Morgan v. Provident Life and Accident Insurance Company

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF OKLAHOMA

RICHARD R. MORGAN, )

)

Plaintiff, )

)

vs. ) Case No. CIV-20-180-D

)

PROVIDENT LIFE AND ACCIDENT )

INSURANCE COMPANY, )

)

Defendant. )

O R D E R

Before the Court are Defendant’s Motion for Summary Judgment [Doc. No. 57] and

Plaintiff’s Motion for Partial Summary Judgment [Doc. No. 58] under Fed. R. Civ. P. 56.

Plaintiff seeks summary judgment in his favor on an insurance coverage issue that underlies

the parties’ dispute. Defendant seeks summary judgment on all claims. The Motions are

fully briefed and ripe for decision.1

Factual and Procedural Background

Plaintiff brings this diversity action to recover damages for breach of an insurance

contract, breach of an insurer’s duty of good faith and fair dealing, and fraud related to a

disability income policy issued by Defendant. Plaintiff is a medical doctor who resides

and practices medicine in Oklahoma. The parties agree that Oklahoma law applies.

1 Each party has filed a response to the opponent’s motion and a reply brief in support of

its own motion. See Pl.’s Resp. Br. [Doc. No. 62]; Def.’s Resp. Br. [Doc. No. 61]; Pl.’s Reply

Br. [Doc. No. 66]; Def.’s Reply Br. [Doc. No. 67]. The Court also authorized supplemental briefs

regarding Defendant’s Motion. See Pl.’s Suppl. Resp. [Doc. No. 80]; Def.’s Suppl. Reply [Doc.

No. 81].

Plaintiff’s operative pleading is the Second Amended Complaint [Doc. No. 29]. It

concerns a disability income insurance policy that Plaintiff purchased from Defendant in

1987. See id., Ex. 1 [Doc. No. 29-1] (hereafter, “Policy”).2 Defendant allegedly markets

this type of policy to physicians to provide disability coverage for an occupation in a

recognized medical specialty. Plaintiff alleges that he worked from 1987 until 2019 as

both a specialist in emergency medicine and a clinician in a non-specialty practice. In

March 2019, Plaintiff suffered a heart attack that allegedly caused him to be permanently

disabled from his specialty occupation as an emergency room physician.

Plaintiff’s illness and loss of income from his specialty occupation allegedly entitles

him to benefits under the “Residual Disability” provision of the Policy. See 2d Am.

Compl. ¶¶ 9, 21; Policy at 10-13 (ECF page numbering).3 In November 2019, Defendant

approved Plaintiff’s loss claim and authorized a payment of benefits, but in January 2020,

Defendant denied further coverage. Plaintiff claims that the denial was contrary to the

Residual Disability provision and caused him to lose monthly payments for his lifetime.

Plaintiff also claims that Defendant breached provisions of the Policy that entitled him to

a waiver of premiums during a period of disability and that Defendant underpaid his benefit

due to an incorrect date of commencement and an incorrect computation of the payment

amount. See 2d Am. Compl. ¶ 13. In these three respects, Plaintiff claims that Defendant

2 The record contains numerous copies of the Policy, including Exhibit 1 to Plaintiff’s

Motion [Doc. No. 58-1] and part of Exhibit 3 to Defendant’s Motion [Doc. No. 57-3] (pp. 45-80).

3 All spot citations to the Policy use page numbers assigned by the electronic case filing

system.

“breached the insurance contract by failing and refusing to properly and promptly pay

covered policy benefits to Plaintiff.” Id. ¶ 15.

Plaintiff also claims that Defendant acted in bad faith in the denial of his claim for

Residual Disability benefits. Plaintiff pleads facts in support of his bad faith claim that

tend to show Defendant discontinued benefit payments for reasons unrelated to Plaintiff’s

right to coverage under the Policy and without regard to the applicable provision, failed to

properly evaluate the medical evidence and adequately investigate his claim, and refused

to pay benefits to which he was entitled under the terms of the Policy in a manner that

unreasonably delayed, and attempted to conceal the true reasons for, Defendant’s decision.

Finally, Plaintiff asserts a claim of fraud based on allegations that Defendant’s

soliciting agent, Earl Chambers, misrepresented in June 1987 the coverage provided by the

Policy for a physician working in a medical specialty who became disabled from the

specialty occupation but continued to practice. Plaintiff alleges Defendant “knew, and

intentionally omitted, the fact that . . . physicians would not be entitled to the total disability

benefit of the policy in the event that the physician became disabled from his [specialty]

occupation at a time when he was already engaged in another [non-specialty] occupation.”

