A federal court of appeals in Georgia held that Equitable Life Assurance Society (“Equitable”) wrongly denied a real estate developer’s claim for total disability benefits when it interpreted its policy to require a complete inability to perform all substantial and material duties of one’s occupation.
Dr. Giddens and His Disability Income Insurance Policies
While working as a dentist, the plaintiff, Dr. Giddens, purchased two disability income insurance policies from Equitable in 1986 and 1988. Specifically, the policies:
- Required Dr. Giddens to be disabled only from his “regular occupation,” not any occupation.
- Defined “your regular occupation” as “the occupation (or occupations, if more than one) in which you are regularly engaged for gain or profit at the time you become disabled.”
- Provided for benefits to be paid in the event of “Total Disability,” defined to mean “your inability due to injury or sickness to engage in the substantial and material duties of your regular occupation.”
- Also provided coverage for partial or “Residual Disability,” defined to mean “your inability due to injury or sickness to perform one or more of the substantial and material duties of your occupation.”
Dr. Giddens’ Claim for Total Disability Benefits
Dr. Giddens enjoyed a successful dentistry career from 1983 until 1994, when health problems forced him to sell his practice and cancel his malpractice insurance. At the time, Dr. Giddens owned two other companies through which he engaged in real estate development and investment. His principal duties in this occupation were entrepreneurial, financial, planning, coordinating, and administrative duties.
Upon being diagnosed with cirrhosis of the liver in October 1998, Dr. Giddens submitted a claim to Equitable, asserting that he was on a waiting list for a liver transplant, was disabled, and was unable to continue pursuing his occupations of dentistry and real estate development. Though Dr. Giddens’ renal functions returned to normal after his May 1999 liver-transplant surgery, he continued to have numerous health problems including hand tremors and numbness, chronic sleep disturbance and fatigue, anxiety, depression, and short-term memory loss. In support of his claim, Dr. Giddens’ treating physician reported that he was unable to perform substantial portions, or “most”, of the duties of a dentist or real estate developer.
Initially, Equitable paid total disability benefits to Dr. Giddens while it investigated his claim. After conducting an in-house medical review, however, Equitable determined that there was no current significant impairment that would preclude Dr. Giddens from performing most of the duties of his occupational description - but continued paying benefits under a reservation of rights.
In September 2001, Equitable learned that Dr. Giddens had stopped practicing dentistry four years before he became disabled and decided that his real estate endeavors were “passive” in nature. Not satisfied with the clarification it received from Dr. Giddens, Equitable terminated his benefits in March 2002. Dr. Giddens then filed a lawsuit seeking to recover past due disability payments.
“Total Disability” from “Your Regular Occupation” under Equitable’s Policies
The issue for the court in Dr. Giddens’ case was whether he was totally or only partially disabled from his regular occupation. In holding that Dr. Giddens was entitled to “total disability” benefits, the court found that:
- Though Dr. Giddens was not regularly engaged in dentistry at the time he became disabled, Equitable did not dispute that he was engaged in the occupation of real estate development - and the uncontroverted medical evidence established that he could no longer perform most or the majority of his duties.
- Equitable’s policy language is ambiguous because the “Total Disability” clause does not identify what percentage of “the” duties the insured must be unable to perform, nor does it say “all” substantial and material duties.
- Even if Dr. Giddens could perform a few substantial and material duties, his ability to perform those tasks in isolation still would not allow him to continue in his real estate development occupation because he is unable to perform the vast majority of duties that are at the heart of his occupation.
The court concluded by explaining that there is a continuum of disability where an insured, such as Dr. Giddens, is totally disabled from his regular occupation when he is unable to perform most or the majority (but not necessarily “all”) of the substantial and material duties.
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