Acquista v. NY Life Ins. Co.

• Decision Date: 05 July 2001
• Parties: ANGELO ACQUISTA, Appellant,<BR>v.<BR>NEW YORK LIFE INSURANCE COMPANY, Respondent, et al., Defendants.
• Court: New York Supreme Court — Appellate Division

285 A.D.2d 73

730 N.Y.S.2d 272

ANGELO ACQUISTA, Appellant,

v.NEW YORK LIFE INSURANCE COMPANY, Respondent, et al., Defendants.

SAXE, J.

July 5, 2001.

Martin B. Adams of counsel (Glenn W. Dopf on the brief; Kopff, Nardelli & Dopf, L. L. P., attorneys), for appellant.

William J. Bradley, III, of counsel (James P. Chou, William B. Kerr, Jo Beth Eubanks and Pamela G. Matthews on the brief; Akin, Gump, Strauss, Hauer & Feld, L. L. P., attorneys), for respondent.

OPINION OF THE COURT

SAXE, J.

This appeal considers plaintiff's entitlement to insurance benefits under three disability insurance policies purchased through defendant insurance agents Jenny Kho and Helen Kho, and issued by defendant New York Life Insurance Company.

In November 1995, plaintiff, a physician with specialities in internal and pulmonary medicine, initially became ill. While an exact diagnosis turned out to be difficult, he underwent numerous bone marrow aspirates, biopsies, and cytogenetic examinations, including blood tests, which revealed abnormalities and the presence of a blood disorder. Dr. Acquista was ultimately informed of a possible diagnosis of myelodysplasia, a disease that might convert into leukemia. His treating physicians have instructed him to avoid exposure to radiation. Presently, he suffers generally from easy fatigue, headaches, and diffuse muscle and joint pain.

However, his application for disability benefits under the three disability insurance policies was rejected by the defendant insurer, on the ground that he can still perform some of "the substantial and material duties" of his regular job or jobs and therefore is not "totally disabled." This lawsuit followed, in which plaintiff brought claims for breach of contract, bad faith and unfair practices, fraud and fraudulent misrepresentation, and negligent infliction of emotional distress.

Upon defendants' motion under CPLR 3211, the Supreme Court granted dismissal of all plaintiff's causes of action except the one based upon the policy provision for residual and partial disability benefits. We now modify the order so as to reinstate a number of the dismissed causes of action.

The Breach of Contract Claims

In support of their motion for dismissal of plaintiff's first, second, and third causes of action, claiming breach of contract, defendants relied upon the language of the three disability insurance policies purchased by plaintiff. Two of those policies provided that the insured will be considered totally disabled if he cannot perform "the substantial and material duties" of his regular job or jobs. The third, somewhat more specifically, defined totally disabled as unable to perform "any of the substantial and material duties" of his regular job or jobs (emphasis supplied). Defendants emphasized that plaintiff is certified both as a pulmonologist and an internist, and assert that plaintiff is still able to perform some of the "substantial and material duties" of an internist.

In addition to the policies themselves, defendants relied upon a 1996 deposition of plaintiff in an unrelated action, at which he stated that in 1992 his practice consisted of both internal medicine and pulmonary medicine, and that he was at that time assistant chief of the Intensive Care Unit (ICU) at Lenox Hill Hospital, teaching the residents during their rotation through the ICU two to three times per week, as well as rotating through the ICU two months out of the year. He added that he was also Chairman of the Lenox Hill Hospital Quality Assurance Committee. Defendants further relied upon plaintiff's statements in a "Confirmation of Interview" form that he is not totally disabled, since he characterized his claim to be for "virtually total disability" from his pulmonary medicine practice. Finally, defendants pointed to a letter dated August 31, 1998, in which plaintiff's counsel stated that plaintiff "can still perform some substantial and material duties of other work activities, including other types of medical practice and certain other business, managerial and administrative activities."

In granting dismissal of these causes of action, the IAS court concluded that even though plaintiff was unable to perform bronchoscopies and other procedures using radiology during the relevant time period, he remained able to practice internal medicine as well as aspects of pulmonary medicine that do not necessitate exposure to radiation. We view this conclusion as a factual determination unwarranted in this context.

