In Klay v. Axa Equitable Life Insurance Company, the insured was a cardiothoracic and vascular surgeon who purchased six disability insurance policies from the insurer in the 1980s. When purchasing the policies, the insured was notified that if he could no longer perform his full and complete duties as a cardiothoracic and vascular surgeon, he would be considered totally disabled.
When the insured applied for life insurance in 2006, his application was denied because the results of his blood tests showed that he had diabetes, high cholesterol, high triglycerides, and hypertension. In April 2007, the insured began to experience leg pain, and he eventually had to go to the hospital, where he was diagnosed with an acute pulmonary embolism. His doctor told him to cut down on his working hours at that time. Since then, the insured had been an insulin-dependent diabetic and has suffered many continuing symptoms of diabetes.
While he had been suffering from many different injuries and had cut down on his workload since initially being diagnosed in 2006, the insured still had performed multiple surgeries, as he operated about two days a week. In September, 2007, the insured informed the insurer that he wanted payment for 50% disability immediately and that he would probably be fully disabled within six months. He and the claims adjuster assigned to handle his claim had multiple disagreements, and he unsuccessfully attempted to talk to the adjuster’s supervisor about the situation. It was revealed that the adjuster was not required to undergo any training prior to starting his employment with the insurer, and since that time he had no additional education or training, beyond on-the-job training, concerning disability claims.
The insured filed a Complaint, alleging that the insurer failed to pay him total disability insurance benefits. One of the counts of the complaint was for a violation of the covenant of good faith and fair dealing. Concerning the bad faith allegation, the court noted that there was no action for a breach of the implied duty of good faith and fair dealing separate and distinct from the underlying breach of contract claim. It therefore subsumed the bad faith count within the breach of contract count.
The court then analyzed the breach of contract claim. The insured alleged that the insurer failed to conduct a proper investigation followed by a fair and equitable resolution of plaintiff’s claim. After a lengthy analysis, the court noted that the facts dictated that the insured was still earning his primary living as a cardiothoracic and vascular surgeon, showing that he clearly was not completely disabled. Even though the claims adjuster may have not been adequately trained or qualified to deal with the insured, he made the correct decision in the end. The court therefore granted the insurer’s Motion for Summary Judgment for the breach of contract claim, which effectively dismissed the bad faith allegations as well.
Date of Decision: September 28, 2010
Klay v. Axa Equitable Life Ins. Co., Civil Action No: 09-12, United States District Court for the Western District of Pennsylvania, 2010 U.S. Dist. LEXIS 102881 (Sept. 28, 2010) (Conti, J.)