115 F.3d 908 (11th Cir. 1997), 95-4388, Fabric v. Provident Life & Acc. Ins. Co.

Docket Nº:95-4388, 95-4975.
Citation:115 F.3d 908
Party Name:Robert K. FABRIC, M.D., Robert K. Fabric, M.D., P.A., a Florida Professional Association, Plaintiffs-Appellees, v. PROVIDENT LIFE & ACCIDENT INSURANCE COMPANY, a Tennessee Corporation authorized to do business in the State of Florida, Defendant-Appellant.
Case Date:June 24, 1997
Court:United States Courts of Appeals, Court of Appeals for the Eleventh Circuit

Page 908

115 F.3d 908 (11th Cir. 1997)

Robert K. FABRIC, M.D., Robert K. Fabric, M.D., P.A., a

Florida Professional Association, Plaintiffs-Appellees,



Corporation authorized to do business in the State

of Florida, Defendant-Appellant.

Nos. 95-4388, 95-4975.

United States Court of Appeals, Eleventh Circuit

June 24, 1997

Page 909

[Copyrighted Material Omitted]

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John E. Meagher, Jeffrey M. Landau, Shutts & Bowen, Miami, FL, for Defendant-Appellant.

Martin G. Brooks, Hollywood, FL, for Plaintiffs-Appellees.

Appeals from the United States District Court for the Southern District of Florida.

Before TJOFLAT and BARKETT, Circuit Judges, and GODBOLD, Senior Circuit Judge.

GODBOLD, Senior Circuit Judge:

This is a removed diversity case brought by Dr. Robert K. Fabric and his professional association against Provident Life and Accident Insurance Company, which had issued disability insurance policies providing for payment of business expense if Dr. Fabric became disabled. Fabric did become disabled, and Provident made monthly payments amounting to $10,000 per month for twenty-four months. Two years after payments ceased Fabric filed this suit, claiming that he had been entitled to $20,000 per month. Provident asserted affirmative defenses including accord and satisfaction, rescission, waiver and estoppel. The district court granted summary judgment for Fabric, denying all of Provident's defenses. We REVERSE and DIRECT that summary judgement be entered for Provident.

In July 1983 Provident issued to Dr. Fabric an overhead expense disability insurance policy providing that if he became disabled it would pay covered expenses incurred in the operation of his business or profession up to $10,000 per month for twenty-four months. In December 1987 Fabric applied to Provident for additional business expense coverage of $10,000 per month in the event he became disabled. In March 1988 Provident issued a new policy that provided for payment of up to $20,000 per month for twenty-four months. The new policy stated "this policy is issued in lieu of and replaces policy number 6-BE-571223, dated July 25, 1983."

The December 1987 application required Fabric to state whether he had or was applying for other disability income coverage or overhead expense disability coverage. He responded by giving information on two individual disability policies that had been issued by Provident (that is, with benefits payable to Fabric but unrelated to his business expense), and the 1983 policy issued by Provident. He did not reveal disability policies issued by two other companies, Monarch Life and MGIS, that provided for benefits of approximately $11,500 per month.

In February 1989 Fabric became disabled. His disabled status is not disputed. In March 1989 he submitted to Provident through his attorney, Leslie Zuckerman, a single notice of claim asserting benefits under Provident's two individual policies and the March 1988 overhead expense policy. 1 In an accompanying letter Zuckerman stated that Fabric desired that future correspondence

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regarding the claim be through Zuckerman's office.

In June 1989 Provident made an initial payment under the 1983 policy of some $28,000. 2 However, in reviewing Fabric's status Provident discovered other disability insurance coverage that had not been revealed in the December 1989 application. It commenced an investigation to determine whether pursuant to its underwriting guidelines it would have issued the 1988 policy had it known of the undisclosed insurance. In July 1989 Provident notified Fabric's attorney that until the matter was resolved it would pay Fabric the $10,000 per month benefit that Fabric would be entitled to under the 1983 policy if it had not been replaced by the 1988 policy, and it continued to make such monthly payments.

After full investigation and review Provident concluded that, counting the undisclosed coverage, Fabric was grossly overinsured. It notified Fabric's attorney that it would not have issued the 1988 policy had it known of the non-disclosed policies because the total insurance already in force at the time of the December application exceeded the limits of the coverage it would write. On November 29, 1989 Provident wrote Zuckerman:

Our Underwriting Department has reviewed the information concerning Dr. Fabric's disability coverage with us and other carriers. The amount of disability insurance in force exceeds the limits of coverage we would have been willing to issue.

The 12/14/87 application for overhead coverage did not contain the complete outline of disability insurance coverage in force at the time. Had our Underwriting Department been aware of the extent of disability coverage in force the 12/14/87 application would not have been approved and no additional overhead expense coverage would have been issued. Again the reason being that Dr. Fabric's coverage already in force at the time of the 12/14/87 application exceeded our Underwriting approval limits. This rule applies to both overhead and disability income coverage as well.

Our only choice was to reissue Policy # 06 BE 571223 [the 1983 policy] which we have enclosed.... Should you have any questions concerning this please do not hesitate to contact us. (bracketed material added).

In January 1990 Provident sent to Fabric a check for $939 with a reference that it was unearned premium on the 1983 policy. Fabric's office inquired about the check, and Provident wrote that it represented the difference between the premiums for the 1988 policy and the 1983 policy. Fabric did not respond and never cashed the check. He made no response to Provident's reissuance of the...

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