Anyone in Dallas, Fort Worth, Grand Prairie, Arlington, Mansfield, De Soto, Richardson, Garland, Mesquite, Burleson, or anywhere else in Texas, who purchases a disability insurance policy may be interested in the reasoning and interpretation of the following case.
On November 29, 2010, the United States Court of Appeals for the Fifth Circuit issued an opinion in the case styled, Bruce Leipzig, M.D. v Principle Life Insurance Company.
From a legal standpoint this case was won by Principle Life Insurance Company (Principle) at the trial court and then was appealed by Dr. Leipzig. He lost on appeal.
For starters, anyone having a disability claim denied should seek the advice of an experienced Insurance Law Attorney. Reading a case like this one will lend some insight into how the courts interpret disability insurance policies.
Here are some relevant facts:
Principle denied Leipzig’s claim for disability insurance benefits. However, this was after he had been receiving the benefits for a while.
Leipzig is a 62 year old surgical otolaryngologist, or ENT, who maintains a practice in Brownwood, Texas, which has a population of 20,000. Brownwood also has 2 other surgical ENT’s and patient demand is limited.
Leipzig purchase the Principle disability policy in 1993. The relevant part of the policy reads as follows:
A Member will be considered Disabled if, solely and directly because of sickness, injury, or pregnancy … one of the following applies:
(a) The member cannot perform the majority of the Substantial and Material Duties of any Gainful Occupation for which he or she is or may reasonably become qualified based on education, training, or experience.
(b)The Member is performing the Substantial and Material Duties of his or her Own Occupation or any occupation on a Modified Basis and is unable to earn more than 66 2/3% of his or her Indexed Predisability Earnings.
The plan defines the term “Substantial and Material Duties” to mean “the essential tasks generally required by employers … in a particular occupation that cannot be modified or omitted.” The Plan defines “Own Occupation” to mean “the occupation the Member is routinely performing … as performed in the national economy.” And finally, “Modified Basis” means “working to his or her full medical and vocational capacity on a part-time basis.”
In 2005, Leipzig was diagnosed with double vision and crossed eyes. By April 2006, he had ceased performing surgery and sold his practice. Principle approved his disability claim effective June 15, 2006.
In February 2007, Leipzig resumed work on a limited basis and Principle continued pay on a reduced basis.
In September 2007, a Dr’s report was generated which stated Leipzig “is seeing patients in his office, so obviously he is not disabled performing all duties as a medical doctor.” Shortly thereafter Principle ceased paying benefits effective June 14, 2008.
Principle informed Leipzig by letter that Leipzig did not meet the definition of “totally disabled,” because he was capable of working full-time, and his income would be 100% of his pre-disability earnings if he did.
Principle said the only reason Leipzig was not working full-time was because there was not enough patients for him to justify full-time work and that did not qualify him for disability benefits.
The court focused on the words in the policy, “solely and directly”, to imply that a claimant’s “sickness, injury or pregnancy” must be the sole cause of his inability to earn more than 66 2/3% of his pre-disability earnings. Principle agreed that Leipzig was not earning that amount but insisted it was because of demand for his services and not because a disability kept him from the earnings.
In finding for Principle in this case the court stated, “The issue is whether Leipzig’s medical condition can be considered the sole cause of his reduced income, or whether, instead, his inability to obtain full-time employment on account of local market conditions is a contributing factor. The plain meaning of the Plan language implies the latter. But for his inability to find full-time employment as a non-surgical ENT in Brownwood, Leipzig is capable of working full time and earning more than 66 2/3% of his pre-disability income. His inability to do that is therefore not “solely and directly” caused by his medical condition.”
This case is much longer than appears here and a reading of it gives more insight into how the courts interpret these disability insurance policies.
Updated: