JOSEPH F. SAPORITO, JR., Magistrate Judge.
This is an action by a policyholder against his insurer for breach of contract and for the statutory tort of bad faith. The plaintiff, Corporal Isaac D. Levine, is a police officer with the Swatara Township Police Department. Corporal Levine purchased an accidental death and dismemberment policy with an individual short-term disability benefit from the defendant, Washington National Insurance Company ("Washington National"). In December 2012, Corporal Levine suffered a cervical spinal injury while at work—when lifting a heavy patrol bag, he reportedly felt a pop or pull in his back and neck area, followed by immediate and severe pain in his shoulder and upper back area. In February 2013, Levine submitted a written claim form to Washington National for payment of benefits under the accident insurance policy. Washington National denied coverage under the policy on the ground that the incident did not constitute a covered accident, as it was not a sudden, unexpected, and unforeseen event.
On November 9, 2015, Levine filed this lawsuit in the Court of Common Pleas for Dauphin County, Pennsylvania. On December 3, 2015, the defendant removed the action to federal court on the basis of diversity jurisdiction.
On March 22, 2017, Washington National filed its motion for summary judgment, together with a statement of material facts and a brief in support. (Doc. 43; Doc. 44; Doc. 45). On April 11, 2017, Corporal Levine filed his response to the motion, together with a counter-statement of material facts and a brief in opposition to summary judgment. (Doc. 47: Doc. 48; Doc. 49). On April 25, 2017, Washington National filed its reply brief. (Doc. 51). The matter is now ripe for disposition.
Under Rule 56 of the Federal Rules of Civil Procedure, summary judgment should be granted only if "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 fact is "material" only if it might affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute of material fact is "genuine" only if the evidence "is such that a reasonable jury could return a verdict for the non-moving party." Anderson, 477 U.S. at 248. In deciding a summary judgment motion, all inferences "should be drawn in the light most favorable to the non-moving party, and where the non-moving party's evidence contradicts the movant's, then the non-movant's must be taken as true." Pastore v. Bell Tel. Co. of Pa., 24 F.3d 508, 512 (3d Cir. 1994).
The party seeking summary judgment "bears the initial responsibility of informing the district court of the basis for its motion," and demonstrating the absence of a genuine dispute of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the movant makes such a showing, the non-movant must set forth specific facts, supported by the record, demonstrating that "the evidence presents a sufficient disagreement to require submission to the jury." Anderson, 477 U.S. at 251-52.
In evaluating a motion for summary judgment, the Court must first determine if the moving party has made a prima facie showing that it is entitled to summary judgment. See Fed. R. Civ. P. 56(a); Celotex, 477 U.S. at 331. Only once that prima facie showing has been made does the burden shift to the nonmoving party to demonstrate the existence of a genuine dispute of material fact. See Fed. R. Civ. P. 56(a); Celotex, 477 U.S. at 331.
Both parties may cite to "particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for the purposes of the motion only), admissions, interrogatory answers or other materials." Fed. R. Civ. P. 56(c)(1)(A). "An affidavit or declaration used to support or oppose a motion must be made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant or declarant is competent to testify on the matters stated." Fed. R. Civ. P. 56(c)(4). "Although evidence may be considered in a form which is inadmissible at trial, the content of the evidence must be capable of admission at trial." Bender v. Norfolk S. Corp., 994 F.Supp.2d 593, 599 (M.D. Pa. 2014); see also Pamintuan v. Nanticoke Mem'l Hosp., 192 F.3d 378, 387 n.13 (3d Cir. 1999) (noting that it is not proper, on summary judgment, to consider evidence that is not admissible at trial).
On or about March 6, 2009, Corporal Levine applied for an accident insurance policy with Washington National. At the time, he was employed as a police officer with the Swatara Township Police Department. He was later promoted to police corporal.
On May 1, 2009, Washington National issued "Accidental Death and Dismemberment Policy with Disability Individual" number XXXXXXX882 (the "Policy") to Levine in accordance with his application. The Policy pays certain cash benefits directly to the policyholder in the event of a Covered Accident. For example, the Policy pays up to $800 for a ruptured disc, up to $100 for physician's visits, and up to $400 for physical therapy. The Policy also provides short term disability benefits, but the parties dispute the total amount of coverage afforded under this provision. On or about January 4, 2011, Corporal Levine submitted a second application on the Policy, adding his wife as an insured as well.
