Bonnie Jue v. Unum Group

Background

Bonnie Jue purchased an “own-occupation” disability-insurance policy from Unum Life Insurance Company of America in 1994. The policy provided total or residual disability benefits if illness or injury prevented her from working, or from working full time, as a dentist. The policy required the insured to receive medical care from someone other than herself that was appropriate for the injury or illness, but waived that requirement when continued care would provide no benefit.

Jue developed De Quervain’s tenosynovitis in both wrists in 1998. Unum initially approved disability benefits and later approved residual benefits after she returned to working part time. Unum continued paying benefits for many years while Jue pursued conservative treatment and declined surgery. In 2001, an Unum representative told Jue that Unum could not force her to have surgery and that declining surgery would not affect her benefits.

Beginning in 2015, Unum moved Jue’s claim to a unit that conducted more active claim reviews. After reviewing updated medical information, obtaining an independent medical examination, and consulting several doctors, Unum determined that De Quervain’s surgery was the appropriate treatment. Unum told Jue that it would discontinue benefits if she did not schedule surgery. Jue consulted Dr. Kilaru, who tried medication and corticosteroid injections and later recommended surgery after the injections provided only temporary relief. Jue did not undergo surgery, and Unum terminated her benefits in May 2018. During the appeal, Dr. Hsu opined that conservative maintenance was appropriate under Jue’s circumstances, but Unum concluded that the opinions favoring surgery were more persuasive.

Jue’s Motion for Partial Summary Judgment

Jue sought partial summary judgment—a ruling that no material factual dispute required a trial—on her breach-of-contract claim. She argued that Unum had waived its right to require surgery or should be barred by equitable estoppel from requiring it. Unum argued, among other things, that factual disputes prevented summary judgment.

The court rejected Unum’s arguments that Jue had not adequately raised waiver and estoppel and that those doctrines could not apply as a matter of law. But the court held that the waiver issue could not be resolved on summary judgment. Jue’s evidence, including the 2001 statement and Unum’s failure to insist on surgery for many years, could support a waiver finding. Unum’s evidence, including the context of the 2001 conversation and later claim handling, could support the opposite finding. Because a reasonable fact finder could interpret the evidence either way, the court denied Jue’s motion on waiver.

The court also concluded that Jue had not established equitable estoppel. It found that she had not shown that Unum engaged in inequitable conduct, caused her a legally relevant disadvantage, or that equitable considerations required preventing Unum from enforcing the surgery requirement. The court therefore denied Jue’s motion for partial summary judgment on her breach-of-contract claim.

Unum’s Motion for Partial Summary Judgment

Unum sought partial summary judgment on Jue’s claim for breach of the implied covenant of good faith and fair dealing and on her demand for punitive damages. Under the “genuine dispute” rule discussed by the court, an insurer is not liable for bad faith when there is a genuine, objectively reasonable dispute about whether benefits are owed.

The court held that Unum’s investigation and decision were reasonable. It emphasized that Unum reviewed Jue’s updated medical information, consulted multiple doctors, obtained an independent examination, considered Dr. Kilaru’s opinion, allowed additional time for alternative treatment, and reviewed Dr. Hsu’s contrary opinion during the appeal. The court concluded that there was a genuine dispute about whether surgery was the appropriate treatment when Unum terminated benefits and that no reasonable jury could find Unum’s investigation and decision unreasonable. The court therefore granted Unum’s motion for partial summary judgment on Jue’s good-faith-and-fair-dealing claim.

For punitive damages, the court explained that California law requires clear and convincing evidence of malice, fraud, or oppression. It found that Jue had not provided evidence meeting that standard. The court therefore granted Unum’s motion for partial summary judgment on Jue’s punitive-damages demand.

Sealing Filings and Disposition

Jue and Unum filed administrative motions concerning documents provisionally filed under seal. The court stated that Unum had four days from the order’s date to file a substantive supporting declaration justifying the sealing of documents filed at Docket Nos. 35 and 40. The opinion does not state that the court finally granted or denied either sealing motion.

Judge William H. Orrick ordered that Jue’s motion for partial summary judgment on the breach-of-contract claim was DENIED, and that Unum’s motion for partial summary judgment concerning the breach-of-implied-covenant claim and punitive-damages demand was GRANTED.