See 2d Am. Compl. ¶ 48. Mr. Chambers allegedly failed to disclose that the Policy would

not provide total disability coverage under the circumstances of Plaintiff’s plan to have a

dual occupation, that is, working throughout his career in “his recognized specialty as an

E.R. physician” and “a second job most of those same years with a physician team doing

clinical work.” Id. ¶¶ 51-52. In ruling on a motion to dismiss, the Court found that

Plaintiff’s allegations state a plausible fraud claim. See 3/26/21 Order [Doc. No. 12].

Following ample time for discovery, both parties now move for summary judgment

on certain issues or claims. Both Plaintiff and Defendant seek a determination in their

favor of the proper interpretation and application of the Residual Disability provision of

the Policy under the facts shown by the summary judgment record. Defendant seeks

summary judgment on Plaintiff’s contract, bad faith, and fraud claims.

Standard of Decision

Summary judgment is appropriate “if the movant shows that there is no genuine

dispute as to any material fact and the movant is entitled to judgment as a matter of law.”

Fed. R. Civ. P. 56(a). A material fact is one that “might affect the outcome of the suit

under the governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

“A dispute is genuine if the evidence is such that a reasonable jury could return a verdict

for either party.” Id. at 255. All facts and reasonable inferences must be viewed in the

light most favorable to the nonmoving party. Id. “Cross-motions for summary judgment

are treated as two individual motions for summary judgment and held to the same standard,

with each motion viewed in the light most favorable to its nonmoving party.” Banner

Bank v. First Am. Title Ins. Co., 916 F.3d 1323, 1326 (10th Cir. 2019).

The movant bears the burden of demonstrating the absence of a dispute of material

fact warranting summary judgment. See Celotex Corp. v. Catrett, 477 U.S. 317, 322-23

(1986). If the movant carries this burden, the nonmovant must then go beyond the

pleadings and “set forth specific facts” that would be admissible in evidence and that show

a genuine issue for trial. See Anderson, 477 U.S. at 248; Celotex Corp., 477 U.S. at 324;

Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 671 (10th Cir. 1998). “To accomplish this,

the facts must be identified by reference to affidavits, deposition transcripts, or specific

exhibits incorporated therein.” Adler, 144 F.3d at 671; see Fed. R. Civ. P. 56(c)(1)(A).

“The court need consider only the cited materials, but may consider other materials in the

record.” Fed. R. Civ. P. 56(c)(3); see Adler, 144 F.3d at 672. If a party who would bear

the burden of proof at trial lacks sufficient evidence on an essential element of a claim, all

other factual issues concerning the claim become immaterial. See Celotex Corp., 477 U.S.

at 322. The Court’s inquiry is whether the facts and evidence identified by the parties

present “a sufficient disagreement to require submission to a jury or whether it is so one-

sided that one party must prevail as a matter of law.” Anderson, 477 U.S. at 251-52.

Statement of Undisputed Facts

The parties agree on many relevant facts related to Plaintiff’s insurance claims.4

Defendant issued the Policy to Plaintiff effective July 17, 1987, and renewed it annually in

subsequent years. Plaintiff continually paid annual premiums to maintain coverage. In

1990, Defendant amended the Policy to provide “important coverage improvements,”

including enhanced Residual Disability coverage. See Pl.’s Mot. Summ. J., Ex. 2 [Doc.

No. 58-2] (hereafter, “Amendment”). In 2001, Plaintiff applied for and received

increased levels of coverage under the Policy, raising the monthly benefit for total

disability to higher amounts of $6,400 in May 2001 and $10,200 in October 2001.

The Policy provides that “[Defendant] will pay benefits for covered loss resulting

from Injuries or Sickness subject to all of the provisions of this policy.” See Policy at 1.

4 The facts regarding Plaintiff’s fraud claim are largely disputed, as discussed infra.

“Injuries means accidental bodily injuries occurring while your policy is in force.” Id.

at 6. “Sickness means sickness or disease which is first manifested while your policy is

in force.” Id. As pertinent here, the Policy provides for payment of Residual Disability

benefits –according to a formula for calculating a monthly benefit based on a loss of

monthly income – in the following provision:

[Defendant] will pay Residual Disability Benefits as follows:

1. Benefits start the day of Residual Disability following the

[180-day] Elimination Period or, if later, after the end of

compensable Total Disability during the same period of

disability.

