Kruzel v. UNUM Life CV-97-414-M 11/06/98 UNITED STATES DISTRICT COURT

DISTRICT OF NEW HAMPSHIRE

Dr. Paul Kruzel, Plaintiff

v. Civil No. 97-414-M

UNUM Life Insurance Company of America, Defendant

O R D E R

This action is a coverage dispute between the plaintiff. Dr

Paul Kruzel, and his disability insurer, the defendant UNUM Life

Insurance Company of America ("UNUM"). The parties have filed

cross motions for summary judgment. For the reasons that follow

the defendant's motion is granted and the plaintiff's motion is

denied.

Standard of Review

Summary judgment is appropriate when the record reveals "no

genuine issue as to any material fact and . . . the moving party

is entitled to a judgment as a matter of law." Fed. R. Civ. P.

56(c). When ruling upon a party's motion for summary judgment,

the court must "view the entire record in the light most

hospitable to the party opposing summary judgment, indulging all

reasonable inferences in that party's favor." Griqqs-Rvan v.

Smith,

(1st Cir. 1990).

The moving party "bears the initial responsibility of

informing the district court of the basis for its motion, and identifying those portions of [the record] which it believes

demonstrate the absence of a genuine issue of material fact."

Celotex Corp. v. Catrett,

(1986) . If the

moving party carries its burden, the burden shifts to the

nonmoving party to demonstrate, with regard to each issue on

which it has the burden of proof, that a trier of fact could

reasonably find in its favor. DeNovellis v. Shalala,

(1st Cir. 1997) .

At this stage, the nonmoving party "may not rest upon mere

allegation or denials of [the movant's] pleading, but must set

forth specific facts showing that there is a genuine issue" of

material fact as to each issue upon which he or she would bear

the ultimate burden of proof at trial.

(guoting Anderson v.

Liberty Lobby, Inc.,

(1986)). In this context,

"a fact is 'material' if it potentially affects the outcome of

the suit and a dispute over it is 'genuine' if the parties'

positions on the issue are supported by conflicting evidence."

Intern'1 Ass'n of Machinists and Aerospace Workers v. Winship

Green Nursing Center,

(1st Cir. 1996)

(citations omitted).

Background

The plaintiff is a dentist who, in 1987, suffered the

accidental amputation of his left thumb. The thumb was

surgically replanted by Dr. Deborah Ekstrom and the plaintiff was

able to resume practicing dentistry. In 1989, plaintiff

2 purchased a dental practice in Concord, New Hampshire, and

operated it as a sole practitioner. On June 6, 1991, he bought a

Disability Income Policy (the "Policy") from the defendant. The

policy included a Future Insurance Option Rider (the "Option

Rider") that entitled plaintiff to apply for additional

disability income benefits within a defined option period.

In late 1992, plaintiff began experiencing discomfort and

tingling in his hands. He was diagnosed as suffering from carpal

tunnel syndrome. Carpal tunnel release surgery was performed on

his left arm on December 18, 1992. The surgery relieved the

plaintiff's discomfort for approximately a year. Then, in late

1993 or early 1994, the symptoms returned. On July 14, 1994,

plaintiff sought medical attention for those symptoms, consulting

Dr. J. Cletus Baier. On March 20, 1995, he exercised the Future

Insurance Option Rider on the Policy. The rider's effective date

was June 6, 1995.

Plaintiff continued to seek medical treatment of the

discomfort in his hands and was eventually advised by Dr. Ekstrom

on May 15, 1995, that he was "unable to continue in his present

occupation" and that he should "consider alternative careers."

On June 14, 1995, plaintiff put his dental practice up for sale

and, on August 7, 1995, he filed a disability claim with the

defendant, listing that day as the start of his disability.

UNUM began paying disability benefits under the original

Policy, but denied coverage under the Option Rider based on an

3 exclusion applicable to disabilities beginning before the

effective date of the Option Rider.

Plaintiff filed this action in state court, seeking a

declaration that UNUM is obligated to pay him benefits under the

Option Rider. Following removal of the case to this court, both

parties filed cross motions for summary judgment.

Discussion

The parties' initial dispute concerns the burden of proof in

the underlying action. The suit was brought under New

Hampshire's declaratory judgment statute, N .H .Rev.Stat.An n .