Upon review of a motion made pursuant to CPLR 3211, we are required to accept as true the allegations of the complaint (Guggenheimer v Ginzburg, 43 NY2d 268, 275). While factual claims flatly contradicted by indisputable documentary evidence are not entitled to such consideration (see, Biondi v Beekman Hill House Apt. Corp., 257 AD2d 76, 80-81, affd 94 NY2d 659), where the pleaded facts state a cause of action, documentary evidence may result in dismissal only where "it has been shown that a material fact as claimed by the pleader * * * is not a fact at all and * * * no significant dispute exists regarding it" (Guggenheimer v Ginzburg, 43 NY2d 268, 275). The documents relied upon by defendant insurer do not flatly disprove the allegations contained in the complaint. Consequently, the question of whether plaintiff can still perform "the substantial and material duties" of the regular job or jobs that he performed prior to the onset of his illness, is not amenable to determination here as a matter of law.

It is irrelevant whether plaintiff is still able to perform other types of tasks. To prevail on their motion, defendants' documents must conclusively establish, as a matter of law, that contrary to plaintiff's allegations, he is still able to perform "the substantial and material duties" of his regular job or jobs as they existed before he became ill. While in some cases it may be possible to make this determination as a matter of law (see, e.g., Taterka v Nationwide Mut. Ins. Co., 91 AD2d 568, affd 59 NY2d 743), in the present instance the determination requires the making of findings of fact, which is not proper in this context.

In plaintiff's affidavit in opposition to defendants' dismissal motion, he explains that prior to his disability, he earned about 90% of his income as a pulmonologist, and that he can no longer practice pulmonary medicine. Indeed, he explains that a pulmonologist is required to perform bronchoscopies, which he is now unable to do.

Further, from the record before us, it cannot be said as a matter of law that as to the remaining 10% of his income that he previously earned as an internist, he is still able to perform those "substantial and material duties" that he was performing at the time he became disabled. Initially, plaintiff explains that inasmuch as all pulmonologists are subspecialists within the specialty of internal medicine, all pulmonologists are by definition internists. However, as an internist, plaintiff can no longer even enter the ICU if any procedures involving radiation, such as fluoroscopies, are being performed. He explains that this prevents him from functioning competently as a treating physician. Further, he is now unable to treat patients in a hospital, because he becomes too easily fatigued.

Plaintiff adds that he receives no salary for certain other aspects of his work upon which defendants rely, such as his teaching position and that of Chairman of the hospital's Quality Assurance Committee.

The question therefore becomes whether those tasks that plaintiff is still demonstrably able to handle, such as seeing a limited number of patients who can make office visits, are substantial enough to amount to the ability to perform "the substantial and material duties" of his regular job or jobs as they existed prior to the onset of his illness. We consider this question to involve a factual determination, precluding dismissal of plaintiff's first, second and third causes of action at this juncture.

Bad Faith Conduct

Plaintiff's fifth and sixth causes of action allege a pattern of bad faith conduct and unfair practices on the part of defendant insurer, and claim resulting emotional distress as well as economic and non-economic injury. The claim that defendant insurance company acted in bad faith is founded upon allegations that it undertook a conscious campaign calculated to delay and avoid payment on his claims, while having determined at the outset that it would deny coverage. He sets forth defendant's ongoing pattern of avoiding the claim, by which it would make multiple requests for additional documentation, upon receipt of which further documents would be demanded, after which plaintiff's claims file would then be transferred to a new examiner, who in turn would make more requests. Plaintiff adds that defendant waited more than two years to request or schedule an independent medical examination.

In seeking dismissal of the bad faith claim, defendant asserts that New York law does not recognize an independent tort cause of action for an insurer's alleged failure to perform its contractual obligations under an insurance policy, relying upon Rocanova v Equitable Life Assur. Socy. (83 NY2d 603) and New York Univ. v Continental Ins. Co. (87 NY2d 308).

It is correct that, to date, this State has maintained the traditional view that an insurer's failure to make payments or provide benefits in accordance with a policy of insurance constitutes merely a breach of contract, which is remedied by contract damages (see, Rocanova, supra; New York Univ. v Continental, supra). Yet, for some time, courts and commentators around the country have increasingly acknowledged that a fundamental injustice may result when a traditional contract analysis is applied to circumstances where insurance claims were denied despite the insurers' lack of a reasonable basis to deny them (see generally, Note, The Availability of Excess Damages for Wrongful Refusal to Honor First ...