2. Benefits will continue while you are residually disabled during

a period of disability but the combined period for which

benefits for Total and Residual Disability are payable can not

exceed the Maximum Benefit Period for Residual Disability.

3. The first six monthly payments for Residual Disability will be

the greater of:

a. 50% of the Monthly Benefit for Total Disability; or

b. the Residual Disability Monthly Benefit for each

month.

Policy at 11, Amendment at 5.5 As defined by the Policy after the Amendment:

Residual Disability or residually disabled, during the Elimination Period,

means that due to Injuries or Sickness:

1. you are not able to do one or more of your substantial and

material daily business duties or you are not able to do your

usual daily business duties for as much time as it would

normally take you to do them;

5 The Amendment removed an “age 65 cap” in the Residual Disability provision of the

Policy “so that benefits for residual benefits may now be payable beyond your 65th birthday.”

See Amendment at 5. A separate provision was added to set maximum benefit periods depending

on the insured’s age at the onset of the injury or sickness. Id. at 2.

2. you have a Loss of Monthly Income in your occupation of at

least 20%; and

3. you are receiving care by a Physician which is appropriate for

the condition causing the disability.

After the Elimination Period has been satisfied, you are no longer required

to have a loss of duties or time. Residual Disability or residually disabled

then means that as a result of the same Injuries or Sickness:

1. You have a Loss of Monthly Income in your occupation of at

least 20%; and

2. You are receiving care by a Physician which is appropriate for

the condition causing the loss of Monthly Income.

After satisfaction of the elimination period (where you are no longer required

to have a loss of time or duties), reference to a “disability” has been removed

and “Loss of Monthly Income” has been substituted to clarify our intent that

a continuing loss of time or duties is not required beyond the elimination

period.

Policy at 10; Amendment at 5.6

Plaintiff had a myocardial infarction (heart attack) on March 17, 2019, for which he

was hospitalized and treated by a cardiologist, Dr. William Collazo, M.D. There is no

question that Plaintiff experienced a “Residual Disability” due to this injury or sickness.

Defendant approved Plaintiff’s loss claim in a letter dated November 21, 2019, stating that

Plaintiff had Total Disability coverage beginning March 17, 2019, and Residual Disability

6 The 1990 Amendment “liberalized” the requirement “to be under the care of a Physician

in order to qualify for disability benefits” – for both Total Disability and Residual Disability – by

adding the following statement at the end of the applicable provision: “We will waive this

requirement when continued care would be of no benefit to you.” See Amendment at 3.

coverage after he returned to work on March 25, 2019.7 Necessarily then, Defendant

determined that Plaintiff was residually disabled as defined by the Policy – meaning that

due to his injury or sickness, Plaintiff was unable to do his substantial and material daily

business duties (or could not do them for as much time as it would ordinarily take him), he

had a 20% or more loss of monthly income in his occupation, and he was receiving care

by a physician that was appropriate for the condition causing the disability. Specifically,

as to the first requirement, Defendant determined Plaintiff was “unable to perform the

material and substantial duties of [his] occupation as an Emergency Physician due to [his]

medical condition of old myocardial infarction and ischemic cardiomyopathy.” See Pl.’s

Mot., Ex. 3 [Doc. No. 58-3] at 2. Defendant cited a physician’s statement completed by

Dr. Collazo dated May 1, 2019, that Plaintiff’s restrictions were to “discontinue physical

exertion due to chest pain, back pain, and shortness of breath.” Id. Defendant noted that

Dr. Collazo’s statement “also mentions behavioral health restrictions of limiting emotional

stress” and gave a duration of “these restrictions and limitations for lifetime.” Id.

As to the loss of income requirement, Defendant notified Plaintiff in the letter that

based on financial information showing a loss of earnings greater than 20% beginning in

April 2019, his elimination period was satisfied on October 1, 2019. A disability payment

for the period of October 1, 2019, to October 13, 2019, was calculated. Necessarily then,

Defendant determined that Plaintiff’s loss of income during this period was a result of his

7 The letter addressed both Plaintiff’s claim under the Policy with Defendant and his claim

for long-term disability benefits under a policy with Unum Life Insurance Company of America

provided by his employer.

injury or sickness from the March 2019 heart attack or heart condition. However,

Defendant stated that disability benefits were approved only to October 21, 2019, which

was the date of Plaintiff’s most recent office visit, pending Dr. Collazo’s response to a

request for additional information. The letter stated: “Our physician, board certified in

