The major issue in this case relates to a clause found in all disability insurance policies requiring the insured to be under the care of a physician. Although Northwestern Mutual accepted Kaplan’s claim that he was disabled due to an obsessive-compulsive disorder, the parties disputed the onset date; and at issue before the court was whether Kaplan was entitled to benefits five years earlier than the date NML began paying benefits. Kaplan argued that his disability began in 1989 when he last worked as a computer programmer; NML refused to pay benefits earlier than 1994, when it received notice of claim. Rejecting his claim for benefits commencing in 1989, among the defenses asserted was that Kaplan was not “under the care of a licensed physician.”
Kaplan argued that the clause was ambiguous because it was susceptible to different meanings; and under the principle of contra proferentum, the ambiguity had to be construed in his favor.
The argument was essentially that the “under the care of a physician” clause could mean 1) that the insured be under the care of a physician at the time he submits a claim for benefits; or 2) that the insured must be under the care of a physician for the entire period for which benefits are sought. A third interpretation is also feasible: that the clause could mean a specialist who is treating the specific condition giving rise to the disability or it could mean seeing any physician for any purpose. Kaplan also suggested a fourth reading: that it could mean seeing a physician for treatment or participating in a study after being diagnosed by a physician (Kaplan had been rejected for participation in a medical study after being misdiagnosed). Agreeing with Kaplan, the court ruled:
But in the final analysis, we agree with Kaplan that an ordinary person who is considering purchasing a disability insurance policy such as KK and LL policies that are before us in this appeal could reasonably believe that the clauses mean that he or she must be under the care of a licensed physician at the time the claim of disability is made. This is because the clauses are stated in the present tense, and also because the policies all require that the insured provide notice of the claim of disability, or proof of disability, which implies that medical confirmation of the disability will be necessary. Such medical confirmation is likely to be available only from a physician who is treating the insured for the condition giving rise to the disability at the time he or she makes the disability claim--indeed, if that physician does not believe the insured person to be disabled by reason of the condition, the insured person is unlikely to make the claim at all. With respect to the MM policy, we also think that the ordinary person purchasing that policy could reasonably think that if he is under the care of a licensed physician at the time he makes his claim for benefits, he is, in fact, under the care of a licensed physician other than himself "during" the time he is disabled. Again, the clause is written in the present tense; it does not say that the insured must have been under the care of a licensed physician at all times or during the entire time that he has been disabled. Moreover, although the preposition "during" can mean throughout the duration of, it can also mean at some point in the course of. See: Webster's Third New International Dictionary 703 (1969) (defining "during" to mean "1: throughout the continuance or course of (no attainder of treason shall work corruption of blood or forfeiture except [during] the life of the person attainted).--U. S. Constitution; 2. at some point in the course of (been away for a couple of weeks [during] the summer). -- J.M. Barzun.)" Thus, an ordinary person shopping for disability insurance and reading the licensed physician clauses contained in each of the policies here at issue reasonably could believe that by being under the care of a licensed physician for the disabling condition "at some point in the course of" the disabling condition, he or she would meet the condition of coverage for the condition. *28-*30.
The court also pointed out that NML could have protected itself by having the insured examined, since an examiner should be capable of reaching an opinion regarding onset date. The court also noted, “Construing these licensed-physician clauses in Kaplan's favor does not defeat the primary purpose of such clauses, in that a disability insurer is adequately protected from the possibility of fraud by its ability to challenge the medical opinion of the insured's own physician, by the use of its own medical expert. Although there is no allegation of fraud in this case, our Supreme Court has held that the primary purpose of licensed-physician clauses in disability insurance policies is the prevention of fraud. See Music v. United Ins. Co. of America, 59 Wn.2d 765, 769, 370 P.2d 603 (1962), citing Massachusetts Bonding & Ins. Co. v. Springston, 283 P.2d 819, 823 (Okla. 1955).” *33-34.
Discussion: This is a fascinating ruling. The identical conclusion was reached in Newman v. Unum, 2000 WL 1593443 (N.D.Ill.), which ruled “The court finds that there is only one reasonable interpretation of this portion of the policy: that, at the time a claim is filed (which, under the terms of the policy, can be as late as one year after the time proof is otherwise required), the claimant must show that he is under the regular care of a doctor.” *6. Other useful cases on this issue are Heller v. Equitable Life Assurance Society of the United States, 833 F.2d 1253 (7th Cir. 1987), where the court explained the purpose of a clause requiring the insured to be “under the regular care and attendance of a physician,” does not “allow the insurer to scrutinize, determine, and direct the method of treatment the claimant receives. . . [The purpose of the clause . . . is to determine the claimant is actually disabled, see, e.g., Russell v. Prudential Insurance Company of America, 437 F.2d 602, 607 (5th Cir. 1971), is not malingering, and to prevent fraudulent claims.” 833 F.2d at 1257. Russell, added that “regular care of a physician” clauses “will not be literally enforced where, as here, there is other available proof of disability and no useful purpose would be served by such enforcement.” 437 F.2d at 607 (citation omitted). Kaplan is also useful in pointing out that particularly in cases involving mental impairments, it is often difficult to obtain contemporaneous evidence regarding the onset of disability.
This note appeared in the March 2003 issue of the Disability E-News Alert! For subscription information, please go to www.disabilityenewsalert.com.
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