On December 21, 2012, Corporal Levine claims to have accidentally injured himself "while lifting a heavy patrol bag and feeling a pop or pull in his back and neck area accompanied by immediate and severe pain in his shoulder and upper back area."
On February 15, 2013, Levine submitted a completed Accidental Injury / Sickness Claim Form, together with medical treatment records and a physician statement. This first claim submission reported December 21, 2012, as the "date of incident," and reflected the receipt of medical treatment for a strain or sprain of the plaintiff's cervical spine and trapezius areas on three separate dates: December 24, 2012;
On March 1, 2013, Levine submitted a photocopy of the same completed Accidental Injury / Sickness Claim Form, together with an invoice for physical therapy services. The submitted materials indicate that Corporal Levine received 14 sessions of physical therapy between January 29 and February 27, 2013. On or about March 5, 2013, Washington National sent Levine an Explanation of Benefits denying his claim on the stated ground that there was "no accident" and explaining that "[a]n Accident means a sudden, unexpected, and unforeseen event."
On March 15, 2013, Levine submitted a physician statement from his orthopedic surgeon. The submitted materials reflected that Corporal Levine received treatment for neck pain on four separate dates: January 9, 2013; January 25, 2013; February 15, 2013; and March 15, 2013. The documentation further indicates that Corporal Levine received an epidural injection in the course of this treatment. On or about March 22, 2013, Washington National sent Levine an Explanation of Benefits denying his claim on the stated ground that the "service/treatment [are] not covered by your policy," based on a finding that there was "no accident" and explaining that "[a]n Accident means a sudden, unexpected, and unforeseen event."
Between January 4 and April 21, 2013, Corporal Levine worked "light duty" at the police department. While on light duty, Levine was able to review paperwork, conduct document research, make and take phone calls, hold pre-tour briefings, attend departmental meetings, and interact with people who came into the police department to file police reports, but he was unable to perform any patrol duties. He was not permitted to drive, to take statements from informants or suspects, to advise individuals of rights and processes, to mediate disputes, to attend court, to collect evidence and substances from the street, or to be placed into antagonistic environments because he could not wear a uniform or defend himself. While on light duty, Corporal Levine was not paid any less for his work time, but he was unable to earn overtime pay for court hearings.
Between April 22, 2013, and September 29, 2013, Corporal Levine was out of work completely on doctor's orders, and during this time period he received temporary total disability workers compensation benefits. On July 8, 2013, Levine underwent disc replacement surgery.
On September 30, 2013, Corporal Levine returned to work with a "light duty" restriction. On December 17, 2013, Levine was cleared to return to work on full-duty status, which he did on December 20, 2013.
On November 20, 2013, Washington National received an "appeal of claim denial" letter from counsel representing Corporal Levine. On January 28, 2014, Washington National responded to Levine's attorney, upholding its denial of benefits.
On November 9, 2015, Corporal Levine filed this lawsuit, seeking the following policy benefits, plus punitive damages, attorney fees, and interest: (a) $800 for suffering a ruptured disc; (b) $100 for physician visits; (c) $400 for physical therapy visits; and (d) 1/30th of his monthly pay or $208.36 per day for 349 days of disability, totaling $72,717.64.
In his complaint, Corporal Levine has asserted claims against Washington National for breach of contract and for the statutory tort of bad faith, actionable under 42 Pa. Cons. Stat. Ann. § 8371.
In Count II of the complaint, Corporal Levine has asserted a statutory bad faith claim, brought pursuant to 42 Pa. Cons. Stat. Ann. § 8371. This statute provides that:
42 Pa. Cons. Stat. Ann. § 8371. Under Pennsylvania law,
Keefe v. Prudential Prop. & Cas. Ins. Co., 203 F.3d 218, 225 (3d Cir. 2000) (citations and internal quotation marks omitted). "These two elements— absence of a reasonable basis for denying a claim under the policy and knowledge or reckless disregard of the lack of such reasonable basis—must be proven by clear and convincing evidence." Cozzone v. AXA Equitable Life Ins. Soc. of the U.S., 858 F.Supp.2d 452, 458 (M.D. Pa. 2012) (citing Klinger v. State Farm Mut. Auto. Ins. Co., 115 F.3d 230, 233 (3d Cir. 1997)).