Internal Medicine, has reached out to Dr. Collazo to verify and discuss support for

restrictions and limitations beyond October 21, 2019.” Id.8

The significance of October 21, 2019, was Dr. Collazo treated Plaintiff that day and

generated a report that led Defendant to question whether Plaintiff’s cardiac condition had

improved to a point of non-disability. Defendant undertook an investigation in which it

gathered additional medical information and employed consulting physicians to review

Plaintiff’s medical records, Dr. Collazo’s response to a questionnaire, and information

submitted by Plaintiff. A summary of this investigation appears in a letter from Unum to

Plaintiff dated January 24, 2020. See Pl.’s Mot. Partial Summ. J., Ex. 5 [Doc. No. 58-5].

Briefly stated, Dr. Collazo’s treatment records indicated as of August 2019 no

restrictions or limitations of Plaintiff’s activities other than to “minimize work stress as

compared to activity prior to [his] myocardial infarction.” Id. at 3. Specifically,

Dr. Collazo recommended that Plaintiff “should curtail his more stressful ER practice and

maintain an office practice.” Id. In the October 21, 2019 office visit, Plaintiff reported

walking two to four miles per day. The only record of an exertional limitation was

8 Pending the receipt of this information, no decision was made regarding Plaintiff’s long-

term disability claim. The letter identified “the following unresolved issue(s): Validation of

[Plaintiff’s] ongoing restrictions and limitations from October 21, 2019 to the present.” Id.

Plaintiff’s self-report of experiencing “intermittent angina responsive to sublingual

nitrates” or nitroglycerin. Id. Plaintiff had undergone a stress test that he self-limited and

that did not show demonstrable ischemia. Defendant’s physicians concluded the medical

evidence did not show “a severely limiting condition.” Id. Defendant concluded after

reviewing the information that neither Dr. Collazo nor Plaintiff provided “information that

intermittent angina . . . either is significant enough to restrict [Plaintiff’s] ability to practice

medicine in any capacity or that these complaints would affect [him] significantly in an

emergency department practice but not in an internal medicine practice.” Id. at 4.

Defendant also referred Plaintiff’s file for a second review by a consulting physician

certified in internal medicine and cardiovascular disease. As stated by Defendant:

This physician stated medical information does not provide medical evidence

to support restrictions and limitations. There is no evidence of myocardial

ischemia by additional testing, and [Plaintiff does] not have unstable or

intractable angina and his chest discomfort stops with stopping exertion and

is relieved by rest or nitroglycerin (8 in 8 months). Our second physician

also noted there is no behavioral health evaluation regarding mental stress

preclusive of occupational activities. Based on his review, our second

physician agreed with the conclusion of our first physician that [Plaintiff’s]

ongoing restrictions and limitations were not supported.

Id. at 4. Finally, Defendant relied on information from Dr. Collazo’s office that Plaintiff

had no office visits from October 2019 to January 2020 and the appointment scheduled for

January 22, 2020, “was for a routine office visit with no testing planned.” Id.

As stated in the January 24, 2020 letter, Defendant determined Plaintiff’s period of

Residual Disability (and long-term disability under the group policy) ended October 21,

2019, because Plaintiff was “able to perform the duties of [his] occupation and [his]

restrictions and limitations are not supported after October 21, 2019.” Id. at 2. Plaintiff

was informed: “Based on our review, the information in your claim file indicates you are

able to perform the duties of your own occupation and your Long Term Disability claim

and Individual Disability claim have been closed effective January 24, 2020.” Id. at 4.9

Discussion

I. Residual Disability Coverage

The coverage question before the Court is whether Plaintiff continued to meet the

criteria for Residual Disability payments when Defendant terminated his benefits. A

resolution of this question requires a determination of which party correctly interprets the

applicable Policy provisions. Plaintiff contends he is entitled to summary judgment on

the coverage issue because the definition of Residual Disability is satisfied as a matter of

law where, after the elimination period, he continued to experience a loss of monthly

income from his emergency room (ER) job as a result of his same injury or sickness.

Plaintiff asserts that under the plain language of the Policy he was not required at that point

to show medical restrictions impacting his ability to perform his job duties. Defendant

asserts it is entitled to summary judgment because Plaintiff has not established that he was

disabled after October 21, 2019, or that he had a loss of monthly income caused by a

disability (as opposed to a voluntary cessation of ER work).

