Metro. Life Ins. Co. v. Liebowitz

• Decision Date: 21 March 2022
• Docket Number: Case No: 2:20-cv-276-JES-MRM
• Parties: METROPOLITAN LIFE INSURANCE COMPANY, Plaintiff, v. Fred A. LIEBOWITZ, Defendant.
• Court: U.S. District Court — Middle District of Florida

592 F.Supp.3d 1072

METROPOLITAN LIFE INSURANCE COMPANY, Plaintiff,

v.Fred A. LIEBOWITZ, Defendant.

Case No: 2:20-cv-276-JES-MRM

United States District Court, M.D. Florida, Fort Myers Division.

Signed March 21, 2022

Jeffrey M. Landau, John Edward Meagher, Shutts & Bowen, LLP, Miami, FL, for Plaintiff.

John L. Maloney, John L. Maloney, PA, South Pasadena, FL, Marcus A. Castillo, Haas & Castillo, PA, Clearwater, FL, for Defendant.

OPINION AND ORDER

JOHN E. STEELE, SENIOR UNITED STATES DISTRICT JUDGE

This matter came before the Court on March 2 through 4, 2022, for a bench trial concerning two issues remaining after consideration of cross motions for summary judgment. The Court heard testimony from Dr. Fred Liebowitz, Jamie Frederick, John Dieguez, William Whitney, Theresa Woods, and Ronald Graff.¹ The Court also received a number of exhibits from both sides and heard closing arguments from counsel. Both parties also filed post-trial memorandum and/or trial briefs. (Docs. ## 118, 119, 120.) As required by Fed. R. Civ. P. 52, the Court makes findings of fact and conclusions of law as set forth below.

I.

In its Complaint, plaintiff Metropolitan Life Insurance Company (MetLife) seeks court-ordered rescission of defendant Dr. Fred Liebowitz's (Dr. Liebowitz) disability insurance policy (the Policy). Specifically, MetLife seeks a Court order "rescinding the Policy, and declaring that Liebowitz has no right, title, or interest in the Policy." (Doc. #1, Prayer for Relief.) In his Third Amended Counterclaim, Dr. Liebowitz asserts two interconnected counterclaims seeking reinstatement of the Policy and payment of benefits under the Policy. (Doc. #58.)

Discovery and trial in this matter were bifurcated. The first (current) phase will determine the insurance coverage issue, i.e., whether there is an enforceable Policy between Dr. Liebowitz and MetLife or whether MetLife can properly rescind the Policy. If coverage is established, the second phase is intended to address what, if any, benefits are due to Dr. Liebowitz under the Policy.

In a prior Opinion and Order (Doc. #103) resolving cross-motions for summary judgment, the Court denied Dr. Liebowitz's motion for summary judgment in its entirety. As to MetLife's motion, the Court granted partial summary judgment in favor of MetLife on the first, second, and fourth components of the fraud elements of MetLife's rescission claim. The Court also granted partial summary judgment in favor of MetLife on Dr. Liebowitz's First, Fourth, Fifth, Sixth, Seventh, and Eighth Affirmative Defenses. Additionally, pursuant to Fed. R. Civ. P. 56(g), the Court found that the following material facts were not genuinely in dispute and treated them as established for the coverage determination in this case:

1. Dr. Liebowitz made false statements concerning material facts when answering Questions 5(i) and 17 in the Application.

2. Dr. Liebowitz knew the representations he made when answering Questions 5(i) and 17 in the Application were false.

3. MetLife was consequently injured when acting in reliance of Dr. Liebowitz's misrepresentations.

4. The Policy includes the provision set forth in Fla. Stat.§ 627.607(1).

5. Dr. Liebowitz was not assisted by a MetLife insurance agent when filling out the Application.

6. MetLife put Dr. Liebowitz on notice of its intent to rescind the Policy based on Dr. Liebowitz's alleged fraud.

7. MetLife relied on the statements made by Dr. Liebowitz in his Application in 2015 and did not investigate his answers until after Dr. Liebowitz filed his claim.

(Doc. #103, p. 33.)

The two primary remaining issues to be resolved in the bench trial are whether MetLife established by a preponderance of the evidence that: (1) Dr. Liebowitz made the false statements on the insurance application with fraudulent intent, and (2) MetLife rescinded the Policy within a reasonable period of time. The Court finds, for the reasons set forth below, that Dr. Liebowitz did have such fraudulent intent and that MetLife did rescind the Policy within a reasonable period of time.

II.

Much of the evidence presented at trial was repetitious of the evidence presented in connection with the summary judgment motions. The parties previously submitted a "Statement of Undisputed Issues of Fact" in the Joint Pretrial Statement (Doc. #97, pp. 6-11). It continues to be the case that "[b]oth parties contend that the facts are essentially undisputed ..." (Doc. #97, p. 11), although the conclusions they draw from the facts vary greatly. The Court finds the following facts have been proven by at least a preponderance of the evidence:

A. DOH Investigations and Complaints

For approximately 30 years Dr. Liebowitz has been a pain management physician, and at all relevant times ran a pain management clinic in the Fort Myers, Florida area. (Doc. #97, ¶ 9(1)). Dr. Liebowitz's primary source of income was treating patients for pain and prescribing narcotics. (Id. ¶ 9(3).) Dr. Liebowitz is not board certified.