Section 8371 does not itself include a limitations period, and the Supreme Court of Pennsylvania has not yet addressed the issue, but Pennsylvania's federal courts have previously held that the state's two-year tort statute of limitations applies to a bad faith action brought under 42 Pa. Cons. Stat. Ann. § 8371. Skirica v. Nationwide Ins. Co., 416 F.3d 214, 223-24 (3d Cir. 2005); Haugh v. Allstate Ins. Co., 322 F.3d 227, 236 (3d Cir. 2003); Cozzone, 858 F. Supp. 2d at 458; CRS Auto Parts, Inc. v. Nat'l Grange Mut. Ins. Co., 645 F.Supp.2d 354, 364-65 (E.D. Pa. 2009); McCullough v. Nw. Mut. Life Ins. Co., No. 2:05cv0105, 2007 WL 4440954, at *3-*4 (W.D. Pa. Oct. 24, 2007). Moreover, these precedents hold that the limitations period for a § 8371 claim commences when the insurer first provides definite notice of its denial of coverage. See Sikirica, 416 F.3d at 224; Cozzone, 858 F. Supp. 2d at 458; CRS Auto Parts, 645 F. Supp. 2d at 365; McCullough, 2007 WL 4440954, at *3.
CRS Auto Parts, 645 F. Supp. 2d at 365 (quoting Adamski v. Allstate Ins. Co., 738 A.2d 1033, 1040, 1042 (Pa. Super. Ct. 1999)) (citations omitted).
Here, Washington National's February 23, 2013, Explanation of Benefits unambiguously informed the plaintiff of its denial of coverage. The plaintiff's subsequent efforts to obtain clarification or reconsideration of this coverage denial by Washington National are immaterial; his right to institute and maintain suit based upon the insurer's "frivolous or unfounded" refusal to pay benefits under the Policy accrued upon receipt of Washington National's Explanation of Benefits dated February 23, 2013. See Cozzone, 858 F. Supp. 2d at 458-59; McCullough, 2007 WL 4440954, at *4. While the precise date upon which he received notice is not clear, at the latest, Corporal Levine received notice of Washington National's denial of coverage on or before March 21, 2013. The plaintiff commenced this action on November 9, 2015, more than two years and seven months later.
Accordingly, the plaintiff's statutory bad faith tort claim under 42 Pa. Cons. Stat. Ann. § 8371 is barred by the applicable two-year statute of limitations, and the defendant is thus entitled to summary judgment on Count II as a matter of law.
The interpretation of an insurance policy is a question of law properly decided by the Court. Med. Protective Co. v. Watkins, 198 F.3d 100, 103 (3d Cir. 1999); Standard Venetian Blind Co. v. Am. Empire Ins. Co., 469 A.2d 563, 566 (Pa. 1983). Principles of insurance policy interpretation are well-settled in Pennsylvania, and are governed by the rules of contract interpretation. See Watkins, 198 F.3d at 103-04; United Servs. Auto. Ass'n v. Elitzky, 517 A.2d 982, 986 (Pa. Super. Ct. 1986). "Those principles include the following: (1) the terms of the insurance policy must be given their ordinary meaning; (2) a term is ambiguous only if reasonably intelligent men, on considering it in the context of the entire policy, would honestly differ as to its meaning; and (3) the parties' true intent must be determined not only from the language but from all the circumstances." State Farm Fire & Cas. Co. v. Bellina, 264 F.Supp.2d 198, 202 (E.D. Pa. 2003). "In determining coverage under an insurance contract, the focus is on the reasonable expectations of the insured and any ambiguous provisions in the policy should be construed in favor of the insured ." Id. at 203.
Washington National contends that it is entitled to summary judgment on the ground that Corporal Levine failed to provide it with notice of his disability claim or proof of loss as required by the Policy. Washington National contends that the Policy requires that the policyholder provide it with a notice of claim and proof of loss, and that "[t]here is no evidence that Levine ever gave Washington National such notice or proof of any disability claim."