Under well-settled Oklahoma law, insurance policies are contracts to be interpreted

as a matter of law if they are unambiguous. BP Am., Inc. v. State Auto Prop. & Cas. Ins.

9 The letter quoted a definition of disability in the group policy requiring that Plaintiff

was “limited from performing the material and substantial duties of [his] regular occupation due

to [his] sickness or injury” and he had “a 20% or more loss” in monthly earnings. Id.

Co., 2005 OK 65, ¶ 6, 148 P.3d 832, 835; see Pitco Prod. Co. v. Chaparral Energy, Inc.,

2003 OK 5, ¶ 12, 63 P.3d 541, 545 (interpretation of unambiguous contract is a matter of

law for the court). Whether an insurance policy is ambiguous is also a matter of law for

the Court. See Am. Econ. Ins. Co. v. Bogdahn, 2004 OK 9, ¶ 11, 89 P.3d 1051, 1054.

The determination of whether a contract is ambiguous is made only after applying

the pertinent rules of construction. See Dodson v. St. Paul Ins. Co., 1991 OK 24, ¶ 12,

812 P.2d 372, 376-77; State ex rel. Comm’rs of Land Office v. Butler, 1987 OK 123, ¶ 9,

753 P.2d 1334, 1336-37. The Oklahoma statutory rules of construction establish that: the

language of a contract governs its interpretation, if the language is clear and explicit and

does not involve an absurdity (Okla. Stat. tit. 15, §§ 154, 155); a contract is to be taken as

a whole, giving effect to every part if reasonably practicable, each clause helping to

interpret the others (id. § 157); a contract must receive such an interpretation as will make

it operative, definite, reasonable, and capable of being carried into effect (id. § 159); words

of a contract are to be given their ordinary and popular meaning (id. § 160); and a contract

may be explained by reference to the circumstances under which it was made, and the

matter to which it relates (id. § 163). “The mere fact the parties disagree or press for a

different construction does not make an agreement ambiguous. A contract is ambiguous

if it is reasonably susceptible to at least two different constructions.” Pitco, 2003 OK 5,

¶ 14, 63 P.3d at 545-56.10

10 Neither party in this case identifies an ambiguity in the pertinent provisions of the

Policy.

As explained below, applying these rules of construction to the Policy leads the

Court to conclude that the Residual Disability provision is unambiguous, that Defendant

incorrectly applied it, and that Plaintiff continued to satisfy the definition of Residual

Disability after October 21, 2019, under the undisputed facts. Because Plaintiff remained

residually disabled after that date, Defendant breached the Policy by terminating Plaintiff’s

coverage for his loss of monthly income from his injury or sickness.11

A. “Residual Disability” Coverage Does Not Require Plaintiff to Show

Functional Limitations After the Elimination Period

Defendant asserts that Plaintiff cannot establish his entitlement to “Residual

Disability” coverage after he recovered from his heart attack and his medical condition

improved because the only ongoing restriction identified by his treating physician, which

allegedly prevented Plaintiff from returning to his ER practice, was to avoid stress.

Defendant contends this restriction was not supported by the medical evidence and, as to

the ER job, “Plaintiff failed to provide any evidence of how he was negatively affected by

stress as an emergency room physician.” See Def.’s Mot. Summ. J. at 34. Defendant’s

position is that Plaintiff must show that a limitation or restriction arising from his medical

condition impacted his ability – that is, his functional capacity – to perform his occupation.

See Def.’s Resp. Br. at 15-17. According to Plaintiff, this type of requirement no longer

applies after the elimination period, when the Residual Disability definition removes a

requirement to show that he was unable to do his substantial and material business duties

11 Plaintiff does not request a determination –and the Court cannot decide on the existing

record – whether Plaintiff was entitled to Residual Disability benefits for the maximum benefit

period, which would extend until his 65th birthday. See Amendment at 2.

or do his usual duties for as long as they would normally take. Plaintiff asserts that

Defendant fails to recognize, and failed to correctly apply, the post-elimination period

definition of Residual Disability to his claim.

Defendant concedes that, to establish Residual Disability after the elimination

period, Plaintiff did not need to show his injury or sickness impaired the performance of

his substantial or material job duties. However, Defendant asserts that the Policy still

required Plaintiff to show the existence of a disabling condition – that is, a disability – and

a causal connection between the condition and his loss of income from an occupation. See

Def.’s Resp. Br. at 17-20; Def.’s Mot. Summ. J. at 35. To reach its position, Defendant

argues that the Policy cannot possibly mean what Plaintiff suggests because the term

“disability” necessarily connotes a functional limitation and no insurer would agree to pay

benefits without proof of a disability. See Def.’s Resp. Br. at 13-14 & n.3. Defendant

points to causal requirements of the Policy, discussed infra, and a general understanding

of “disability” based on various uses of the term throughout the Policy. For example,

Defendant argues that naming the Policy a “disability income policy” necessarily means it

was intended to provide income lost due to a disability. See id. at 19.

