Principal Life Ins. Co. v. Brand
| Decision Date | 08 September 2021 |
| Docket Number | 15-CV-03804 (GRB) (JMW) |
| Parties | PRINCIPAL LIFE INSURANCE COMPANY, Plaintiff, v. JASON P. BRAND, Defendant. |
| Court | U.S. District Court — Eastern District of New York |
REPORT AND RECOMMENDATION
Plaintiff Principal Life Insurance Company commenced this action against Defendant Jason P. Brand seeking a declaratory judgment that Plaintiff properly rescinded Defendant's disability income insurance policy (the “Policy”) based on Defendant's allegedly fraudulent material misrepresentations on his policy application. (DE 219.) In response, Defendant asserted counterclaims for breach of contract and breach of the implied covenant of good faith due to Plaintiff's failure to provide coverage for Defendant's disability as required by the policy. (DE 276.) Before the Court on referral from the Honorable Gary R Brown are Plaintiff's and Defendant's respective motions for summary judgment pursuant to Federal Rule of Civil Procedure 56. For the reasons that follow, the undersigned respectfully recommends that Plaintiff's motion be granted in part and denied in part, Defendant's motion be granted in part and denied in part, and that accordingly, the amended complaint and amended counterclaims now be dismissed.[1]
In 2009, Defendant began experiencing cervical pain. (DE 297-2 at 7.) Multiple MRIs taken by East River Imaging, PC revealed a herniated disc with a flattening of the thecal sac in Defendant's cervical region. (Id. at 7-8.) Defendant sought and received treatment for his neck pain from numerous doctors, namely Drs. Gungor, Sun, Millman, Mathews, and Yu. (Id. at 3.) Over the course of his treatment, these doctors prescribed Defendant multiple prescription pain medications and had Defendant attend physical therapy. (Id.) Defendant's neck treatment also included multiple cervical epidural injections as a means of combating the pain. (Id.)
On July 19, 2011, Defendant began receiving treatment from a psychiatrist, Dr. Allen Stemplar, because he was experiencing anxiety, panic, depressed mood, insomnia, and poor appetite. (Id. at 12.) These symptoms were considered chronic, meaning they had existed for over a year. (Id.) Defendant attended twenty sessions with Dr. Stemplar, who diagnosed him with general anxiety disorder and treated him with insight-oriented psychotherapy and multiple medications. (Id. at 12-13.) Specifically, Dr. Stemplar prescribed Defendant Cymbalta, Ativan, Lexapro, Ambien, Diazepam, and Pamelor in hopes of treating his anxiety. (Id. at 14.) Dr. Stemplar made sure to describe each medication to Defendant and explained why he was prescribing it. (Id.)
In September 2011, while being treated for both cervical pain and anxiety, Defendant began searching for disability insurance through his broker, David Glenn. (Id. at 16.) Defendant expressly sought a policy that did not exclude coverage for cervical conditions. (Id. at 4.) Defendant had previously purchased life insurance through Glenn, who works as an independent contractor for Rampart Insurance under his limited liability company, Charter Trade Credit. (Id.)
On September 9, 2011, Glenn emailed Lee Ganz-a disability insurance specialist at Rampart-to inquire about disability insurance for Defendant. (Id.) Glenn, using the health information he received from Defendant, explained that Defendant had “[h]ealth issues, ” including “[s]lightly elevated cholesterol history controlled with meds, slight anxiety using very low dose med . . ., slightly elevated blood pressure, no longer an issue.” (Id. at 16-17.) Two days later, a disability consultant at Rampart, Frank Johnston, asked Glenn what caused Defendant's anxiety and how long he had been on medication, to which Glenn responded: (Id. at 17.) After Johnston informed Glenn that Defendant would “be a decline with all of [their] traditional carriers until he [was] stable on the meds for at least one-year [sic], ” the following email exchange occurred:
(Id. at 17-18.) That same day, Glenn forwarded his email thread with Johnston to Defendant. (Id. at 18.)
On January 6, 2012, Glenn sent Defendant a blank application for disability insurance through Plaintiff and advised Defendant to disclose any medication that he had taken or was currently taking. (Id. at 21.) Part A of the application asked:
Within the last five years, have you been treated for, or been diagnosed as having a heart condition, chest pain, stroke, back or neck problem, sleep disorder, psychological condition (including but not limited to, counseling from mental health or substance abuse provider, and/or psychotherapist), cancer, diabetes, alcohol abuse, or drug dependency?
(Id. at 22 (emphasis added).) While Defendant checked “yes” to this question, he explained in the details section that he had “back surgery lower lumbar spine 2009 herniated dis[c].” (Id.) When asked whether he had, in the last ten years, been treated for or been diagnosed as having “chronic fatigue, stress, depression, anxiety or any other emotional or psychological disorder, ” Defendant checked “no, ” but explained that he had “Hypertension - on medication - Toprol XL 25 mg 1x day.” (Id.) When asked whether he had, in the last ten years, been treated for or been diagnosed as having “back or neck pain, disc problems, spinal sprain or strain, sciatica, arthritis, carpal tunnel syndrome, or any other disease or disorder of the bones, joints or muscles, ” Defendant checked “yes” and explained that he “had lumbar dis[c] surgery [in] 2009.” (Id.) Finally, Defendant answered “no” when asked whether, in the last ten years, he had any “medical tests . . . illness or injury, ” if he had “consulted a doctor, psychiatrist, or other healthcare provider not provided in response to a previous question, ” or if he had “been advised to take any medication or treatment not provided in response to a previous question.” (Id. at 23 (capitalization altered).) On January 9, 2012, Defendant executed the application, certifying that his responses were true and correct and acknowledging that the policy would not become effective unless he was in the same state of health as represented on the application and that any knowledge of his broker, Glenn, could not be imputed onto Plaintiff. (Id. at 23-24.)
After receiving the application, Plaintiff conducted a phone interview with Defendant. (Id. at 24.) When asked whether he had consulted a doctor, clinic, emergency room, or other health care provider in the prior three years, Defendant answered “yes, Steven Goldberg, ” for a physical with no follow-up treatment. (Id.) Defendant only disclosed Crestor, Tricor, and Lisinopril-cholesterol medications-when asked if he was currently under any medication or treatment. (Id.) In response to questions regarding his back pain, Defendant stated that he began experiencing lower back pain in 2008 and that he received treatment for his herniated lumbar disc and discectomy from a Dr. Gamache. (Id. at 25.) As with his initial application, Defendant did not disclose that he received treatment from Drs. Gungor, Sun, Millman, Mathews, and Yu for his cervical issues, and did not mention that he received epidural injections for his neck pain. (Id.) When asked whether he had “consulted a counselor/therapist for any reason such as stress, anxiety[, ] or depression, ” Defendant responded “no.” (Id.)
On February 1, 2012, Plaintiff advised Defendant that it would approve his disability coverage with an exclusion for the lumbar spine. (Id.) Coverage would be for a $18, 250 a month benefit. (Id. at 28.) There are key relevant terms under the Policy which must be referenced in determining the instant dispute. They are:
TOTAL DISABILITY - means solely due to injuries or sickness: During the Your Occupation Period you are unable to perform the substantial and material duties of your occupation and you are not working . . . . If you are unemployed, total disability means, solely due to injury or sickness, you are prevented from obtaining a job that you are reasonably suited to by your education, training and experience.
(Id. at 28 (capitalization altered).) The Policy also includes a host of exclusions, stating, in pertinent part:
(Id. at 29 (capitalization altered).) Further, the Policy permits Plaintiff to rescind the agreement as follows:
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