Heller v. Equitable Life Assur. Soc. of U.S.
| Decision Date | 10 November 1987 |
| Docket Number | Nos. 86-1482,86-1518,s. 86-1482 |
| Citation | 833 F.2d 1253 |
| Parties | Dr. Stanley HELLER, Plaintiff-Appellee and Cross-Appellant, v. The EQUITABLE LIFE ASSURANCE SOCIETY OF the UNITED STATES, Defendant-Appellant and Cross-Appellee. |
| Court | U.S. Court of Appeals — Seventh Circuit |
John D. Lien, Richard L. Cram, Chicago, Ill., for Equitable Life Assur. Soc. of U.S.
Harvey Sussman, Sussman & Hertzberg, Ltd., Chicago, Ill., for plaintiff-appellee and cross-appellant.
Before WOOD, COFFEY and MANION, Circuit Judges.
The Equitable Life Assurance Society, defendant-appellant, appeals from the order of the district court entering a declaratory judgment in favor of Dr. Stanley Heller, plaintiff-appellee, for the defendant's alleged breach of a disability income insurance contract. The district court found that Dr. Heller was entitled to receive $5,880 per month from Equitable on the insurance contract from March 21, 1984, through February 5, 1986, and thereafter for the time period Dr. Heller was totally disabled. Dr. Heller cross-appeals from the district court's order reducing the total amount of disability benefits payable from Equitable, as well as from the district court's refusal to award taxable costs, including attorneys' fees, under Illinois law. We affirm in part, reverse in part, and remand for further proceedings consistent with this opinion.
Dr. Stanley Heller, a physician, is licensed to practice medicine in the state of Illinois. 1 Dr. Heller is a board-certified physician in the field of Cardiovascular Diseases and specializes in invasive cardiology. He was also the Director of the Cardiovascular Catheterization Laboratory 2 at St. Joseph's Hospital, Chicago.
In early 1983 Dr. Heller met with Paul Berlin, an agent for The Equitable Life Assurance Society (Equitable) to discuss simplifying his existing professional disability insurance coverage, for at the time he was insured under six or seven different policies issued by at least two different companies. After evaluating Dr. Heller's existing policies, Mr. Berlin informed Dr. Heller that if he decided to purchase the Equitable disability income policy as offered ($7,000 monthly), he would be required to cancel his other disability policies. 3 At the time Dr. Heller applied for disability coverage in March of 1983, he represented on the application that he had no other disability coverage as he intended to cancel his other disability policy at the time Equitable's coverage took effect. Equitable's policy, issued the following month in April of 1983, provided that Dr. Heller would be paid the sum of $7,000 per month, after a 90-day elimination period, if and when he became totally disabled as defined in the policy. Dr. Heller, with the payment of an added premium, contracted for additional $1,200-per-month coverage while totally disabled under the policy for a period limited to one year with the same 90-day elimination period incorporated therein. Dr. Heller testified that he directed his office manager to cancel all his other disability policies when the Equitable policy became effective, and "to the best of [his] knowledge," she cancelled the policies. He further testified that it was not until November of 1984, some eight months after his withdrawal from practice, that he was informed by an office employee that he still had an American Motorist Insurance Co. (American Motorists) disability policy in full force and effect. 4
During the latter quarter of 1983 Dr. Heller developed a painful and crippling condition in his left wrist and hand diagnosed as carpal tunnel syndrome. 5 Dr. Heller testified that as he experienced the debilitating symptoms of the condition in his left wrist and into his hand, he was prevented from practicing in his specialty as an invasive cardiologist after March 20, 1984. Dr. Heller applied for benefit payments on his Equitable disability income policy in late March 1984. The policy issued to Dr. Heller defined "total disability" as follows:
"Total disability means the complete inability of the Insured, because of injury or sickness, to engage in the Insured's regular occupation, ... provided, however, the total disability will not be considered to exist for any period during which the Insured is not under the regular care and attendance of a physician,...."
Dr. Heller claimed that because he was unable to engage in his profession as an invasive cardiologist as a result of the carpal tunnel syndrome condition, and because he was under the regular care of a physician and had made timely premium payments, he was entitled to disability benefits under the policy. Initially, Equitable made payments pursuant to the disability income provisions 6, but terminated these payments after May 5, 1985, because he (Dr. Heller) refused to undergo carpal tunnel surgery upon Equitable's insistence. As a result of Equitable's refusal to continue payments under the contract, Dr. Heller initiated the present action.