The Policy includes a section setting forth "Claim Provisions":
Under the Policy, "Loss" is defined as "a specified event due to a Covered Accident for which We pay benefits under this Policy or any riders attached. For disability benefits, Loss means each full Day of Total Disability." "Accident" is defined as "a sudden, unexpected and unforeseen event," and "Covered Accident" is defined as "an Accidental Injury that occurs while You are insured under this Policy and which is not excluded in this Policy." "Accidental Injury" is defined as "accidental bodily injuries sustained by the Insured Person which are the direct and independent cause of the loss and occur while the Policy is in force." Finally, the Policy defines "Totally Disabled" or "Total Disability" as "the period of time during which You are wholly and continuously unable to perform physical tasks that You can normally do and such inability prevents You from engaging in the material and substantial duties of Your regular occupation."
On February 15, 2013, less than 60 days after the December 21, 2012, incident in which he was injured, Corporal Levine submitted his initial written notice of claim on a preprinted claim form furnished by Washington National. On that form, he checked a box provided to indicate that he was filing a claim for accidental injury. He provided his name and the Policy number, as required. He checked another box indicating that the accident occurred at work. At the bottom of the form, he affixed his signature and dated it "12/28/12." The preprinted form furnished by Washington National did not instruct or otherwise prompt the claimant to identify any particular accident benefits he or she requested for payment under the Policy, but merely to provide preliminary information to the insurer of the existence and nature of the claim.
In support of his claim, Corporal Levine attached medical treatment records and a physician statement to his completed Company claim form. The medical records were completed by Thomas Ladley, PA-C, the physician assistant who treated Levine. PA Ladley's treatment notes informed Washington National that he had seen Levine for treatment on December 24, 2012, January 2, 2013, and January 7, 2013. PA Ladley's notes informed the insurer that Corporal Levine's upper left back and neck area had been injured on December 21, 2012, and that Levine had advised PA Ladley that, while lifting a heavy patrol bag at work, Levine felt a pop/snap or pull in his upper back.
The medical records informed the insurer that, on December 24, 2012, Levine was examined and an x-ray of his cervical spine was performed. Based on this examination, PA Ladley recorded a diagnosis of a sprained or strained neck and prescribed naproxen and physical therapy, with Levine to return for a follow-up appointment about a week later.
The medical records informed the insurer that, on January 2, 2013, PA Ladley saw Levine for a follow-up exam. Based on this examination, PA Ladley recorded a diagnosis of a sprained or strained neck and prescribed a work restriction of "no patrol duties" until MRI results came back. PA Ladley also completed a physician statement on January 2, 2013, in which he reported the two visits,
The medical records informed the insurer that, on January 7, 2013, PA Ladley saw Levine for a third exam. Based on this examination, PA Ladley recorded a diagnosis of a sprained or strained neck, provided Levine with a prescription for tramadol (an opioid pain medication used to treat moderate to moderately severe pain), referred him to an orthopedic specialist for further treatment, and prescribed a work restriction of "no patrol duties" until Levine could be seen by an orthopedist.
Eight days after it received Corporal Levine's written notice of claim, Washington National sent him an Explanation of Benefits denying coverage based on a finding that there was "no accident" and explaining that "[a]n Accident means a sudden, unexpected, and unforeseen event."
On March 1, 2013, less than 90 days after the December 21, 2012, incident in which he was injured, Corporal Levine resubmitted the same preprinted claim form that he had submitted on February 15, 2013,
On March 15, 2013, less than 90 days after the December 21, 2012, incident in which he was injured, Corporal Levine submitted an additional physician statement, completed by John Grandrimo, DO, an orthopedic surgeon who treated Corporal Levine. The physician statement informed Washington National that Dr. Grandrimo had seen Corporal Levine for treatment on four occasions: January 9, 2013; January 25, 2013; February 15, 2013; and March 15, 2013. In his physician statement, Dr. Grandrimo reported his diagnosis of cervicalgia and his treatment of Corporal Levine with an epidural steroid injection, and he described the cause of Levine's injury as the lifting of a 40 to 50 pound bag at work on December 21, 2012, at which time Levine reportedly noticed some increasing pain in his neck and felt a pop in the back of his neck.