By a personally delivered letter dated May 10, 2010, the Florida Department of Health (DOH) notified Dr. Liebowitz that it was conducting a confidential investigation of a complaint filed against him in connection with the medical care he provided to different patients. (Id. ¶ 9(10); Pl. Ex. 12.) Dr. Liebowitz notified his malpractice insurance carrier of the DOH investigation, and his carrier hired attorney William Whitney (Mr. Whitney) to represent Dr. Liebowitz. (Doc. #97, ¶ 9(12).) Around this same time, the DOH initiated two additional investigations against Dr. Liebowitz, relating to his care of approximately thirteen patients. (See Pl. Ex. 98D (describing cases).)

The DOH proceeded with the three confidential investigations until early 2013. Dr. Liebowitz testified that, from his point of view, the three investigations appeared largely dormant during these years, which he attributed to weakness of the cases.

Starting in January 2013,² after a panel of the DOH found probable cause, the DOH filed and served Dr. Liebowitz with three separate Administrative Complaints (the "DOH Complaints") alleging substandard medical care was provided to certain patients. (Doc. #97 ¶ 9(11); Pl Ex. 27.) The DOH Complaints alleged that on many occasions Dr. Liebowitz improperly prescribed pain killers to patients, including one incident where a patient subsequently died from drug overdose. The DOH Complaints requested that the Board of Medicine impose penalties on Dr. Liebowitz, including revocation or suspension of his medical license, restrictions on his medical practice, fines, reprimands, probation, corrective action, and remedial education. On February 14, 2013, Dr. Liebowitz signed an Election of Rights form disputing the facts in the DOH Complaints and requesting a formal hearing. (Def. Ex. 39.) Dr. Liebowitz testified at trial, and has always maintained, that he did nothing improper and that the DOH would not be able to prove otherwise. Dr. Liebowitz testified that, based on the advice of counsel, he believed that nothing in the DOH allegations was of sufficient severity to warrant the loss of his medical license.

Throughout the DOH proceedings, from the confidential complaints to the DOH Complaints, Mr. Whitney kept Dr. Liebowitz apprised of significant developments.

(Doc. #97, ¶ 9(13).) Dr. Liebowitz testified that he worked hard to defend himself against the DOH's allegations with counsel, painstakingly reviewing medical records and expert opinions, because he felt he had done nothing wrong. Dr. Liebowitz stayed current on matters related to the DOH Complaints because the proceedings were important to his medical practice and reputation. Dr. Liebowitz testified that both he and Mr. Whitney felt Dr. Liebowitz would be successful in his defense.

In July 2014, the DOH provided Dr. Liebowitz with a proposed settlement (the 2014 Settlement Agreement) (Pl. Ex. 35) for the three pending DOH Complaints. Dr. Liebowitz and Mr. Whitney discussed the proposal in detail. Around this same time, Dr. Liebowitz was sent another notice from the DOH concerning a fourth, still-confidential investigation into his medical care of patients.³ In September 2014, Dr. Liebowitz hired a second attorney (Allan Grossman⁴ ) with his own funds to provide another review of his cases and to evaluate the 2014 Settlement Agreement. (Pl. Ex. 98D.)

The proposed 2014 Settlement Agreement contemplated resolution of Dr. Liebowitz's three pending DOH Complaints and did not consider the fourth investigation. The 2014 Settlement Agreement included a reprimand against Dr. Liebowitz's medical license; a "death penalty" provision for Dr. Liebowitz's specialized practice, which, if accepted, would have prohibited Dr. Liebowitz from prescribing controlled substances; the imposition of a fine and costs; and other non-economic conditions. Dr. Liebowitz testified he never took this proposal seriously, and never accepted it.

Dr. Liebowitz did, however, on advice of counsel, take steps in late 2014 to enhance his settlement negotiation position. Dr. Liebowitz: (1) hired a risk management consultant to evaluate his medical practice (Pl. Ex. 98E); (2) took various continuing medical education courses related to his specialty; and (3) went to Colorado for a physician's assessment (Pl. Ex. 98F). Dr. Liebowitz paid for these services out-of-pocket.

B. MetLife Insurance Application and Policy Issuance

For the prior 10-15 years, Dr. Liebowitz's regular insurance agent was Mark Vertich (Mr. Vertich), an independent insurance broker. Sometime in mid-to late-2014, Dr. Liebowitz spoke with Mr. Vertich about obtaining disability insurance. Dr. Liebowitz testified that, several years before speaking with Mr. Vertich about disability insurance, he had a disability policy with another insurer for 10-15 years but had let the policy lapse for several years before seeking the MetLife policy. Dr. Liebowitz decided that, considering his current family situation, he had made a mistake in letting the policy lapse. It...