Hurley v. First UNUM Life Insurance , 808 N.Y.S.2d 247 ( 2005 )

In an action, inter alia, for a judgment declaring that the plaintiff is totally disabled and that the defendant is obligated to pay the plaintiff benefits pursuant to a policy of disability insurance, the plaintiff appeals, as limited by her brief, from so much of a judgment of the Supreme Court, Nassau County (O’Connell, J.), entered March 20, 2003, as, after a nonjury trial, and upon an order of the same court dated March 30, 2001, as amended June 14, 2001, and September 11, 2002, which, among other things, determined that the plaintiff breached her duty of cooperation under the disability insurance policy by refusing to submit to a medical test requested by the defendant, and granted that branch of the defendant’s cross motion which was to dismiss the complaint, is in favor of the defendant and against her dismissing the complaint, and the defendant cross-appeals from so much of the same judgment as, upon the order, directed that the dismissal of the complaint be “without prejudice,” and directed reimbursement of certain premiums paid by the plaintiff.

Ordered that the judgment is reversed insofar as appealed from, on the law, that branch of the cross motion which was to dismiss the complaint is denied, the order is vacated, and the matter is remitted to the Supreme Court, Nassau County, for the entry of an amended judgment declaring that the plaintiff is disabled and the defendant is obligated to pay to the plaintiff disability benefits in accordance with the terms of the subject policy of insurance; and it is further,

Ordered that the cross appeal is dismissed as academic in light of the determination of the appeal; and it is further,

Ordered that one bill of costs is awarded to the plaintiff.

The plaintiff, a dental hygienist, purchased an “own occupation” policy of disability insurance from the defendant, First UNUM Life Insurance Company, in 1991. In or about September 1994 the plaintiff was diagnosed as suffering from carpal tunnel syndrome. She made a claim under the policy and the defendant required that she undergo a medical examination by a physician it selected. The examination included an electromyelograph study (hereinafter EMG), the result of which was negative. After considering the report of its examining physician, which reached the conclusion that the plaintiff was suffering from pronator teres syndrome, either in addition to or rather than carpal tunnel syndrome, the defendant determined that the plaintiff was totally disabled and commenced paying benefits pursuant to the policy. Each month thereafter, the plaintiff duly submitted a statement by her treating physician, Dr. Peter Stein, attesting to the continuation of the condition that resulted in the finding of a disability, as required by the policy, and the defendant paid the benefits due pursuant to the policy.

In early 1997 the defendant’s claims examiner reviewed the plaintiffs file and found it questionable that the plaintiff was totally disabled as a result of her work as a dental hygienist, but was able to care for the child to which she had given birth subsequent to the onset of her disability. There was no medical evidence in the file, or produced subsequently, to support the reasonableness of this concern. The claims examiner ordered a medical review of the plaintiff’s file and, as a result of that review, a physician employed by the defendant suggested to the plaintiff’s physician that the plaintiff undergo an additional EMG. Although the plaintiffs physician initially agreed to that suggestion, and took steps to implement it, he subsequently discussed the matter with the plaintiff and they “decided that it probably wouldn’t change anything, repeating EMGs.” The plaintiff admitted that she initially agreed to submit to the EMG, but later changed her mind. A progress report by the plaintiffs physician dated May 12, 1997, indicated that “[d]ue to the complexity of her problems and bilateral nerve compressions and the limited guarantee of improvement by surgery, further invasive testing (EMG’s) will be deferred at present.”

In a telephone conversation on June 3, 1997, the claims examiner advised the plaintiff that in order for benefits to continue she would have to undergo the EMG. The substance of that conversation was confirmed by letter of the same date from the claims examiner to the plaintiff, which stated, in relevant part: “As discussed today, no further benefits can be extended until an EMG test is performed and the results are received and reviewed by this office. Based on all the information in the file and a telephone conversation between Dr. Stein and our medical consultant, we find that there is a lack of significant clinical and objective findings to support the degree of impairment you claim exists.”

The plaintiff then obtained an attorney. By letter dated June 17, 1997, to the plaintiffs attorney, the claims examiner stated: “As discussed with Ms. Hurley and yourself, we feel we have a deniable claim at this time. However, we are willing to keep the file open pending the result of an EMG. After your review of the enclosed information, please advise as to whether Ms. Hurley will be having an EMG or not.” This was followed by a letter dated July 9, 1997, to the plaintiff’s attorney, in which the claims examiner stated: “As previously discussed with yourself and Ms. Hurley, we have not received any indication that Ms. Hurley will be having an EMG. Therefore, this claim has been closed.” The letter then summarized the basis for the defendant’s determination:

“As you are aware, we have completed a comprehensive review of all the medical records of Dr. Peter Stein. We then arranged for one of our staff physicians to review Ms. Hurley’s medical records and to speak to Dr. Stein regarding Ms. Hurley’s condition. Our staff physician and Dr. Stein . . . agreed to strongly suggest to Ms. Hurley that she undergo these studies. Even though we felt we had enough information in this file to close this claim for lack of significant clinical and objective findings to support the degree of impairment Ms. Hurley claims exists, we were willing to keep the file open until the EMG studies were done.

