Harris v. Provident Life and Acc. Ins. Co.

• Decision Date: 29 October 2002
• Docket Number: Docket No. 01-9265.
• Citation: 310 F.3d 73
• Parties: Louise M. HARRIS, Plaintiff-Counter-Defendant-Appellee, v. PROVIDENT LIFE AND ACCIDENT INSURANCE COMPANY, Defendant-Counter-Claimant-Appellant, Provident Companies, Inc., Defendant-Appellant.
• Court: U.S. Court of Appeals — Second Circuit

310 F.3d 73

Louise M. HARRIS, Plaintiff-Counter-Defendant-Appellee, v. PROVIDENT LIFE AND ACCIDENT INSURANCE COMPANY, Defendant-Counter-Claimant-Appellant Provident Companies, Inc., Defendant-Appellant.

Docket No. 01-9265.

United States Court of Appeals, Second Circuit.

Argued: August 28, 2002.

Decided: October 29, 2002.

Arthur J. Siegel, Albany, NY, (Bond, Schoeneck & King, Albany, NY, of counsel), for Appellant Provident Life and Accident Ins. Co.

Jean F. Gerbini, Joel L. Hodes, Melvin H. Osterman, Heather D. Diddel, Whiteman Osterman & Hanna, Albany, NY, on the brief, for Appellee Louise M. Harris.

Before: MESKILL, CARDAMONE and STRAUB, Circuit Judges.

MESKILL, Circuit Judge.

Defendants-appellants Provident Life and Accident Insurance Co. and Provident Companies, Inc. (collectively "Provident") appeal from an order of the United States District Court for the Northern District of New York, Hurd, J., granting plaintiff-appellee Louise M. Harris' (Harris) motion for summary judgment on the first count of the complaint, denying Provident's cross-motion for summary judgment, and dismissing Provident's counterclaim. Harris has cross-appealed the district court's dismissal of the second count of the complaint. Jurisdiction is premised on diversity of citizenship pursuant to 28 U.S.C. § 1332(a)(1), Harris being a citizen of New York, each Provident entity being a Delaware corporation, and the claimed damages exceeding $75,000. We have appellate jurisdiction pursuant to 28 U.S.C. § 1291 as this is an appeal from a final judgment of the district court.

The first count of the complaint alleges that Provident breached its contract with Harris by refusing to pay her disability benefits pursuant to an insurance policy. The district court found that Harris was entitled to summary judgment on this claim, as she had established that no genuine issue of material fact existed as to whether she was totally disabled. The second count of the complaint alleges that Provident breached the implied covenant of good faith and fair dealing by refusing to pay Harris disability benefits. The district court found that Provident was entitled to summary judgment on this claim, because under New York law, a claim for breach of the implied covenant is duplicative of a breach of contract claim. Provident's counterclaim seeks rescission of the insurance contract based on an allegation that Harris withheld material information regarding her medical condition from Provident. The district court granted summary judgment on this claim to Harris and dismissed the counterclaim in its entirety.

We conclude that the district court erred in finding that no genuine issue of material fact exists as to whether Harris is totally disabled and entitled to disability payments under the insurance policy. We therefore vacate the district court's order granting summary judgment in favor of the plaintiff on the first count of the complaint and remand the case for further proceedings on that count only. We affirm the district court's order dismissing the second count of the complaint and dismissing Provident's counterclaim.

BACKGROUND

Harris is a medical doctor, specifically, an anesthesiologist. As such, she was required to work long shifts. Her tasks were physically and mentally demanding. Because she worked in surgical procedures, Harris was required to use and was surrounded by latex products. At the time Harris claims to have become disabled, she was working approximately 60 hours per week and earning over $200,000 annually.

In 1992, while living and working in California, Harris entered into a disability insurance contract with Provident, whereby Harris would receive benefits if she became unable to work as an anesthesiologist. At the time Harris claims to have become disabled, the insurance policy provided benefits in the amount of $10,560 per month if Harris became "totally disabled." The insurance policy states that a covered person is "totally disabled" if she is "not able to perform the substantial and material duties of [her] occupation[ ] and [she is] receiving care by a Physician which is appropriate for the condition causing the disability." The policy further states that "occupation" means the occupation in which the covered person is engaged at the time she becomes disabled, including the person's specialty.

