Allianz Life Ins. Co. of N. Am. v. Muse
| Docket Number | 20-6026,20-6185,20-6186 |
| Decision Date | 26 August 2022 |
| Parties | ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA, Plaintiff Counterclaim Defendant-Appellee/Cross-Appellant, v. GENE L. MUSE, M.D. Defendant Counterclaimant-Appellant/Cross-Appellee, and PATIA PEARSON, Defendant. |
| Court | U.S. Court of Appeals — Tenth Circuit |
(D.C. No. 5:17-CV-01361-G) (W.D. Okla.)
Before TYMKOVICH, Chief Judge, LUCERO and MORITZ, Circuit Judges.
After falling from a ladder and sustaining injuries, Gene Muse filed a claim for benefits under his long-term-care policy with Allianz Life Insurance Company of North America. Allianz ultimately denied coverage and filed this action against Muse and his caregiver, Patia Pearson, alleging that they conspired to defraud and deceive Allianz and seeking a declaration that Muse was not entitled to benefits. Muse filed several counterclaims. After an order granting partial summary judgment to Allianz and a jury verdict in Muse's favor on the remaining claims, the parties appeal challenging the summary-judgment order, two pretrial orders and a posttrial order rejecting each parties' request for attorney fees. For the reasons that follow, we reverse in part, affirm in part, and remand for further proceedings.
Muse purchased an insurance policy for long-term care (the Policy) from Allianz and paid all required premiums over a ten-year period. To be eligible for benefits under the Policy, an insured must be "certified as being Chronically Ill which means," as relevant here, "being unable to perform, without Substantial Assistance, at least two Activities of Daily Living [ADLs] for a period of at least 90 days due to loss of functional capacity."[1] App. vol. 1, 55. ADLs are Bathing, Continence, Dressing, Eating, Toileting and Transferring, each of which is defined under the Policy. And "Substantial Assistance means hands-on or stand-by assistance of another person without which [the insured] would be unable to perform the [ADLs]." Id. (formatting omitted).
If an insured is eligible for benefits, the Policy provides Daily Benefits in the amount of $358.27, adjusted each year for inflation, for what it terms "Home and Community Services." Id. at 47. As relevant here, one type of Home and Community Service is "Home Care," which "is a program of services provided . . . through a Home Health Care Agency," including both "care by a Home Health Aide" and "homemaker services." Id. at 53 (formatting omitted). In turn, a "Home Health Aide is a person . . . who provides[] Maintenance or Personal Care" (among other services) "under the supervision of a Home Health Care Agency" and who is "duly licensed or certified under state law." Id. (formatting omitted). And "Maintenance or Personal Care . . . is any care provided primarily to give needed assistance" that results from "being Chronically Ill." Id. at 54 (formatting omitted).
Also relevant to this appeal, the Policy contains certain limitations and exclusions, including a provision excluding coverage for services for which an insured has "no financial liability or that is provided at no charge in the absence of insurance." Id. at 58. Muse also purchased an Indemnity Benefit Rider that forms part of the Policy. The rider provides that the payable benefit amount "will be equal to the full Daily Benefit shown in the Benefit Information section of the Benefit Schedule, regardless of actual charges incurred." Id. at 50. It further states that "[a]ll definitions, provisions, limitations, and exceptions of the Policy apply to [the] rider unless changed by [the] rider." Id.
II. The Accident and Insurance Claim
The events giving rise to this lawsuit started when Muse fell from a ladder, resulting in multiple injuries to his left foot, right knee, and both hands. After the accident, Muse closed his orthopedic-surgery practice and hired Pearson, a long-time friend and former romantic partner, to be his live-in caregiver. After Muse learned that the Policy required care to be provided by a Home Health Aide licensed under state law, Pearson took courses to become a certified Home Health Aide and obtained her certification from the Oklahoma State Department of Health. Muse then initiated a claim under the Policy, with the assistance of counsel, seeking Home and Community Service benefits for Home Care provided by Pearson. Muse advised Allianz that he was unable to perform several ADLs and provided a medical statement from his surgeon, Houshang Seradge.
