A Florida federal court ruled that Reliance Standard Life Insurance Company (“Reliance Standard”) owed an obstetrician/gynecologist disability benefits after wrongly interpreting the policy to deny his claim.
Dr. Freling and his Claim for Total Disability Benefits
The plaintiff, Dr. Freling, amputated part of an index finger and damaged the nerves in that and one other finger in an accident with a circular saw. Dr. Freling then filed a claim with Reliance Standard stating that he was totally disabled under his “regular occupation” disability insurance policy because he could no longer perform surgery or provide office-based care and exams. Under the policy, “totally disabled” means that, as a result of an injury or sickness, for the first 24 months, an insured cannot perform the material duties of his/her regular occupation.
Reliance Standard determined that Dr. Freling was still able to perform some of the duties required of an OB/GYN and denied his claim. Dr. Freling appealed the denial and submitted additional evidence of his disability. However, Reliance Standard denied his appeal and stated that he did not provide satisfactory proof of his inability to perform each and every “material duty” of his “regular occupation” as identified by the U.S. Department of Labor Dictionary of Occupational Titles (“DOT”).
Dr. Freling then filed a lawsuit seeking to recover past due disability payments.
The Court’s Decision
The court ruled in favor of Dr. Freling and held that:
- An inherent conflict of interest exists because Reliance Standard pays benefits out of its own assets and, therefore, the heightened arbitrary and capricious standard of review applied;
- Reliance Standard’s interpretation of “regular occupation” to mean Dr. Freling’s profession as defined in the national economy by the DOT was incorrect;
- As “regular occupation” was not defined by the policy, it must be interpreted in favor of Dr. Freling, as referring to his specific medical practice, and strictly against Reliance Standard since it wrote the policy;
- Whether Dr. Freling was able to perform the material duties of his occupation within the meaning of the policy required reference to his actual duties rather than the tasks listed in the DOT;
- Dr. Freling’s claim that he cannot perform his duties is supported by the record while Reliance Standard’s position is without support, wrong and unreasonable; and
- The record also supports a finding that Reliance Standard’s policy interpretation was tainted by self-interest.
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