Opinion
Civil Action No. 99-2028-GTV
September 28, 2000
MEMORANDUM AND ORDER
The court has under consideration plaintiff's Motion for Entry of Award for Plaintiff's Attorneys' Fees (Doc. 56). This is an action to recover on a disability insurance policy issued to plaintiff by defendant's predecessor. Plaintiff prevailed on her claim for benefits under the policy, and now seeks to recover her attorneys' fees pursuant to K.S.A. 40-256. The motion is denied for the reasons set forth in this order.
Defendant issued a disability policy to plaintiff in 1985. On the application for that policy, plaintiff listed her occupation as "physician" and described the duties of her occupation as "cardiologist." In 1990, plaintiff applied for and received reinstatement of this same policy, and on that application she listed "heart surgeon" as the duties entailed in her occupation. The disability policy provided, inter alia, that if plaintiff should become totally disabled prior to her reaching age sixty-three, she would be entitled to benefits. The provisions of the policy pertinent to the court's decision on the issue of an award of attorneys' fees were that defendant would consider plaintiff to be totally disabled if due to sickness or injury, she was unable to engage in the occupation that she engaged in at the time she became disabled, or if she sustained the complete loss of the use of one hand and one foot. While the policy was in effect plaintiff suffered a stroke which left her paralyzed on the left side of her body. As a result, plaintiff became unable to use her left arm and hand, and unable to walk without leaning or holding on to furniture or walls.
Defendant paid plaintiff disability benefits in the amount of $9,100 per month from March 1994 to February 1998, at which time it denied further benefits, asserting that plaintiff no longer qualified as totally disabled under the terms of the policy because she was able to practice as a clinical cardiologist. The disability insurance policy provided:
[Defendant] will consider you totally disabled if, due to sickness or injury, you are unable to engage in your occupation. Occupation means your occupation at the time a disability began.
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[Defendant] will also consider you totally disabled if you have sustained the complete loss of: the use of one hand and one foot.
Defendant asserted that plaintiff's occupation, as listed on her original insurance application, was physician, and that she was able to engage in this occupation, as evidenced by the fact that she was practicing as a clinical cardiologist. In its motion for summary judgment filed in this case, defendant pointed out that plaintiff had indicated on numerous applications for hospital staff privileges and applications to health insurers that she had "no physical condition which would impair her ability to practice medicine."
The defendant's motion for summary judgment proffered the foregoing reasons as support for its denial of coverage. In the order denying the motion for summary judgment, this court concluded that the insurance contract was ambiguous, and that the term "occupation" as used in the policy was subject to different constructions. The court also concluded that a genuine issue of fact remained as to the complete loss of the use of one foot by plaintiff. The motion was denied, and the case was set for trial. On the day trial was to begin, the court announced to the parties that at trial the court would construe the occupation of plaintiff to be that of a heart surgeon at the time of her stroke. The defendant then conceded that plaintiff was no longer able to perform invasive surgical procedures, and that no issues remained for trial on the question of liability. The parties were in agreement on the amount to which plaintiff was entitled under the policy, and judgment was entered for plaintiff in the amount of $209,300.00, plus prejudgment interest of $20,553.55. The matter of attorneys' fees remained for determination, and the instant motion followed.
K.S.A. 40-256, the Kansas statute under which plaintiff seeks an award of attorneys' fees, provides as follows:
[I]n all actions . . . in which judgment is rendered against any insurance company . . . on any policy or certificate of any type or kind of insurance, if it appear from the evidence that such company, society or exchange has refused without just cause or excuse to pay the full amount of such loss, the court in rendering such judgment shall allow the plaintiff a reasonable sum as an attorney's fee for services in such action, including proceeding upon appeal, to be recovered and collected as a part of the costs.
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The determination of whether an insurance company has refused to pay a claim without just cause or excuse is a matter that depends on the facts and circumstances of a particular case. Allied Mut. Ins. Co. v. Gordon, 248 Kan. 715, 725, 811 P.2d 1112, 1125 (1991). If there exists a good faith legal controversy over liability, attorneys' fees must be denied. Id. Similarly, if an insurer has a bona fide and reasonable factual basis for refusing to pay a claim, no attorneys' fees are available. Id. (citations omitted). "Denial of payment that is not arbitrary, capricious, or in bad faith will not give rise to an award of attorney fees." Id. (citation omitted).
Plaintiff contends that defendant had no bona fide reason for denying her claim. An insurer's denial of a policy claim is considered "bona fide" if the insurer's explanation "is not frivolous or patently without reasonable foundation." Glickman v. Home Ins. Co., 86 F.3d 997 (10th Cir. 1996) (citing Clark Equip. Co. v. Hartford Accident Indem. Co., 227 Kan. 489, 608 P.2d 903, 907 (1980)). Although this court ultimately rejected defendant's position with respect to the definition of "occupation," the court would not characterize the denial of benefits or the arguments made to the court as frivolous or devoid of any reasonable foundation. In the court's memorandum and order which denied the defendant's motion for summary judgment, the court concluded that the disability insurance policy in this case was ambiguous, and that the term "occupation," as used in the policy, could be reasonably construed to mean "physician," "cardiologist," or "heart surgeon." Although it did not carry the day, defendant had a legitimate argument to present to the court, and its denial of benefits to plaintiff was not without just cause or excuse. See Allied Mut. Ins. Co., 248 Kan. at 725, 811 P.2d at 1125. No statutory attorneys' fee award is justified.
IT IS, THEREFORE, BY THE COURT ORDERED that plaintiff's Motion for Entry of Award for Plaintiff's Attorneys' Fees (Doc. 56) is denied.