Court Finds That The Risk Of Contracting Covid-19 And Unavailability Of Personal Protective Equipment Is Not An Injury Or Illness Within The Meaning Of Plaintiff-Physician’s Disability Policy

In Osborn v. The Paul Revere Life Insurance Company, No. 1:21-CV-00842-CDB, 2024 WL 1020486 (E.D. Cal. Mar. 8, 2024), a California Eastern District Magistrate Judge (assigned for all purposes) granted summary judgment to The Paul Revere Life Insurance Company, finding that Paul Revere did not breach the terms of Plaintiff’s individual disability or business overhead expenses policies when it concluded that Plaintiff was not disabled due to an illness or injury.

Plaintiff was an oral and maxillofacial surgeon who opened and owned a business in Bakersfield, California. In addition to an individual disability insurance (“IDI”) policy, Paul Revere also issued to Plaintiff a business overhead expense (“BOE”) policy that covered business expenses in the case of total disability. At some point, Plaintiff was diagnosed with asthma, hypogammaglobulinemia and hypertension for which he treated annually with an allergist/immunologist and his PCP. In March 2020, at the start of the pandemic, Plaintiff saw his two physicians who both told him that due to his diagnoses he was considered “high risk” and should limit his exposure to Covid-19. Just days later, Plaintiff stopped working and cancelled work for his entire staff. Between March and May 2020, Plaintiff’s office manager attempted to get protective personal equipment (“PPE”) for the office, but experienced difficulty in doing so. Plaintiff’s office manager located available PPE in July 2020. However, in June 2020, Plaintiff decided to permanently close his practice as he was, at that time, unable to determine when the needed PPE would become available and laid off all but his administrative staff who handled patient transfers and accounts receivable. Plaintiff listed his California residence for sale and moved to his ranch in Colorado. In August 2020, Plaintiff experienced a pulmonary embolism while traveling back from Colorado.

On November 3, 2020, Plaintiff submitted a claim for total disability as of March 2020 due to “asthma, hypertension and status post-saddle pulmonary embolism” stating that he could not work in a Covid-19 environment due to his comorbidities and the unavailability of PPE. His PCP completed a physician statement noting that he advised Plaintiff not to work due to Covid-19 risk. Paul Revere arranged for two physician reviews of Plaintiff’s claim. Both reviewing physicians determined (1) that Plaintiff’s pre-existing conditions were well controlled, and (2) while Plaintiff would be at risk of developing complications if he were to contract Covid-19, the medical evidence did not support that Plaintiff was medically restricted from working in anticipation of contracting the virus. One reviewing physician did note, however, that if Plaintiff was unable to obtain PPE, he should not practice. Aside from the 27-day period of recovery from the pulmonary embolism, both physicians concluded that Plaintiff was not restricted from practicing as an oral surgeon. After a vocational review in which OSHA guidelines for working in close proximity with patients during Covid-19 were assessed, Paul Revere denied Plaintiff’s claim. Plaintiff did not appeal but instead filed suit alleging claims for breach of contract and bad faith.

The Court granted Paul Revere’s motion for summary judgment, finding that Plaintiff’s comorbidities alone did not prevent him from working as an oral surgeon. Indeed, prior to the pandemic, Plaintiff had worked full time (35-40 hours) for years with diagnoses of asthma, hypogammaglobulinemia, and hypertension. It was only six months after the manifestation of an external circumstance – COVID-19 and Plaintiff’s initial inability to obtain PPE – that Plaintiff first asserted his underlying impediments were totally disabling. The Court noted that Plaintiff offered no compelling evidence that his work activity necessarily would have diminished had he returned to work and no evidence he was unable to perform all the regular duties of his occupation on the first day he absented himself from work or thereafter. Moreover, Plaintiff’s performance of his occupational duties alone did not create a risk of future harm, as he could have continued to perform his material duties while mitigating his risk (with patient screenings and PPE). Thus, the Court concluded that the inability to obtain supplies is neither an “injury” nor a “sickness” rendering Plaintiff totally disabled and eligible for benefits, but rather, a choice not to work without adequate supplies.

The Court further found that Plaintiff was not entitled to business overhead expenses because his business was no longer in operation during the period for which Plaintiff sought benefits. The Court noted that the BOE policy only covers expenses that are “ordinary” and “necessary” “in the operation of” Plaintiff’s business. Expenses incurred after the close of Plaintiff’s practice are not recoverable as necessary to the “operation” of his profession. Finally, the Court granted summary judgment on Plaintiff’s bad faith and punitive damages claims finding that the evidence presented—including that by Plaintiff—demonstrated a reasonable, fair, and thorough investigation by Paul Revere.

If Paul Revere or your insurer has denied your disability insurance claim, contact us for assistance.