Continental Cas. Co. v. Novy, 3-779A185

• Decision Date: 29 June 1982
• Docket Number: No. 3-779A185,3-779A185
• Citation: 437 N.E.2d 1338
• Parties: CONTINENTAL CASUALTY COMPANY, Defendant-Appellant, v. Charles A. NOVY, M.D., Plaintiff-Appellee.
• Court: Indiana Appellate Court

Page 1338

437 N.E.2d 1338

CONTINENTAL CASUALTY COMPANY, Defendant-Appellant, v. Charles A. NOVY, M.D., Plaintiff-Appellee.

No. 3-779A185.

Court of Appeals of Indiana Third District.

June 29, 1982.

William E. Borror, Hunt, Suedhoff, Borror, Eilbacher & Lee, Fort Wayne, for defendant-appellant.

Thomas S. Locke, James A. Federoff, Fort Wayne, for plaintiff-appellee.

GARRARD, Judge.

Dr. Charles A. Novy began practicing medicine in Garrett, Indiana in 1951. He was engaged in a general practice of medicine, which included obstetrics, routine surgery, the setting of fractures, and the administering of anesthetics.

In 1966 Continental Casualty Company offered an occupational disability policy to members of the Indiana State Medical Association. Dr. Novy sent in an application for coverage and Continental accepted him as an insured. The doctor received a five year accident and two year sickness occupational disability policy providing for monthly benefits of $800 in the event of disability.

In February of 1967 Novy's hands became excessively dry and the skin began to crack open. Novy consulted with a dermatologist who diagnosed the condition as radiodermatitis, an injury resulting from exposure to x-rays. The exposure to such radiation occurred In 1969 an ulcer developed on the back of the doctor's right hand, for the treatment of which he consulted with a doctor at the Cook County Hospital burn unit in Chicago. Medication healed the ulcer but substantial scar tissue remained.

in the course of Novy's practice. Dr. Novy had used a fluoroscope to x-ray fractures while he set them, and in so doing he had repeatedly exposed his hands to the x-rays. Upon discovering the source of his affliction the doctor ceased all work with x-rays. However, the effects of the exposure to radiation were irreversible and the problems with his hands worsened. The doctor testified that in late 1967 his hands began to stiffen, forcing him to give up the surgical and obstetrical procedures in his practice.

In August of 1970 Continental proposed an increase in coverage and benefits for the doctor. Continental offered him increased benefits of $1000 a month on his occupational disability policy and additional coverage under a general disability policy. In his application Novy advised Continental that he had physical difficulties with his hands, stating in the application that he had radiodermatitis of his right hand which was being treated and was improving. Continental then issued the doctor the two policies discussed below, but attached an elimination endorsement to each policy. The elimination endorsements provided that any loss caused or contributed to by "skin disorder" would be excluded from the increased benefits. The maximum indemnity payable under either policy for loss attributable to the skin disorder was $800 a month, the same amount as provided for in the initial policy entered into in 1966. Under these terms Novy tendered his premiums.

In November of 1970 Novy underwent surgery on his right hand. A skin graft was made to correct scar tissue left from the ulceration suffered in 1969. During the period that he was absent from his practice due to the skin grafting, he applied for and received benefits of $800 a month from Continental Casualty.

In April of 1971 the graft healed and Novy returned to his practice. He described his activities as seeing patients and giving anesthetics. However, he did not perform surgery, obstetrics, or anything in which he would have had to use his hands "in a delicate way."

Throughout 1971 the condition of the right hand continued to deteriorate. Warty growths and ulcers developed on the joints of the fingers of the right hand.

In February of 1972 Continental again offered the doctor increased benefits. The doctor elected to increase the indemnity payable to $1,200 a month on both policies. In his application the doctor stated that he had chronic radiation burns on his right hand. The policies returned by Continental contained elimination endorsements identical to those in the policies issued in 1970.

Also in 1972 Novy consulted with a plastic and reconstructive surgeon, Dr. Brucker. The diagnosis was that the condition of the right hand had so deteriorated that the amputation of the middle and ring finger was necessary. In September of 1972 the two fingers were amputated. Also, the index finger was grafted to the abdominal wall in an effort to reduce the ulceration on that finger. The index finger was removed from the abdominal wall several weeks later. Further revisionary work was done on the stumps of Novy's fingers in March of 1973. Throughout this period the doctor was not practicing. He applied for and was receiving benefits of $800 a month from Continental.