("RSA") § 491:22 (1997), which provides in part that "[a]ny

person claiming a present legal or eguitable right or title may

maintain a petition against any person claiming adversely to such

right or title to determine the guestion as between the parties,

and the court's judgment or decree thereon shall be conclusive."

We look to New Hampshire law to determine which party has the

burden of proof, as that guestion involves substantive, rather

than procedural, law. See Suburban Const. Co, Inc. v. Sentry

Ins.,

, 171 n.l (D.N.H. 1993).

Plaintiff contends that UNUM bears the burden of proof under

RSA 491:22-a (1997), since the case relates to insurance

coverage. That section provides: "In any petition under RSA

491:22 to determine the coverage of a liability insurance policy,

the burden of proof concerning the coverage shall be upon the

insurer whether he institutes the petition or whether the

4 claimant asserting the coverage institutes the petition." UNUM

counters that according to its plain language, the statute only

applies to coverage disputes over liability insurance policies,

and the policy at issue here is not a liability policy. See

Johnson v. Watts Regulator Co.,

, at *6 (D.N.H.

Oct. 26, 1994) (declining to apply N .H .Rev.Stat.Ann. § 491:22-a

where policy at issue was not a liability policy), aff'd ,

(1st Cir. 1995). Plaintiff rejoins that the New Hampshire

Supreme Court has not interpreted the section in that manner, but

has broadly applied it — even in cases involving other than

liability policies. See e.g., Trombly v. Blue Cross Blue Shield

of New Hampshire - Vermont,

(1980)(medical benefits

insurance policy); Curtis v. Guaranty Trust Life Ins. Co.,

(1989) (accident policy covering plaintiffs' minor

daughter).

In both Trombly and Curtis, however, the court merely

referenced § 491:22-a in passing. In neither case did the court

sguarely address the contention that the statute applies only to

cases involving liability insurance. This court is confident

that if called upon to construe § 491:22-a in a context like that

presented here, the New Hampshire Supreme Court would likely

reach the same conclusion. RSA 491:22-a is not applicable to

cases involving insurance policies that are not liability

policies. See Hutton v. Essex Group, Inc.,

(D.N.H. 1994) (noting that where an issue has not been decided by

the state's courts or legislature, a federal court exercising

5 diversity jurisdiction may predict how the state supreme court

would decide the issue); Johnson v. City of Laconia,

(1996)(where language of statute is plain and

unambiguous, court need not look beyond language to discern

legislative intent).

As RSA 491:22-a does not apply, "the burden in this case is

not shifted to the defendant[] . . . but remains with the

plaintiff under traditional New Hampshire contract principles

placing the burden on the party arguing the contract has been

breached." New Hampshire Ball Bearings v. Aetna Cas.,

(D.N.H. 1994), rev'd on other grounds,

(1st Cir. 1995). In any event, notwithstanding some

skirmishing over which of them bears the initial burden of

producing evidence that an applicable exclusion exists, the

parties do appear to agree that the ultimate burden of persuasion

rests with the plaintiff. See, e.g.. Lamb v. Insurance Company,

(1936) ("Although the duty of adducing some

proof that the plaintiff was responsible for the fire devolved

upon the defendant, no logical reason appears for holding

inapplicable the usual rule which places 'upon a plaintiff the

general risk of non-persuasion.'"); Trepanier v. Insurance Co.,

(noting that the plaintiff "was reguired to show

facts making the exclusions and exceptions of the policies

inapplicable"). Thus, the plaintiff will be treated, for

purposes of resolving these summary judgment motions, as having

the ultimate burden of proof at trial on the issue of coverage.

6 UNUM contends that it is entitled to summary judgment

because there is no genuine issue as to the one material fact —

that the plaintiff's disability began before the Policy's

effective date, and, therefore, it is entitled to judgment as a

matter of law. Plaintiff, on the other hand, argues that because

UNUM cannot prove that he was disabled prior to the policy's

effective date he is entitled to judgment declaring that benefits

under the Option Rider are due him.

The Option Rider provides that "no benefit will be payable

under the new coverage for any disability that begins before the

effective date of the new coverage unless you return to work full

time for at least six months while the new coverage is in

effect." Disability and disabled are defined in the policy as

"the period while you are satisfying the Elimination Period, or

while the Total Disability Benefit, the Residual Disability

Benefit or the Loss of Use Benefit is payable." (Policy at 6.).