The Court rejects Defendant’s reading of the Residual Disability provision of the

Policy to require that Plaintiff establish his March 2019 injury or sickness continued to

impair his functional capacity to perform his occupation after the elimination period was

satisfied. Defendant’s arguments discount the significance of the enhanced definition of

Residual Disability that was added to the Policy in 1990. The Amendment removed

references to “disability” from the part of the definition that applies after the elimination

period and substituted “Loss of Monthly Income” in place of “disability.” The express

purpose of this change was “to clarify [Defendant’s] intent that a continuing loss of time

or duties is not required beyond the elimination period.” See Amendment at 5.

Defendant’s insistence that Plaintiff must continue to show a functional impairment

affecting his occupation cannot be squared with this aspect of the Residual Disability

provision. See Dodson, 1991 OK 24, ¶ 11, 812 P.2d at 376 (insurance contract must be

construed “so as to give reasonable effect to all of its provisions”). Instead, a continuing

effect from the disabling event or condition is satisfied through other criteria, namely, 1) a

loss of income in the insured’s occupation as a result of the same injury or sickness and

2) continuing to receive care by a physician for the condition causing the loss of income.12

B. “Residual Disability” Coverage Requires a Causal Connection Between

Plaintiff’s Injury or Sickness and His Loss of Monthly Income

Although establishing Residual Disability after the elimination period does not

require showing a functional impairment, the Policy does require that “as a result of the

same Injuries or Sickness” the insured “have a Loss of Monthly Income in [his] occupation

of at least 20%.” See Amendment at 5. Also, a “Loss of Monthly Income” is defined to

require that it “must be caused by the Residual Disability for which claim is made.” See

Policy at 10. Clearly then, Plaintiff is required to show a causal connection between his

March 2019 injury or sickness and his continued loss of work income.

12 Defendant points to the inclusion of an appropriate care requirement in the definition

of Residual Disability to signify that Plaintiff must show the continued existence of a disabling

condition. See Def.’s Resp. Br. at 22-28. But there is no evidence that this requirement impacted

Defendant’s coverage decision because the decision was made while Plaintiff was still being

treated by Dr. Collazo.

Defendant seems to argue that a causal relationship between Plaintiff’s medical

condition and his income loss was destroyed if he no longer had a disabling condition –

that is, Plaintiff’s voluntary decision not to return to ER work after his medical condition

improved was the proximate cause of his continuing income loss. Defendant offers no

legal support for this argument.

Oklahoma insurance law follows the “efficient proximate cause” doctrine, unless

the terms of a particular insurance policy adopt a different rule. See Duensing v. State

Farm Fire & Cas. Co., 2006 OK CIV APP 15, ¶ 17, 131 P.3d 127, 133-34. Under this

doctrine, “when concurring causes of the damage appear, the proximate cause is the

dominant or efficient one that sets the other causes in operation; incidental causes are not

proximate though they may be nearer in time and place to the loss.” Shirey v. Tri-State

Ins. Co., 1954 OK 214, ¶ 0, 274 P.2d 386 (syllabus by the Court). Assuming there were

concurrent causes of Plaintiff’s income loss, the Court is not persuaded that any voluntary

decision by Plaintiff to forego ER work was more than an incidental cause of his loss of

employment income.

The summary record shows that Defendant determined Plaintiff’s disabling medical

condition was his “old myocardial infarction and ischemic cardiomyopathy.” See Pl.’s

Mot., Ex. 3 [Doc. No. 58-3] at 2. In treating this condition, Dr. Collazo recommended

that Plaintiff should make a permanent lifestyle change by discontinuing a work schedule

in which he regularly performed two occupations – specifically, stopping the occupation

that was more stressful or demanding (the ER job). Defendant concedes that patients with

cardiac conditions may receive recommendations for lifestyle changes to improve overall

health, which may include exercise, sleep habits, special diet, or weight loss. See Def.’s

Mot. Summ. J. at 32. Plaintiff’s treating physician identified a change that could produce

a better outcome for Plaintiff, that is, decreasing a heavy workload from having two jobs.

