. Ass’n v.
Sockwell, 829 So. 2d 111, 127 (Ala. 2002); see also State Farm Fire & Cas Co. v.
Brechbill, 144 So. 3d 248, 258 (Ala. 2013) (citing Gulf Atlantic Life Ins. Co. v.
Barnes, 405 So. 2d 916, 924 (Ala. 1981)) (“Regardless of whether the claim is
[one for normal or abnormal bad faith], the tort . . . requires proof of [an] absence
of legitimate reason for denial.”); Atl. Specialty Ins. Co. v. Mr. Charlie Adventures,
18

L.L.C., 644 F. App’x 922, 926 (11th Cir. 2016) (quoting Nat’l Sec. Fire & Cas. Co.
v. Bowen, 417 So. 2d 179, 183 (Ala. 1982)) (“Alabama courts have made clear
that, ‘[w]hen a claim is fairly debatable, the insurer is entitled to debate it, whether
the debate concerns a matter of fact or law.’”) (some quotation marks omitted);
Pyun v. Paul Revere Life Ins. Co., 768 F. Supp. 2d 1157, 1171–72 (N.D. Ala.
2011) (because the insurance company had a “reasonably debatable reason” for
denying the plaintiff’s claim, the insurance company was due summary judgment
on the plaintiff’s abnormal bad faith claim).
Unlike a traditional disability insurance claimant, Oliver had not held a
vocation for over six years at the start of his incapacity. Consequently, “MONY
evaluated his claim based on his ability to perform the daily activities he was
actually engaged in at the time of his disability claim.” Doc. 31 at 22. Oliver
claims that, in doing so, MONY “created its own debatable reason [for
constructively denying his claim] by going outside the policy language.’” Doc. 28
at 26. Oliver also (correctly) asserts that “[t]he policy language . . . does not
require the insured to have a current job.” Id. Still, Oliver’s contentions miss the
mark because, regardless of whether Oliver’s “regular occupation” is the job he
abandoned six years earlier, defendants were still entitled to verify the accuracy of
the medical records Oliver submitted in support of his claims. See, e.g., doc. 34-4
at 11 (policy language stating, “We may have you examined as often as we may
19

reasonably require while a claim continues.”). Relevant here, the medical records
were not as definitive in confirming Oliver’s disability as Oliver contends. For
example, Oliver reported at his medical appointments that his subjective pain level
had decreased by approximately half during the months after he initially claimed
disability. See docs. 29-5 at 11; 34-18 at 11; 34-1 at 503–05. Moreover, records
from the Doleys Clinic Pain and Rehabilitation Center showed that Oliver was able
to “perform self-care activities [and] household tasks, and [care] for his wife.”
Doc. 31 at 23 (citing, e.g., doc. 34-1 at 426–29).
Additionally, from a clinical standpoint, Dr. Johnson’s records noted “no
instability,” doc. 34-1 at 531, 619, 622–23, which cast his opinion that Oliver was
totally disabled into doubt. Licciardello testified that
instability [at L4-5 and L5-S1] affects treatment options, . . .
symptoms, . . . [and] prognosis. Instability is not something that is
generally resolved without surgical intervention. It is expected to
continue to be symptomatic because . . . in a degenerative
spondylolisthesis, which is what [Oliver] has, . . . it’s not expected to
improve. It will continue to progress, and when you add instability
onto it, then improvement without surgical intervention . . . is not
likely.
Doc. 29-5 at 37. A person who then has “no instability” has a condition that will
improve. As Dr. Nichols, the physician defendants selected and whose opinion led