Following a trial to the court, the trial judge found that if Dr. Heller were to undergo surgery to decompress the median nerve in his left wrist, he might very well be relieved of the carpal tunnel syndrome condition, thus allowing him to return to his practice. After reviewing Equitable's disability policy, the trial judge determined that Dr. Heller was not required to submit to elective surgery because Equitable failed to include the surgery requirement in its professional disability contract. The trial court ordered Equitable to reinstate disability payments, but because evidence disclosed that Dr. Heller continued to be insured under an American Motorists policy, the trial court reformed the contract concluding that Equitable would have reduced disability payments to $5,880 per month if Equitable had knowledge of the existence of the other insurance at the time of the issuance of the policy in question.
On appeal Equitable argues that because Dr. Heller refused to submit to surgery to relieve the debilitating and limiting effects of his carpal tunnel syndrome condition, the trial court erred in finding Dr. Heller to be totally disabled under the terms of the policy. Equitable also asserts that because Dr. Heller misrepresented the nonexistence of the American Motorists disability policy on its application form, the insurance contract should have been rescinded under Illinois law 7 rather than reformed. Thus, because Dr. Heller (1) misrepresented the nonexistence of other insurance; and (2) refused to undergo carpal tunnel surgery, Equitable claims that Dr. Heller is not entitled to disability income payments. Dr. Heller cross-appeals, asserting (1) that he is entitled to the full $7,000 per month Equitable disability payments after the expiration of the five-year American Motorists disability policy; (2) that the trial court failed to award him the $1,200 per month supplemental income as required by the terms of the Equitable policy; and (3) that he is entitled to taxable costs, including attorneys' fees, as a result of Equitable's unreasonable and vexatious conduct terminating his disability income payments.
Illinois law controls this case as Equitable issued the policy to Dr. Heller in Illinois, the state where Dr. Heller resided and practiced medicine. Our research reveals, and both parties agree, that the Illinois courts have not directly addressed the question of whether a disability income policy providing that the claimant must be "under the regular care and attendance of a physician" requires an insured to submit to surgical treatment for the condition causing the total disability in order to receive benefits. Thus, we rely on the traditional principles of insurance and contract law, long recognized by the Illinois courts as an appropriate basis for resolving whether the clause conditions coverage on the insured's undergoing surgery. Initially, Illinois courts apply the rule that any ambiguities in the provisions of an insurance policy will be construed against the drafter of the instrument, the insurer, and in favor of the insured, see, e.g., Burton v. Government Employees' Insurance Company, 135 Ill.App.3d 723, 90 Ill.Dec. 526, 482 N.E.2d 233 (1985); Dora Twp. v. Indiana Insurance Company, 78 Ill.2d 376, 36 Ill.Dec. 341, 400 N.E.2d 921 (1980); however, "where ... there is no ambiguity, [the courts] will not ignore the very plain language of the policy." Rock Island Bank v. Time Ins. Co., 57 Ill.App.3d 220, 14 Ill.Dec. 719, 720, 372 N.E.2d 998, 999 (1978) (emphasis added). Secondly, insurance policy "[e]xceptions to liability must be expressed in unequivocal language so that it is reasonable to assume the insured understood and accepted these limitations." Garman v. New York Life Insurance Company, 501 F.Supp. 51, 52 (N.D.Ill.1980) (citing Michigan Mutual Liability Company v. Hoover Brothers Inc., 96 Ill.App.2d 238, 237 N.E.2d 754 (1968)).
A reading of the Equitable disability policy discloses that it fails to set forth any requirement or limitation of coverage requiring an insured to submit to surgery for treatment of the condition causing the total disability. The policy provides coverage where (1) the insured is prevented from engaging in his or her regular occupation because of sickness or injury and is totally disabled; and (2) that the insured be under "the regular care and attendance of a physician." 8 Equitable does not dispute that Dr. Heller is presently unable to practice as an invasive cardiologist but argues that his failure to submit to surgery for his disabling condition as recommended 9 requires a finding by the Court that he is no longer "under the regular care and attendance of a physician." Therefore, Equitable asserts that Dr. Heller is no longer entitled to disability income benefits.
We reject Equitable's arguments because the language in the policy stating that the claimant must be "under the regular care and attendance of a...
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