There is no question that this change caused a loss of work income, and no facts suggest a

separate cause. There is no evidence, for example, that Plaintiff experienced any other

injury or sickness or any intervening cause decreased Plaintiff’s work income.

In summary, Defendant’s incorrect reading of the Policy impacted its investigation

and resolution of Plaintiff’s Residual Disability claim. The reviewing doctors were asked

to evaluate whether Plaintiff had limitations or restrictions from his medical condition that

continued to impair his functional capacity to perform his occupation. This was not the

proper question under the Residual Disability provision after the elimination period ended.

On the present record, it is undisputed that the loss of income was a result of Plaintiff’s

discontinuation of his ER job and this change of occupation was a result of his treating

physician’s advice to discontinue working two jobs and, specifically, to discontinue the

more stressful one. Accordingly, Plaintiff was entitled to Residual Disability coverage at

the time Defendant terminated his payments.

For these reasons, the Court finds that Defendant breached the Policy by denying

Residual Disability benefits to Plaintiff after October 21, 2019.

II. Bad Faith

To establish a breach of Defendant’s duty of good faith and fair dealing with its

insured, Plaintiff must show that Defendant breached the insurance contract and, in so

doing, acted in a manner constituting bad faith. See Brown v. Patel, 2007 OK 16, ¶ 9,

157 P.3d 117, 121. To prevail on his bad faith claim, Plaintiff must prove: 1) Defendant

was required under the Policy to pay his Residual Disability claim; 2) Defendant’s refusal

to pay the claim was unreasonable under the circumstances because Defendant had no

reasonable basis to refuse, did not perform a proper investigation, or did not properly

evaluate the results of the investigation; 3) Defendant did not deal fairly and in good faith

with Plaintiff; and 4) Defendant’s bad faith conduct was the direct cause of Plaintiff’s

alleged injury. See Duensing v. State Farm Fire & Cas. Co., 2006 OK CIV APP 15, ¶ 39,

131 P.3d 127, 138; see also Badillo v. Mid Century Ins. Co., 2005 OK 48, ¶ 25, 121 P.3d

1080, 1093 (per curiam) (listing essential elements). Defendant asserts that, regardless of

whether Plaintiff was entitled to further payments, the record shows Defendant “made a

wholly reasonable determination based on a thorough and complete investigation” and did

not act in bad faith. See Def.’s Mot. Summ. J. at 38.

Upon consideration of facts supported by the record and viewed most favorably to

Plaintiff, as required by Rule 56, the Court finds that Plaintiff has demonstrated the

existence of a genuine dispute of material facts that prevents summary judgment on his bad

faith claim. Defendant addresses only Plaintiff’s allegation that Defendant and its

medical consultants wrongly ignored his stress-based disability claim. However, Plaintiff

also alleges, and presents properly supported facts to show, that Defendant pursued a global

approach to two separate claims under different policy provisions and, as a result,

processed his claim under the Policy in a manner that applied an inconsistent disability

requirement and ignored critical differences with the Residual Disability provision.

Defendant has persisted in that approach throughout this case, and refuses to acknowledge

a distinction between the two policies. A reasonable jury could find that Defendant has

not dealt fairly and in good faith toward Plaintiff and his claim under the Policy.

Therefore, Defendant is not entitled to summary judgment on Plaintiff’s bad faith claim.

III. Fraud

Defendant seeks summary judgment on Plaintiff’s fraud claim based on an alleged

lack of evidence to establish all essential elements of fraudulent misrepresentation.

Defendant asserts: 1) “Plaintiff cannot establish that Mr. Chambers made a material

statement;” 2) “Plaintiff cannot provide evidence that Mr. Chambers made a false

statement;” 3) Plaintiff cannot show “Mr. Chambers knew that [the] purported statement

was false, or that it was made recklessly without any knowledge of the truth;” and

4) Plaintiff cannot prove “he acted in reliance on Mr. Chambers’ purported statement” or

any reliance was justifiable. See Def.’s Mot. Summ. J. at 23, 24, 25, 26.13 Defendant

identifies the “purported statement” to be that the Policy would provide total disability

coverage for Plaintiff’s “emergency room specialty regardless of whether he worked a

second job.” Id. at 25.

