Equitable Life Assur. Soc. of U.S. v. Studenic

• Decision Date: 13 March 1996
• Docket Number: No. 94-9401,94-9401
• Parties: EQUITABLE LIFE ASSURANCE SOCIETY OF the UNITED STATES, Plaintiff-Counter-defendant-Appellant, v. Gary S. STUDENIC, Defendant-Counter-claimant-Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 412

77 F.3d 412

EQUITABLE LIFE ASSURANCE SOCIETY OF the UNITED STATES Plaintiff-Counter-defendant-Appellant, v. Gary S. STUDENIC, Defendant-Counter-claimant-Appellee.

No. 94-9401.

United States Court of Appeals Eleventh Circuit.

March 13, 1996.

Ronald Louis Reid, Alston & Bird, Atlanta, GA, Andrew McCampbell Gibson, Alston & Bird, Duluth, GA, for Appellant.

Taylor Webb Jones, Linda R. Greer, Jones Brennan & Eastwood, Atlanta, GA, for Appellee.

Appeal from the United States District Court for the Northern District of Georgia.

Before TJOFLAT, Chief Judge, CARNES, Circuit Judge, and FAY, Senior Circuit Judge.

FAY, Senior Circuit Judge:

I. BACKGROUND

Gary Studenic became a licensed chiropractor in 1979. He opened his own chiropractic clinic after obtaining his license and by 1984, had opened a second clinic. In 1980 and 1984, Studenic entered into three disability insurance contracts with Equitable Life Assurance Society of the United States ("Equitable"). The first policy provided for payment of $2000 per month should he become disabled from the practice of chiropractic. The second policy provided for an additional $2000 per month in the event he became disabled. The third policy, which was an overhead disability policy, would pay $2000 a month for 15 months. The contracts provided that if the insured became "totally disabled," he was required to notify Equitable of the claim and provide monthly statements to Equitable as long as the disability continued. The contracts defined the term "total disability" as "the inability of the insured, due to injury or sickness, to engage in the substantial and material duties of your regular occupation."

Studenic had a chronic shoulder condition rooted in a history of shoulder injuries sustained during a college wrestling career. In 1984, while working at his chiropractic clinic, Studenic aggravated his condition when he fell from a ladder. He experienced significant pain while treating patients between 1984 and 1988. Studenic then found that he was no longer capable of enduring the pain on a regular basis and elected not to treat patients after January 1989. Although Studenic no longer practiced chiropractic after January 1989, he continued to own and operate his two chiropractic clinics.

Before filing a claim for total disability due to his shoulder condition and giving Equitable notice about the injury a certain event transpired. Despite his shoulder condition and resulting inability to practice chiropractic, Studenic was nevertheless able to play tennis and injured his knee in the process of doing so on June 18, 1990. Studenic filed a total disability claim on August 17, 1990, which pertained solely to his knee injury. Studenic asserted in the claim form that it was a disability due to his left knee injury that caused him to quit practicing on June 18, 1990. However, apparently he had not been treating patients for at least seventeen months at the time his knee was injured. Studenic confirmed during his trial testimony that nothing was mentioned about his shoulder injury in the initial total disability claim.

On September 21, 1990, over twenty months after he quit practicing chiropractic, Studenic filed a claim form with Equitable alleging a disability attributable to his shoulder injury. ¹ Notes introduced at trial made by the Equitable claims agent who handled Studenic's claim revealed that in a telephone conversation with the agent, Studenic explained that he had not filed a claim sooner because it did not occur to him to do so. Studenic testified at trial that his disability began when he first stopped working because of the trouble with his shoulder in 1989.

Equitable paid Studenic $44,133.33, equalling nine months total disability benefits for the period between June 18, 1990 and March 17, 1991. However, in April 1991, Equitable discontinued further payment of total disability payments to Studenic based, in part, on a surveillance video that showed him performing various physical activities at his farm which Equitable believed were inconsistent with his claim for "total disability."

Equitable resumed payments to Dr. Studenic after an independent medical exam provided inconclusive evidence with regard to his disability. The payments made were for 50% of the maximum benefits and amounted to $16,000 in partial benefits covering an eight month period. After that period, Equitable discontinued payments and filed an action for declaration of its obligations under the policies.

II. PROCEDURE

On February 20, 1992, Equitable filed a declaratory judgment action against Studenic requesting clarification of its rights, obligations, and liabilities, if any, under the three disability insurance contracts entered into with Studenic between 1980 and 1984. In its complaint, Equitable alleged, inter alia, that Studenic was neither totally disabled nor residually disabled, as defined in the insurance contracts, and that he failed to satisfy conditions precedent to payment under the contracts. Studenic counterclaimed and demanded a jury trial, seeking a declaration that he was disabled, the payment of past due disability benefits, and bad faith penalties and attorney's fees pursuant to Official Code of Georgia Annotated § 34-4-6.

Equitable moved for a directed verdict at the close of both Studenic's case in chief and at the close of all the evidence. One of the grounds for the motion was that Studenic did not timely file his claim for disability based on the notice requirement in the contracts and the eighteen month delay in filing. Both of Equitable's motions for directed verdict were denied. The jury returned a verdict in Studenic's favor and specifically found that Studenic was totally disabled from engaging in his occupation as a chiropractor within the meaning of the three insurance contracts, he was entitled to a 1% award of bad faith penalties, however, he was not entitled to an award of attorneys' fees. The district court entered judgment on the jury's verdict, which judgment awarded Studenic, inter alia, $157,747.62 in past due payments and interest under the policies.

Equitable moved for judgment as a matter of law both before and after the district court's entry of judgment on the grounds that: (1) Studenic did not provide timely notice of his disability claims; (2) Studenic was not "disabled" as a chiropractor because Studenic himself testified that he was an investor at the time he filed his disability claims, and because there was no evidence showing Studenic was totally disabled from his occupation as an investor; and (3) an award of bad faith penalties was improper because Equitable's denial of Studenic's claims were not frivolous, unreasonable or unfounded as a matter of law.

The district court granted, in part, and denied, in part, Equitable's motion. The court held that the question of the sufficiency of Studenic's excuse and Studenic's diligence in giving notice to Equitable were properly submitted to the jury. Further, the district court held that Equitable waived its claim that Studenic's occupation was that of an investor at the time the disability claim was filed, by withdrawing a jury charge related to that issue. The district court further held that Studenic was not entitled to recover bad faith penalties because there were factual disputes regarding Studenic's claims. Amended judgment consistent with the district court's order was filed on November 15, 1994. Equitable appeals the district court's order denying its motion for judgment as a matter of law, and the judgment entered thereon.

III. STANDARD OF REVIEW

"We review rulings on motions for judgment as a matter of law by applying de novo the same legal standards used by the district court. Both courts consider all of the evidence, but all reasonable inferences must be drawn in the nonmovant's favor. If the jury verdict is supported by substantial evidence--that is, enough evidence that reasonable minds could differ considering material facts--the motion should be denied. A mere scintilla of evidence in the entire record, however, is insufficient to support a verdict." United States Anchor Manufacturing, Inc., v. Rule Industries, Inc., 7 F.3d 986, 993 (11th Cir.1993).

IV. ANALYSIS

Equitable...