Wiley v. Unum Life Insurance Company of America

Background

Darrell Wiley purchased a disability insurance policy from Unum. The policy provided a monthly benefit of $1,500. It allowed 60 months of benefits if the disability resulted from sickness and lifetime benefits if it resulted from injury.

Wiley submitted a disability claim in 2015. Unum initially determined that he was not disabled, but later accepted that restrictions and limitations existed beginning January 3, 2015, and paid benefits from that date. Unum eventually determined that the disability resulted from sickness rather than injury. After Wiley filed this lawsuit, Unum continued paying benefits under a reservation of rights while the case was pending, meaning it reserved its position about whether it ultimately owed those payments.

Wiley sued for breach of contract, violation of the implied covenant of good faith and fair dealing, and declaratory relief. The opinion addresses the parties’ summary-judgment motions.

Unum’s Motion for Summary Judgment

The court denied Unum’s motion on Wiley’s breach-of-contract claim, except insofar as the claim sought benefits owed before January 3, 2015. Unum argued that its payments under a reservation of rights meant Wiley had no remaining claim. The court rejected that argument because Unum had committed to paying the larger amount only until the lawsuit resolved how much it owed, not indefinitely.

The court granted Unum’s motion on the bad-faith claim. Under California law, an insurer may avoid bad-faith liability when there is a genuine dispute about coverage, but the insurer must still conduct a thorough and fair investigation. The court found that the parties genuinely disputed whether Wiley’s disability resulted from sickness or injury, but Wiley had not identified a genuine dispute of material fact showing that Unum’s investigation was unfair, unreasonable, or inadequate.

The court considered Wiley’s arguments about allegedly missing medical records, his wife’s deposition, the effect of the vehicle accident, the focus on diagnosis, the independent psychiatrist’s examination, a change in Unum’s review procedure, and the qualifications of Unum’s benefits specialist. It concluded that these arguments did not establish a material factual dispute about the investigation’s sufficiency. The court also granted summary judgment on punitive damages to the extent they were based on the bad-faith claim.

The court separately granted Unum’s motion concerning benefits allegedly owed before January 3, 2015. Wiley had filed suit after the applicable limitations period and had not shown a basis for tolling it. The court denied Wiley’s request to delay summary judgment for additional discovery because he did not identify specific, essential facts that further discovery would likely produce.

Wiley’s Motion for Summary Judgment

Wiley moved for summary judgment on whether all documents he claimed were included on a compact disc sent by his counsel to Unum were actually transmitted. The issue was relevant only to the bad-faith claim, which the court had already resolved in Unum’s favor. In any event, the court denied Wiley’s motion because declarations from the parties created a genuine dispute about whether all of the claimed files were transmitted.

Disposition

Unum’s motion for summary judgment was denied on the breach-of-contract claim except as it related to benefits owed before January 3, 2015. It was granted on the covenant of good faith and fair dealing claim and for benefits owed before January 3, 2015. Wiley’s motion for summary judgment was denied. The court also struck Wiley’s unauthorized supplemental filing.