Sternberg v. The Paul Revere Life Insurance Company

Background

Richard Sternberg, an orthopedic surgeon, purchased three disability-insurance policies from The Paul Revere Life Insurance Company. The policies provided benefits for total and residual disability caused by sickness or injury. They defined total disability as being unable, because of injury or sickness, to perform the important duties of the insured’s occupation while receiving regular and personal care from a physician. The parties agreed that the physician-care requirement was satisfied.

Sternberg took leave beginning April 6, 2012, after a detached retina, an intraocular bleed, and complications from spinal decompression surgery. He returned part-time on July 3, 2012, and full-time on July 16, 2012, but could no longer take emergency-room call or perform open surgical procedures. He instead increased his clinical schedule and continued seeing the same type of patients and performing non-operative orthopedic therapies. He took another leave from January 11, 2013, through April 15, 2013, and remained unable to perform open surgery or emergency-room duties after returning. This work arrangement continued until March 23, 2015, when he became completely disabled.

The parties agreed that Sternberg was completely disabled during the periods from April 6, 2012, to July 3, 2012; from January 11, 2013, to April 15, 2013; and from March 23, 2015, onward. The dispute concerned the two interim periods: July 3, 2012, to January 11, 2013, and April 15, 2013, to March 23, 2015. Paul Revere concluded that Sternberg was entitled to residual-disability benefits rather than total-disability benefits during those periods. Sternberg sued for breach of contract, damages, and a declaration that he had been continuously totally disabled.

Legal standard and analysis

The parties filed cross-motions for summary judgment. Summary judgment is appropriate when there is no genuine dispute about a material fact and the moving party is entitled to judgment as a matter of law. The court applied New York law to interpret the insurance policies.

The court rejected Paul Revere’s proposed interpretation that total disability required inability to perform any or all important duties. Relying on the policy language and cited New York law, the court held that an insured can perform the important duties of an occupation when the insured can perform work of the same general character as the prior job, requiring similar skills and training and involving comparable duties. The court used a functional approach that considered the professional activities performed before and after the disability.

The court found that Sternberg’s work after his injuries remained generally the same. He worked at the same hospital, with the same patients, and in the same clinics. Although he could no longer perform open surgery, less than half of his pre-disability charges were tied to open surgical procedures, and he had spent more than half of his pre-disability time in clinics as a non-operating physician. His increased clinical schedule did not change the general character of his work because clinical duties had been a significant and essential part of his occupation before the disability. The reduction in his salary also did not establish that he had changed occupations; the court noted that such a reduction could instead be addressed through residual-disability coverage.

Disposition

The court concluded that Sternberg was not totally disabled under the policies during the disputed interim periods. It denied Plaintiff’s motion for summary judgment and granted Defendant’s motion for summary judgment.