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to the approval of Oliver’s claim, 7 explained, Dr. Johnson’s report “mentioned
there’s a spondylolisthesis, and then in the next sentence [stated] no instability
noted. That makes no sense.” Doc. 34-15 at 13. Dr. Nichols added that even if
the “no instability” notation was a “typo,” Dr. Johnson still failed to adequately
emphasize the segmental instability or discuss the instability in such a manner
“that others could understand what [it] means.” Id. at 13–14. Put differently, by
stating that Oliver had “no instability” and then by refusing initially to talk to DMS
about Oliver, Dr. Johnson created a chain of events that caused defendants to have
to further investigate the claim and to ultimately request the IME. Indeed, as Dr.
Nichols testified, “it [was] reasonable for the insurance company to have referred
[Oliver] for an [IME]” in light of Dr. Johnson’s report. Id. at 15.
In short, to prove bad faith, Oliver bears the burden of demonstrating that
MONY lacked a legitimate or debatable reason to investigate his claim further and
to request additional information, including an IME. For the foregoing reasons,
including, but not limited to, Dr. Johnson’s medical records which failed to
accurately portray Oliver’s medical history, Oliver’s own testimony about the
decrease in his pain, and Oliver’s refusal to submit to an IME by Dr.
Freudenburger, the court finds that Oliver cannot meet his burden. Therefore,

7

Unlike Dr. Johnson’s medical report, Dr. Nichols found instability during his
examination of Oliver, which from a medical standpoint corroborated Oliver’s subjective
complaints. See doc. 34-15 at 14–15. As a result, defendants approved Oliver’s claim.
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because “Alabama courts have made clear that, ‘[w]hen a claim is fairly debatable,
the insurer is entitled to debate it, whether the debate concerns a matter of fact or
law,’” Atl. Specialty Ins. Co., 644 F. App’x at 926 (quoting Bowen, 417 So. 2d at
183) (some quotation marks omitted), MONY’s motion as to Count IV is due to be
granted, and Oliver’s motion denied as to MONY.
E. Negligence and Wantonness (Count V)
Oliver’s claim in Count V for alleged negligence and wantonness in
handling his claim, see doc. 1-1 at 12–14, fails because the Alabama Supreme
Court “has consistently refused to recognize a cause of action for the negligent
handling of insurance claims, and it will not recognize a cause of action for alleged
wanton handling of insurance claims.” Kervin v. Southern Guar. Ins. Co., 667 So.
2d 704, 706 (Ala. 1995). See also Pate v. Rollison Logging Equipment, Inc., 628
So. 2d 337, 345 (Ala. 1993) (same); Chavers v. National Security Fire & Casualty
Co., 405 So. 2d 1, 5 (Ala. 1981) (“[W]e have expressly rejected any cause of
action based upon an insurer’s negligence in handling direct claims.”).
Accordingly, defendants’ motions are due to be granted as to Count V.

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F. Trespass to Property (Count VI)
In Count VI, Oliver pleads a claim for trespass to property, 8 contending that
defendants “acknowledged custody of a portion of insurance funds identified for
payment to [Oliver] in the amount of specifically identified funds of $33,600.00,”
and that this amount “rightfully belonged to [him] and did not require [him] to sign
any ‘release’ of any Defendant.” Doc. 1-1 at 14. This contention is based on the
settlement offer Brian Hayes sent to Oliver, which stated: “I am writing to confirm
the Company’s settlement offer of $33,600 in exchange for a full release of your
claim and surrender of Policy 87x1-26-65 for cancellation.” Doc. 34-3 at 93.
Oliver fails to cite, and this court has not found, any Alabama case holding that a
proposed settlement of an insurance policy constitutes conversion. Accordingly,
defendants’ motions as to Count VI are due to be granted.
IV. CONCLUSION
In light of the foregoing, Oliver’s motion for partial summary judgment,
doc. 27, is due to be denied.

MONY’s and DMS’s motions for summary

judgment, docs. 30 and 32, are due to be granted. The court will enter a final order
consistent with this Memorandum Opinion.

8

Defendants construe this as a claim for conversion, and Oliver agrees. See doc. 38 at
25. A claim for conversion requires Oliver to prove “[l]egal title with immediate right of
possession . . . to the converted property at the time of conversion.” See Roberson v. Ammons,
477 So. 2d 957, 962 (Ala. 1985).
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DONE the 21st day of December, 2016.

_________________________________
ABDUL K. KALLON
UNITED STATES DISTRICT JUDGE

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