Opinion
00 Civ. 997 (JSM)
December 12, 2001
For Plaintiff: Martin I. Gold New York, NY.
For Defendant: Andrew I. Hamelsky Wright, Pindulic Hamelsky, LLP, New York, NY.
MEMORANDUM OPINION ORDER
Morton L. Schuster ("Plaintiff") brings this action against The Paul Revere Life Insurance Company ("Defendant") following Defendant's alleged failure to provide Plaintiff with lifetime disability benefits under Plaintiff's insurance plans. Defendant now moves for summary judgment and seeks to dismiss the claim pursuant to Federal Rule of Civil Procedure 56.
Facts
Plaintiff has three disability insurance policies with Defendant, issued in 1984, 1986, and 1989. Each policy provides for insurance against "total disability" and "residual disability." Total disability is defined as the inability "to perform the important duties of [the policy holder's] regular occupation" due to injury or sickness. (Def.'s Ex. 3 at 7.) Residual disability is defined as the inability "to perform one or more of the important duties of [the policy holder's] regular occupation" or the inability "to perform the important duties of [the policy holder's] regular occupation for more than 80% of the time normally required to perform them." (Def.'s Ex. 3 at 7.) While total disability benefits can continue after age 65, residual disability benefits will only extend past age 65 in limited situations.
In March, 1995, Plaintiff injured his knee and he filed a statement for disability benefits in September, 1996. While the form did not require Plaintiff to specifically elect total or residual disability benefits, Plaintiff did note that his ability to carry out his job responsibilities was "severely hampered." (Pl.'s Ex. E.) On October 22, 1996, Defendant wrote to Plaintiff advising him that his claim statement has been received and that in order to receive residual disability benefits, Plaintiff would have to submit financial statements and an additional physician's statement. Plaintiff complied with the requests and accepted the residual disability checks. On one of the financial information forms, dated December 16, 1996 (Plaintiff's 65th birthday), Plaintiff noted that his earnings had been reduced due to an "inability to perform [his] job responsibilities." (Pl.'s Ex. H.) However, a monthly progress report of May, 1997, noted that Plaintiff's work was continuing on a "limited basis" and the attached physician statement noted that Plaintiff was partially disabled. (Def.'s Ex. 18.)
Because Defendant was treating the claim as one for residual disability benefits, Defendant's last payment to Plaintiff was made on November 19, 1998. Plaintiff sought continuing benefits from Defendant, but Defendant denied further liability. Plaintiff is now seeking lifetime disability benefits, arguing that he is entitled to total disability benefits under the insurance policies.
Discussion
A party moving for summary judgement is entitled to prevail if "there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). Inferences and ambiguities are all drawn in favor of the nonmoving party and against the moving party. See Lang v. Retirement Living Publ'g Co., 949 F.2d 576, 580 (2d Cir. 1991). However, the nonmoving party has the obligation to show that there is a factual dispute that must be resolved at trial. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49 (1986).
Defendant argues that since Plaintiff's original claim was for residual disability benefits, Plaintiff is estopped from now claiming total disability based on the same injury. Additionally, Defendant notes that the policies require Plaintiff to give timely notice when making a claim and thus Plaintiff cannot now make a claim for total disability benefits. Both of these theories presume that Plaintiff's original claim was indeed a claim for residual disability benefits. However, the facts regarding the nature of the original claim are very much in dispute.
Plaintiff argues that he was merely applying for disability generally and was unaware of the difference between total disability and residual disability. In support of this, Plaintiff claims that he did not receive copies of the insurance policies (which contain the definitions) until after he was denied lifetime benefits. Once Plaintiff received the policies, he realized that he was entitled to lifetime benefits. Accordingly, Plaintiff alleges that he did not know the difference between residual disability and total disability when he received the October 22, 1996, letter referring to his eligibility for residual disability and when he complied with the informational requests in that letter. To Plaintiff's credit, the initial claim form did not ask him to elect for total or residual disability benefits, unlike other claim forms used by Defendant. (See Pl.'s Ex.G.)
In rebuttal, Defendant notes that Plaintiff did have copies of the policies because Plaintiff signed the Policy Change Riders that were attached to copies of the policies. (See Def.'s Ex. 2, 3, 4.) Defendant argues that a party's failure to understand his rights under a policy does not excuse his noncompliance with the policy. See Kaplan v. New York Life Ins. Co, 288 N.Y.S. 674 (N.Y. City Ct. 1936). However, a lack of knowledge of the content of such insurance coverage may be excusable when such content is in the control of the insurer. Olin Corp. v. Ins. Co. of North Amer., 966 F.2d 718, 725 (2d Cir. 1992) (citing Padavan v. Clemente, 350 N.Y.S.2d 694 (N.Y.App.Div. 1973). Here, if Plaintiff did not receive the policies, Plaintiff should not be expected to know the content of the policies with respect to these specific definitions. Whether Plaintiff actually received copies of the policies is a material fact in dispute.
Defendant similarly claims that Plaintiff's representations are evidence that the initial claim was one for residual disability. For example, a monthly progress report of May, 1997, notes that Plaintiff's work was continuing on a "limited basis" and the attached physician statement notes that Plaintiff is partially disabled. (Def.'s Ex. 18.) However, Plaintiff also represented on his initial claim form that his ability to carry out his job responsibilities was "severely hampered" and months later noted that he was unable to carry out these responsibilities. It is apparent that whether Plaintiff's original claim was intended to be a claim for residual disability benefits is a material fact in dispute. This is not, as Defendant implies elsewhere, a case where Plaintiff is creating an issue of fact merely to defeat summary judgment. See Steinberg v. Paul Revere Life Ins. Co., 73 F. Supp.2d 358, 363 (S.D.N.Y. 1999).
It should be made clear that in addressing the issue of what Plaintiff actually applied for, this opinion is not touching on the question of Plaintiff's eligibility for total disability benefits. Under New York law, "it is generally a question for the jury to determine whether a policyholder is totally disabled within the meaning of the policy provision." Godesky v. First Unum Life Ins. Co., 658 N.Y.S.2d 970, 971 (N.Y.App.Div. 1997); see Stewart v. Penn Mutual Life Ins. Co., 99 Civ. 5779, 2000 WL 4152, at *2 (Jan. 3, 2000 S.D.N.Y.). But see Shapiro v. Berkshire Life Ins. Co., 212 F.3d 121 (2d Cir. 2000) (affirming a grant of summary judgment where there were undisputed material facts proving that the insured was totally disabled).
For the foregoing reasons, Defendant's motion is denied.
SO ORDERED.