This is the second of a two-part column. The first part was published Monday.

The outcome of Simmons v. Paul Revere Life Insurance Co., 2018 WL 558960 (W.D. Wash., Jan. 25, 2018), discussed in Part 1 of this column on Monday is not as clear-cut as the court found. Since Dr. William Simmons, a dentist, was no longer able to perform a number of material job duties that were a major part of his practice prior to his car accident, his claim raised serious issues about the protection his disability policy provided.

The claim failed because Simmons maintained both the hours he had worked prior to his injury, and his income was not diminished, but that is unusual in cases such as this.

In contrast, Stoneman v. Paul Revere Life Insurance Co., 2013 WL 6768616 (E.D. Mich., Dec. 20, 2013), involved a real estate attorney and syndicator who suffered from severe coronary artery disease. After undergoing heart surgery, Stoneman returned to work, but in a markedly limited capacity and experienced a 90 percent loss of income.

Paul Revere nonetheless maintained that Stoneman was residually disabled rather than totally disabled; however, the court rejected the insurance company’s interpretation.

“[I]t is not enough to say that Stoneman was involved in real estate and remains involved in real estate and he is therefore residually disabled,” the court explained. “Under this approach, even though Stoneman was able to return to work in some capacity, it cannot be said that his performance of some real estate-related duties automatically precludes a finding of total disability. See, e.g., Giddens v. Equitable Life Assurance Society, 445 F.3d 1286, 1298 (11th Cir. 2006) (holding that plaintiff-insured was not precluded from showing a total disability despite retaining an ability to ‘perform a few substantial and material duties … including, for example, selecting house plans, materials and subcontractors … ‘ because ‘his ability to perform those tasks in isolation still would not allow [plaintiff] to continue in his real estate development occupation [where] he is unable to perform his entrepreneurial, financial, planning, coordinating and administrative duties, which were the heart of his real estate occupation[ ]’). Stated slightly differently, the fact that Stoneman returned to some form of work after his surgery does not necessarily mean that Stoneman returned to his prior occupation.”

The court also accepted Stoneman’s argument that “the inability to work at one’s predisabiltiy intensity, pace, hours and energy can result in the inability to perform ‘the important duties’ of an occupation.”

The court relied on Rosenthal v. Long-Term Disability Plan of Epstein, Becker & Green P.C., No. CV-98-4246, 1999 U.S. Dist. LEXIS 21443, at *5, 1999 WL 1567863 (C.D.Calif., Dec. 21, 1999) (unpublished), which found “the important duties of a trial lawyer include performing to a high level under heavy stress for long hours.”

Thus, the court concluded, “just because Stoneman was performing some duties does not necessarily mean that he was performing the important duties of his predisability occupation.” (citing Dowdle v. National Life Insurance Co., 407 F.3d 967, 972 (8th Cir.2005) (concluding that surgeon who could no longer stand long enough to perform orthopedic surgery but who could conduct office visits, see patients, read X-rays, perform IMEs, interpret data and promote referrals was totally – not residually – disabled because he could not perform “the most important substantial and material duty” of his predisability occupation)).

Stoneman also pointed to the plaintiff’s consistent annual loss of income of more than 80 percent during an eight-year period.

“This explains why Stoneman received the maximum monthly amount under the policy even though Paul Revere had classified Stoneman as residually disabled,” the court found. “The sizable income reduction here supports a finding that Stoneman cannot perform the important duties of his predisability occupation even though Stoneman continued to work on a reduced basis after his open heart surgery. See Dowdle, 407 F.3d at 968-69 (noting that plaintiff-insured’s income declined from $89,915/month to $11,700/month before affirming lower court decision finding plaintiff totally disabled and further noting that plaintiff worked 6’½ days per week post-disability).”

In Stoneman, the court also flatly rejected Paul Revere’s argument made in Simmons that the total disability and residual disability clauses needed to be read together, and that a total disability finding required the inability to perform all of the important duties of an occupation. “The problem for [Paul Revere] is that the total disability clause in [the policy] does not identify what percentage of ‘the’ duties the insured must be unable to perform,” the court noted. “The clause does not say ‘all’ [important] duties or ‘most’ or any percentage….” Giddens, 445 F.3d at 1298 (rejecting defendant-insurer’s effort to add the word “all” to a disputed policy defining total disability as the inability to perform “the substantial and material duties of your regular occupation”).