Neither the Total Disability Benefit nor the Loss of Use Benefit

is at issue here.

The Elimination Period begins on the first day of total or

residual disability and consists of the 90 days before the date

benefits are payable "during which you are totally or residually

disabled." (Policy at 7.) The Policy provides that "[i]f the

disability ceases before you satisfy the Elimination Period and

you become disabled again from the same cause within 6 months, we

will combine those periods of disability to determine when

benefits begin." (Policy at 7.)

7 The Policy's definition of residual disability and

residually disabled depends on whether the Elimination Period has

been satisfied. During the Elimination Period the terms mean:

1. injury or sickness does not prevent you from engaging in your regular occupation, BUT does restrict your ability to perform the material and substantial duties of your regular occupation: a. for as long a time as you customarily performed them before the injury or sickness; or b. as effectively as you customarily performed them before the injury or sickness; and 2. you are receiving medical care from someone other than yourself which is appropriate for the injury or sickness. We will waive this reguirement when continued care would be of no benefit to you.

(Policy at 7.) The post-Elimination Period definition is as

follows:

After the Elimination Period has been satisfied, "Residual disability" and "residually disabled" then mean that as a result of the same injury or sickness which caused you to satisfy the Elimination Period: 1. you experience at least a 20% loss of net income in your regular occupation; and 2. you are receiving medical care from someone other than yourself which is appropriate for the injury or sickness. We will waive this reguirement when continued care would be of no benefit to you.

(Policy at 7. )

Interpretation of the Policy is governed by state law. See

LaSorsa v. UNUM Life Ins. Co.,

(1st Cir. 1992).

Under New Hampshire law, construction of policy language presents

a guestion of law for the court to decide. See Calabraro v.

Metropolitan Prop. & Cas. Ins. Co.,

(1997).

The court "construe[s] the terms of the policy as would a

reasonable person in the position of the insured on more than a

casual reading of the policy as a whole."

(guoting Brouillard v. Prudential Prop. & Cas. Ins. Co.,

(1997) .

UNUM maintains that the plaintiff's disability began "well

before" June 6, 1995, since his medical and financial records

indicate that the hours he worked and his effectiveness at work

declined steadily between August 1994 and June 6, 1995. UNUM

relies on the following undisputed facts. Plaintiff reported to

Dr. Ekstrom on August 17, 1994, that his symptoms were

interfering with his work. (Ekstrom Dep. at 20-21; PI. Dep. At

48.) On August 18, 1994, plaintiff reported to Dr. Ralph D.

Beasley that he had to decrease his working hours "from a full

eight hours a day to stopping around 3:30 in the afternoon."

(Beasley Dep. at 28; Pi. Dep. at 55; Beasley Ex. 4.) He also

told Dr. Beasley that he was dropping his dental instruments.

(Beasley Dep. at 29; Pi. Dep. at 57; Beasley Ex. 4.) On August

23, 1994, he informed Dr. H. James Forbes that he had cut back on

his work time and was working only four days a week. (Pi. Dep. at

72; Pi. Ex. 5.) On September 15, 1994, Dr. Baier noted in his

records that plaintiff "has had to continue to alter work hours

and take breaks because of pain in the thumb as wellas cramping

in the forearm on the left." (Decker Aff. Ex. 2.) In office

notes dated January 12, 1995, Dr. Baier observed that even with

pain medication plaintiff had to "take breaks during the day and

sometimes curtail his whole work day because of lingering pain."

(Decker aff. Ex. 3.)

9 While plaintiff does not concede that the pain in his hands

adversely affected his work performance, he controverts only one

of his doctors' reports recording a decrease in or rearrangement

of the hours he was able to work (See Pi. Dep. at 100 (disputing

Dr. Beasley's report of 20 hours per week).) On the undisputed

facts, a reasonable jury could only conclude that the plaintiff

was experiencing over this period a restriction in his ability to

work "as long a time as [he] customarily" had. Therefore, there

is no genuine dispute of material fact as to that issue. See

Anderson v. Liberty Lobby, Inc.,

(1986)

(dispute about a material fact is genuine "if the evidence is

such that a reasonable jury could return a verdict for the

nonmoving party"). Under the terms of the Policy, the

Elimination Period was triggered some time prior to June 6, 1995.