Based on the evidence of record, a reasonable jury could find in favor of the plaintiff on this issue. As instructed by the terms of the Policy, Corporal Levine provided Washington National with a "completed Company claim form" within 60 days after the start of his period of disability due to an accidental bodily injury, which occurred on December 21, 2012. This written notice included his name and Policy number. In support of his claim, and within 90 days after the start of his period of disability, Corporal Levine submitted two physician statements, medical records documenting several physician office visits, and an itemized bill for physical therapy services. These materials informed Washington National of the nature and extent of Corporal Levine's injury and its effect on his ability to work. In particular, the medical reports informed the insurer that Levine had been placed on a "no patrol duties" work restriction as a result of his injury.
Thus, summary judgment must be denied on this basis.
Washington National contends that it is entitled to summary judgment on the ground that Corporal Levine has failed to adduce any evidence that he was totally disabled within 90 days after the alleged accidental injury as required by the Policy.
The Policy provides a short-term disability benefit of $2,000 per month for up to twelve months.
As noted above, the Policy defines "Totally Disabled" or "Total Disability" as "the period of time during which You are wholly and continuously unable to perform physical tasks that You can normally do and such inability prevents You from engaging in the material and substantial duties of Your regular occupation."
Corporal Levine was removed from work altogether by his physician on April 22, 2013, more than 90 days after the December 21, 2012, incident in which he was injured. Between January 4, 2013, and April 21, 2013, Corporal Levine was permitted by his doctor and by his employer to work on "light duty" status. He was able to perform some, but not all, of his normal job duties while on light duty.
Washington National argues that, because Corporal Levine was able to perform some of his job duties while on light duty, he was not "totally disabled" under the Policy within the applicable 90-day period, and thus he was not entitled to payment of short-term disability benefits under the Policy. In particular, Washington National notes that Levine was able to perform five-and-a-half of the Swatara Township Police Department's 18 "Law Enforcement Essential Job Functions" applicable to all police positions, and several of the Department's "Essential Duties and Responsibilities" applicable to the position of Police Corporal. In response, Corporal Levine argues that although he was able to perform some of the administrative duties of a police officer or police corporal, he was unable to perform the core physical labor required for a police officer to be effective— he was unable to drive or go out on patrol, to interact with the accused or with his subordinates in a tactical environment, or to face antagonistic situations and be prepared to physically defend himself or others while enforcing the law and safeguarding the public.
In Cobosco v. Life Assurance Co. of Pa., 213 A.2d 369 (Pa. 1965), the Supreme Court of Pennsylvania addressed a similar situation in which the proprietor of a hardware store, who was only able to perform some of less strenuous job duties she had previously performed as a hardware merchant before her injury, sought to collect benefits under a disability policy. The Cobosco court stated:
Id. at 372-73 (citations omitted). Cobosco has been applied in cases involving policy language similar to that at issue here. See Klay v. AXA Equitable Life Ins. Co., Civil Action No. 09-12, 2010 WL 3885117, at *12-*14 (W.D. Pa. Sept. 28, 2010) (policy defined "total disability" as the "inability due to injury or sickness to engage in the substantial and material duties of your regular occupation"); Fleishman v. Gen. Am. Life Ins. Co., 839 A.2d 1085, 1088-89 (Pa. Super. Ct. 2003) (policy defined "totally disabled" as "unable to perform all the material and substantial duties" of a given occupation).
Washington National relies on Klay and another case, DiTommaso v. Union Cent. Life Ins. Co., Civ. A. No. 89-6323, 1991 WL 249977 (E.D. Pa. Nov. 25, 1991), aff'd, 972 F.2d 1330 (3d Cir. 1992) (table decision). Both Klay and DiTommaso involved surgeons who were no longer able to perform more complex surgeries, but who continued to practice medicine and perform simpler surgical procedures. In both cases, that was sufficient for the court to conclude that no reasonable jury could find that the policyholders were totally disabled.
