Peninsular Life Ins. Co. v. Blackmon
| Decision Date | 04 September 1985 |
| Citation | 476 So.2d 87 |
| Parties | PENINSULAR LIFE INSURANCE COMPANY v. Charlie A. BLACKMON. 83-1414. |
| Court | Alabama Supreme Court |
James T. Upchurch III of Rushton, Stakely, Johnston & Garrett, Montgomery, for appellant.
Robert M. Alton, Jr., Montgomery, for appellee.
This is an appeal of a judgment based on a jury verdict finding breach of an insurance contract and bad faith failure to pay a claim. We affirm in part, reverse in part, and remand with directions.
Charlie A. Blackmon was employed as a debit agent with Peninsular Life Insurance Company (Peninsular). His job consisted of selling insurance policies and collecting premiums, primarily door to door. As a fringe benefit of his employment, Blackmon had disability coverage supplied by Connecticut General Life Insurance Company (Connecticut General). Because this policy did not pay benefits until an employee was totally disabled for six months, Peninsular maintained a supplemental disability plan whereby an employee could receive temporary disability coverage during the six-month waiting period. Peninsular paid the amount of this temporary disability out of its general operating revenues, without withholding any premiums from its employees. The supplemental plan was an oral agreement; there was no written policy, no formal mechanism for evaluating claims, and no definitions for determining if an employee was totally disabled, and the plan was not regulated by the state insurance department. The amount and duration of the coverage that an employee could receive depended on his length of service with Peninsular. In Blackmon's case, he was entitled to $2,086.19 during a maximum of 13 weeks' disability.
Blackmon suffered from several health problems, including diabetes mellitus, glaucoma, hypertension, chronic obstructive lung disease, bilateral clubbed feet, degenerative arthritis, and a right inguinal hernia. In March 1982, he underwent surgery to repair the hernia and, as a result, missed 10 weeks of work. He filed for disability under the supplemental plan and received compensation.
Early in May 1982, Blackmon was told that if he did not return to work by May 17, 1982, he would be fired. He returned to work on that day, but still continued to suffer from various medical problems.
During the next eight months, Blackmon did not miss a day of work, but his production, apparently measured largely by the premiums collected, steadily declined. On January 24, 1983, he was notified that because of his declining production he was being discharged effective January 28, 1983. On January 26, 1983, Blackmon visited his doctor and received a note stating that his medical condition was preventing him from working "at his usual pace" and that he needed "more time" to recuperate. Blackmon presented this note to his supervisor and requested to be placed on disability status. ...
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