Falcon v. Nw. Mut. Life Ins. Co., Civil Action No. 19-404
| Decision Date | 30 November 2020 |
| Docket Number | Civil Action No. 19-404 |
| Parties | JOSEPH R. FALCON, M.D., Plaintiff, v. THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY, Defendant. |
| Court | U.S. District Court — Western District of Pennsylvania |
MEMORANDUM OPINION
Plaintiff Joseph R. Falcon, M.D. ("Dr. Falcon") brings this action against defendant The Northwestern Mutual Life Insurance Company ("Northwestern Mutual"), in which he seeks benefits to which he believes he is entitled under a disability income policy. Northwestern Mutual paid Dr. Falcon disability benefits for 24 months but asserts that the policy it issued did not provide him with a lifetime benefit as he contends because he did not become totally disabled prior to the policy anniversary date following his 60th birthday.
Presently pending before the Court is Northwestern Mutual's motion for summary judgment. For the reasons that follow, its motion will be denied.
Dr. Falcon commenced this action in March 2019 in the Court of Common Pleas of Allegheny County, Pennsylvania. Northwestern Mutual removed the action to this Court on the basis of diversity jurisdiction. Dr. Falcon later filed a Second Amended Complaint (ECF No. 27) which includes seven causes of action, including breach of contract, negligence, fraud, negligent misrepresentation, violation of the Pennsylvania Unfair Trade Practices and Consumer Protection Law, 73 P.S. §§ 201-1 to 201-9.3 ("UTPCPL"), bad faith in violation of 42 Pa. C.S. § 8371 and a claim for declaratory relief. The parties have consented to full jurisdiction before a United States Magistrate Judge.
On May 29, 2020, the parties stipulated to the dismissal of the fraud claim in Count III (ECF No. 31). On the same date, Northwestern Mutual moved for summary judgment with respect to the remaining claims. Its motion has been fully briefed (ECF Nos. 33, 38, 41).
In February 1990, Dr. Falcon purchased two disability policies from Northwestern Mutual: Disability Income Policy No. D731755 (hereinafter, "the Policy"); and a disability overhead expense policy. (Defendant's Concise Statement of Material Facts ("DCSMF") ¶ 1.)1 Only the Disability Income Policy is at issue in this case.
According to Dr. Falcon, his attorney advised him that he needed to protect his family if something should happen to him by obtaining a disability policy which would cover him for a lifetime. (Falcon Dep. 13:13-14;2 DCSMF ¶¶ 2-3) Dr. Falcon wanted a policy that would cover him if he was unable to perform all of his activities as a practicing plastic surgeon and that would provide for lifetime benefits if he became disabled. (Id. at 14:19-24.)
In response to his inquiry, a Northwestern Mutual representative recommended a Northwestern Mutual policy that would provide him with disability benefits. (Id. at 14:25-15:4.) See Plaintiff's Response to Defendant's Statement of Material Facts ("PRDSMF") ¶ 53.)3 Dr. Falcon applied for a disability income policy and disability overhead expense policy with theassistance of Gary Helman, a financial representative for Northwestern Mutual. Dr. Falcon met with Mr. Helman on February 6, 1990, to sign an application for the policies. According to Dr. Falcon, the handwriting on the disability insurance application is not his. (DCSMF ¶¶ 4-6.) Dr. Falcon was unsure if Mr. Helman filled out the application but asserts that he would not have signed it without receiving an explanation about the policy from Mr. Helman and signed it at the same time that it was completed. (PRDSMF ¶ 7.)
The following boxes are checked on the application: Monthly Benefit of "$15,000"; Maximum Benefit Period "LF" (meaning "life"); Beginning Date "91"; and "Initial Period to Age 65" (as opposed to "Initial Period to Age 70"). (ECF No. 39-1, Ex. 4 at 2.)
Regarding the application process to obtain a disability insurance policy from Northwestern Mutual, its corporate designee, Donald Seebach, testified that:
As far as an underwriter goes, we realize that there is an agent in the field that would take the application from the proposed insured like Dr. Falcon, and that gets partially input in the field office, gets sent to the home office to complete application input, and then gets assigned to an underwriter. The underwriter looks at the information on there, decides if they need additional information, and if they are able to issue a policy, then they issue the policy. And sometimes we have to change the terms of what was applied for.
(DCSMF ¶ 8.)
Dr. Falcon represents that Mr. Helman provided him with a quote for a policy with a premium of $6,705.00 per year that would provide a lifetime benefit of $15,000 per month upon the occurrence of a disability prior to the policy anniversary that followed his 65th birthday. (PRDSMF ¶ 55.)4 Dr. Falcon decided to purchase the Policy. (Id. ¶ 56.)
