Sager v. Standard Ins. Co.

• Decision Date: 26 August 2011
• Docket Number: No. 5:08-CV-628-D,5:08-CV-628-D
• Court: U.S. District Court — Eastern District of North Carolina
• Parties: DANIEL L. SAGER, Plaintiff, v. STANDARD INSURANCE COMPANY, Defendant.

DANIEL L. SAGER, Plaintiff, v. STANDARD INSURANCE COMPANY, Defendant.

No. 5:08-CV-628-D

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NORTH CAROLINA WESTERN DIVISION

SO ORDERED. August 26, 2011

ORDER

On December 29, 2008, Daniel L. Sager ("Sager" or "plaintiff") sued Standard Insurance Company ("Standard" or "defendant") in the United States District Court for the Eastern District of North Carolina seeking benefits under his disability insurance policies. Sager alleges that Standard breached its contracts with him and handled his insurance claim in bad faith. On November 3, 2010, Sager and Standard filed cross-motions for summary judgment [D.E. 42, 44]. On December 6, 2010, Sager and Standard filed responses in opposition [D.E. 51, 52]. On December 20, 2010, Sager and Standard replied [D.E. 53, 54]. As explained below, the court grants Standard's motion for summary judgment and denies Sager's motion for summary judgment.

I.

Summary judgment is appropriate when, after reviewing the record taken as a whole, no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a); Anderson v. Liberty Lobby. Inc., 477 U.S. 242, 247-48 (1986). The party seeking summary judgment bears the initial burden of demonstrating the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the moving party has met its burden, the nonmoving party may not rest on the allegations or denials in its pleading, Anderson, 477 U.S. at248-49, but "must come forward with specific facts showing that there is a genuine issuefor trial." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (emphasis removed) (quotation omitted). A trial court reviewing a motion for summary judgment should determine whether a genuine issue of material fact exists for trial. Anderson, 477 U.S. at 249. In making this determination, the court must view the evidence and the inferences drawn therefrom in the light most favorable to the nonmoving party. Scott v. Harris, 550 U.S. 372, 378 (2007).

Sager is insured by Standard under two disability insurance policies. Pl.'s Mem. Supp. Mot. Summ. J., Ex. 1 (hereinafter "Disability Policies").¹ The policies provide Total Disability and Residual Disability coverage benefits, provided Sager meets certain conditions. The policies define "Total Disability" as follows:

Because of Your Injury or Sickness:

1. You are unable to perform the substantial and material duties of Your Regular Occupation; and

2. You are not engaged in any other gainful occupation for which You may become qualified by reason of education, framing, or experience; and

3. You are under the regular care of a Physician appropriate for Your Injury or Sickness. This Physician's care requirement will be waived when We receive written proof, satisfactory to Us, that further care would be of no benefit to You.

Id. at 9, 37.² The policies define "Residual Disability" as follows:

You are not Totally Disabled, but because of Your Injury or Sickness:

1. Your Monthly Earnings are reduced by 20% or more of Your Indexed Prior Monthly Earnings; and

2. You are under the regular care of a Physician appropriate for Your Injury or Sickness; and

3. You are able:

a. To do some, but not all, of the substantial and material duties of Your Regular Occupation; orb. To do all of the substantial and material duties of Your Regular Occupation, but not for as long a time or as effectively as You did immediately prior to Your Injury or Sickness.

Id. at 20, 53. The policies contain a 90-day waiting period before total disability benefits become payable, and the insured must be continuously disabled throughout the 90-day waiting period. See id. at 4, 9, 11, 33, 37, 39. This waiting period also applies to a claim for residual disability benefits. See id. at 20, 53.

Sager is an independent financial consultant. Sager Dep. 59; Pl.'s Mem. Supp. Mot. Summ. J., Ex. 1 at 59 (Sager's Application for Disability Insurance). Sager contracts with investment companies to solicit and sell their investment products on a commission basis. See Sager Dep. 41-59. Sager's job involves networking, cold-calling, making presentations, attending seminars and social events, and preparing paperwork for clients. Id.; see Pl.'s Mem. Supp. Mot. Summ. J., Ex. 1 at 59. In 2006, Sager was living in Norfolk, Virginia, and working as a financial consultant for Mass Mutual Investor Services ("Mass Mutual"). Sager Dep. 17-18, 50-52. Before and after bis injuries, Sager led an active lifestyle, which included mountain biking, playing tennis, golf, and kickball, and running half-marathons and a full marathon. See id. at 19-21.

