Matthew v. Unum Life Ins. Co. of Am.
| Decision Date | 25 April 2011 |
| Docket Number | No. 10–2514.,10–2514. |
| Citation | 639 F.3d 857 |
| Parties | Albert David MATTHEW, M.D., Plaintiff–Appellee,v.UNUM LIFE INSURANCE COMPANY OF AMERICA, Defendant–Appellant. |
| Court | U.S. Court of Appeals — Eighth Circuit |
OPINION TEXT STARTS HERE
Terrance J. Wagener, argued, Molly R. Hamilton, on the brief, Minneapolis, MN, for appellant.Richard D. Snyder, argued, Sten–Erik Hoidal, on the brief, Minneapolis, MN, for appellee.Before LOKEN, MELLOY, and SHEPHERD, Circuit Judges.MELLOY, Circuit Judge.
Albert David Matthew, M.D. (“Matthew”), a urologic surgeon, brought this action against Unum Life Insurance Company (“Unum”), seeking disability benefits under the terms of his disability insurance policy with Unum. The case was tried to a jury, which found that Matthew was entitled to residual disability benefits. Unum appeals several district court orders following the verdict. Specifically, Unum contends the district court erred in granting Matthew's post-trial motion to correct the special verdict, in awarding prejudgment interest, and in denying Unum's post-trial motions for judgment as a matter of law, a new trial and declaration of a mistrial. For the reasons stated below, we affirm in part and reverse in part.
On March 27, 1990, Unum issued a disability income policy (“the Policy”) to Matthew. Pursuant to the Policy, Unum was obligated to pay Matthew “the Monthly Benefit Amount” in any month after an initial ninety-day “elimination period” that Matthew was “totally disabled or experience[d] at least a 20% loss of net income in his regular occupation as a result of a present injury or sickness.” Under the terms of the Policy,
‘Gross revenue’ means any income received by the Insured or his business for personal services performed by him in his regular occupation. 1 ...
‘Net income’ means gross revenue minus the Insured's share of the usual and customary business expenses which he or his company incurs on a regular basis and are essential to his established business operation....
‘Prior net income’ means the largest of: (1) the Insured's average monthly net income for the last 12 months before the Elimination Period began; (2) the Insured's average monthly net income for the 12–month period immediately before those 12 months; or (3) the highest average monthly net income for any two consecutive years of the last 5 years before the Elimination Period began....
‘Loss of net income’ means the Insured's indexed 2 prior net income minus the net income he received for the month to which a payment relates....
‘Regular occupation’ means the Insured's occupation at the time the Elimination Period begins....
Before becoming disabled, Matthew practiced as a urologic surgeon for eighteen years. He was the founding partner of Adult & Pediatric Urology, PLLP (“APU”) in St. Cloud, Minnesota, where his practice involved in-office consultations and procedures as well as surgeries. Following an ankle injury in 1993, Matthew developed a degenerative ankle condition, which caused the major weight-supporting bone in his ankle to deteriorate and, eventually, collapse. This interfered with Matthew's ability to walk or stand at the operating table for any prolonged period of time. In 1996, on the advice of his treating doctor, Matthew stopped doing surgical procedures that required standing for more than an hour and a half.
On August 22, 1996, Matthew advised Unum in writing that he intended to make a claim for disability benefits under the Policy, and on February 19, 1997, he submitted a disability claim to Unum requesting total disability benefits. According to the Policy,
‘Total disability’ and ‘totally disabled’ mean injury or sickness restricts the Insured's ability to perform the material and substantial duties of his regular occupation to an extent that prevents him from engaging in his regular occupation.
‘Residual disability’ and ‘residually disabled’ mean injury or sickness does not prevent the Insured from engaging in his regular occupation, BUT does restrict his ability to perform the material and substantial duties of his regular occupation: (i) for as long a time as he customarily performed them before the injury or sickness; or (ii) as effectively as he customarily performed them before the injury or sickness.