Although Plaintiff does not disagree with this characterization, the focus of his

argument – and what the Court found to be a plausible claim in its Rule 12(b)(6) ruling –

is that Mr. Chambers made a material omission in representing to Plaintiff that the Policy

13 Defendant also makes a conclusory assertion that “Plaintiff cannot establish that

Mr. Chambers was acting as Provident’s agent when Plaintiff obtained the IDI Policy.” See

Def.’s Mot. Summ. J. at 23. Plaintiff points out this argument ignores the fact that Mr. Chambers

completed and signed the 1987 application for Defendant’s Policy as the soliciting agent, and

Oklahoma Insurance Department records show Mr. Chambers was an appointed agent for

Defendant during the relevant time frame. See Pl.’s Resp. Br., Ex. 15 [Doc. No. 62-15].

would cover a total disability from his specialty practice regardless of whether he continued

to work. See Pl.’s Resp. Br. at 24, 27, 31, 34-35, and 41-42. Mr. Chambers’ alleged sales

pitch accurately described total disability coverage for a physician who limited his practice

to a recognized specialty, but was not true for a physician with both a specialty practice

and a non-specialty one. As interpreted by the Court, the Policy did not provide total

disability coverage for a physician practicing in a recognized specialty if the physician had

two occupations and lost the ability to perform only one. Plaintiff asserts, supported by

his own testimony, that Mr. Chambers did not disclose this limitation or explain the effect

of dual occupations, even though they expressly discussed (and so Mr. Chambers knew)

this was exactly what Plaintiff planned to do. See, e.g., id. at 34-35 (“the truth of what

occurred in the sale of the policy is made false and deceitful, because Dr Morgan was

working, and was going to work, two (2) jobs and the agent knew it”).

At bottom, Defendant’s attack on this fraud theory is that Plaintiff has no proof other

than his own testimony as to what he and Mr. Chambers discussed and what Mr. Chambers

knew, and he cannot show that his reliance on Mr. Chambers’ alleged representation or

omission was justifiable. See Def.’s Reply Br. at 5, 8-10. Defendant relies, in part, on

the heightened standard of proof under Oklahoma law requiring fraud to be established by

clear and convincing evidence.14

14 Defendant also suggests that Plaintiff’s affidavit [Doc. No. 62-2] should be disregarded

under the “sham” affidavit rule of Franks v. Nimmo, 796 F.2d 1230, 1237 (10th Cir. 1986). See

Def.’s Reply Br. at 7. The Court does not find the statements in Plaintiff’s affidavit “completely

inconsistent” with or “in direct contradiction to” his deposition testimony, as argued by Defendant.

Id. at 6-7. Thus the affidavit cannot be disregarded. See Law Co. v. Mohawk Constr. & Supply

The Court is not persuaded by Defendant’s argument that Plaintiff’s evidence is

insufficient as a matter of law to establish his fraud claim. First, the Court’s role in the

summary judgment process does not extend to judging the credibility of a witness or

assessing what weight to give to admissible evidence. Second, the “clear and convincing”

standard requires only “a firm belief or conviction as to the truth of the allegation sought

to be established.” Sides v. John Cordes, Inc., 1999 OK 36, ¶ 14, 981 P.2d 301, 306 n.15.

Upon consideration of the summary judgment record in the light most favorable to

Plaintiff as required by Rule 56, the Court finds that a genuine dispute of material facts

prevents summary judgment on Plaintiff’s fraud claim. Plaintiff has presented minimally

sufficient facts, when viewed together with all reasonable inferences in his favor, that may

establish Mr. Chambers deliberately or recklessly omitted material facts from his sales

pitch to Plaintiff regarding total disability coverage for a specialty practice and that Plaintiff

reasonably relied on Mr. Chambers’ representations in deciding to purchase and maintain

the Policy. Therefore, Defendant is not entitled to summary judgment on Plaintiff’s fraud

claim.

Conclusion

For these reasons, the Court finds that the Residual Disability provision of the Policy

covers Plaintiff’s loss of income from his occupation after the elimination period without

further proof of impaired functional capacity.

Co., 577 F.3d 1164, 1169-70 (10th Cir. 2009); see also Hernandez v. Valley View Hosp. Ass’n,

684 F.3d 950, 956 n.3 (10th Cir. 2012).

IT IS THEREFORE ORDERED that Plaintiffs Motion for Partial Summary

Judgment [Doc. No. 58] is GRANTED in part and Defendant’s Motion for Summary

Judgment [Doc. No. 57] is DENIED, as set forth herein.

IT IS SO ORDERED this 30" day of March, 2023.

\ by Q QP:

TIMOTHY D. DeGIUSTI

Chief United States District Judge

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