PHILADELPHIA – A federal appeals court here affirmed a verdict of summary judgment for National Life Insurance Company and against a man who felt the U.S. District Court for the Eastern District of Pennsylvania mistakenly interpreted a disability insurance policy, which resulted in the termination of his benefits.
U.S. Court of Appeals for the Third Circuit judges Julio M. Fuentes, D. Brooks Smith and Richard L. Nygaard opted to uphold the trial court’s verdict in favor of the company, in its case with plaintiff Daniel S. Bowerman.
“Bowerman, a licensed chiropractor, began receiving residual disability benefits from National Life in 1990, following a shoulder injury he suffered after falling off of his bike. The policy covered total disability but contained a Rider for Residual Disability Income Benefit,” Nygaard said.
The policy listed the following language:
“Until an income benefit, for any period of continuous disability, has been paid to the Insured’s 55th birthday, or for 120 months, whichever is longer, occupation means the occupation of the Insured at the time such disability begins. Thereafter it means any occupation for which the Insured is or becomes reasonably fitted by education, training or experience.”
Further, the rider in question was written as follows:
“This rider, while in force, and the policy shall be treated as one instrument. The terms of the policy shall apply to this rider unless the rider states otherwise. The Insured shall be deemed partially disabled only if, due to accidental injury or due to sickness, the Insured is not able: 1. to perform one or more of the important daily duties of the Insured's occupation as defined in this policy; or 2. to engage in the Insured’s occupation as defined in this policy for as much time as was usual prior to the start of disability. The manner in which we determine: 1. periods of continuous disability prior to and after the Benefìt Start Date; and 2. periods of separate disability; shall be the same as set forth in this policy.”
Subsequently, Bowerman continued his chiropractic business on a reduced schedule, but also worked a full or near full-time position at Independence Healthcare Management-Independence Blue Cross, plus additional consulting work.
After receiving benefits for 21 years, National Life sent Bowerman a letter in 2011 informing him upon its “investigation and assessment of the facts in his file, it was terminating his partial disability benefit on his 55th birthday because he no longer met the definition of disability.”
“It determined that his full-time work as Medical Director at Independence Healthcare Management-Independence Blue Cross was fitted to his education, training or experience, making him ineligible for continued benefits. He pursued an administrative appeal of this decision, but was not successful,” Nygaard said.
It was Bowerman’s contention the District Court that National Life violated the Employee Retirement Income Security Act of 1974 (ERISA) by terminating his residual insurance benefit – notably, by focusing only on the term “occupation” which appears in the policy, and not accounting for the separate term “Insured’s occupation” that appears in the Rider.
“The District Court determined that the plain language of the Rider tied the definition of occupation to the Policy. It further determined that Bowerman’s attempt to create a distinct term in the Rider – “Insured’s occupation” – with a unique meaning is not supported by the language of the policy. We agree on all points,” Nygaard stated.
“The language of the Rider is unequivocal. The definition of partial disability is ‘to perform one or more of the important daily duties of the Insured’s occupation as defined in this policy,’ and ‘to engage in the Insured’s occupation as defined in this policy for as much time as was usual prior to the start of disability,” Nygaard added.
“Importantly, the Rider also states that ‘the manner in which we determine: 1. periods of continuous disability prior to and after the Benefìt Start Date…shall be the same as set forth in this policy. This plainly ties the Rider to the policy to define the term ‘occupation’ and to understand how periods of continuous disability are determined.”
Nygaard explained the District Court decided the Rider and policy “provided a definition of ‘occupation’ that used one standard (‘occupation of the Insured at the time such disability begins’) in the period of continuous disability up to the first 10 years or to age 55 (whichever is later), and a second standard to define the term after that (‘any occupation for which the Insured is or becomes reasonably fitted by education, training or experience’).”
“For this reason, we reject Bowerman’s contention that the policy was ambiguous on this point. Accordingly, we do not agree with his assertion that the Rider should be construed to mean that residual disability benefits are not subject to a changing standard in the determination of what the term ‘occupation’ means,” Nygaard said.
“For these reasons, we conclude that the District Court’s interpretation of the policy was not erroneous, and we will affirm the order granting summary judgment in favor of National Life,” Nygaard concluded.
The plaintiff is represented by Alan H. Casper in Philadelphia.
The defendant is represented by Elizabeth A. Venditta of White & Williams, also in Philadelphia.
U.S. Court of Appeals for the Third Circuit case 15-1129
U.S. District Court for the Eastern District of Pennsylvania case 2:13-cv-06645
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at firstname.lastname@example.org