On or about March 16 and 17, 1998, Harris was working at Glens Falls Hospital as the staff anesthesiologist. During her shift, Harris worked primarily in the Obstetrics Department, but also went in and out of the Operating Room for various procedures. At that time, the Obstetrics Department was undergoing major construction for latex abatement, which made the area very dusty. Harris began to feel ill and to have difficulty breathing. Harris continued to feel ill for several days, and on March 19, 1998 she was examined by Dr. Michael Slaughter, an allergist. Dr. Slaughter informed Harris that he believed she had asthma, which he believed could have been induced by an allergy to latex.

Between March 19, 1998 and May 4, 1998, Harris attempted to work as an anesthesiologist both at Glens Falls Hospital and at another area hospital, avoiding the construction area at Glens Falls. Throughout that time period, Harris avoided using latex gloves, and took medication to treat her symptoms. On May 4, 1998, Harris returned to Dr. Slaughter after having difficulty breathing at work. Dr. Slaughter advised Harris to stop working. Harris has not worked as an anesthesiologist since that date.

On or about May 16, 1998, Harris submitted a claim to Provident asserting, in a physician's statement prepared by Dr. Slaughter, that she had become unable to work due to "latex induced asthma, plus latex anaphylactoid reaction, plus latex contact reactivity, plus allergic rhinitis." Provident paid preliminary disability benefits to Harris for the period from May 4, 1998 through September 3, 1998, but informed Harris that she would have to provide proof of continuing disability on a monthly basis.

In September 1998, Dr. James DeMasi, an allergist and asthma specialist, evaluated Harris at Provident's request.¹ Dr. DeMasi testified at his deposition that he was retained by Provident to determine whether Harris had a latex allergy; he was not specifically asked to determine whether Harris had asthma, but the presence or absence of asthma was part of the evaluation because it may be a symptom of latex allergy. Dr. DeMasi found no evidence that Harris was allergic to latex, but suspected that Harris "may have some asthma." Dr. DeMasi also suspected that Harris had an anxiety disorder which included a perception of a latex allergy. Dr. DeMasi tested Harris' lung capacity, which was normal, and determined that whatever asthma Harris might have was triggered by dust or other irritants other than latex. On the basis of these findings, Provident denied Harris' application for benefits, notifying Harris of its decision by a letter she received on or about October 24, 1998. Harris appealed the denial to Provident's review board, which affirmed the decision to deny benefits on November 18, 1998, noting that Harris had not presented any new evidence that she was in fact totally disabled.

After receiving Dr. DeMasi's initial report, Harris wrote to Provident requesting that she be evaluated by one of four experts, including one from Johns Hopkins and one from the Mayo Clinic, whom she considered "[t]he most prominent names in the literature on latex allergy." Provident declined to have Harris evaluated by any of these experts.

On October 15, 1998, Harris visited Johns Hopkins on her own initiative and was evaluated by Dr. Franklin Adkinson. The tests performed by Dr. Adkinson did not support a finding that Harris was allergic to latex. Dr. Adkinson diagnosed Harris as having suffered an "acute pulmonary insult" as a result of the construction at Glens Falls Hospital. Dr. Adkinson's secondary diagnosis was asthma, and his tertiary diagnosis was a possible latex allergy. Dr. Adkinson advised Harris orally at the time of his evaluation that he felt she could return to work and "see how she does." Dr. Adkinson produced a written report of his findings on January 5, 1999, which he sent to Harris and Dr. Slaughter. Harris did not inform Provident of the results of Dr. Adkinson's evaluation or disclose his report until required to do so by an order of the district court dated December 20, 2000.

On June 30, 1999, Harris went to the Mayo Clinic on her own initiative and was evaluated by Dr. Loren Hunt. Dr. Hunt found no evidence of latex sensitivity. Dr. Hunt also reported that Harris' treadmill testing, echocardiogram, pulmonary artery pressure and other tests were all normal. Dr. Hunt's report stated that Harris' "health appear[ed] to be quite good," and did not recommend that Harris take any medications. Dr. Hunt advised Harris that she could return to work at Glens Falls Hospital after construction there was completed. Harris did not inform Provident of the results of the Mayo Clinic evaluation until required to do so by an order of the district court dated December 20, 2000.

Harris initiated litigation against Provident in the United States District Court for the Northern District of New York on July 15, 1999, claiming that Provident had breached its contract with her by refusing to pay her disability benefits, and that Provident had also breached the covenant of good faith and fair dealing implicit in that contract. Provident filed a counterclaim contending that it was entitled to rescission of the insurance contract because Harris had failed to inform Provident of the results of her testing at Johns Hopkins and the Mayo Clinic in a timely manner. Harris moved for summary judgment on the breach of contract claim and on Provident's counterclaim. Provident moved for summary judgment on both counts of the complaint and on its counterclaim.

On December 14 and 15,...