UNUM next points out that plaintiff's disability could not

have begun before July 14, 1995, the day he first consulted Dr.

Baier about his symptoms, as the definition of residual

disability reguires that the insured be receiving appropriate

medical care from someone other than himself. Assuming then,

UNUM's argument continues, that plaintiff's disability began

between July 14, 1994 and June 6, 1995, that disability could not

have ceased such that a new disability commencing on August 7,

1995, the day plaintiff claims his disability started, could

gualify under the Policy as a separate carpal tunnel related

disability.

The Policy defines a successive disability as follows:

10 A period of disability which follows a past period of disability will be considered a separate period of disability only if the subsequent period of disability is : 1. caused by a different injury or sickness than the one which caused the past period of disability; or 2. separated from the last period of disability by at least six months during which you are able to return to work full time in your regular occupation. Any such separate period of disability will be considered a new disability; it will be subject to its own Elimination Period and Maximum Benefit Period and will be subject to all policy requirements. Any other subsequent period of disability will be considered an extension of the past period of disability.

UNUM contends that because no six month period intervened between

plaintiff's periods of disability during which plaintiff was able

to return to work full time, he suffered a continuing period of

disability beginning prior to the Option Rider's effective date.

UNUM supports its argument with a report by its economic

expert, James Gravel. The report posits alternative disability

starting points of August, September, and October, 1994, and then

calculates the prior net income, as defined in the Policy, for

each starting point. The report demonstrates that no matter what

starting point is used, there is no six month period between

periods of disability during which plaintiff returned to work

full time. Thus, under the successive disabilities provision of

the Policy, the plaintiff's August 7, 1995 disability is a

continuation of the prior disability, as defined by the Policy's

terms.

An example may clarify UNUM's argument. Assuming a start

date of August 1, 1994, prior net income, as defined by the

policy is $29,522 (See Gravel Aff. Ex. 4; see also Ex. 7 to Mem.

11 of Law in Supp. of Pl.'s Obj. to UNUM's Mot. for Summ. J. and

Pl.'s Cross Mot. for Summ. J. ("Pl.'s expert opinion")(computing

same highest average month net income). Eighty percent of that

figure is $23,617 (See Pl.'s expert opinion). Assuming

plaintiff's symptoms did not abate during that period, the

Elimination period would run from August through October, 1994.

From November, 1994 through February, 1995 plaintiff's monthly

income was less than $23,617. Thus, plaintiff was residually

disabled under the Policy. In March, 1995, plaintiff's income

was $24,655, so he was not disabled under the policy's terms. In

April, however, plaintiff's income again dropped below $23,617

and remained below that figure in May, June, July and August.

Plaintiff was, therefore, disabled during that period. As the

May to August period is separated from the last period of

disability by only one month (March), it is "considered an

extension of the past period of disability" (Policy at 9). Thus,

plaintiff's disability in August, 1995, for which he seeks

benefits under the Option Rider, would, under the policy's terms,

be the same disability as existed prior to June 6, 1995.

UNUM's expert performed the same calculations for starting

months of September and October and obtained similar results.

UNUM does not run a calculation for any date after October 1,

1994, because after satisfying the 90 day Elimination Period,

there would be fewer than six months remaining until June, 1995.

Plaintiff attaches some significance to the defendant's

failure or inability to "identify a specific disabling event or

12 specific disability date." The Policy, however, does not require

the occurrence of a disabling event, and, although the ninety-day

Elimination Period must, of necessity, start on some date, UNUM's

inability to precisely determine that date is not fatal. UNUM

has shown that the disability started some time before June 6,

1995, that it could not have started prior to July 14, 1994, and

whatever date between those two is identified as the actual start

date, the disability experienced on August 7, 1995, was an

extension of the prior disability. Plaintiff is therefore not

entitled to benefits under the Option Rider.

Conclusion

For the foregoing reasons, the defendant's motion for

summary judgment (document no. 6) is granted and plaintiff's

cross-motion for summary judgment (document no. 8) is denied.

SO ORDERED.

Steven J. McAuliffe United States District Judge

November 6, 1998

cc: Arthur W. Perkins, Esq. Gordon A. Rehnborg, Jr., Esq. Byrne J. Decker, Esq.

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