But we find the facts of Cobosco and Fleishman more akin to those presented in this case. While on light duty status, Corporal Levine was able to perform some administrative duties of his position in an office setting, but he was unable to perform any of the physically demanding duties required of a patrol officer or a police corporal out in the field. Corporal Levine is not totally disabled as a matter of law merely because he cannot perform any or most of the physical work required of his position, but a jury might reasonably find that his light office duties were not great enough to make his contribution substantial and important in relation to the total amount and character of the work typically required to conduct police operations as a patrol officer or police corporal in Swatara Township. See Fleishman, 839 A.2d at 1089-90; Cobosco, 213 A.2d at 374; see also Koshy v. Ohio Nat'l Life Ins. Co., 2009 WL 1325424, at *1 (E.D. Pa. May 12, 2009) ("[W]hether or not a claimant is disabled within the meaning of an insurance policy is an issue of fact, to be decided by a jury.").
Thus, summary judgment must be denied on this basis.
Washington National contends that it is entitled to summary judgment with respect to the amount of short-term disability benefits available under the Policy. In particular, Washington National contends that the Policy provides a short-term disability benefits payment of $2,000 per month for up to twelve months—a maximum of $24,000 in total short-term disability benefits—as opposed to the plaintiff's claim for a total of $72,717.64 in short-term disability benefit payments (1/30th of Levine's monthly pay or $208.36 per day for 349 days of disability).
As noted above, the Policy provides for payment of a short-term disability benefit as shown in a Benefit Schedule attached to the Policy. The Benefit Schedule lists various benefit payments afforded under the Policy, including the following:
In the body of the Policy this disability benefit is described as follows:
For reasons that are not entirely clear, Corporal Levine seeks disability benefits in the amount of "1/30 of his monthly pay or $208.36 per day for 349 days of disability, totaling $72,717.64." Washington National seeks summary judgment with respect to the amount of short-term disability benefits available under the Policy. Washington National contends that the disability benefit is limited to $2,000 per month for a maximum of 12 months, and that disability benefits may be paid for any partial months at the rate of 1/30 of that $2,000 monthly benefit per day (approximately $66.67 per day).
Although it might have been clearer if the Benefit Schedule explicitly stated that the "$2,000" disability benefit was a monthly amount, considered in the context of the entire Policy—particularly in light of the Policy's discussion of this benefit in terms of a "full month" and a prorated benefit payment for periods less than a month at a rate of "1/30 of the monthly amount" per day—the only reasonable interpretation of the "$2,000" disability benefit described on the Benefit Schedule is a benefit payment of $2,000 per month, for a period of up to twelve months at most.
The plaintiff's proposed construction of this benefit is not reasonable. There is nothing in the Policy to suggest any relationship whatsoever between the disability benefit and the policyholder's monthly income. Moreover, the plaintiff's construction renders the stated disability benefit of "$2,000" entirely superfluous.
Accordingly, Washington National is entitled to partial summary judgment with respect to the maximum amount of disability benefits available under the Policy. We find that the Policy affords, at most, a short-term disability benefit of $2,000 per month for up to twelve months from the date of the Covered Accident (or a maximum of $24,000). In the context of the undisputed material facts of this case, Corporal Levine may recover no more than a maximum of $23,000 in total disability benefits.
For the foregoing reasons, Washington National's motion for partial summary judgment (Doc. 43) will be granted in part and denied in part.
With respect to Count I of the complaint, partial summary judgment will be granted in favor of Washington National with respect to the maximum amount of disability benefits available under the Policy. We find that, as a matter of law, the Policy affords short-term disability benefit payments of $2,000 per month for a maximum period of twelve months after a Covered Accident, and in the context of the undisputed material facts of this case, Corporal Levine may recover no more than a maximum of $23,000 in total disability benefits.
With respect to the balance of Washington National's arguments in favor of partial summary judgment on Count I of the complaint, the motion for partial summary judgment will be denied.
With respect to Count II of the complaint, summary judgment will be granted in favor of Washington National on the ground that the plaintiff's statutory bad faith claim is barred by the applicable statute of limitations.
In light of the Court's dispositive ruling on Count II of the complaint, Washington National's motion in limine (Doc. 52) will be denied as moot.
An appropriate Order will follow.