Dr. Falcon believed that he was purchasing a policy with a lifetime benefit for a disability arising during the Policy's initial period to age 65. (Falcon Dep. 16:20-21, 30:20-25.) The application itself did not include definitions or other details regarding any provision of the Policy that may be relevant to Dr. Falcon's understanding and Northwestern Mutual does not contend that Mr. Helman explained the limitations of the Policy to Dr. Falcon at any time.
Upon issuance of a policy, it is Northwestern Mutual's practice to mail the policy to the financial representative who, in turn, delivers the policy to the policyholder. Its internal documents reflect that the Policy was mailed to Dr. Falcon's financial representative on March 20, 1990. Dr. Falcon does not remember receiving a copy of the Policy in 1990 or seeing it until after he became disabled before December 2016, when he asked for a copy. (DCSMF ¶¶ 9-13.)5 Dr. Falcon has maintained a file of all his insurance policies issued over the past 30 years, but it does not include copies of the Policy or the overhead office insurance policy he also obtained at the same time. (PRDSMF ¶ 62.) Northwestern Mutual did not produce any documentation that shows that Dr. Falcon was provided with the Policy. (Id. ¶ 64.)
Over the years, Dr. Falcon occasionally met with Northwestern Mutual agents, including after he turned age 60, and was never told "that the policy you are under is only a two-year policy." (Id. ¶ 65.) Indeed, after Dr. Falcon turned 60, he met with several agents to discuss extending his Policy after age 65. They informed him that if he were to do so, it would only cover two years of benefits in the event he became disabled, his premiums would increase toover $8,000, and there was no option for a lifetime benefit. Dr. Falcon declined to extend coverage. (Id. ¶ 66.)
Dr. Falcon did receive annual premium statements and declarations over the years. These identified a lifetime benefit with an initial benefit to age 65. Internal documents maintained by Northwestern Mutual also show Dr. Falcon's benefits period "to age 65 W/LTB" and an initial period to 65. (Id. ¶¶ 68-69.)
On December 18, 2016, at age 64, Dr. Falcon became disabled from his occupation as a plastic surgeon due to vision loss. He immediately notified his insurance agent of a claim under the disability income policy issued by Northwestern Mutual. In January 2017, he formally requested disability benefits under the policy, claiming to have become disabled from his occupation as a plastic, reconstructive and hand surgeon due to optical neuropathy causing partial vision loss in his left eye. (DCSMF ¶¶ 14-15; PRDSMF ¶¶ 72-73.)
Dr. Falcon spoke with Andrew Falk, an analyst and technical advisor for Northwestern Mutual. According to Dr. Falcon, Mr. Falk sarcastically remarked during their conversation that it was "convenient" that Dr. Falcon became disabled just months before his Policy would expire. (PRDSMF ¶ 75.) Mr. Falk denies making this statement. (Defendant's Response to Plaintiff's Counterstatement of Material Facts ("DRPCMF") ¶ 75.)6
Upon receipt of the claim, Northwestern Mutual began gathering medical and financial information, including interviewing Dr. Falcon on January 23, 2017. The Interview Guide completed by Mr. Falk states that he reviewed with Dr. Falcon the maximum benefit period of 24months that Northwestern Mutual asserts is applicable under the policy. As set forth in correspondence dated April 6, 2017, Northwestern Mutual determined that Dr. Falcon was totally disabled as of December 18, 2016 and approved his disability claim. In its letter, it further advised that the Beginning Date for benefits would be March 18, 2017 and reviewed the applicable Maximum Benefit Period. (DCSMF ¶¶ 16-18.) Northwestern Mutual advised Dr. Falcon that he was only entitled to a maximum benefit period of 24 months rather than a lifetime benefit because he had not become disabled prior to the anniversary date following his 60th birthday, namely by February 6, 2012. (ECF No. 39-1 Ex. 7.)
Upon learning that Dr. Falcon did not have an original copy of the Policy, Northwestern Mutual assembled a "substitute" policy for him. The substitute policy identifies an annual premium of $8,370 for a maximum benefit period of 24 months. It does not provide for a lifetime benefit. The substitute policy further provides that it is guaranteed renewable after the insured's 65th birthday, and that its terms and premiums cannot be changed. It states: "THIS SUBSTITUTE POLICY IS ISSUED ON THE REPRESENTATION THAT THE ORIGINAL POLICY HAS BEEN LOST OR DESTROYED IT MAY NOT BE AN EXACT DUPLICATION OF THE ORIGINAL POLICY." (PRDSMF ¶¶ 76-81.)
The page numbers are inconsistent in the substitute policy and page 4 is missing. (Id. ¶ 82.) Northwestern Mutual asserts that older policies like this one did not have a page 4 and began on page 5. (DRPCMF ¶ 82.)
On August 29, 2018, nearly two years after Dr. Falcon's...
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