MARIN COUNTY, Calif. (June 20, 2023)— In a groundbreaking decision that will have far-reaching implications for disability insurance policyholders throughout California, the California Court of Appeal has issued a crucial published opinion in favor of the plaintiff, Dr. Mark Bennett, represented by Terrence “Terry” Coleman of Pillsbury & Coleman.
This landmark ruling will significantly improve the rights and protections of individuals with disability insurance policies in the state.
The decision addresses a common issue faced by many policyholders who purchased disability insurance that they thought would provide for payment of lifetime monthly benefits. Often, policies are written to actually only provide for lifetime benefits for a disability due to an accident; but if the disability is due to sickness, benefits end when the insured reaches age 65. Insurance companies routinely try to recharacterize a disability stemming from an accidental injury as being “degenerative” in nature — a sickness — limiting benefits to age 65. When initially accepting a claim for benefits and beginning payment of monthly benefits, insurance carriers often include a statement in the acceptance letter that, although they are accepting the claim, they are doing so on the basis of sickness rather than accident, such that benefits will end when the insured reaches age 65.
Many policyholders don’t notice or understand the insurance company’s statement that the claim is only accepted on a sickness basis. Many think the insurance company will back down by the time they reach age 65, which often would be many years later.
But when a policyholder later challenges a termination of benefits, insurance companies have successfully argued in court that the policyholder waited too long to challenge the determination and should have immediately filed suit in response to the initial acceptance letter.
Over the years, insurance carriers have relied on this tactic to curtail policyholder benefits. When the carriers subsequently terminate benefits years later, policyholders who challenge these decisions face the carriers’ argument that the statute of limitations had already started when the initial letter was delivered. This argument has been regrettably accepted by many federal court cases and trial courts, resulting in unfavorable outcomes for policyholders.
The dispute in this matter stems from a breach of contract claim involving Dr. Mark Bennett, an oral surgeon, who purchased three disability insurance policies from Ohio National in 1984, 1991, and 1995. These policies provided coverage in the event of total disability, preventing him from performing the substantial tasks of his job due to injury or sickness. In 2006, at 53, Dr. Bennett sustained injuries to his left shoulder and collarbone after being thrown off a horse.
Despite receiving medication, physical therapy, and accommodations, he later developed pain in his left hand, which reduced his surgical capabilities. In 2014, he stopped working due to his injury. The insurance company accepted his claim and began paying benefits, but also sent Dr. Bennett a letter asserting that his condition was “degenerative” and due to sickness rather than injury. The insurer stopped all benefits on his 65th birthday because his total disability occurred after age 55. When Dr. Bennett filed suit to challenge the wrongful termination of benefits, the insurer argued, and the Marin County Superior Court agreed, that his suit was untimely.
The recently published opinion from the California Court of Appeal has unequivocally rejected this flawed reasoning. The court ruled that the statute of limitations begins only after benefits are actually terminated, offering a significant victory for policyholders across the state. This decision sets a crucial precedent that will protect the rights of policyholders and ensure that insurance carriers cannot exploit technicalities to deny rightful benefits.
“This ruling is a game-changer for disability insurance policyholders in California,” said Terry Coleman, lead attorney for Dr. Bennett. “It reinforces the principle that policyholders deserve fair treatment and protects them from being unjustly deprived of benefits they are entitled to. We are thrilled with the Court of Appeal’s decision and believe it will have a lasting positive impact on policyholders throughout the state”, he added.
Lead trial attorney Terry Coleman is a partner at Pillsbury & Coleman, LLP, a San Francisco-based law firm focused exclusively on representing policyholders in insurance disputes and insurance bad faith litigation. The firm represents individuals and businesses in insurance-related matters, ranging from maritime all sums claims in mesothelioma cases and technology errors and omissions insurance to ERISA and private long-term disability claims.
Link to the Opinion: Bennett Opinion