“Since there is insufficient medical information to support Ms. Hurley’s claimed inability to work, we are unable to extend further benefits and have closed this claim.”

The plaintiff thereafter continued to refuse to undergo the EMG and ultimately instituted this action, inter alia, for a judgment declaring that she is totally disabled and that the defendant is obligated to pay benefits pursuant to the policy of disability insurance. The defendant denied that the plaintiff is totally disabled and defended on the additional ground that the plaintiff failed to submit to the examination, as required by the terms of the policy. Following a nonjury trial, the Supreme Court determined that the plaintiffs failure to submit to the testing constituted a breach of her duty to cooperate under the policy and, inter alia, dismissed the complaint without prejudice on that basis. The Supreme Court declined to address the issue of the plaintiffs disability on the ground that it was not necessary to reach that issue in light of its determination. This appeal and cross-appeal ensued.

Under the terms of the policy of disability insurance at issue here, the plaintiff was obligated to submit to a medical examination that was reasonably requested by the defendant at any time during the pendency of a claim. Since the policy treated each monthly payment as the subject of a separate claim, the plaintiffs claim was “pending” for each such period and the defendant was effectively permitted to require that the plaintiff undergo such an examination on a regular basis, provided that it was reasonable to do so. The willful failure of the insured to submit to a reasonably requested examination is a legitimate basis for denying the claim (see Argento v Aetna Cas. & Sur. Co., 184 AD2d 487, 488 [1992]; Pizzirusso v Allstate Ins. Co., 143 AD2d 340, 341 [1988]; Ausch v St. Paul Fire & Mar. Ins. Co., 125 AD2d 43, 50 [1987]). In this context, however, the requirement that the request be reasonable can refer only to reasonableness in relation to the insurer’s determination to honor or deny the claim. Viewed in that light, the defendant’s request, under the particular facts of this case, was not reasonable.

Here, the plaintiff was diagnosed as suffering from carpal tunnel syndrome over two years before the claim was closed despite a negative EMG. The plaintiffs treating physician testified, and the physician who conducted the original medical evaluation on behalf of the defendant confirmed, that this was not unusual in light of the relatively high number of false negative results from the test. The plaintiffs treating physician further testified cogently that in light of this fact, a further EMG would not alter his diagnosis or his conclusion that the plaintiff suffered from a disabling condition. The medical evidence submitted by the defendant failed to counter this testimony. As a result, the plaintiffs refusal to undergo the EMG was not inconsistent with her obligations under the policy.

In any event, even if the defendant had reasonably requested an additional medical examination, the complaint was improperly dismissed on the ground that the plaintiff refused to submit to that examination since the defendant did not deny the claim on that basis (see General Ace. Ins. Group v Cirucci, 46 NY2d 862, 864 [1979]; Shell v Fireman’s Fund Ins. Co., 17 AD3d 444, 446 [2005]; Pawley Interior Contr., Inc. v Harleysville Ins. Cos., 11 AD3d 595, 596 [2004]). As the letters from the defendant’s claims examiner made clear, while the defendant threatened to discontinue benefits by reason of the plaintiff’s failure to undergo the EMG, the defendant ultimately denied the plaintiffs claim on the basis of the lack of sufficient evidence that the plaintiff was disabled within the meaning of the policy. Having elected to terminate the plaintiffs benefits because it found insufficient evidence that the plaintiff was disabled, the defendant had no basis to request a further examination and the plaintiffs subsequent failure to undergo the additional examination was immaterial to the validity of the termination (see Finkelstein v Equitable Life Assur. Socy. of U.S., 256 App Div 593, 596-597 [1939], affd 281 NY 690 [1939]). The Supreme Court erred, therefore, in dismissing the complaint on the ground that the plaintiff failed to undergo the requested examination.

The validity of the defendant’s action thus turns on the sufficiency of its finding that the plaintiff was not disabled within the meaning of the policy. Although the Supreme Court did not reach this issue, the scope of our review is sufficiently broad that we may reach the issue nonetheless and render the judgment we find to be warranted (see Northern Westchester Professional Park Assoc. v Town of Bedford, 60 NY2d 492, 499 [1983]; Ausch v St. Paul Fire & Mar. Ins. Co., supra at 46). Upon doing so, we find that the complaint should have been sustained.

In the unique circumstances of this case, the plaintiff made out a prima facie case that the defendant breached the contract of insurance by establishing that the defendant admitted that she was disabled within the meaning of the “own occupation” disability policy by paying her claim for a period of 272 years, and that there had been no change in her medical condition since that time. The defendant’s proof, consisting, essentially, of testimony that without the EMG there was no “objective” proof of the plaintiff’s disability, was insufficient to overcome the plaintiffs showing.

The parties’ remaining contentions are either without merit or have been rendered academic in light of our determination.

Since this is an action for a declaratory judgment, we remit the matter to the Supreme Court, Nassau County, for the entry of a judgment declaring that the plaintiff is disabled within the meaning of the policy and that the defendant is obligated to pay to the plaintiff disability benefits in accordance with the terms of the policy of insurance (see Lanza v Wagner, 11 NY2d 317 [1962], appeal dismissed 371 US 74 [1962], cert denied 371 US 901 [1962]). H. Miller, J.P., Adams and Spolzino, JJ., concur.