Allianz subsequently informed Muse that Home Care must be provided by an employee of a healthcare facility, not an independent contractor. Pearson then arranged to provide her services under the supervision of AdLife HomeCare, LLC,[2] a licensed Home Health Care Agency, to comply with the Policy terms. Allianz then determined that Muse was eligible to receive benefits for Home Care Services provided by Pearson and AdLife from July 1, 2015, to January 26, 2016.
Soon after, a dispute arose as to whether Muse was Chronically Ill. as required to qualify for benefits under the Policy. Unbeknownst to Muse, Allianz had flagged Muse's claim for potential fraud and conducted video surveillance to determine if Muse's physical capabilities matched the documentation prepared by AdLife indicating that Muse needed assistance with several ADLs. According to Allianz, the video surveillance showed Muse engaging in various ADLs without assistance. As a result, Allianz concluded Muse was not Chronically Ill. as of November 23, 2015, and informed Muse that no further benefits would be provided for Home Care Services on or after that date.
Muse appealed and submitted additional medical information in support of his claim. After a lengthy back and forth, during which time Allianz requested additional information and arranged for an in-home nursing assessment, Allianz reversed its decision and reinstated Muse's Home Care Benefits from November 23, 2015, to January 1, 2016.
After reversing its decision to deny benefits, Allianz conducted another round of surveillance, which purportedly showed Muse walking and engaging in other physical activities without assistance. Subsequently, in response to a request from Allianz, Seradge provided Allianz with a Chronically Ill. statement indicating that Muse was able to independently perform the ADLs of Ambulation, Eating, and Transferring. But Seradge stated that he "[did] not know" if Muse needed assistance with Bathing, Continence, Dressing, and Toileting. App. vol. 3, 518. Shortly thereafter, Muse informed Allianz that he was treating with new physicians and Allianz should receive a report from Christopher Bouvette certifying that Muse needed stand-by assistance with the ADLs of Ambulation and Transferring and hands-on assistance with the ADLs of Bathing, Continence, Dressing, Eating, and Toileting.
After receiving Seradge's Chronically Ill. statement, Allianz notified Muse that Allianz would not approve Muse's Home Care benefits after April 21, 2017, because Seradge had not certified Muse as being Chronically Ill. Muse appealed and resubmitted Bouvette's report that certified Muse as being Chronically Ill. Allianz subsequently informed Muse that there was "conflicting medical evidence" as to whether Muse was Chronically Ill. which Muse disputed. App. vol. 6, 1496. Allianz filed this lawsuit prior to resolving Muse's second appeal.
III. The Lawsuit
Allianz sued Muse and Pearson for fraud and conspiracy to defraud. Allianz also sought recovery for benefits it asserted were improperly paid and a declaratory judgment that Muse was not entitled to additional benefits for services provided after April 22, 2017. Muse denied these allegations and counterclaimed for breach of contract, breach of the duty of good faith and fair dealing, fraud, and intentional infliction of emotional distress.[3] The district court dismissed Muse's claims for fraud and intentional infliction of emotional distress, a ruling Muse does not challenge on appeal.
Allianz then moved for partial summary judgment, and the district court granted that motion in part. As relevant here, the district court ruled that Allianz was entitled to a declaratory judgment that Home Health Care Services rendered by Pearson from April 22, 2017, to March 30, 2018, were not covered by the Policy.[4] It further agreed with Allianz that Muse's bad-faith counterclaim failed as a matter of law.
Allianz subsequently filed two motions in limine. The first sought to prevent Muse from presenting evidence of damages for time periods during which he was ineligible for benefits. The second sought to prevent Muse from asserting a claim for anticipatory repudiation on the ground that Muse was improperly asserting such claim on the eve of trial. The district court ruled in Allianz's favor on both issues. First, the district court prohibited Muse from presenting evidence of damages relating to time periods for which the district court had ruled Muse was ineligible for benefits. The district court also prohibited Muse from presenting evidence of damages for the loss of future benefits because it found that the loss of future benefits was too speculative. Second, the district court found that because Muse's newly asserted anticipatory-repudiation counterclaim failed as a matter of law, Muse could not present evidence of damages based on an anticipatory-repudiation theory. After these rulings, Muse acknowledged that nothing remained of his breach-of-contract counterclaim and omitted it from the pretrial report.
Allianz's fraud and conspiracy claims proceeded to trial, and the jury found in favor of Muse and Pearson. The district court subsequently entered judgment in favor of Muse and...
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