On June 15, 2006, at age 30, Sager injured his left knee while playing kickball. Id. at 117; Def.'s Mem. Supp. Mot. Summ. J., Ex. 4 at 561 (Carreau Interview); Dr. Brown Dep. 8. An MRI revealed a grade-one sprain of the medial collateral ligament, and partial tears of his anterior cruciate ligament ("ACL") and medial meniscus. Pl.'s Mem. Supp. Mot. Summ. J., Ex. 1 at 671 (hereinafter "Sager Claim File"). On June 22, 2006, Dr. Samuel Brown examined Sager and referred him to a physical therapist to improve his knee mobility and strength. Id. at 667; Dr. Brown Dep. 8-9. On July 13, 2006, Dr. Brown again examined Sager, noted that Sager was making progress in physical therapy, and scheduled an appointment for a "possible final check" for the following month. Sager Claim File 665; see Def.'s Mem. Supp. Mot. Summ. J., Ex. 6 at 98-104 (The Therapy NetworkRecords, hereinafter "Therapy Records").³ By August 8, 2006, Sager was able to run for 16 minutes at 4 miles per hour during his physical therapy session. Sager Dep. 121; Therapy Records 107. Sager began jogging on his own and reported that he only experienced knee pain when his knee was extended or during "high level activities." See Sager Dep. 122; Therapy Records 108-111. However, in September 2006, Sager reinjured his knee and returned to physical therapy. See Sager Claim File 661; Therapy Records 110-12. In October 2006, Sager again reinjured his left knee while participating in a charity golf event. Sager Claim File 561. Dr. Brown examined Sager and an MRI revealed that Sager had torn the ACL in his left knee. Id. at 659-60. On October 24, 2006, Dr. Brown informed Sager that he would need surgery to repair his ACL and arranged for Sager to receive a knee brace to keep his knee stable until surgery. See id. at 659. Sager told Dr. Brown that he was changing his business and would be relatively free over the next few months. Id.⁴ Sager continued physical therapy until his surgery in December 2006. Id. at 561. Before undergoing knee surgery, Dr. Brown did not place any work restrictions on Sager. See Dr. Brown Dep. 14-30, 38-39; Sager Dep. 145-48; Sager Claim File 561-62, 683-84. In fact, Sager continued working part-time and participated in a seminar in October 2006, but spent most of his time simply trying to "maintain contacts." See Sager Dep. 145-48; Sager Claim File 561-62.

On December 4, 2006, Dr. Brown performed reconstructive surgery to repair Sager's ACL. Dr. Brown Dep. 10; Sager Claim File 561. After the surgery, Dr. Brown recommended that Sager not work. See Dr. Brown Dep. 30. Sager began physical therapy and by January 2007, Sager was off of his crutches and able to resume moderate activity. See Sager Claim File 654-56, 686; Dr.Brown Dep. 32-34, 39-43. On January 9,2007, Dr. Brown authorized Sager to resume working between four to six hours a day with certain restrictions. See Brown Dep. 32-35, 39-40. On February 1, 2007, Sager reported that he was walking a half mile to and from the gym and was driving his manual-transmission vehicle without difficulty. Id. at 42-43. On February 6, 2007, Dr. Brown advised Sager that he could return to "sedentary" work anytime, and could do some walking and traveling as needed. Id. at 46-47. On March 20, 2007, Dr. Brown examined Sager and released him to "full duty," which meant that Sager was free to return to work on a full-time basis. Id. at 47-48. Dr. Brown discharged Sager and has not examined or treated Sager since March 20, 2007. Id. at 48-49. Dr. Brown testified that Sager was "quite active" at the time of his discharge, and recalls that "there were really no significant limitations." Id. at 61. Dr. Brown advised Sager that if his pain or symptoms persisted or got worse, he should seek medical care. Id. Sager has not sought or received any treatment for his knee since March 20, 2007. See Sager Dep. 88, 119-20.

On January 18, 2007, Sager submitted a claim for disability insurance benefits for his knee injury. Sager Claim File 567-70. On April 13, 2007, after investigating Sager's claim, Standard informed Sager that he did not qualify for benefits. See id. at 434-42. Standard explained that Sager had not provided satisfactory written proof that he met the policies' definition of disability continuously throughout the 90-day elimination period and beyond. Id. Additionally, Standard noted that it was unable to determine whether Sager's claimed loss of earnings was actually caused by his injury. Id. at 440-41. Standard also informed Sager that it reserved the right to consider and assert other reasons for limiting or denying Sager's claim if, upon further investigation, such reasons were identified. Id. at 442. On May 31, 2007, Sager sent a letter to Standard, appealing the denial of his benefits and responding to Standard's determination. Id. at 476-79. Sager maintained that his disability began when he injured his knee in June 2006, and that it was "only after an intensive rehabilitation [that he] was in a condition to return to the full time duties of travel and sales which accompanies [his] own occupation." Id. at 478. Sager then calculated the 90-day elimination periodand informed Standard that he believed he was entitled to residual or total disability benefits from October...