The amount of benefits owed under the Policy is calculated differently depending on the extent of Matthew's disability. In any given month, if Matthew “is totally disabled or [his] loss of net income is 75% or more,” Unum is required to pay “the Maximum Disability Benefit,” which is a fixed dollar amount of $11,924, for that month. If, however, Matthew's “loss of net income is less than 75% but at least 20%,” the amount payable is determined by the following formula:
loss of net income x Maximum Disability Benefit
prior net income
In March, June, July and August of 1997, Unum requested certain financial information from Matthew, including copies of Matthew's office billing records, appointment book, surgical schedules, and his personal and business tax returns. The record reflects that Matthew signed releases allowing Unum to request his surgical schedules from the hospitals at which he worked, and that Unum received Matthew's surgical schedules for the period January 1, 1995 to April 2, 1997 from Columbia St. Cloud Surgical Center. However, Matthew refused to provide his personal or business tax returns, arguing that they were not relevant to his entitlement to benefits.
On August 19, 1997, Unum notified Matthew that it did not have the necessary financial information to determine whether he was totally or residually disabled under the Policy. Unum renewed its request for copies of Matthew's billing records and appointment book and advised Matthew's counsel that “failure to provide this information may result in our inability to make a liability decision on Dr. Matthew's claim.” On September 19, 1997, Unum warned that failure to provide additional information by September 26, 1997 “will result in the closing of our handling of Dr. Matthew's claim file.” On September 29, 1997, Unum indicated that because it had received no additional information from Matthew, it was unable to accurately adjudicate Matthew's claim and, therefore, could not provide residual or total disability benefits to Matthew. However, Unum invited Matthew to forward any additional information to its office at any time for prompt review.
On September 23, 2004, represented by new counsel, Matthew renewed his request for disability benefits under the Policy, and provided Unum with summary financial records for APU dating back to 1997. These records showed both income earned by Matthew in providing professional services to his patients and passive income distributed to him as a partner of APU under APU's profit-sharing arrangement. On April 20, 2005, Matthew furnished Unum with his production billing records dating back to 1996, excluding the records already provided. However, Matthew continued to resist providing his personal and business tax returns. On May 2, 2005, Unum advised Matthew that without his tax returns, it was unable to accurately calculate his prior monthly income and current monthly income for purposes of determining whether there was a loss of income of at least twenty percent or greater for the claimed period of disability. Nevertheless, Unum agreed to issue total disability benefits from September 23, 2004 onwards under a reservation of rights.3 On May 16, 2005, Matthew provided Unum with his personal and business tax returns for the tax years 1991 through 2003. Thereafter, he provided tax returns for 2004 and 2005.
On May 2, 2008, Unum concluded that Matthew became totally disabled within the meaning of the Policy on July 12, 2005 because that was the date on which he stopped working completely due to his condition. Unum further determined that Matthew did not qualify for residual disability benefits prior to July 12, 2005 because he did not incur a twenty percent or more loss in net earnings for the years 1996 through 2005. Therefore, Unum requested that Matthew repay the benefits he had been paid under a reservation of rights for the period September 23, 2004 through July 11, 2005.
On June 11, 2008, Matthew commenced the instant action in the District Court for the District of Minnesota, seeking total disability benefits or, in the alternative, residual disability benefits, for the period October 1, 1996 through July 11, 2005. Unum counter-claimed for repayment of $114,470.48 in benefits already paid to Matthew under a reservation of rights. Specifically, Unum sought $83,474 in benefits paid to Matthew before July 12, 2005, as well as benefits paid to him during the ninety days after July 12, 2005, under the theory that the Policy's ninety-day elimination period should have started on that date. The district court denied the parties' cross motions for summary judgment, and the matter was tried to a jury beginning on January 4, 2010.
At trial, Unum argued that Matthew was not entitled to residual disability benefits because his tax returns demonstrated that his taxable income did not decrease by twenty percent or more after 1996. Matthew argued that he was entitled to residual disability benefits from October 1, 1996 onwards because the revenue generated from services that he himself performed declined by twenty percent or more after that date. He pointed to APU's allocation sheets, which showed that, as a result of his injury, his personal production declined from twenty-five percent of the APU partners' overall production in 1995, when APU had four partners, to eight-and-a-half percent in 1999, when there were six partners, and three percent in 2004, when, again, there were six partners. Matthew argued that his taxable income was irrelevant because it included his distribution of partnership profits, which was a proportion of the revenue generated by APU's combined staff and,...
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