The court further cited Giddens for illuminating the policy’s ambiguity: “We do not suggest that ‘all’ is an unreasonable interpretation of the policy language, but we do say that ‘most’ or the ‘majority’ of the substantial and material duties is also a reasonable interpretation if an insured is unable to engage in his regular occupation as a result of his inability to perform most or the majority of those duties.”

Nor are Giddens and Dowdle outlier cases.

One of the leading decisions in this area is Gammill v. Provident Life & Accident Insurance Co., 55 S.W.3d 763 (Ark. 2001), a disability insurance case involving an invasive cardiologist. Following Dr. Todd D. Gammill’s injury in a car accident – followed by a stroke – he was no longer able to perform invasive procedures, although he continued to practice noninvasive cardiology in an office setting. The court examined whether Gammill’s ongoing work in his profession negated his claim for total disability.

The court concluded that since Gammill was unable to perform the invasive and other procedures he had performed prior to his stroke, and because he reduced his time and saw 50 percent fewer patients, he qualified for total disability benefits.

“Simply stated,” the court explained, “whether an insured can perform ‘the majority’ of his duties is not the correct standard. Once again, the relevant inquiry is whether the insured is prevented from performing any of the substantial and material duties of his occupation, and as already stated above, Provident concedes that Gammill is prevented from performing three of the substantial and material duties necessary to being a cardiologist.”

The Gamill and Dowdle rulings represent the majority viewpoint on this issue. Summarizing those cases and others, in Giampa v. Trustmark Insurance Co., 73 F.Supp.2d 22 (D. Mass. 1999), a federal court surveyed cases on this issue from around the country in a matter involving a disability income claim brought by a chiropractor who alleged total disability on account of his inability to perform manipulations.

There, the court set forth the general rule of analysis: “The approach of most courts in similar cases is to examine the nature of the substantial and material duties that the claimant actually performed before his injury and to inquire whether after injury he can continue to perform them ‘in the usual and customary way.’ Blasbalg v. Massachusetts Casualty Insurance Co., 962 F.Supp. 362, 368 (E.D. N.Y. 1997) (quoting Niccoli v. Monarch Life Insurance Co., 70 Misc. 2d 147, 332 N.Y.S.2d 803, 807 (N.Y. Sup. Ct. 1972), aff’d, 45 A.D.2d 737, 356 N.Y.S.2d 677 (N.Y. App. Div. 1974); see also, e.g., 15 George J. Couch, et al., Cyclopedia of Insurance Law ‘§53:67, at 108-10 (2d ed. 1983) (‘It is sufficient [for total disability] that the insured cannot perform all the substantial and material acts necessary to the prosecution of his business or occupation in a customary and usual manner.’ (citing numerous cases))….

“A claimant is unable to perform the substantial and material duties of his regular occupation in the customary manner, and is therefore entitled to total disability coverage, ‘whenever there is a substantial change in the responsibilities, terms or conditions of [his] occupation.’ (citing McFarland v. General American Life Insurance Co., 149 F.3d 583, 588 (7th Cir. 1998))….

“On the whole, the focus of the case law is on how the claimant earned his ‘primary living’ before his injury, DiTommaso v. Union Century Life Insurance Co., 1991 U.S. Dist. LEXIS 17079, No. 89-6323, 1991 WL 249977, at *1 (E.D. Pa., Nov. 25, 1991), aff’d, 972 F.2d 1330 (3d Cir. 1992), not on tasks peripheral to his daily work, even if ‘pursued for gain,’ Hopkins, 594 S.W.2d at 315-16 (adopting a dictionary definition of ‘occupation’ as ‘the principal business of one’s life’ and holding that a jury could find truck-driving to be the regular occupation of a claimant who also daily supervised his son’s business before his disability ended his 23-year driving career (quoting Webster’s Third New International Dictionary)). 73 F.Supp.2d at 26.”

Thus, while Simmons did not appear to suffer a sufficient loss to justify a total disability claim, the Simmons case is by no means a sweeping victory for Paul Revere Life Insurance Co. in contrast to the cases cited above.

The majority view is that if the insured is limited to such an extent that what he or she is doing is not really performing the same profession – an obstetrician who can no longer deliver babies or a trial lawyer who can no longer appear in court or conduct depositions – the disability is total.

But where the insured continues to perform the overwhelming majority of predisability duties and can generate earnings comparable to predisability wages, the disability is properly characterized as residual.

This article was initially published in the Chicago Daily Law Bulletin. 

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