In April of 1973 Novy reopened his practice, although he did not notify Continental. At this point his right hand was essentially useless and the left hand was beginning to stiffen. He described his activities as a winding down of his practice, getting patients' records together and referring them to other doctors. An agent of Continental discovered that Novy was working and the benefits were halted. In December of 1973 Novy closed his practice.

In January of 1974 he became employed as a staff physician at the Veterans Administration Hospital in Fort Wayne. He described In April of 1977 the doctor filed suit against Continental, alleging that it was in breach of contract for failure to pay him disability benefits to which he was entitled. Trial without a jury was commenced on July 11, 1978. On November 15, 1978 the court made its first special findings of fact, conclusions of law and judgment, to which both parties filed motions to correct errors. The court denied both motions but amended its special findings of fact, conclusions of law and judgment. The court found that under the terms of the policies Dr. Novy was disabled and entitled to benefits of $1200 a month for as long as he was so disabled. Both parties again filed motions to correct errors, which were overruled. ¹ This appeal followed.

the duties of the position as the treatment, examination and diagnosis of patients. He was not authorized or capable of doing surgical procedures and he could not tolerate the scrubbing and cleansing process required for any sterilized procedure. He worked in this capacity at the V.A. Hospital until the summer of 1978, when he took a sick leave.

The appellant Continental raises these issues:

1. Whether the trial court's judgment awarding the plaintiff benefits under either of the insurance policies for an "injury" occurring prior to the effective dates of the policies was contrary to law and not supported by the evidence.

2. Whether the judgment of the trial court was contrary to law and not supported by the evidence in regard to Dr. Novy being "disabled" within the meaning of the "occupational" disability insurance policy.

3. Whether the judgment of the trial court was contrary to law and not supported by the evidence in regard to Dr. Novy being "disabled" within the meaning of the "total" disability insurance policy.

4. Whether the decision of the trial court that the "elimination endorsement" was inapplicable was contrary to law and not supported by the evidence.

5. Whether the trial court committed reversible error in refusing to grant the defendant a new trial under Indiana Rules of Procedure, Trial Rule 59(A)(6) because of newly discovered evidence, which evidence was not available at the time of trial.

6. Whether the judgment of the trial court as it relates to plaintiff being under the "regular care and attendance of a currently licensed physician or surgeon, other than the insured," a condition precedent to recovery under the policies, was contrary to law and not supported by the evidence.

The appellee Novy on cross appeal raises these issues:

1. Whether the decision of the trial court, in finding plaintiff/cross-appellant was not entitled to punitive damages, was contrary to law?

2. Whether the decision of the trial court in failing to award plaintiff/cross-appellant prejudgment interest at the statutory rate from the date of his claim for benefits under the policies to the date of judgment was contrary to law?

The doctor's suit was based upon breach of contract. Novy alleged that Continental had failed to perform its obligations under the insurance contracts. The occupational disability policy, referred to as Exhibit 1 by the trial court, was first issued in 1966. The policy, in relevant part, stated that Continental Casualty Company:

"HEREBY INSURES CHARLES A. NOVY, M.D. of Garrett, Indiana (herein called the Insured) and, subject to all the provisions, definitions, limitations and conditions of the policy, promises to pay indemnity for loss covered by this policy resulting from injury or sickness in the manner and to the extent herein provided.

'Injury' wherever used in this policy means bodily injury caused by an accident occurring while this policy is in force, and resulting in loss. 'Sickness' wherever used in this policy means sickness or disease which causes disability commencing while this policy is in force.

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Part II.

MONTHLY ACCIDENT INDEMNITY

A. Indemnity will not be paid under this Part unless the disability either (1) commences while this policy is in force or (2) commences after the Company refuses to renew this policy but less than thirty-one days from the date of the accident occurring while the policy was in force.

B. Indemnity will not be paid under this Part for any period of disability during which the Insured is not under the regular care and attendance of a currently licensed physician or surgeon, other than the Insured, nor for any period of disability prior to the expiration of the Elimination Period Accident, if any, stated in the Schedule. When the Elimination Period Accident stated in the Schedule is "None," indemnity will also be payable under Paragraph D for...